Mobile broadband computing to explode in 2010?

I just received Disruptive Analysis’ new report, “Mobile Broadband Computing”. It 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.

Really interesting. If you’d like to get a copy, please visit disruptive analysis’ site. Best regards
CVA