The report
Disruptive Analysis’ new report, “Mobile Broadband
Computing” provides a detailed analysis of the market for fast wireless
data connectivity from notebooks, smaller "netbooks", and the new category
of mobile Internet devices (MIDs).
The popularity of flatrate data plans and cheap HSDPA modems has accelerated
the market to reach 35 million subscribers worldwide at the end of
2008, more than doubling in a year. New innovations like "free"
subsidised netbooks, sold through mobile carriers' channels are driving
expectations of a continued explosion in 2009 and 2010.
There is widespread enthusiasm for notebooks and MID
featuring built-in 3G or WiMAX modems. Long-term prospects for the
broader market are exceptional, with the global market growing to over
340 million active users by the end of 2014, using a mix of 3G, WiMAX
and LTE networks.
But despite this, some of the short-term optimism is
unjustified.
Above all, the global economy faces a vicious downturn
which will impact notebook sales. It will make customers and OEMs
cautious. It will focus minds on cashflow and margins. Moreover, some of the
mobile broadband business model assumptions have serious flaws.
This is the first thorough report on the sector since
the financial crisis of late 2008. It analyses the impact of the recession
and "credit crunch" on customers, vendors and operators. It also looks at
the risks of a parallel "capacity crunch" as some 3G networks become
congested by cheap mobile broadband traffic.
Although the market for datacards and dongles has grown
up on long-term, monthly contract subscriptions for data usage, there is a
natural limit to this. Many consumers will not want an additional monthly
commitment - especially if they use cheap prepaid models for their
cellphones. WiFi has gained mass adoption mostly through free use in
homes, offices, cafes and elsewhere - not through regular paid
subscriptions. Mobile broadband must adopt similarly flexible business
models.
At the same time, some operators' marketing teams have
become over-zealous about competing with fixed broadband. In some
markets, HSDPA is now cheaper than ADSL. This is unsustainable, as the cost
structures differ hugely. There are physical limits to the capacity
of mobile data networks, which will be rapidly reached with the explosion of
low-cost traffic. It is no coincidence that future wireless technologies
like femtocells need fixed broadband.
The report cuts through the rhetoric about
this new area of growth for mobile operators. While it is undeniably a
welcome source of new revenues, it is not without challenges.
One of the key challenges is the adoption
of embedded-3G and embedded-WiMAX notebooks. Despite improved hardware
and software, along with falling module prices, these will grow slowly
alongside the separate dongles. Predictions of 50%+ attach rates in 2-3
years are over-optimistic: there are numerous practical, commercial and
economic reasons for delayed adoption.
The report provides a full analysis
of all the driving forces behind the market, and all the inhibitors.
It provides forecasts of:
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Shipments of mobile computing devices (notebooks,
netbooks, MIDs, modems)
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Attach-rates of 3G, LTE and WiMAX in new shipping
devices
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Installed base of devices
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Uptake of mobile broadband access services among device
owners
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Segmentation between embedded WWAN, external modems &
handset "tethers"
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Breakdown of 3G/LTE , WiMAX and combined multimode
network technologies
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Analysis of business / payment models: contract,
prepaid, bundled, session-based, free
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Geographic split of mobile broadband users
It examines a broad range of factors influencing device
choice, and motivations of vendors, operators and end users. Strategies of
the key suppliers are analysed, as well as the broader picture positioning
computing-oriented devices against smartphones and
consumer electronics.
The report is 180 pages long, and is based on a
broad
research effort spanning dozens of briefings, meeting and interviews, among a
wide cross-spectrum
of operators, PC & device suppliers, semiconductor firms, network infrastructure suppliers, industry
associations and software
specialists.
The report has been researched & written by
Dean Bubley, founder of Disruptive Analysis, author of the Disruptive
Wireless blog, and a recognised authority on
mobile broadband, wireless business models, spectrum policy, smartphones and
FMC. He has been covering the evolution of broadband wireless technologies
since 2001.
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Mobile
broadband computing (MBC) has grown very strongly in 2008, to 35m global
subscribers. This is forecast to increase almost 10x by 2014, to 341m.
-
Growth has
been driven by cheap HSDPA modems and flatrate data plans.
-
The majority
of MBC users exploit conventional-seized laptops with separate 3G USB
modems (“dongles”). This model will continue to lead despite the growth of
netbooks, built-in 3G, WiMAX and MIDs (mobile Internet devices).
-
At present,
Europe accounts for 50% of global mobile broadband users, reflecting
earlier introduction of consumer-friendly USB dongles and
ferociously-competitive low-priced HSDPA tariffs.
-
In the short
term, embedded-WWAN notebooks will grow in sales only slowly, reflecting
the slowing economy, market inertia and price of 3G dongles, and
limitations of business models like traditional monthly long-term
contracts.
-
Comparisons
with fast adoption of WiFi in notebooks ignore factors like free usage
models, and module cost as a % of OEMs’ gross profit margin per PC.
-
“Free”
netbooks, provided on a subsidised basis by mobile operators on typical
2-year contracts are popular, but have a limited addressable market.
-
By the end of
2011, about 30% of mobile broadband users will be exploiting notebooks
with built-in 3G or WiMAX modules. 58%, roughly twice that proportion,
will use external modems like USB dongles.
-
By 2014,
there will be 150m users of notebooks and netbooks with embedded mobile
broadband worldwide. In terms of shipments, 100m wireless-enabled laptops
will be sold annually by then – but not all will be activated.
-
The new
market category of MIDs will grow only slowly. Only 3m will be sold in
2009, although by 2014 this should grow to ten times that figure.
-
Ericsson,
Intel and Qualcomm are driving down costs of WWAN modules for strategic
reasons, relating to dominance of HSPA, growth of WiMAX and perpetuation
of CDMA respectively.
-
By 2012,
there will be 45m users of WiMAX-enabled MBC devices. 11m of these will
also use 3G or LTE connections in various hybrid approaches.
-
An increasing
number of subscribers will use their 3G handsets as “tethers” for their
PCs, instead of modems or built-in modules. However, fewer than 10% of
people will use tethers as their sole access method.
-
Use of LTE in
mobile broadband computing devices will be very limited until 2012. After
that, ramp-up will be rapid, reaching 75m units shipped in 2014.
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By 2011, only
40% of mobile broadband users will be on long-term monthly contracts. Most
will use prepaid, session-based, bundled or “free” models.
-
The cellular
industry needs to work out methods to avoid the “tyranny of the SIM card”
in enabling easy, session-based, mobile broadband offerings.
-
Consumer
preference for small netbooks as a mobile computing device form-factor is
a positive for both Intel and Microsoft. ARM-based chips from TI, Qualcomm
and others, running Linux, will mostly appear in niche MIDs, mobile
variants of consumer electronics devices, and high-end smartphones.
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Published December
2008
190 pages
Summary contents
Inquire or buy
Who should buy the report?
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Mobile operators
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PC manufacturers
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Semiconductor companies
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WWAN module & modem vendors
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Internet brands & service providers
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Computing retailers & distributors
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Device OS providers
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Mobile application developers
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Consultants & investors
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Consumer electronics firms
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VoIP and IMS suppliers
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