Although cellular modem shipments in 2006 were slightly below expectations, the momentum is building for this market to reach nearly $10 billion by 2012, a 47% compound annual growth rate.
ABI Research principal analyst Dan Shey says, “The fundamental drivers for sales of modems are the proliferation of 3G networks and better cellular broadband pricing. Operators made significant efforts in 2006 to upgrade their networks to 3G technologies, particularly in North America and Europe. Operators are also tempting customers with various cellular broadband pricing options, although the total monthly costs are still too high to encourage significant modem adoption by consumers.”
PC Cards represented the majority of sales in 2006. Internal modems did not meet sales expectations, but they will begin to lead sales starting in 2009. “The value chain for internal modems is complex with several issues still needing attention particularly related to distribution,” notes Shey. “However, operators, laptop vendors and chipset manufacturers are committed to this form factor and they continue to work together to develop the embedded modem market.”
2006 also saw the introduction of two new modem form factors, the USB modem and the 3G/Wi-Fi router. The ubiquity of the USB port, not only in laptops but also in desktops, will lift the USB modem to second place in worldwide sales, late in the forecast period.
A new ABI Research study, “Expanding Cellular Broadband Connectivity to the Laptop: PC Cards, Express Cards, Minicards, USB modems and 3G/Wi-Fi Routers” provides a comprehensive overview of the market for cellular modems. The report analyzes the factors both driving and inhibiting growth and examines how changes in the market are creating both opportunity and complexity for the value chain participants, which include chipset manufacturers, wireless operators, and producers of modems, laptops and connection client software. In-depth analysis is also given to the value-creating role of the connection client and its impact on the value chain participants. Finally, this report provides comprehensive market share and forecast information. Market share analysis is given for modem supplier, distribution channel, and customer type. Forecasts are provided for each of five different form factors by worldwide region, technology standard and air interface, and average selling price.