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China Wi-Fi Market Development 2005
Analysys International, Aug 2005
Our Findings
Wi-Fi Market Profile
- On the global market, demand for chips and equipment used in the manufacturing of Wi-Fi devices will continue to increase smoothly.
- On the global market, it's impossible for an independent ISP to become profitable. However, responses from users are good for Telecom Operators that can provide Wi-Fi services bundled together with a slew of other broadband services.
- On the global market, Wi-Fi services ten to be developed on a large scale. Network Carriers can make a profit only if enough access points support the deployed services. Because of this, the Wi-Fi industry can be greatly enhanced by cooperating amongst themselves. For instance, having a shared user base between access providers would streamline the user experience by allowing a user to login with one ID and password for any location.
- In the domestic market, investments in Wi-Fi from telecom operators have been gradually slowing down Wi-Fi services have begun to be applied in specific industries, like retailing. And it has become widely used as an effective Intranet access point. In the first half of 2005, the growth rate of revenue from the sales of WI-Fi Intranet access points was 58 percent higher than the previous year. Wi-Fi products purchased by individuals also increased by 47 percent.
- The domestic equipment market has two kinds of provider. One is the traditional telecom equipment manufacturers, like Huawei, ZTE, and UT. These companies sell their products directly to telecom carriers and service providers. This type of company is severely constrained by the stagnate investments from the telecom industry. The other kind of equipment provider evolved from intranet access equipment like D-Link, TP-Link, and Linksys. Unlike the former companies, these companies greatly benefit from investments in individual products
- In the domestic market, investments in Wi-Fi from telecom operators have been gradually slowing down Wi-Fi services have begun to be applied in specific industries, like retailing. And it has become widely used as an effective Intranet access point. In the first half of 2005, the growth rate of revenue from the sales of WI-Fi Intranet access points was 58 percent higher than the previous year. Wi-Fi products purchased by individuals also increased by 47 percent.
- The domestic equipment market has two kinds of provider. One is the traditional telecom equipment manufacturers, like Huawei, ZTE, and UT. These companies sell their products directly to telecom carriers and service providers. This type of company is severely constrained by the stagnate investments from the telecom industry. The other kind of equipment provider evolved from intranet access equipment like D-Link, TP-Link, and Linksys. Unlike the former companies, these companies greatly benefit from investments in individual products.
- Although there has been recent growth in the domestic WLAN market, many of the core technologies used in production are at the mercy of overseas chip manufacturers. Because the barriers for entering the WLAN market are relatively low, it has been flooded with companies resulting in severe competition and decreased profits.
Product features
- The form factor of Wi-Fi products has been gradually changing since its inception. Originally, it was deployed as a pure access point, offering a way to connect to the existing infrastructure. But now, it is more concentrating on intelligent functionality with the new devices that offer switching and routing capabilities. These have eliminated the original forms and have become the major products of the Wi-Fi market.
- There are several major issues concerning the future of Wi-Fi technologies. These issues are related to the following areas of concern: Security, QoS (Quality of Service), location based services, support for IPv6 technologies, and resource management for wireless equipment.
Chief Challenges faced by Wi-Fi Implementers
There are many challenges that must be faced by those who whish to implement the Wi-Fi technologies.
- The challenges for the telecom industry can be summed up with the following questions that need to be answered.
- Is it necessary to continue investing in Wi-Fi networks?
- How should we invest in Wi-Fi technologies?
- How is the Wi-Fi market defined?
- Do we need to reconsider the target market segments?
- Do we need to segregate the market differently?
- The chief problems faced by enterprise and internal IT implementers can be listed as follows:
- Enterprises will encounter security issues from attempted hacker intrusions to the private intranet. Hackers will try to gain access by intercepting wireless signals.
- Enterprises will also have to deal with internal user security as employees deploy readily available access points in an unapproved manner. Such deployments are usually not secure and allow penetrations from the hackers previously discussed.
- Enterprises will also have to overcome the decision issues that apply to Wi-Fi deployment, especially considering improvements to operation efficiency.
- Individual users that implement Wi-Fi technologies will also discover problems. Wi-Fi services that are provided by the telecom industries will be too expensive for most users. This especially becomes an issue because of the lack of necessity, since most home computers are desktop PCs that don't have the need for mobile functionality.
Chief Challenges faced by Wi-Fi equipment providers and manufacturers
- The telecom equipment providers must adopt a completely different strategy for selling Wi-Fi products. In this sense, Huawei is currently one of the leaders.
- Providers of traditional IT products will need to discover ways to benefit from a changing market by using various chips from different manufacturers. By juggling agreements with chip providers, they can seize some opportunities the Wi-Fi technology development. This is especially true for those companies that are small or are new to the Chinese market.
Methodology
We arrived at corresponding conclusions mainly through analyzing first and second hand market information.
- The first-hand information mainly comes from sampling the major manufactures or agents of channels and end users conducted by us.
- In-depth Interviews of major manufacturers
- In-depth interviews of major agents of channels, distributors and retailers
- Sampling of end users
- The second-hand information is mainly public information that comes from the following sources:
- Information in the public domain of the industry
- Opinions vended by senior industry experts
- Data and information provided by relevant government departments
- Related economic data
- Annual and quarterly reports of enterprises
- Interviews with product users
- Financial analysis and reports by financial analysts
- Information from the Internet
- Our database
Due to the fact that we depend on the information obtained through interviews with manufacturers/channels to reach its conclusion on the scale of market, the data provided by manufacturers on the types of products they offer, their operating revenues and marketing activities shall have a considerable impact on the final analysis of the reports.
The data reported by us is the result obtained after repeated crosschecks. We are confident that the reported data is accurate and meaningful.
Our Suggestions
Suggestions for domestic Wi-Fi Service Providers
- Providers of Wi-Fi services should consider horizontal cooperation with other Service Providers. Doing so would allow them to integrate resources and provide users with a 'Single-account Roaming' between various service providers.
- Providers can simplify the experience of using their WLAN. They can do this by allowing the use of a single account, such as a Broadband Account, from many access points.
- In an effort to develop the market, service providers should try to cooperate with various service industries. This would help create a user base and provide a viable solution to the increasing user demand. They can do this by offering free Access Points in public places like coffee shops and cafes. Whereas, in meeting rooms, conference halls, and large group conventions, they can collect fees based on access time or bandwidth usage.
- As far as enterprise implementations are concerned, we suggest improving Wi-Fi security by adopting the new emerging technologies for wireless security, like implementations of VPN.
Suggestions for Wi-Fi Equipment Providers
Those providers with a desire to take a strong position in the gradually increasing Wi-Fi market would do well to consider the following two aspects of the industry:
- Providers should consider how to develop their Wi-Fi implementations by examining all related and connected industries and tie it into a fully formed business model. They should also form their own opinions and propositions about Wi-Fi operations. By discussing their ideas and design strategies with the telecom industries to create a mutually beneficial agreement. Together, they can drive the construction of a successful Wi-Fi infrastructure.
- Equipment manufacturers may also need to change marketing strategies. They should consider bundling Wi-Fi with other communication products. And, it is vital that they quickly establish a distribution channel and make it stable.
For companies that initially provided intranet products, we suggest that close attention is paid to new technologies. This is especially true when it comes to applications of Wi-Fi products. This would allow them to gain a privileged position in negotiations with chip manufacturers that form the base of the Wi-Fi industry.
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