Enterprise WLAN Vendors Must Reassess Strategies to Benefit from the Next Wave of Campus Network Innovation

Wireless Local Area Network (WLAN) vendors targeting campus networks are being confronted by a convergence of several trends that are upending their understanding of the market. The first is the growing complexity of campus networking requirements, spanning everything from a rapidly increasing volume and density of client devices in the network to the introduction of new ultra-high reliability applications such as Autonomous Guided Vehicles (AGVs). The second is the greater divergence between the demands of specific industry verticals. For example, whereas warehouses are prioritizing the support for an expanding number of AGVs and additional services like asset tracking, large public venues are primarily concerned with enlarging network capacity and the handover between WLAN and cellular. Again, whereas the education vertical is swiftly migrating to cloud management, large enterprises and healthcare are steadfast in their commitment to on-premises management. The third is a widening gap between regional regulation, with unlicensed 6 Gigahertz (GHz) and Automated Frequency Coordination (AFC) standing out as notable cases of this. The fourth is the accelerating pace of technological evolution, which is leaving vendors disorientated and unclear about how best to approach revolutionary new technologies such as Artificial Intelligence (AI) or WLAN/cellular convergence. Compounding the challenge for WLAN vendors are the shifting market dynamics with which must contend, including the acquisition of Juniper Networks by HPE Aruba Networking, or the emergence of new market entrants such as TP-Link, which are aggressively challenging incumbents for market share. This ABI Insight analyzes some of the ways vendors must respond to the above challenge.

Although the field of WLAN vendors serving campus networks is wide and diverse, their Research and Development (R&D) and go-to-market strategies have all been characterized by one of four approaches:

1. All-Rounder: Vendors with broad and diverse portfolios that contain solutions for all the major campus verticals. Benefits from the largest Total Addressable Market (TAM), but technology stack lacks focus, and they often suffer from an inability to optimize their solutions for specific verticals. Examples include Cisco and HPE Aruba Networking.
2. Vertical Focused: Vendors that have optimized their technology stack for select campus verticals. Although such vendors can capture sizable market shares in their target fields, they are tied to fortunes of their chosen sectors and are unequipped to address opportunities that fall outside of it. Examples include Arista and Extreme Networks.
3. Technology Specialist: Value proposition centered on industry leadership in specific innovative technologies. They can capture industry-wide opportunities related to their specialism, but that can lead to pigeonholing and challenges in aligning with desired business outcome during implementation. Examples include Juniper Networks and Fortinet.
4. Small and Medium Business (SMB) Targeted: Vendors focusing resources on the SMB market. Enterprise-focused vendors are often unable to compete on cost-efficiency and management simplicity, although vendors in this field face low margins due to price sensitivity, and often struggle to climb up the value chain. Examples include NETGEAR and D-Link.

These strategies, which already faced their own individual challenges, are now being strained further by the profound market disruption brought by the rapid evolution of campus networking. Without strategic readjustment, previously successful strategies may soon prove untenable. Whereas before, vendors could develop campus networking one-size-fits-all solutions, the growing divergence between verticals will make it necessary for vendors to prioritize development and marketing on select verticals going forward. All-rounder and technology specialist strategies are most at risk from this development. This does not mean that vertically-focused approaches do not require reassessment though. While in the past, many vendors simply enhanced their capabilities through acquisitions, the interoperability and consistency issues resulting from bolting purchased technologies onto legacy systems limits a vendor’s ability to provide the efficiency, scalability, unity, and ease of management required to address the growing complexity of campus demands. SMB-focused vendors will also require strategic readjustment to account for the heightened competition from new highly cost-efficient market entrants, and from OpenWiFi, which offers a compelling open-source, disaggregated, and vendor-neutral alternative to their proprietary solution.

Prior to developing a vertical-optimized solution, vendors must first decide which vertical(s) they wish to focus on. When doing so, they should consider the following:

• Total Addressable Market (TAM): Consideration should be given to a vertical’s TAM, as this helps assess Return on Investment (ROI) and determine whether the pie is big enough for multiple vendors. Outside of enterprise campuses, education has the greatest TAM. Alongside the sheer number of education establishments, this TAM is supported by the broad array of funding mechanisms available, such as the E-rate funding mechanism administrated by the Federal Communications Commission (FCC) in the United States.
• Growth Verticals: Vendors are best able to capture new business when a vertical is rapidly expanding. ABI Research projects that industrial manufacturing and healthcare will be two of the fastest growing verticals throughout the rest of this decade. This is because the latest WLAN innovations are enabling applications in these environments that the technology was previously unable to handle, notably mission-critical applications requiring low latency.
• Competitive Landscape: New entrants will struggle to find success in highly saturated markets. Although enterprise campuses may offer the largest TAM, the high degree of competition and strong incumbents in the vertical makes market success challenging.
• Managed Service Provider (MSP) Ecosystem: MSPs facilitate vendors breaking into campus networks with their industry relationships, vertical-specific knowledge, and robust support network. Vendors should survey the MSP landscape to discover potential partners before settling on a vertical.  
• Demands of the Vertical: Vendors should take stock of current capabilities and identify which vertical they are best aligned with.

Strategic shifts are also necessary in response to the wave of rapid innovation that the industry is witnessing. WLAN vendors should consider the following steps:

• Software-Defined Wi-Fi 7 APs: When upgrading networks, enterprises with low levels of 6 GHz demand currently will wish to invest in 6 GHz tomorrow, but still leverage their equipment with 5 GHz today. Software-defined radios will enable this, as they can be reconfigured between 5 GHz and 6 GHz on-demand.
• Network Densification: Although the higher Multiple Input, Multiple Output (MIMO) configurations made possible with newer 802.11 standards were intended to support high-density environments, configurations above 4x4 MIMO cannot operate in real-world environments. A higher density of Access Points (APs) may prove the most effective way of dealing with greater client density.
• Regional Approach to AFC: The long-awaited certification for AFC in the United States is imminent, but it may be several years (if ever) before other major markets follow. Vendors should not build standard-power 6 GHz into their value propositions in markets without AFC authorization until they are certain when it will be available.
• Artificial Intelligence: Vendors must take a levelheaded approach to AI, aiming to clearly define the goals and specific business problems they are trying to address through its deployment. Key areas for development are Large Language Models (LLMs) for network management, application monitoring for root cause analysis, AI-driven automated Radio Resource Management (RRM), and digital twins.
• Network Architectures: Optimize architectures for target verticals, bearing in mind the cloud/on-premises preference of the sector. Hybrid architectures are also suggested to avoid single points of failure or inconsistent outcomes.
• OpenWiFi: SMB vendors prioritizing cost-efficiency should explore the potential of leveraging OpenWiFi. They can use the open-source Software Development Kit (SDK) as a foundation to save on R&D costs and enable ecosystem interoperability, while adding additional proprietary features on top that will allow for the requisite optimization that campus networks demand.
• Network-as-a-Service (NaaS): MSPs are best positioned to deliver NaaS to customers, so WLAN vendors should optimize their network management platforms for MSPs and invest in partnerships with MSPs with vertical-specific expertise. They should avoid providing NaaS directly, as they lack the vertical-specific expertise that specialist MSPs possess, and in doing so, they are also in direct competition with any MSP partners they have.
• Proprietary Technologies: New features outside of the 802.11 standard are required to handle the growing complexity of demands within campus networks. Examples of proprietary technologies that campus networks will find valuable are technologies for handling mobile applications or those that guarantee Quality of Experience (QoE).
• Industry Influence: Gain industry leadership by contributing to standardization initiatives and participating in industry trials. This not only raises a vendor’s profile to potential customers, but also enables them to steer the industry.