Adoption of Wireless LAN and IP Telephony Creating Hotbed of Opportunity Within Key Vertical Markets, Says IDC

FRAMINGHAM, MA – OCTOBER 13, 2005 – A newly released IDC forecast series reports that the professional services and other personal services industries are expected to present a hotbed of opportunity in the U.S. wireless LAN market over the next five years. Spending on wireless LAN equipment within each industry is expected to more than double by 2009, producing a five-year compound annual growth rate (CAGR) of nearly 20% within each sector. Similarly, cost savings and robust feature sets are expected to be the primary drivers for increased spending on IP telephony equipment over the forecast period, which is expected to rise the fastest within the financial services and retail sectors. In terms of overall volume, the largest amount of spending will continue to be concentrated within the government sector, which alone spent $100 million on wireless LAN equipment and $118 million on IP telephony equipment in 2004.

Dan Corsetti, senior analyst in Vertical Market Research at IDC, noted that, "although there are many applications that can be used on wireless LAN, there are only a few that can be used within any particular business or industry. Because of this, the main issue regarding adoption will be identifying a business case for wireless LAN within different vertical industries. Since delivering basic connectivity will usually not be the primary growth driver, it will be necessary to identify data-driven, mission-critical applications or even a secondary cost driver besides basic connectivity, such as wireless voice or fixed mobile convergence."

For example, IDC anticipates that the driving force behind adoption of wireless LAN within professional services firms will be the need to support increased connectivity and coverage for the sector's locally mobile workforce, as well as the need for temporary wireless LAN deployments. Meanwhile, increasing competition in the personal and other services industry is expected to spur this segment's adoption of wireless LAN. In particular, the hospitality industry, which is encompassed within the personal and other services segment, is expected to be a key adopter of wireless internet access for guest services in order to advance customer care and intimacy, improve the customer experience, and create competitive differentiators.

Much like its adoption of wireless LAN, the increased utilization of IP telephony equipment in the financial services sector will stem from the industry's need to improve performance of networked applications, increase real-time integration of data, and manage convergence. Although somewhat smaller in terms of its growth rate, the retail industry is also expected to significantly extend its use of IP telephony equipment through 2009, mostly in an effort to help execute business objectives related to improving customer care and interaction, supply chain management, and managing a globally disparate workforce.

IDC's U.S. WLAN Equipment 2005-2009 Forecast by Vertical Market (IDC #33760) and U.S. IP Telephony Equipment 2005-2009 Forecast by Vertical Market (IDC #33882) are two in a series of four enterprise networking forecasts. The other two forthcoming studies are U.S. Router Market Forecast by Vertical Market 2005-2009 (IDC #33807) and U.S. LAN Switch 2005-2009 Forecast by Vertical Market (IDC #33801). Each study focuses on a particular enterprise networking sub-market, providing an overview and five-year forecast segmented by industry and company size. Finally, analysis of the drivers influencing end-user spending on enterprise networking equipment within different industries is also addressed, thus underscoring opportunities for vendors to penetrate verticals providing the fastest adoption rates.

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