This report details and analyzes the core business and service model trends impacting the market in 5 key areas: as-a-Service subscription models, strategic partnerships, Internet Service Provider (ISP) dynamics, the consumer retail market, and OpenRoaming. In-depth case studies for each will help illustrate and contextualize these developments. Finally, to assist industry players in attuning their strategies to the new environment, ABI Research provides best practices and analyst recommendations for all the assessed areas.
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Market Overview
- A key trend forming the enterprise and industrial networking markets is the shift from Capital Expenditure (CAPEX)-heavy investments toward Operational Expenditure (OPEX) models in the form of Hardware-as-a-Service (HaaS) and Network-as-a-Service (NaaS).
- Among the growth drivers for OPEX Wi-Fi service models are financial constraints, labor shortages, and network agility requirements.
- The expansion of as-a-Service models has also impacted other aspects of the Wi-Fi infrastructure value chain, including Wi-Fi performance testing, which is used by Internet Service Providers (ISPs) to test Original Equipment Manufacturer (OEM) and Original Device Manufacturer (ODM) equipment.
- Wi-Fi performance Testing-as-a-Service (TaaS) products, first introduced by Spirent, have become more economically viable—leading to increased adoption and TaaS facility expansion across Europe. ISPs in Asia-Pacific are not as enthused about TaaS as the West; therefore, the region is not a major focus right now for TaaS vendors.
- To circumvent some emerging global challenges and to remain competitive in a saturated market, ISPs in the United States and Western Europe have adapted from relying on low-range, low-cost Wi-Fi Customer Premises Equipment (CPE) to deploying more advanced, higher-cost mid-range equipment.
- Of all consumer Wi-Fi CPE sold in 2022, 77.5% of those sales were generated through ISPs. This proportion will remain quite similar through 2028.
- While some Wi-Fi equipment vendors like Arcadyan and Zyxel sell consumer Access Points (APs) exclusively to ISPs, other equipment vendors, such as Linksys, are working with ISPs to grow their market share. The latter arrangement provides the benefit of a larger captive market and the ISP managing marketing and logistics, but lower Average Selling Prices (ASPs) are the trade-off.
“One of the most fundamental transformations currently being witnessed in the enterprise and industrial networking domains is the gradual migration to as-a-Service subscription models.” – Andrew Spivey, Industry Analyst at ABI Research
Key Decision Items
Create Strong Value Propositions
Wi-Fi vendors launching Network-as-a-Service (NaaS) solutions or improving their current offerings should orient service design around the core requirements of enterprises. These include the demands for reduced financial risks, rapid deployment, greater Wi-Fi flexibility, and ongoing maintenance, as well as an aversion to forced vendor lock-in. Moreover, NaaS vendors should offer multiple delivery models, with options to transition mid-term to ensure greater market acceptance.
Handle Testing-as-a-Service the Right Way
The Testing-as-a-Service (TaaS) model has become an entrenched trend in the Wi-Fi space, notably in Europe. Put simply, TaaS services are often used by ISPs before a commercial launch to determine if revisions need to be made to the Wi-Fi equipment. In terms of business value, TaaS provides ISPs and their Wi-Fi equipment manufacturers with an economical way to ensure their devices meet quality standards. As will be pointed out shortly, there is great potential for equipment vendors to relieve ISPs of some of the burden that the testing process entails.
First, for Wi-Fi equipment vendors that choose to engage with TaaS, it’s vital that you compile a detailed catalog database of the performance results of your equipment. This can provide valuable insight into how to improve equipment designs and facilitate the identification of patterns in the results. For example, this would help reveal suppliers with components that frequently fall short of requirements.
Aside from creating a database on TaaS results, Wi-Fi equipment vendors also need to form strategic partnerships with TaaS vendors to play a larger role in the testing process. By being more directly involved with the TaaS testing process, ISPs are relieved of some duties on an already long list of tasks they must complete.
Earmark Funds for Partner Development
With the majority of enterprise Wi-Fi equipment vendor sales going through channel partners, the partnership programs that facilitate and incentivize business between the two sides play an important role. As a best practice, Wi-Fi infrastructure vendors should dedicate funds to investment and business development in partnership programs. This can potentially be broken out as a separate item in financial reporting to highlight the seriousness with which the vendor takes partner development. These funds can be used toward enticing rewards, the design of co-marketing content, the development of online partner platforms, and the creation of targeted educational or certification programs. Cisco has one of the most comprehensive partner programs in the Wi-Fi space and should be used as a winning model.
Ensure Wi-Fi Vendor Interoperability
Wi-Fi customers are displaying an increased aversion to walled garden ecosystems, and the benefits of value-added services can be multiplied if equipment from other vendors is also compatible. Thus, Wi-Fi vendors and ISPs should invest in platforms that facilitate this cross-vendor interoperability, with collaboration between multiple vendors in the Wi-Fi ecosystem (either vertically or horizontally) as one way to achieve this.
Develop Dual-Band Wi-Fi 7 CPE
While Wi-Fi vendors must continue supporting Wi-Fi 6E for CPE, they should have their eye on Wi-Fi 7, which will see the client installed base dominate by 2026. To strike this balance, Wi-Fi infrastructure players should develop dual-band Wi-Fi 7 CPE.
There is currently considerable underappreciated demand for dual-band Wi-Fi 7 APs from the ISP market. These will be driven by ISPs that plan to deploy advanced CPE in markets with limited or no 6 Gigahertz (GHz) access, and/or low 6 GHz device adoption. Moreover, certain Wi-Fi 7 features, such as preamble puncturing and MU-RU will be especially attractive to congested environments like Multi-Dwelling Units (MDUs). In such environments, it has previously been challenging to achieve high data rates and low latencies with previous standards.
Adopt a Forward Thinking Mindset
Rather than being merely reactive, Wi-Fi vendors should become proactive by identifying partners early before the necessity arrives. Engaging with partners at the early stages of development will allow for the exertion of influence on the direction of their development (i.e., the features they prioritize or markets they focus on). As part of this long-term strategy, Wi-Fi vendors must ensure that synergy is created between the value-added services, instead of having them as isolated point solutions for single use cases.
Key Market Players to Watch
Dig Deeper for the Full Picture
To learn more about how to form your Wi-Fi Local Area Network (LAN) business strategy and how as-a-Service deliveries should be structured, download ABI Research’s Residential and Enterprise Wireless LAN Business and Service Model Analysis research report.
Not ready for the report yet? Check out our Assessing the Various OT Trends in the Industrial WLAN Market Research Highlight. This content is part of the company’s Wi-Fi, Bluetooth & Wireless Connectivity Research Service.
