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The evolution of the mobile broadband market from USB modem to embedded module has implications for MNOs’ channels strategies

27 апреля 2009

Mobile broadband growth in Europe has been spectacular during 2008: subscriber numbers increased by 132% to almost 20 million. One of the key driving factors has been the availability of user-friendly USB modems. However, the dominance of the USB modem is under threat from a diverse range of form factors, most notably the embedded modem.

The forthcoming Analysys Mason report Mobile broadband devices: from USB modems to where? will examine the evolution of the mobile broadband devices market, analysing the potential of the various device types. This Insight article draws on some of the major findings from the report.

Over the next five years, the prevailing trend will be away from using mobile broadband modems as peripheral devices and towards embedding the functionality in the device. Increasingly, notebook PC manufacturers are fitting modems as standard – as has previously been the case with the screen, keyboard and mouse, and Wi‑Fi and Bluetooth connectivity, the modem will become embedded within the device. This trend will limit the lifespan of the standalone USB modem. It will also limit the appeal of other peripheral devices, such as Wi-Fi home hubs with HSPA backhaul, including T-Mobile’s Mobile Broadband Share Dock and the Huawei D100. As illustrated in the chart below, USB modems will dominate mobile broadband connections in Europe over the next three years. In 2008, 77% of connections used a USB modem. By 2014, this proportion will have fallen to 42%, with embedded modules accounting for 50% of the market.


Figure 1: Mobile broadband devices market in Europe, 2007–2014 [Source: Analysys Mason, 2009]

These forecasts have implications for MNOs’ distribution channels. MNOs have controlled the USB-modem market, but they cannot compete with the range of notebooks offered through traditional IT channels, which will dominate distribution of embedded devices. As a result of losing control of the device distribution channel, MNOs must do three things. Firstly, they need to ensure that their channel strategies reflect the new market reality, for instance by making SIM-only offers available. Secondly, they must ensure that they have a strong relationship with the traditional IT channels, which will increasingly act as distributors for MNOs. Finally, they should maintain a small range of notebooks tied to special promotions, and should compete aggressively with connectivity-oriented subnotebooks.

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