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Commentary: Something completely different

Wireless LANs are coming to your home, and Cisco Systems knows it. But this market differs from the service provider markets that Cisco is used to.

By Phil Redman, Gartner Analyst

Wireless LANs (local area networks) are coming to your home, and Cisco Systems knows it. But this market differs from the enterprise and service provider markets that Cisco is used to.

Wireless LAN equipment

See news story:
Cisco details wireless strategy
continues to decrease in cost and become more affordable for consumers, who will increasingly demand this technology. Several factors will cause the demand for wireless networking in the home to grow:

• As Internet and computer functions become more integrated into daily life, consumers will be more driven to share high-speed Internet connections.

• Consumer applications such as gaming, voice over IP, and video on demand will help drive the adoption of wireless LAN technology in the home.

• As more business consumers adopt this technology, it will be extended into their home offices to allow for remote access.

Wireless LANs will fill in gaps in coverage and extend capabilities to the wide area networks that service providers, such as AT&T Wireless, Sprint PCS and Verizon Wireless, can't afford to offer.

Cisco wants to position itself to take advantage of the growth potential of home networking. However, this market will provide different challenges from the ones its traditional markets present. First, Cisco has not built up a brand name among consumers, so penetrating this market will likely require partnerships--perhaps with consumer electronics companies such as Philips and Sony.

Second, consumers are price-conscious, and Cisco, which is used to charging a premium for its networking products, will have to learn how to make do with smaller profit margins. It will take some time, then, for Cisco to build up this business. Although the consumer market will eventually support high-volume sales, it has not quite reached the takeoff point.

(For related commentary on uses of wireless LANs, see TechRepublic.com--free registration required.)

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