Friday, December 12, 2008

Embedded mobile broadband over-hyped but will grow

The near-term importance of new embedded-3G and embedded-WiMAX notebooks has been significantly over-estimated, according to a new research report published by Disruptive Analysis. Even in three year's time, laptops with built-in wireless access will only be used by 30% of total, active mobile broadband subscribers globally. External USB modems (or "dongles") will account for 58% - almost twice as many.

However, the report, "Mobile Broadband Computing: Device Market Forecasts & Business Model Scenarios" predicts that in the long term, embedded mobile broadband will indeed overtake separate modems, in terms of both shipments and the active user base. By 2014, there will be 150m users of notebooks and the smaller "netbooks" with embedded mobile broadband worldwide. In terms of device shipments, 100m wireless-enabled laptops will be sold annually by then although not all of them will actually be activated.

The study identifies numerous reasons for the slower-than-anticpated growth of embedded WWAN (wireless wide area networking). Key reasons include: the global recession impacting notebook purchases, unfavourable pricing differentials; the limitations of the sales and support channels for mobile-enabled notebooks; and the typical two-year monthly contract payment model, which does not fit with much of the target market for these devices. This makes comparisons with the rapid rate of adoption of WiFi in laptops appear over-simplistic.

Interestingly, the report also predicts that 2009 will be a much more difficult year for mobile broadband, compared with the huge growth experienced in 2008. The recession and non-availability of credit will drive a softening of demand for laptops generally, as well as a focus on value. For most people, built-in 3G or WiMAX is a "nice to have", not a "must have".

Despite upgrades to higher peak speeds for HSPA, the total capacity is still limited by a range of network bottlenecks - referred to as the "Capacity Crunch".

One outcome will be a shift to new business models for mobile broadband. As well as revised prices and bandwidth caps, Disruptive Analysis expects to see new payment mechanisms emerge. Prepay ("pay as you go") accounts are already popular in some markets and this will increase. In addition, new session-based, sponsored or "free" mobile broadband models will start to mirror the WiFi hotspot business especially where network congestion can be lowered by the use of new femtocell access points. Conventional, long-term, monthly contracts will account for only 40% of worldwide mobile broadband subscribers by the end of 2011.

The report, "Mobile Broadband Computing: Device Market Forecasts & Business Model Scenarios" is available to buy from Disruptive Analysis. It includes detailed analysis of new product sales (3G laptops, netbooks, dongles, MIDs), installed base and mobile broadband service uptake by device type, network technology and business/payment model. Details are available at disruptive-analysis.com.

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