By Ed Sutherland

October 5, 2004

Wireless LAN startups Legra Systems and AirFlow Networks may be the latest victims of the consolidation under way in the Wi-Fi switch market.

“I have no comment,” was Kevin Gallagher’s response to Wi-Fi Planet’s question concerning AirFlow’s status. AirFlow’s PR point man refused to elaborate. Calls to the Sunnyvale, California AirFlow corporate offices were met with a steady busy signal.

Meanwhile, Burlington, Mass.-based Legra Systems reportedly has shut its doors. Calls to the Wi-Fi switch company are met with a recording. The Legra Web site is no longer available. Legra’s vice president of marketing did not return phone calls.

Stafanie Guzikowoski of Beaupre & Co., says Legra Systems dropped the public relations firm recently.

“We stopped working for them in June,” says Guzikowski. Guzikowski says she’s aware of rumors surrounding Legra’s demise.

WLAN switch rivals Colubris and Meru, along with wireless routing company NextHop, have all been named as firms looking to pick up the remnants of AirFlow and Legra. Neither Colubris and Meru returned calls inquiring about reports that they are interested in owning the intellectual property of AirFlow or Legra. [After publication, we heard from NextHop: “Yes, NextHop has acquired some — not all — of Legra Systems,” says Dennis Tsu, vice president of marketing at NextHop. “We expect to announce products in the first quarter of 2005,” which will use Legra’s technology.]

In April, AirFlow said it would begin licensing its wireless LAN Switch-on-a-Chip technology to competitors. Brian Jenkins, vice president of marketing and development at AirFlow, told Wi-Fi Planet at the time that the company was leaving the switch market due to the additional investment that would have been needed to stay competitive.

“By licensing, we get to take advantage of what the vendors have out there,” he said. “If we did it on the systems side, we’d have to spend all the time replicating what others are doing.”

AirFlow reportedly is down to three employees, and is attempting to sell its intellectual property. AirFlow’s CEO Bob Machlin would only say that he had “no info” to add to news surrounding the company’s closure, according to Unstrung.com.

When contacted by Wi-Fi Planet, Machlin neither confirmed nor denied the rumors, saying only that the reports of AirFlow’s demise were “interesting.”

These companies are not the first Wi-Fi related entities to be hit hard. Last week, chipmaker Bermai shut its doors when it lost funding. The Palo Alto, Calif.-based company was on the brink of announcing the availability of its 802.11a chipset for home media use—it would have been the first to support the full draft 802.11e quality of service standard.

The shakeout of the Wi-Fi switch market, long predicted, is now coming to pass, says Phil Solis, senior analyst with ABI Research.

“Too many companies are in the market to compete,” says Solis.

Success begets success, according to Solis. In order for a startup company to survive, it must receive revenue. For a firm to gather revenue, it must be successful.

AirFlow and Legra “tried to do something different,” Solis told Wi-Fi Planet. While they failed, “at least they tried something.”

Solis points to Airespace and Meru as two success stories in the WLAN switch marketplace. Airespace is succeeding due to its ability to partner with industry heavyweights like Nortel and IBM — such partnerships help vendors get their equipment in the door of enterprises, says Solis.

Meru has survived because of its ability to differentiate itself by targeting specific segments of the market, like voice.

Revenue, partnerships and differentiation — in order for companies to make it in the increasingly competitive Wi-Fi switch market, “you need it all,” says Solis.