WiFi Router Market: Moderate Growth with Stability

GfK regularly monitors retail sales of various non-food items. This allows you to get information about what kind of products customers choose, where and when they prefer to make purchases, how much money they spend, how sales are distributed across regions and what is currently the specific consumption in a particular market segment.

According to the GfK oring monitor, retail sales of Wi-Fi routers for 10 months of 2018 increased by 4.9% in monetary terms compared to the same period last year. Among the main suppliers of these devices GfK names the following companies (in alphabetical order): ASUS, D-Link, Huawei, Keenetic, Mikrotik, Tenda, TP-Link, Xiaomi. What is the success of these vendors and their equipment? We asked this question to representatives of firms.

“Each supplier has a wide range of models optimized for different tasks and customer needs,” recalls Denis Serechenko, director of networking solutions for Huawei Enterprise Business Group in Russia. – Therefore, it is impossible to talk about anyone “most successful” model that would stand out sharply against the rest. There are different proposals that correspond to different requests; they are all quite successful in their niches. ”

According to Mikhail Kirichenko, TP-Link sales director in Russia, on the Wi-Fi equipment market, success is ensured by such parameters as a wide range, availability, and the offer of actual solutions that are in demand by the market. TP-Link, following this path, offers more than 200 models in its product matrix, which satisfies all user requests.

“Success is a combination of several factors,” says Konstantin Tikhonov, director of sales for Tenda in Russia and the CIS. – To make the model popular, you need an attractive price-quality ratio plus market demand. For the success of the company need a balanced range. And, of course, such factors as a professional team and an understandable, loyal affiliate policy are important. ”

According to Ilya Ponomarev, General Director of KINETIK LLC, often local “successes” in pieces are achieved by dumping. “But this is not our case,” he said. – We associate our successes with the quality of products, no matter how trite and advertising it may sound. We have a lot of experience in promoting fairly expensive (50–100% more expensive compared to formally competing models from other manufacturers) Internet centers, which, however, sold much better even in pieces, not to mention money. Just because they were very successful models in terms of not only the formal hardware features, but also the software, functionality, cloud services, and the quality of the product as a whole. Fortunately, more and more users refuse to perceive the router as a constructor, which takes time to find, try and install some kind of alternative firmware with which the device will do what a normal router should do. In addition, users want to have support, which can be described with these words: “Here you have access to my router, do me everything at the highest level without my participation.” And we, unlike many others, are doing this. ”

Demand is not the highest, but steady

Today, it is Wi-Fi that can be considered the key technology of wireless communications, so the demand for these devices will continue, Denis Serechenko said. Wired solutions are a thing of the past, they are trying to abandon cables, while 4.5 G or 5G wireless alternatives remain at the level of pilot projects, which means that Wi-Fi technology will be relevant for a long time.

“The demand for wireless routers is steady,” says Sergey Vasiuk, director of marketing for D-Link in the CIS and Baltic countries. – You can talk about some redistribution of the offers of basic devices in favor of telecom operators, providing customers with customized models as part of complex tariff plans. In addition, the share of high-price devices with additional consumer characteristics is increasing, solutions based on routers with an increased coverage area appear, but on the whole, at present, there is no particular reason to talk about a decrease in demand as a whole. ”

Yuri Tarasov, CEO of Smart Orange, a distributor of Xiaomi, also claims that sales of Wi-Fi devices will grow. One of the main reasons is the development of technology, namely the mastering of the 5 GHz band. In addition, the Gigabit Internet becomes more accessible to the average user, which often leads to the replacement of old equipment with new ones.

“According to our estimates, taking into account the upcoming pre-New Year sales, the market will end 2018 at least as good as the previous one,” said Ilya Ponomarev. “And this is despite the fact that the purchasing power of the population is not growing against the background of another fall in the ruble exchange rate and active promotion by some major providers of their“ free “routers.

Konstantin Tikhonov agrees that demand persists, but indicates a change in customer requirements for productivity and quality of equipment. Mobile Internet has not yet become a substitute for wired, even at the household level. The quality of the service leaves much to be desired. Tenda also pays attention to the dynamics of the expansion of the Wi-Fi router range of leading players in the network equipment market: along with the release of simple affordable models targeted at the most unpretentious users, devices are appearing that meet the requirements of more demanding digital content consumers. In general, according to him, the telecommunications equipment market, even in a difficult period, not only did not show negative dynamics but also often showed growth.

“Strong demand for Wi-Fi routers remains, but gradually interest is shifting towards equipment that supports the standard 802.11ac and ZigBee protocols, without which it is impossible to control the devices used in the smart home,” said Mikhail Kirichenko. “For existing wireless networks, users are increasingly choosing Wi-Fi signal boosters and more advanced solutions that support Mesh technology.”

He added that this year demand has dramatically shifted from 300 Mbit / c devices to devices that support the AC standard. This is due to the fact that manufacturers managed to offer the market cheaper equipment in this segment against the background of new attractive tariffs of providers offering high-speed Internet access.

“This year, the total sales of TP-Link routers continued to grow, the share of deliveries of routers directly to providers increased significantly,” Mikhail Kirichenko comments on the situation. “But we also see that the market is close to saturation, and this leads to stronger competition between providers and partners of the first and second levels.”

Konstantin Tikhonov also speaks about the continued growth. According to him, Tenda is increasing its market share, and at the moment, according to his estimate, it is about 10%. The company does not exclude that this is connected not so much with an increase in the market capacity, but with the redistribution of shares between the main players. He added that in comparison with 2017, sales of Tenda equipment increased threefold in unit terms.

“In 2018, we significantly increased the supply of Wi-Fi routers, especially to federal providers,” said Sergey Vasyuk. – This was the result of the company’s transition to the development of equipment by Russian specialists from the Research and Development Center in Ryazan, and the transition to the delivery of products using its own production and logistics complex was completed. We do not believe that in the near future, demand will drop significantly because now providers are beginning to actively transfer customers to devices with support for the 802.11.as standard and gigabit ports. ” He also noted that in 2017 the company as a whole increased deliveries compared to 2016 by about 20%, and this year it expects an increase of about 30%.

“Our sales volumes have not changed, however, we consider this a very good result for the transitional period of changing the brand, reconfiguring the channel and completely updating the model range,” said Ilya Ponomarev. – The current year was very difficult for the company since the Keenetic brand separated from the Zyxel brand and became independent. Despite all the difficulties, we were able to keep market share and continue to develop the Keenetic product line (we added four new models) and after the inevitable decline “at the crossing”, we are increasing our sales. ” He added that Keenetic maintains its share of the routers market, which is close to 30% in the money. In addition, sales of dual-band devices continued to grow. In Keenetic, it is expected that by the end of the year, the share of the segment of dual-band routers in monetary terms will approach the mark of 50%.

Trading Routers Remains attractive to the channel.

Despite the intense competition, good demand for wireless routers continues to attract the attention of channel participants. An alternative in the form of 4G, 5G technologies or the next generation, of course, will appear, but in the near future, Wi-Fi devices will retain their dominant position.

According to Sergey Vasyuk, resellers do not have to make any noticeable efforts to promote and sell wireless devices. Products are in demand, and we can talk about optimizing the reseller portfolio, which will provide the required margins amid the transition to higher speed models.

Perhaps we can talk about the appearance in the near future of new classes of devices such as multifunctional routers with support for voice assistant and device control of the smart home, IoT, etc.

“It is quite profitable to promote and sell Wi-Fi routers,” Denis Serechenko is convinced. – With regard to competition from the 5G, then it is not. This technology is still under development, and so far we can only talk about pilot projects. 4G is available only in large cities, often not at maximum speeds, and its cost is quite high. ”

As noted by Yuri Tarasov, in some areas of Moscow, and especially in the suburbs, users are not satisfied with the quality of mobile communications. Accordingly, the router and traditional Wi-Fi solve these problems in apartments, and the transition to a frequency of 5 GHz increases the speed and quality of data transmission.

Ilya Ponomarev agrees with him: “With all the charms of the mobile Internet of the 4th or even the 5th generation, Russian users have become accustomed to a certain quantitative and qualitative level of access to the network: they are now served with tariffs of more than 100 Mbps, not to mention limitless. On the rise, the gaming market, and there the quality of Internet access (with minimal delays) is very important. In addition, we must not forget about the scale of the territory of the Russian Federation. Indeed, there are places where the mobile Internet gets even before the landline. But as soon as appetites in terms of consumption and traffic grow, the mobile Internet loses to any stationary variant. Accordingly, resellers will promote what the user needs. ”

The Consumer is Conservative: Price and Trouble-Free use are in Priority

Customer preferences along with fashion and technological innovations have a significant impact on the dynamics of the markets and the balance of power. But the segment of Wi-Fi routers in this sense turned out to be quite conservative.

According to Denis Serechenko, the preferences of customers over the past year have not changed. There have always been two requests from their side: quality and reasonable price, which means that products with an optimal price-quality ratio have always enjoyed the highest demand, and this trend continues.

“In order to respond to the demands of the market, we are closely watching how user requests and preferences are changing,” says Ilya Ponomarev. – On the surface are the trends of fashion and technology. This is clearly seen in the GfK reports. For example, in Russia, two-thirds of the market is still occupied by single-range Wi-Fi routers, while the share of dual-band is growing steadily. Also, the penetration of Gigabit Internet access speeds is still low. ” Yuri Tarasov noted that more and more customers are switching to dual-band models. In addition, the consumer now requires a maximum user-friendly product for comfortable and trouble-free use.

According to Sergey Vasyuk, numerous marketing campaigns of operators have a tangible impact on the routers market, and in the conditions of growing competition, they must constantly make greater efforts to attract new and retain existing customers, including free or subsidized distribution of routers. This makes the ratio of price and technical characteristics of fundamental importance. If technical specifications are not very critical for small regional operators because of the simplicity of the service delivery schemes, then federal telecom operators give them price and priority as the supplied devices must meet many specific requirements, in addition to speed limits, such as remote diagnostics, configuration tools, firmware updates, etc.

“We state the decline in demand for N-standard routers and, accordingly, explosive growth on dual-band (AC) and devices with gigabit ports,” says Konstantin Tikhonov. – Our hits in this segment are AC routers costing just over 1.5 thousand rubles. However, the main trend of the next few years, we believe MESH-system. They satisfy the most demanding Wi-Fi users, solving a whole range of tasks. For example, such a system provides “seamless” roaming, gives a steady signal, solving the problem of attenuation with a complex geometry of an apartment or reinforced concrete floors in small rooms, provides a guaranteed data transfer rate on areas up to 500 sq. m

There will not be a full-fledged alternative for a long time

Most market players are confident that the prospects for Wi-Fi equipment, despite the appearance of new technologies, remain good. “As a means of providing access to local networks, Wi-Fi does not have a full-fledged alternative, so traditional devices will be in demand for many more years,” says Denis Serechenko.

According to Ilya Ponomarev, the Wi-Fi equipment sales driver will be the IoT theme that is gaining popularity in Russia, fueled by the introduction of smart home systems, the OTT services market, the ubiquity of smart TVs and the development of the gaming industry. All these applications need high-quality stable Internet access with reliable network segmentation. Some applications are so important that they need redundant access. That is, the above-mentioned 4G / 5G-Internet often needs to be entered into some system simply as a backup channel. In addition, any small business is also unthinkable without Wi-Fi, VPN-tunnels.

But Konstantin Tikhonov believes that Wi-Fi routers, in the classical sense of technology, will lose popularity. In the future, in two, maximum three years, we will talk about Mesh systems, which will force out classics from the market. As an example, Tikhonov cites the United States, where Mesh now occupies 30% of the market for Wi-Fi routers. China in terms of Mesh sales is rapidly approaching this indicator.

“In the near future, the segment of Wi-Fi routers will remain quite promising, even for basic devices. This is confirmed by the analysis of the volume of providers’ purchases and the increase in the number of offers on the shelves of federal and local resellers, ”concluded Sergei Vasiuk.

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