Ubiquiti in Three Words: Disruptive Wireless Provider

To tell the Ubiquiti story, let’s first go back in time two decades to 2003. Apple (Nasdaq: AAPL) was working hard on designing a revolutionary new product it called the “iPhone,” which it wouldn’t actually release to the public until four years later. As part of the design process, it was figuring out how its iPhone would communicate with wireless networks, so they could download emails and even software applications. It was simultaneously designing base stations, which were the transmitting access points the devices would connect to.

One of Apple’s networking engineers on this project was Robert Pera, whose job was to work on those base stations. Robert noticed something interesting: Apple’s Wi-Fi base stations were transmitting signals at far below FCC allowances. If they just tweaked the design so the devices consumed a bit more power, they could broadcast Wi-Fi for miles. This would be much more valuable for iPhone customers.

Apple passed on the idea, dismissing it as unnecessary and too expensive. Pera eventually quit and used his personal savings to found Ubiquiti less than a year later.

That same scrappy, product-minded mentality remains in Ubiquiti’s DNA today. It’s now a $15 billion empire, though it has stayed true to its roots of democratizing the internet and selling only superior-performing products.

Ubiquiti categorizes its product lines into service provider (airMAX), enterprise (UniFi), and consumer segments (AmpliFi). In its financial results, it reports the consumer products within its enterprise segment.

Rural service providers were the first to embrace Ubiquiti’s products. Underserved internet providers who operated out in the sticks had customers constantly complaining about spotty internet connections, and Ubiquiti’s low-priced products were much-needed alternatives to their jimmy-rigged solutions. Larger and more established service providers soon followed — like Comcast’s Xfinity — which used their EdgeMax routers to transmit signals, their airFiber bridges for wireless backhaul, and their embedded software to monitor the internet usage of their own paying customers. Word spread internationally, and Ubiquiti gained traction in locations where internet connectivity was desired but often completely unavailable. Even today, more than half of Ubiquiti’s revenue still comes from outside of North America.

Ubiquiti then moved upmarket and began to sell to enterprise customers, who were providing employees with smartphones and tablets, and also buying other B2B products like sensors and security cameras that needed wide-ranging wireless connectivity. Office buildings, university campuses, sporting arenas, restaurants, and retailers all began installing Ubiquiti equipment to provide wireless internet to anyone who needed it. Enterprise today accounts for two thirds of the company’s total revenue, and its strong network of distributors and value-added resellers (VARs) helped drive enterprise sales up 51% to $1.2 billion in fiscal 2021.

Ubiquiti’s consumer segment is still a rather small piece of the pie, though its reputable brand and credibility is driving higher-margin direct-to-consumer sales as the Internet of Things gains traction. Many families are purchasing Ubiquiti equipment to boost the internet speed of their own homes.