Wireless Sensor Networks: a Fragmented Market with Great Potential

ABI: Markets for Wireless Sensor Networks (WSN) are in their early stages of development, and should begin to realize their true potential starting in 2007. Today, multiple standards and technologies are still vying for supremacy, and that fragmentation slows market growth. Many WSN devices use IEEE 802.15.4 chips. At the networking level, the ZigBee protocol competes with Zensys' Z-Wave and SmartLabs' INSTEON for residential WSN use. WSN will find uses across a range of locations and contexts, where it will enable control of everything from home lighting to factory automation. WSN, a few products are now available, for example some based on Zensys's Z-Wave. But for the most part, products are still in development. WSN will play roles in residential, commercial and industrial settings. Residential products are first in the market: applications are simpler, lead-times shorter, testing and reliability demands less stringent. Commercial and industrial solutions will follow. But market dynamics will change as the industry grows. Today many WSN chips—really systems-on-a-chip (SoC)—are packaged in modules that may include added circuitry, stack networking layer software and antennas. OEMs can use these drop-in components to WSN-enable their products without having to know a lot about RF engineering or having to do extensive testing. In this early market we see a place for these module makers to help OEMs. But over time, as volumes increase and cost becomes an issue, we think that OEMs will begin to forego the modules, since they add a variable cost. They will develop products based directly on the SoC; their costs are fixed and spread over a greater number of units. Once unit numbers exceed a certain threshold, which differs from vendor to vendor, it makes more sense for OEMs to do some of this integration work themselves. However there is a place for modules to continue to thrive: in certain commercial segments and in industrial plant monitoring. Volumes will be low enough for OEMs to forego expensive in-house development of RF expertise and use the module. Also, many modules, such as those from Dust Networks, come with supporting software, bundled as a system that makes it easier to deploy a complex network. Wireless Sensor Networks, Publ 20060413