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3G embedded mobile devices have lower total cost of ownership than 2G

3G embedded mobile devices typically have a lower total cost of ownership than their 2G equivalents, according to the Analysys Mason report entitled The total cost of ownership for embedded mobile devices which was made publically available today at the Mobile Asia Congress in Hong Kong.

The report, conducted for the GSMA, is based on input from a wide range of players across the embedded mobile ecosystem.

Analysys Mason’s investigations found that around 90% of embedded devices being deployed in some of parts of the market use 2G technologies rather than more advanced technologies such as 3G. This is largely because of the higher upfront costs of 3G modules. However, these upfront costs do not reflect the total cost of ownership associated with embedded mobile devices.

Presenting the report at the GSMA’s Mobile Asia Congress in Hong Kong, Ian Streule, Senior Manager at Analysys Mason said, “The cost of the communications module is only between 1% and 14% of the total cost of ownership. For devices that generate significant traffic, like in-car entertainment systems, the higher cost of a 3G module is more than offset by the lower costs of 3G traffic over the lifetime of the device.” This means that established and emerging embedded mobile solutions may be better served by 3G technologies, with a lower total cost over the long term.

The report also looks at the constraints that encouraging the deployment of 2G modules could impose on the way that mobile operators use their spectrum. “Future network strategies for mobile operators are not likely to be driven by the embedded mobile market, but rather by traffic-intensive mobile broadband services,” explains Streule. “If an operator chooses to decommission its 2G network and re-farm the spectrum, it could find that its options are restricted because of today’s tendency to deploy 2G embedded modules in devices with long service lives, like smart meters.”

For instance, the report suggests that decommissioning 2G networks could trigger additional costs to replace legacy 2G embedded mobile equipment. Analysys Mason estimates that such a cost could be over USD150 million for a representative Western European operator with 10 million subscribers.

The report therefore concludes that once enforced replacement costs are taken into account, for almost all applications the total cost of ownership for 3G modules is lower than for 2G. “The good news is that as 3G multi-mode modules reach economies of scale, they are closing the cost gap with 2G modules and will help further reduce the total cost of ownership,” said Glenn Lurie, president of emerging devices , resale and partnerships at AT&T, reacting to the report.

The report represents one element of the GSMA’s Embedded Mobile initiative, which aims to encourage the expansion of the global embedded mobile market by identifying and lowering the main barriers, developing common guidelines and driving innovation.

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