Can startups continue to play?

Can startups continue to play?
As if the more than 50 companies building wireless-LAN chips weren't enough players for the WLAN market, soon there will be more than 15 vendors selling WLAN switches. While debate rages on as to exactly what a WLAN switch is, I define it as a centralized WLAN control/management box talking to "thin" access points. I credit Symbol Technologies and its Mobius product for commercializing the concept, which seems to be leading to the full collapse of WLAN infrastructure into the network closet. I count myself among those who see it as a sea change in WLAN infrastructure; it's hard to imagine standalone fat APs surviving.

While Symbol is a formidable competitor, a whole bunch of new companies sensed the opportunity and immediately set to work to compete. Indeed, the huge amount of investment in the switched segment is indicative of the fact that product differentiation now needs to be in architecture, implementing customer-beneficial features well above the MAC of 802.11. Standards level the playing field; architectural innovations put the craters back in, with players hoping that the competition will fall into one.

But not so fast. Looking at the switched products at Interop indicates that they are all fundamentally the same, with each brand placing the emphasis slightly differently. It stands to reason that what might be initial inadequacies in a given product will quickly be corrected (mainly via software), resulting in the early commoditization of this otherwise-exciting new category.

That leads to a question a client recently asked: With giants like Extreme, Nortel, Proxim and Symbol (and soon Cisco) in this space, who will buy from a startup? Is the innovation that new ventures traditionally bring to the market now the province of all? Are the VCs wasting their money overbuilding yet another segment of the wireless market?

I don't think so. And that's because it's still early in wireless LAN history. We're just seeing the start of volume deployments to which switched architectures are so well-suited. And the real differentiators may not be technological, but, rather, such subtleties as distribution, service and support.

A smaller, more focused company just might claim some advantage here. Stay tuned for a wild ride, but I expect some of the startups to be standing when the dust clears.

Craig J. Mathias is principal of Farpoint Group (Ashland, Mass.).