Abstract

Global WLAN markets experienced explosive growth in 2003. Though shipment share of notebook PCs with built-in WLAN continued to rise in 2004, rankings of WLAN makers were still reshuffled. This is because the market growth power from desktop/notebook PC module ODM/OEM production is shrinking makers' profits. In addition, the lack of new technology drivers after 802.11g models hit the market, and home wireless multimedia applications' inability to drive market growth also contributed to the momentum for WLAN maker reshuffling.

In the fourth quarter of 2003, problems began to appear with GST's GPS (Global Positioning Satellite) handset and dual-mode card inventory pile-ups. Difficulties in production line switchovers emerged as well. In June 2004, GST sold the Neihu factory building to D-Link, and by October, was acquired by Cameo.

In the past several years, Cameo has been among the top three shippers of NICs and switches. As Ethernet offerings began to heat up, Cameo's superiority in mass production swept the unmanaged Layer 2 switch market, seizing orders from two of the three largest global retail channel players. Shipment volume rocketed up as a result, making Cameo the top Taiwanese shipper of switches in the second quarter of 2004. 

As Cameo's WLAN equipment rollouts have been late, its shipment volume has been unable to break into the top three makers. Nonetheless, the merger with GST will facilitate expansion of Cameo's shipment scale.

D-Link's primary WLAN suppliers are GST, Cameo, and Z-com, but their supply capabilities compared unfavorably with Honhai (Ambit) to Negear, and with CyberTAN and Gemtek to Linksys. Now with GST and Cameo set to merge, and Alpha Networks and Z-com to cooperatively supply, D-Link will likely generate stronger synergy in its supply chain to compete with Linksys and Netgear. Moreover, such development is expected to inspire players in each supply chains to forge closer partnership.

Appendix

Research Scope

Taiwanese WLAN shipments encompass all WLAN NIC, modules, and access points produced by Taiwanese makers anywhere in the world.

Definitions

Business Types

OEM

The OEM (Original Equipment Manufacturing) business model entails carrying out product manufacturing or assembly according to specifications supplied by the customer. The OEM business model emphasizes production efficiency; thus, in order to lower costs, customers outsource manufacturing to OEM providers. This cooperation forms a division of labor among design, manufacturing, and sales.

ODM

The ODM  (Original Design Manufacturing) business model entails undertaking product design and manufacturing, but not direct retail sales or brand promotion. ODM providers either collaborate with customers on product specifications or independently design products according to customer specifications; the ODM provider then receives manufacturing orders upon customer approval. The ODM model links the sales capabilities of the ODM customer and the design and manufacturing capabilities of the ODM provider, developing a cooperative division of labor throughout the product's value chain.

Product Types

WLAN NIC

WLAN function as a data communications system that provides wireless peer-to-peer and point-to-point connectivity, usually within a building. In place of twisted-pair or coaxial wires or optical fiber used in LANs, WLAN transmit and receive data over electromagnetic waves over ISM (Industry, Scientific, Medical) bands between 2.4GHz or 5.8GHz.

WLAN NIC refers to a PCB (Printed Circuit Board) that is attached or embedded into a PC or mobile device. A WLAN NIC provides device to device or device to WLAN AP data communications on a specific frequency or radio band.

WLAN AP

A WLAN AP connects a wired LAN to one or many WLAN devices, or acts as a bridge between two WLAN devices. Wireless Access points typically incorporate an Ethernet port and radio communications capability.

Routers

Routers control network flow by determining the best routing for data transmission between a transmitter and a receiver. Routers are typically controlled by software and are programmed to provide the most inexpensive, fastest, or least busy of all available routes. Routers operate at layer 3 of the ISO-OSI (International Standard Organization's Open System Interconnect) model. Routers can be further divided by the number and type of network protocols they can support and by the number of ports available for protocol routing.

Glossary of Terms