Shift to controller-less WLANs hits Cisco’s wireless revenues

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More than a decade ago, Cisco was in the vanguard of the transition from ‘fat’ WiFi access points to thinner APs managed by a centralized controller. Now, the decline, in turn, of that controller architecture has hit the company’s wireless results, as the industry moves towards a cloud-managed approach.

The rise of cloud-based enterprise WLANs is benefiting Cisco’s Meraki division, and justifying the acquisition of that company in 2012. However, those gains are not yet fully offsetting the loss of controller revenues, according to CEO Chuck Robbins, on the recent analyst call to discuss quarterly results.

During the Q&A session, according to NetworkWorld, Cisco said that its wireless business revenues were down 2% year-on-year in the third quarter, mainly because of declines in traditional WiFi controllers, but there was strong growth in the Meraki solution.

Responding to a question from analyst Ittai Kidron of Oppenheimer, Robbins said:
“First of all, the market is transitioning to a controller-less architecture, so in large part, our access points were actually positive, but the controller side of that business was down. Meraki was positive and then also we are a pretty substantial recipient of E-rate (schools and libraries fund) business, so as that has moved out much more slowly than expected I think, that has also impacted that business.”

Robbins has talked about the transition to controller-less solutions, which enable faster deployment for enterprises and service providers, simpler management, and a shift of  spending from capex to opex. He, like many industry players, expects other types of network infrastructure, such as wireline switches and security, to make the same move, and the same will also be seen in cellular small cells over time.

As well as Meraki, other pioneers of the controller-less WiFi architecture included Aerohive and Mojo Networks. The gathering pace of digital transformation within many enterprises is now making this approach more attractive, placing the focus on speed and flexibility. Want to read more? Try the Wireless Watch service now!

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Caroline has been analyzing and reporting in the hi-tech industries since 1986 and has a huge wealth of experience of technology trends and how they impact on business models. She started her career as a journalist, specializing in enterprise and carrier networks and in silicon technologies. She spent much of her journalistic career at VNU Business Publishing, then Europe’s largest producer of technology publications and information services . She was publishing director for the launch of VNU’s pan-European online content services, and then European editorial director. She then made the move from publishing into technology market analysis and consulting, and in 2002 co-founded Rethink Technology Research with Peter White. Rethink specializes in trends and business models for wireless, converged and quad play operators round the world and the technologies that support them. Caroline’s role is to head up the wireless side of the business, leading the creation of research, newsletters and consulting services focused on mobile platforms and operator models. In this role, she has become a highly recognized authority on 4G systems such as LTE and WiMAX, and a prolific speaker at industry events. Consulting and research clients come from major mobile operators, the wireless supply chain and financial institutions.

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