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Lower prices drive wireless networking

Falling prices spurred shipments at the end of 2001, new research indicates, a trend that is also expected to keep revenue growth at bay this year.

The wireless networking market took off at the end 2001, according to new research, as sagging prices improved sales and shipments.

Research firm Cahners In-Stat Group said shipments increased to 2.9 million units compared with 2.6 million units shipped in the third quarter. But the lower prices pinched overall revenue, which fell 3 percent, to $464 million from $479 million.

In-Stat said it also expects the trend to continue for most of this year. "The prices are just falling dramatically, so it's going to be hard to see any increase in revenue," said Gemma Paulo, an In-Stat analyst.

Cisco Systems grabbed an 18 percent share of the market, followed by Buffalo Technology, which took a 10 percent stake.

The numbers include sales of access points and NICs (network interface cards). An access point is equipment that acts as a hub and connects to a wireless LAN (local area network) or an Internet connection. An NIC connects a laptop, PC or handheld computer to a wireless network. Paulo estimates that the bulk of the NIC market, about 70 percent, is comprised of PC cards.

Sales of gear that runs on the 802.11b standard, or Wi-Fi, dominated over 802.11a in the market, a trend Paulo believes will continue this year as other standards like 802.11g start to make inroads.

Falling prices also encouraged consumers to scoop up cheaper gear in the fourth quarter, causing the home market to grow 20 percent from the third quarter in terms of shipments and 11 percent in terms of revenue.

Paulo said the average selling price of an NIC fell from about $125 to about $100 during the quarter.