Wireless router adoption will spur competition and encourage future price decline
Los Angeles, CA (PRWEB) September 11, 2014
Wireless access points (WAPs) have a buyer power score of 4.5 out of 5, signifying that buyers have a strong upper hand in negotiations with suppliers. According to IBISWorld procurement analyst Daniel Krohn, “falling purchase costs, along with the growing abundance of wireless routers and low switching costs, have boosted buyer power to its currently high level.” Semiconductors are a significant component to WAP production and, therefore, semiconductor prices have a strong influence on suppliers' purchase costs. Emerging technologies within the semiconductor market have been drastically reducing the costs associated with their production, encouraging a fall in semiconductor prices. Because semiconductor costs make up the bulk of suppliers' purchasing outlays, falling semiconductor prices have driven down WAP suppliers' operational costs. In turn, WAP suppliers have been granted additional price flexibility, a trend that is expected to continue through 2017. Buyers find it easier to negotiate with suppliers that are able to lower their costs. As such, falling semiconductor prices have boosted buyer leverage.
“The availability of wireless routers and low switching costs also help buyer power,” says Krohn. Over the past three years, wireless router technologies have emerged, providing buyers a router and access point in one device. This technology reduces network complexities and the buyer's total costs of wireless network ownership. Thanks to these benefits, wireless routers are fast becoming a more effective solution for buyers' wireless networking requirements. Meanwhile, because buyers face low switching costs, they can easily transition from WAPs to wireless router technologies. In turn, wireless router adoption is rapid, creating strong competitive pressures within the WAP market. This competition enhanced buyer power considerably.
The level of security that a WAP provides is generally the largest determinant of its price. WAPs offer a wide variety of security features, including encryption capabilities, rogue access point detection and authentication protocols. Adding these features to a product requires additional programming, which adds to the research and development (R&D) costs associated with the product. In turn, these additional costs apply upward pressure on prices. Furthermore, offering additional security features adds to the value of the product, which gives suppliers more pricing power for these products. The four largest vendors in the market are Cisco Systems, Aruba Networks, Hewlett Packard Company and CDW.
For more information, visit IBISWorld’s Wireless Access Points procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of wireless access points (WAPs). A WAP translates the electronic signal from a network's router into a wireless signal that the user's wireless devices can receive, providing the user wireless internet access. This report excludes other networking equipment, including modems and all forms of network routers and switches.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.