Despite criticism, wireless market progressing

SCOTTSDALE, Arizona -- Although the wireless data/Internet market has had to bear the brunt of some tough public criticism, it is steadily progressing, according to In-Stat/MDR. The high-tech market research firm reports that there are some very bright spots in the wireless data market. 

The availability of the proper infrastructure and color handsets, and the rollout of next generation services such as CDMA 1xRTT and General Packet Radio Service (GPRS), is aiding the market's growth. Overall, the messaging market (thanks to the newer Enhanced Messaging Service (EMS) and Multimedia Messaging Services (MMS) that support graphics and video) will continue to outstrip the wireless Internet market, in terms of subscribers, through 2006, growing from an estimated 305 million at the end of 2001 to more than 1 billion by the end of 2006. While smaller than the messaging market, the wireless Internet market is growing at the same pace.

Service pricing

“Going forward, the wireless Internet market's future rests largely on service pricing,” said Becky Diercks, a director with In-Stat/MDR. “In most regions, service pricing is completely inconsistent and far too expensive for the average consumer. However, Orange’s announcement of bargain basement GPRS pricing in Europe and Nextel and Verizon Wireless’ flat pricing in the US are definitely steps in the right direction. Sprint PCS launched a challenge to other US providers just last week with extremely aggressive pricing for PCS Vision.”

Beyond service pricing, more compelling applications need to come to market and carriers need to do a better job of tying applications to services for the market to really take off. Thus far, the CDMA-based carriers are experiencing more success tying applications to services than are the GPRS carriers.

Stat/MDR also found that:

▪ The wireless Internet market will grow from 74 million wireless Internet subscribers, at the end of 2001, to more than 320 million subscribers by the end of 2006.

▪ Japan is the obvious early leader in the wireless Internet market, primarily due to the innovations of NTT DoCoMo, based on Personal Digital Cellular (PDC) technology. However, competition is growing in Japan, and DoCoMo's next hope, its Wideband Code Division Multiple Access (W-CDMA)-based Freedom of Mobile Access (FOMA) service, is largely failing due to minimal coverage, high device and service pricing, and a lack of applications that set that technology apart from the earlier generation's service.

▪ The Korean market is now coming on strong in the Wireless Internet space, largely fueled by CDMA technologies, and the US is not performing as badly as some might expect. The Wireless Internet market is receiving a further caffeine jolt from Sun's J2ME and even Qualcomm's Binary Runtime Environment for Wireless (BREW) technologies. Even WAP is performing satisfactorily, when integrated with these technologies, in certain markets.

▪ Europe is largely failing with GPRS technology and, not including SMS and other messaging services, is falling behind the rest of the world in terms of wireless data adoption. W-CDMA technology will likely not be its savior.

The report, Worldwide Wireless Data/Internet Market: Bright Spots in a Dark Industry, forecasts the worldwide wireless messaging and Internet market. Forecasts are broken down in detail, by region (Americas, Europe, Japan, ROW). Subscriber forecasts for all of the primary air-interface technologies (circuit-switched CDMA, CDMA 1xRTT, CDMA 1xEVDO, CDMA 1xEVDV, circuit-switched TDMA and GSM, EDGE, W-CDMA/UMTS, PHS and PDC) are provided. Additional information is broken down for the US market (private packet services including CDPD, iDEN, DATATAC and Mobitex) and for two-way messaging (ReFLEX). Additionally, US subscriber forecasts are broken down by consumer and business user. Carrier profiles are also included for 30 of the leading mobile operators.

Wireless home networks

In another In-Stat/MDR report issued this month, it was reported that the wireless home networking space is evolving to one which involves the wireless connection of the PC cluster of devices (broadband modem, router/AP device, desktops, laptops, PDAs, web tablets) to the entertainment cluster of devices (audio and visual equipment such as TVs, DVD players, MP3 players, gaming devices and home theater devices such as high-end displays and DVRs), Wi-Fi technology will take the lead.

In-Stat/MDR projects that with 802.11b already being accepted into the home and 802.11a already beginning to penetrate early adopter homes, worldwide annual Wi-Fi node shipments will be 33 million in 2006, up from the approximately 6 million nodes expected to ship out in 2002.

"With Wi-Fi AP gateway devices available for about $120, and with PC cards falling to the $50-70 range at retail and e-tail, as of 2H 2002, end-users are readily accepting Wi-Fi as an attractive method of wirelessly sharing broadband Internet access," said Gemma Paulo, a Senior Analyst with In-Stat/MDR. "The popularity of Wi-Fi in the home has generated increased interest in extending this wireless home network to entertainment and home automation clusters, opening the door to Wireless Personal Area Network (WPAN) technologies such as Ultra-wideband (UWB) and Zigbee."

The report, Wireless Cribs: Living Large with a Wireless Home Network, contains detailed Wi-Fi forecasts, by technology (2.4 GHz, 5GHz, dual-mode 2.4/5GHz), by form factor (NIC, AP), and by geography in addition to UWB node and Zigbee forecasts. Analysis of the Wi-Fi IC market players and an analysis of Wi-Fi embedded vs non-embedded clients going forward, are also provided.