Market forces to drive embedded cellular modem sales

Although embedded cellular modem sales have been slow to take off, momentum is building for increased sales, according to a recent study from ABI Research. One recent development is the GSMA’s Mobile Broadband Service Mark initiative which, backed by media spending of $1 billion, will create awareness of laptops with embedded connectivity.

Other drivers include: Qualcomm’s Gobi chipset that enables modem connectivity on both GSM and CDMA networks; lower mobile broadband pricing; and networks maintaining their current EV-DO Rev A and HSPA air interfaces for at least two more years. ABI Research forecasts that these and other market forces will increase embedded cellular modem sales to nearly $9 billion in 2013.

However ABI Research principal analyst Dan Shey observed that there are some near term barriers to market development. “Although embedded connectivity is convenient, operators can apply the important levers of PC Card and USB modem pricing and promotion, as well as device-specific mobile broadband pricing. These factors can change the total value proposition of an embedded modem device and limit their uptake in the near term.”

Another near-term barrier is the current negative economic environment. Shey concluded: “The holiday season will be difficult this year for purchases of bigger ticket items such as laptops. It would not be surprising for laptop OEMs to work more closely with operators to help drive the sales of these devices both with and without embedded connectivity. In other words, product bundles that include laptops, mobile broadband price offers and/or USB modems may be made available to entice buyers during these difficult economic times.”