Wi-Fi 7 Upgrade Cycle: Is the Networking Industry Prepared?

Current State of Wi-Fi Technology and Trends

The current state of Wi-Fi technology is marked by significant advancements, particularly with Wi-Fi 6E, which enhances user experiences in various settings, from stadiums to municipalities. Companies like HPE and Cisco are leveraging these technologies to improve connectivity, operational efficiency, and customer satisfaction across diverse applications.

"According to Pope, powering the stadium's signature experiences with high-performance Wi-Fi helped earn the Falcons recognition as No.1 in Overall Gameday Satisfaction in the NFL's annual Voice of the Fan survey for the 2022-2023 season. Serving millions, annually Hosting more than 50 major sporting and entertainment events and three million guests annually, the 75,000-seat stadium also boasts more than 20 different event spaces with premium amenities, fully customizable experiences, dedicated event team staff, and state-of-the-art technology for creating unique and unforgettable events." --- (HPE, press release, 2024/04/16)

"ThousandEyes will support flow collection for both Cisco and non-Cisco networking platforms. ThousandEyes Endpoint Experience is now enriched with Meraki Wi-Fi and Local Area Network (LAN) telemetry and device information, enabling customers to gain deeper insight into local network issues impacting user experience. Meraki Assurance Overview is now powered by ThousandEyes Internet and SaaS visibility, empowering customers with insight into performance beyond their Meraki Wi-Fi and LAN environment to rapidly pinpoint issues across owned and unowned domains." --- (CSCO, press release, 2024/06/04)

"Dynamic municipality leverages Wi-Fi 6E and AI-powered networking to help build a vibrant civic life that attracts more than 130 corporate headquarters while generating municipal operations savings of up to 50 percent. Frequently topping ‘best places to live’ indexes, the City of Carmel, Indiana, is continuing its focus on promoting quality of life by modernizing its wired and wireless networking infrastructure with a Wi-Fi 6E-enabled HPE Aruba Networking solution from Hewlett Packard Enterprise (NYSE:HPE)." --- (HPE, press release, 2024/05/21)

"Today, we rely on mobile and IoT-enabled technologies for moving almonds that arrive fresh from the field through production quickly, efficiently, and safely, which ultimately enables delivering the highest value to our grower-owners. Supporting quality, flavor and freshness around the clock. As the domestic almond supply and production leader since its founding in 1910, Blue Diamond relies extensively upon Wi-Fi connectivity for receiving and tracking almonds and almond products throughout its manufacturing, storage, and distribution processes." --- (HPE, press release, 2024/06/05)

"That's a substantial increase in just a few years. This makes our new Wi-Fi 6E deployment critical to supporting both customer expectations and the back-of-the-house applications we use to orchestrate the best-in-class experiences we deliver to every attendee, at every event, to make them feel appreciated, valued, and respected. Future-ready for rich, immersive experiences. With its new Wi-Fi, AMBSE plans to enhance the offerings within the stadium app, including the introduction of precision wayfinding." --- (HPE, press release, 2024/04/16)

Readiness and Competitive Landscape of Networking Companies

Networking companies are navigating a highly competitive landscape as they prepare for the Wi-Fi 7 upgrade cycle. Executives emphasize the need for disciplined execution and strategic investments to maintain margins and drive growth, while competitors are actively developing new technologies and services.

"Maybe you can talk about the competitive landscape for your business and why should we not assume that pricing pressures are going to significantly rise in this environment as everybody is trying to fight for footprint?" --- (CSCO, earning call, 2024/Q1)

"And then, ultimately, on the networking and hybrid cloud is about both gross margin, because of our content is more software and services, while we'll deliver on the bottom-line. So, I think our strategy all coming together, but it's very competitive dynamic there and we have to execute every day with discipline, which is what we did again this quarter." --- (HPE, earning call, 2024/Q1)

"Just curious if you're seeing that overall competitive landscape shift at all kind of in the last 12 months and if we might see a similar campaign against another competitor there?" --- (NET, earning call, 2024/Q2)

"Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses." --- (MSFT, sec filing, 2024/Q4)

"We believe that we are making progress on our strategic priorities. We continue to operate in a challenging macroeconomic and highly competitive environment and while the overall environment remains uncertain, we continue to invest in priority areas with the objective of driving profitable growth over the long term. CISCO SYSTEMS, INC." --- (CSCO, sec filing, 2024/Q3)

Impact on Consumer and Enterprise Markets

The impact of Wi-Fi 7 on consumer and enterprise markets is significant, with Cisco noting strong growth in enterprise and service provider sectors. Companies like Google and Microsoft emphasize the need for practical applications, while AWS reports increased enterprise activity, indicating a readiness for the upgrade cycle.

"And if you slice it the other way, so not by geo but by customer market, it was good growth in enterprise, double digit growth in public sector and actually good growth in service provider and cloud for us, which that customer market, the way we group customers together there includes cable and telco, which have one set of dynamics going on and hyperscaler, which has a very different set of dynamics going on inside there." --- (CSCO, conference, 2024/09/10)

"And more importantly, taking them and translating into real use cases across the consumer and enterprise side, I think on that frontier. I think there is still a lot of" --- (GOOG, earning call, 2024/Q2)

"And on that front, I feel good about the breadth of Microsoft offering, whether it's in consumer side, whether it's on commercial per seat side or on the consumption meters, that's, I think, the fundamental driver." --- (MSFT, earning call, 2024/Q4)

"AWS segment sales grew to $91,000,000,000 up 13% year over year. And in Q1 of this year, we reached an annualized sales run rate of more than $100,000,000,000 During 2023, we saw enterprise customers of all sizes trying to save money in an uncertain economy." --- (AMZN, event transcript, 2024/05/22)

"And we believe that that market opportunity over the next few years is certainly going to be a tailwind for us as well and we have a whole strategy to help our enterprise customers actually take advantage of that transition." --- (CSCO, event transcript, 2024/06/04)

Customer Feedback and Adoption Rates

Customer feedback indicates a strong interest in innovation and improved performance, with companies like Microsoft actively seeking adoption statistics. Cisco highlights the importance of user input in product development, while Google emphasizes user choice in technology, all suggesting a positive trajectory for Wi-Fi 7 adoption.

"While it's still relatively early in this space, we're very excited about the opportunity and the rapid rate of innovation and customer adoption. In 2023, we had meaningful improvement across our financial results." --- (AMZN, event transcript, 2024/05/22)

"What's sort of the customer feedback and reception been? Any adoption statistics you can share with us?" --- (MSFT, conference, 2024/09/05)

"Customer-Centric Enhancements Feedback from our users has been instrumental in the development of Reach 2.0." --- (CSCO, press release, 2024/04/23)

"We now believe user choice is the best path forward there and we'll both improve privacy by giving users choice and we'll continue our investments in privacy enhancing technologies, but it is obviously an area we will be taking feedback from the players in the ecosystem and we are committed to being privacy first as well." --- (GOOG, earning call, 2024/Q2)

"And people -- our customers really want improved price performance all the time." --- (AMZN, earning call, 2024/Q2)

Future Trends and Innovations in Wi-Fi 7

The networking industry is poised for significant advancements with Wi-Fi 7, driven by rapid silicon innovation and increased order volumes for wireless access points. Cisco emphasizes its broad portfolio and accelerated innovation pace, while Google expresses optimism about future technological developments, indicating a strong foundation for Wi-Fi 7's evolution.

"to do in 2, 2.5, 3 years per silicon generation is now happening in 12 months or less. And what we've seen is over the last four and a half years, we have put out 14 different variants of Silicon 1." --- (CSCO, Investor Day, 2024/06/04)

"I wanted to know if you could talk a little bit about both the opportunities and the challenges of operating at scale in a time like this where there's a lot of technology innovation going on and how you see the elements of trying to strike a balance towards moving the organization forward while still continuing to both invest for growth as well as balance margins. Thanks so much." --- (GOOG, earning call, 2024/Q1)

"So as I think about our differentiation, as I wrap this up and get our teams up here to talk about how they see growth in their areas, I think, 1st of all, the increased pace of innovation and the breadth of our portfolio is a big differentiator for us." --- (CSCO, event transcript, 2024/06/04)

"It will play out over time, but I feel we are well positioned, and more importantly, when I look at the innovation that's ahead and the way the teams are working hard on it, I am very excited about the future ahead." --- (GOOG, earning call, 2024/Q1)

"We gave a couple of stats on the previous call. We continue to see large orders in that space grow in the Wi Fi and particularly in the wireless access point space." --- (CSCO, conference, 2024/05/20)

Regulatory Challenges Affecting Wi-Fi 7 Adoption

Regulatory challenges significantly impact Wi-Fi 7 adoption, as highlighted by AT&T's commitment to support measures that reduce burdens on competition and facilitate the transition to IP-based networks. Addressing these regulatory frameworks is crucial for overcoming barriers to connectivity and ensuring effective service offerings.

"We continue to support regulatory and legislative measures and efforts, at both the state and federal levels, to reduce inappropriate regulatory burdens that inhibit our ability to compete effectively and offer needed services to our customers, including initiatives to transition services from traditional networks to all IP-based networks." --- (T, sec filing, 2024/Q2)

"We look forward to other tribes evolving like we have had the opportunity to do. Our additional $3B commitment will address the main barriers to connectivity – access, affordability and adoption – for those who need it most." --- (T, press release, 2024/04/04)

Key Use Cases Driving Wi-Fi 7 Demand

Key use cases driving Wi-Fi 7 demand include faster connectivity for enhanced user experiences, interoperability among devices, and the need for modern collaboration tools. Companies like Apple and Cisco emphasize that these advancements are crucial for improving workflows and driving revenue in a connected world.

"Faster Connectivity with Wi-Fi 6E and 5G With faster wireless connectivity on the go, users can do even more on iPad Air." --- (AAPL, press release, 2024/05/07)

"Now what I thought we'd do is start out by walking you through 2 key growth drivers that we think are going to help us drive this business forward. The first one is interoperable devices and then the second one is AI powered contact center." --- (CSCO, event transcript, 2024/06/04)

"But I think we are in this phase, where we have to deeply work and make sure on these use cases, on these workflows. We are driving deeper progress on unlocking value, which I'm very bullish will happen, but these things take time." --- (GOOG, earning call, 2024/Q2)

"Wi-Fi + Cellular models with 5G allow users to access their files, communicate with colleagues, and back up their data in a snap while on the go." --- (AAPL, press release, 2024/05/07)

"As we use collaboration as a key wedge into organizations, it actually drives a fair amount of revenue for Jonathan as well because it's all around modernizing the portfolio." --- (CSCO, event transcript, 2024/06/04)