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Cisco Pursues Wi-Fi ‘Small Cell’ Sales as Data Traffic Surges

Cisco Systems Inc. is expanding into a line of products that enable cellular-like roaming on Wi-Fi networks as Chief Executive Officer John Chambers seeks to capitalize on last year’s doubling of mobile-data traffic.

The “small-cell” technology lets carriers such as AT&T Inc. shift data from their cellular networks to Wi-Fi without interruption, relieving congestion, Cisco said in a statement today. The products may help San Jose, California-based Cisco, the biggest networking-equipment provider, compete with Stockholm-based Ericsson AB, the largest maker of wireless gear.

Wireless data traffic -- videos, audio and e-mails sent via laptops, smartphones and tablets -- more than doubled in 2011 and will do the same this year, Cisco said this month. Ericsson said Feb. 21 it’s buying Wi-Fi equipment maker BelAir Networks Inc. for an undisclosed amount and yesterday announced new products that combine Wi-Fi and cellular network capabilities.

“Everyone is trying to get into Wi-Fi,” Peter Jarich, service director at researcher Current Analysis Inc. in Sterling, Virginia, said. “Cisco has to protect its start.”

Cisco accounted for 52 percent of industrywide sales of Wi-Fi networking gear for corporate customers in 2011, and was one of top-three vendors in such gear for wireless service providers, researcher Dell’Oro Group Inc. said.

Global industry sales of Wi-Fi gear to service providers are projected to quadruple from 2011 to 2016, to 2 million units, Dell’Oro said. That’s more than double the pace of growth for sales to corporate customers, Dell’Oro said.

‘Big Step’

Cisco previously offered carriers Wi-Fi gear that didn’t integrate with their cellular networks. Cisco is showcasing its products at this week’s Mobile World Congress show in Barcelona.

“It’s a big step for us,” Murali Nemani, senior director of service provider-mobility marketing at Cisco, said in an interview. “In the service provider space, our focus has been in routing and switching and packet core. With this announcement, we are now going into the access infrastructure.”

AT&T, the second-largest U.S. wireless-service provider, and Calgary-based Shaw Communications Inc. have already started using Cisco’s new technology, and some international carriers are in commercial trials with the products, Nemani said.

For carriers, routing to Wi-Fi networks is becoming the preferred solution for mobile-data traffic, which will grow 18-fold from 2011 to 2016, Cisco estimated. By 2015, Wi-Fi networks will manage more traffic than fixed-line or cellular networks, according to Cisco estimates. Wired networks handled 60 percent of the global traffic flow in 2011, followed by Wi-Fi with 38 percent and cellular with 2 percent, Cisco said.

“The industry is evolving from traditional Wi-Fi to Wi-Fi and cellular,” Chris DePuy, an analyst with Dell’Oro, said in an interview. “The definition of what these devices look like is changing.”

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