Maravedis: 2011 predictions

Here are the trends research firm Maravedis predicts for 2011:

Trend #1: Pads will proliferate and diversify.

The mobile device market will continue to see increased competition among WebPhones, partially masking the emergence of a more capable and diversified field of tablets/pads and ‘transformer' devices that covers the span between notebooks and smartphones. This trend will be driven by the growing functionality of combined devices and services; more powerful performance yet longer battery life combined with the thirst for higher bandwidth applications will enable market growth.

Trend #2: Emergence of multiple device attachment.

Although it has been part of the justification for HSPA/HSPA+ and LTE evolution, market awareness of multiple device usage is lagging. Most consumers think of wireless in terms of one device per user, but this will start to change in 2011 as the focus shifts from the dominance of WebPhones to the multiple device market environment.

Trend #3: The friction between LTE/HSPA and WiMAX will fade.

Due to convergence of devices and networks and operators' focus on delivering competitive services, media and industry focus will be less on the debate between the two technology camps and more on the delivery of profitable common attributes of broadband and multi-service IP environments.

Trend #4: Android will continue to gain ground on Apple.

Google-led Android and sister effort Chrome OS and app stores will gain market share and recognition to end the year more as equals. Android/Chrome will largely overcome an image problem: while Android devices now outnumber the iPhone and applications have swelled, Apple starts the year with the impression it remains the clear market innovator--this will have changed by year's end.

Trend #5: Growth outside of North America and Europe will become more profound.

While the focus on LTE developments in the U.S. and Japan will capture many headlines, the influence of populous regions outside of developed markets will shift the balance of industry influence. Indian operators' decisions will come down on the side of LTE rather than WiMAX, and further defections are likely. China and India will shape up as innovators in low cost WebPhones and tablets and the applications that help drive them.

Below we provide some more specific 4G predictions and forecasts by category:

LTE

The worldwide LTE subscriber base will reach 6.52 million in 2011. Leading LTE operators will be Verizon Wireless (USA) and NTT DoCoMo (Japan), with 2.66 million and 2 million subscribers respectively.

There will be a cumulative number of 219 LTE commitments, 71 trials and 57 commercial deployments for the FDD-LTE standard; and 26 commitments, 12 trials and 4 deployments for TDD-LTE.

TDD-LTE will be used as an extender of network capacity in 2011 (TDD femto/picocells will be implemented). Telefonica O2 (Germany) could become the first commercial adopter of this approach, using FDD for outdoor coverage and LTE TDD for urban capacity.

Europe and North America will be the leading regions in terms of commercial LTE deployments, accounting for 22 and 15 respectively.

WiMAX

The Global WiMAX subscriber base will reach 18.87 million in 2011. The regions with the greatest contribution of WiMAX subscribers will be North America and Asia-Pacific, with 8.5 million and 4.74 million subscribers respectively.

The number of WiMAX deployments will slightly decrease for the first time ever in Europe. The failure of several greenfield operators to run profitable WiMAX services, and the momentum of LTE gaining commitments from all mobile carriers, are the reasons for this decrease from the current 164 to 159. However, the number of subscribers will increase considerably, from 1.38 million to 2 million, because of Yota's delayed switch to FDD-LTE.

Backhaul

Wireless backhaul will recover from the market size reduction it has suffered in 2010. Innovative wireless backhaul technologies such as e-band, free space optics and NLOS backhaul (point-to-multipoint) will help to increase market size to close to $5 billion.

TD-LTE (2.3 and 2.6 GHz) and NLOS backhaul (also in 3.5 GHz) systems will make use of the spectrum left vacant by former WiMAX deployments. NLOS backhaul will focus on 3.5 GHz (available worldwide except in the US), since it is the only band among those covered by WiMAX that is not being addressed by TD-LTE. However, the deployment of TD-LTE by most of 2.6 GHz spectrum licensees is not certain, so there are also chances for NLOS backhaul deployments in that band. The 2.3 GHz band, under-utilized in the US, poses another good opportunity for both technologies.

Femtocells

There are many indications from major mobile operators such as China Mobile, NTT DoCoMo in Japan, and Taiwan's Chunghwa Telecom that femtocells will play a big part in their network rollout strategy starting next year. Maravedis predicts that this larger group of operators will boost the adoption of femtocells across the world more quickly than originally anticipated. Femtocell pricing will continue to be a barrier for widespread adoption. However, we expect the price to fall to as low as US$70-80 in 2011 from its current $100 price. We further expect the demand for femtocells will be highest in 2012, when upfront payment is expected to be below $50.

Devices

We expect smartphones to come to dominate the device market over the next five years. Market share leadership will, in turn, be driven by the success of the individual ecosystems. We believe that market support exists only for a limited number of ecosystems. Consumers will not adopt new closed ecosystems when compared with the choice of the leading ecosystem, Apple (which happens to be closed) or an open ecosystem. We expect RIM and HP Palm to fail to bring new customers to their solutions, or even to maintain their current market share. With regard to new open ecosystem entrants such as MeeGo and Windows Phone 7, we believe that the key to their success will be the creation of holistic ecosystems involving deep media and application libraries, consumer and enterprise product tie-ins, and integrated cloud services. Although this is a difficult challenge for both companies, Microsoft appears to be much better equipped for this task than Nokia.

Tablets are another new element of the smartphone revolution, and it is still unclear whether this is a completely new product segment or rather a replacement of some of the laptop market. Regardless, Apple has again shown with its iPad that there is a tremendous opportunity for vendors who are able to create innovative and compelling products. Tablets also help to bolster the ecosystems for which they are designed by providing another channel for application sales - one that commands higher prices than the handheld channel.

The changes in the device industry since the introduction of the iPhone have been striking and it is difficult in the midst of such disruption to predict an outcome. 2010 has been a year during which the players have appeared to solidify and publicize their strategic plans. However, we expect many aspects of the industry to be in flux throughout 2011, setting the stage for dramatic changes.

Maravedis is a premier global provider of market intelligence and advisory services focusing on 4G and broadband wireless technologies, regulation and markets.

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