Despite Threats from Phones-as-Modems, Cellular Modem Sales to Top $22 Billi

• Posted: Wednesday, September 17, 2008
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• Author: pradhana
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• Filed under: Broadband

Recently Sprint lowered its mobile broadband prices for using the cellular phone as a modem, leaving its pricing using PC Cards and USB modems unchanged. But even given this threat, cellular modem sales are set to top $22 billion by 2013.

ABI Research principal analyst Dan Shey notes, “Customers want mobile broadband experiences like those provided by their PCs, meaning they want the fastest devices. Phones with at least 3G radios threaten cellular modem sales; however shipments of these modems will not exceed 30% of cellular handset shipments by 2011.”

But to truly understand this threat, we must analyze regional penetration of 3G devices. Industrialized countries will see deeper penetration of these higher-priced devices, typically in the hands of business customers. However convenience is important to business customers: PC Cards and USB modems are far more convenient than phones for broadband connectivity. Adding complexity to the analysis is the growing penetration of embedded cellular connectivity in laptops and notebooks, which will reduce the need for external devices.

How does this apply to consumers and to developing world regions? Shey adds, “Any operator can drop the price for mobile broadband using the phone as the modem, which is more amenable to a broad customer base regardless of world region. But the questions remain: how will this pricing change detract from use of the phone for other revenue-generating services? Does it perpetuate the perception of the operator as the ‘dumb pipe’?” [ABI Research]

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