Dell’Oro Group reported enterprise-class wireless LAN (WLAN) revenues hit a record $3 billion in the fourth quarter of 2022 with average unit prices expected to peak this year.

“Like everything else around us, the price of each WLAN AP [access point] is going up. Manufacturers have had to deal with higher component and logistics costs, and although the latter are coming down, the component costs are still elevated,” Dell’Oro WLAN Research Director Siân Morgan said.

As a consequence, manufacturers have raised the prices for their distributors and end customers. “Industry players have told us that when capacity is constrained, manufacturers have a tendency to run the higher-priced, premium products through their product lines,” she told SDxCentral.

For example, if a company wants to purchase a 2x2 access point with a transfer rate of 2.4 Gb/s, but the only product made available is a 4x4 with a 4.8 Gb/s transfer rate, the customer has to settle for the latter which comes at a higher price.

Organizations are buying more and more Wi-Fi 6, and the adoption of the new, more expensive technology is also increasing the average price of WLAN units, Morgan noted.

Cisco stood out in the fourth quarter as having shipped more WLAN units than it ever has before under easing supply chain conditions, Dell'Oro reported.

“Cisco shipped a massive batch of WLAN units in the fourth quarter of 2022,” Morgan said. “They increased their shipments by 58% year over year, the highest growth rate of any vendor – which is quite impressive when you consider that they were already the market leaders.”

Vendors including Cisco have been dealing with supply constraints by re-designing products and finding alternate sources of supply, according to Morgan, who noted Cisco’s supply management team secured a couple of contracts that allowed them to ship 2.5 million units in the fourth quarter.

Most major vendors outside of China shipped more units than they ever had before and are experiencing “unusually high backlogs,” Morgan said. “As the last of the supply constraints loosen, manufacturers’ ability to fulfill the outstanding wireless LAN orders will keep improving."

Companies including HPE Aruba, Ubiquiti, CommScope Ruckus, Extreme Networks, Juniper Mist, Fortinet, Cambium Xirrus, and Alcatel-Lucent Enterprises all had “their best or close-to-best quarter in terms of unit shipments.”

The contraction in China’s market was driven by the two main enterprise-class WLAN vendors in China, Huawei and H3C, Morgan said. Huawei has had “huge year-over-year growth in unit shipments for the past four quarters,” she added, but the vendor refocused geographic distribution of revenues in the fourth quarter of 2022, with the most growth in sales coming from Europe, the Middle East and Africa (EMEA) and Caribbean and Latin America (CALA) instead of China.

These changes to the company’s distribution come in the midst of international controversy surrounding equipment from China-based vendors, which has caused countries like Germany to initiate bans on some equipment from Huawei.

China’s National Bureau of Statistics recently announced that the country’s GDP was 3% in 2022, significantly lower than the March target of 5.5%, Morgan pointed out. The country's government is targeting 5% GDP growth for 2023, despite the statistics bureau acknowledging contraction in demand and weakening expectations.

Morgan added, “It is also going to be interesting to watch how HPE’s sale of its stake in H3C change the enterprise WLAN dynamics in China.” That transaction is expected to be completed at the end of the year.