Subsidies will not be critical to embedded wireless devices

[1]

Consulting firm Accenture predicts that by 2017 most consumer electronics devices will have some form of wireless connectivity in order to function. But don't expect all those devices to be subsidized by wireless carriers. That's just one of the many messages we heard consistently throughout yesterday's FierceMarkets "Embedded Wireless Devices" virtual conference. To see the archive of the event, click here [2].

Handset subsidies have become a mainstay for consumers and now that model seems to have migrated to wireless-enabled netbooks and laptops. In December, RadioShack announced a $99 Acer netbook tied with a two-year wireless data contract from AT&T. Likewise, in May, Verizon Wireless started selling the HP Mini 115NR for $200 with a two-year data contract priced at $40 to $60 per month.

But at yesterday's event, Glenn Lurie, president of emerging devices, resale and partnerships at AT&T, said the subsidy model isn't necessarily the way to ensure longevity in the embedded space, even though it has worked well for AT&T so far. "Subsidies will still be around, but it's not the key to our success," Lurie said.

Instead, he described a world where both subsidized and non-subsidized models co-exist, along with prepaid and postpaid rate plans. He also expects future embedded devices to have robust operating systems that can help diagnose problems.

The new embedded wireless device world likely will provide initial opportunities for both operating system makers and user interface designers. But as the market matures, there likely will be some standardization (and perhaps consolidation) among UI makers, operating systems vendors and chip manufacturers, according to Miguel Myhrer, partner at Accenture.

For now, however, the wireless carriers are battling to attract device makers, application developers and retailers to ensure that their technology (whether its WiMAX, EVDO or UMTS/HSPA) is in the OEM device roadmap. That's the only way they can guarantee that their network will benefit from this drive for wireless connectivity. --Sue [3]