Executive Summary

The Cellular Broadband 3G Modem Market: Multi-Mode and Hotspots Add Spice to Life

SKU: IN1004602SIAnalyst: Allen Nogee

[email protected]+1.480.609.4543

March 2010

©2010 In-Stat All Rights Reserved | http://www.in-stat.com

Executive Summary

The report reviews the 3G cellular modem market, but does not include modems used in mobile handsets. This particular segment of the 3G cellular modem market is evolving. 3G modems have become multi-modal, and are expected to cover many different frequencies within the device. Mobile hotspots, as demonstrated by the Novatel Wireless MiFi device, are another way that 3G modems are being used.

HIGHLIGHTS The 3G cellular modem market

has seen rapid price erosion in the last two years. Huawei entered the market in 2008 and lowered their prices. Huawei can do this because 3G modems offer the end piece to a turnkey solution.

By 2014, more than half of all mobile PCs will have an embedded 3G cellular modem.

In 2010, XX million 3G cellular modems (aside from mobile handset modems) will be sold. This represents $XX billion in revenues to modem vendors.

In 2014, XX million cellular modems (external and embedded) will be sold and the global revenue from these sales will be $XX billion.

A small, but significant market is developing in digital signage and in other M2M applications for 3G cellular modems.

According to the TAP panel, customers preferred greater download speeds and strong local coverage.

After studying selected wholesalers for pricing information and reviewing several financial statements, In-Stat determined that the ASP of external or USB modems dropped from $XX per unit in 2008 to $XX per unit in 2009. This type of price drop is less likely in the future because modem products are taking on more functionality (HSPA with 3G fallback, or hotspot functionality).

External modems are increasingly utilizing USB connectivity. This makes sense since USB is nearly ubiquitous in PCs and common on mobile handsets.

The market for external 3G cellular modem clients is larger than the market for embedded modems. This will hold true in 2010, but embedded modems will surpass external 3G modems in 2011 (barely in 2011, but more forcefully in years to come). However, because of declining ASPs, the peak year for revenues from external 3G modems will be 2010, when the market reaches $XX billion globally.

In 2012, shipments for 3G cellular modems embedded in PCs will total XX million modems.

Total revenues from 3G cellular modems (again excluding mobile handsets) eclipsed $XX billion in 2009. Even as pricing pressures meet product demand, in 2014, the revenues from 3G cellular modems should reach $XX billion by that time.

Figure 1. Total Annual Revenues 3G Modem Market, External and Embedded, (US$ in Millions) 2008–2014

XX


SKU: IN1004602SI


Report Summary

The report reviews the 3G cellular modem market, but does not include modems used in mobile handsets. This 3G cellular modem market is evolving. 3G modems have become multi-modal, and are expected to cover many different frequencies within the device. Mobile hotspots, as illustrated by the Novatel Wireless MiFi device, are another way that 3G modems are being used.

After studying selected wholesalers for pricing information and reviewing several financial statements, In-Stat determined that the ASP of external or USB modems dropped from $XX per unit in 2008 to $XX per unit in 2009. This type of price drop is less likely in the future because modem products are taking on more functionality (HSPA with 3G fallback, or hotspot functionality).

This report also includes survey information from our TAP panel. The panel was narrowed to people who used 3G cellular modems and asked about their likes and dislikes about wireless broadband.

This report forecasts the trends in external modem products, embedded modems in PCs and in non-PCs (CE devices, digital signage, etc.). For these form factors, history and forecasts are presented for 2008–2014 and include total unit shipments, ASPs, and total global revenues from 3G cellular modems.


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Table of Contents

Executive Summary................................................................................................................................................... 1

Introduction ................................................................................................................................................................ 4

Cellular Modem Survey Results ................................................................................................................................ 5

Access................................................................................................................................................................... 5

Service ................................................................................................................................................................ 11

Preferences ......................................................................................................................................................... 20

Forecasts............................................................................................................................................................. 22

Influences Driving Cellular Modem Usage...................................................................................................... 22

What Could Slow 3G Cellular Modem Growth?.............................................................................................. 23

Shipments, ASPs, and Revenues................................................................................................................... 24

Vendor Profiles ........................................................................................................................................................ 28

External Modem Vendors.................................................................................................................................... 28

C-motech......................................................................................................................................................... 28

Huawei ............................................................................................................................................................ 29

Novatel Wireless ............................................................................................................................................. 29

Option Wireless Technology ........................................................................................................................... 30

Sierra Wireless................................................................................................................................................ 31

Embedded Modems ............................................................................................................................................ 31

Ericsson .......................................................................................................................................................... 32

Icera ................................................................................................................................................................ 32

Qualcomm....................................................................................................................................................... 32

ST-Ericsson..................................................................................................................................................... 33

Roll-Up Tables ................................................................................................................................................ 35

Methodology ............................................................................................................................................................ 37

Glossary................................................................................................................................................................... 38

List of Tables ........................................................................................................................................................... 40

List of Figures .......................................................................................................................................................... 41

Related In-Stat Reports ........................................................................................................................................... 42


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Methodology

Primary research for this report was accomplished through direct interviews and/or email exchanges with cellular modem vendors during the 3rd and 4th quarters of 2009. Secondary sources included financial documents from public companies, and information gleaned from vendor websites.

The forecasts in this report are based on In-Stat’s broad database of device and subscription forecasts, along with cellular network deployment data tracked in In-Stat’s quarterly 3G/4G Deployment Tracker. Additional data and statistics have been provided by various organizations, such as the CDMA Development Group, the GSM Association, and 3G Americas.

This report focuses on 3G cellular modems, including CDMA1X 2000 EV-DO, and WCDMA/HSPA cellular modems, which allow a mobile PC to connect to a cellular data network. Both external modems (including PC Cards and USB modems) and embedded modems (modems built-in to mobile PCs) are included. Cellular modem cards intended for use in other consumer electronics devices, outside of mobile PCs, are not included in this report, nor are embedded cellular modems in cellphones. Dedicated LTE and WiMAX modems were classified as pre-4G and were not included in the report.

The survey results featured in the report are from a survey of In-Stat’s Technology Adoption Panel (TAP). In-Stat’s TAP is a dynamic, online panel of almost 18,000 of US technology users and decision makers interested in contributing their opinions and insights about technology usage and technology issues in the workplace and at home. The panel is comprised of a diverse group of people who represent a wide range of company sizes, industries, and areas of expertise. The diversity of the panel allows us to gather information about a variety of topics from many different perspectives.

Since the panel was recruited primarily as a business panel, it should not be considered representative of all US consumers. Although the panelists are also consumers, and can give their opinions as such, there are many differences in the composition of the panel vs. the overall consumer population in the US In particular, the panel is under-represented by younger people (average age of respondents is currently 42 years old), and the majority of TAP panelists (~86%) are men. In addition, TAP panelists tend to be more highly educated, have a higher average household income, and, in general, are more “tech savvy” than the average US consumer. Even though TAP survey findings cannot be applied to the consumer market as a whole, the “tech savvy” nature of the panel does provide good insight into early market trends.

Note that some numbers in this report may not calculate exactly due to rounding. The numbers are calculated at a higher precision than shown.

All numbers are worldwide. All revenue figures, unless noted, are in US dollars.


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List of Tables

Table 1. Wireless Broadband Service Example 1.............................................................................................. 13



Table 4. Wireless Broadband Service Example A ............................................................................................. 16

Table 5. Wireless Broadband Service Example B ............................................................................................. 17

Table 6. Wireless Broadband Service Example C............................................................................................. 18

Table 7. Annual Shipments of 3G External Modem Clients, (Units in Thousands) 2008–2014 ........................ 24

Table 8. 3G Cellular Modem ASPs, External and Embedded Modems, (US$) 2008–2014.............................. 25

Table 9. Annual Revenues of 3G External Modem Clients, (US$ in Millions) 2008–2014................................ 25

Table 10. Breakdown of Annual External Clients Between USB Modems and PC Cards, (Units in Thousands) 2008–2014 ....................................................................................................................... 25

Table 11. Annual Shipments of 3G Modems Embedded in Mobile PCs, (Units in Thousands) 2008–2014....... 26

Table 12. Annual Shipments of 3G Embedded in CE or M2M Devices, (Units in Thousands) 2008–2014........ 27

Table 13. Total 3G Cellular Modem Shipments, External and Embedded Modems, (Units in Thousands) 2008–2014 ........................................................................................................................................... 27

Table 14. Total Annual Revenues Modem Market, External and Embedded, (US$ in Millions) 2008–2014 ...... 27

Table 15. Matrix of Vendors/Manufacturers in USB or External 3G Modems ..................................................... 35

Table 16. Matrix of Vendors/Manufacturers in Standalone Hotspot/Router 3G Modems.................................... 36

Table 17. Matrix of Vendors/Manufacturers in Embedded, Non-Handset, 3G Modems ..................................... 36

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List of Figures

Figure 1. Total Annual Revenues 3G Modem Market, External and Embedded, (US$ in Millions) 2008–2014 .. 2

Figure 2. Ways Consumers Access Mobile Broadband........................................................................................ 5

Figure 3. Devices Consumers Used to Access Mobile Broadband (Multiple Choices Allowed)........................... 6

Figure 4. Factors That Discouraged Wireless Internet Access in Public (Choose All Factors That Apply).......... 7

Figure 5. Service Attributes That Cellular Subscribers Liked Best ....................................................................... 8

Figure 6. Subscribers’ Complaints About Cellular Broadband Service................................................................. 9

Figure 7. Compared to 2008, My 2009 Mobile Broadband Usage Was… Compared to 2009, My Mobile Broadband Usage in 2010 Will Be... .................................................................................................... 10

Figure 8. Did the Greater Availability of 3G-Capable Devices Result in a Decision to Buy Mobile Broadband Services? ............................................................................................................................................. 10

Figure 9. Most Important Attributes of a Wireless Broadband Service Provider (Up to Three Choices Allowed) ............................................................................................................................................... 11

Figure 10. Most Important Wireless Broadband Service Providers Can Offer ..................................................... 12

Figure 11. Interest Level to Service Example 1 .................................................................................................... 13



Figure 14. Interest Level to Service Example A .................................................................................................... 16

Figure 15. Interest Level to Service Example B .................................................................................................... 17

Figure 16. Interest Level to Service Example C.................................................................................................... 18

Figure 17. Price Willing to Pay Additionally for an Embedded Cellular Modem ................................................... 19

Figure 18. Reasons TAP Panel Members Would Want Wireless Broadband Service (Up to Three Choices Allowed) ............................................................................................................................................... 19

Figure 19. Pricing Model Preferences for Access to Wireless Broadband Modem .............................................. 20

Figure 20. Willingness to Switch From Current Broadband Provider to Wireless Broadband Provider ............... 21

Figure 21. Willingness to Pay $10–$15 a Month for Wireless Broadband Service............................................... 21

Figure 22. Interest in a Single-Fee for Multiple Devices Wireless Broadband Access ......................................... 22

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Executive Summary

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