Will embedded wireless transform the industry?

Aside from the news about Palm's new OS and Microsoft's search deal with Verizon Wireless, there was a lot of buzz at the Consumer Electronics Show about embedded wireless--or wireless technology being incorporated into all types of consumer electronics devices--from laptops to MIDs to gaming devices, cameras and navigation systems.

FierceWireless hosted an invitation-only executive roundtable discussion on this topic yesterday morning at the Consumer Electronics Show in Las Vegas. Panelists Glenn Lurie, president of emerging devices at AT&T Mobility; Mats Norin, vice president, mobile broadband modules at Ericsson; and Vickie Obenshain, director of wireless strategy at Panasonic all predicted that embedded wireless will gain lots of traction in 2009 but they also said that there are some key challenges that have to be resolved first.  

The good news is that there are several factors driving the demand for embedded wireless. Broadband wireless networks are now pervasive, embedded module prices have dropped to a more affordable pricepoint and wireless carriers are finally devoting resources to this burgeoning area. At yesterday's panel discussion, Obenshain said that the drop in the price of the wireless modem has accounted for Panasonic seeing a rise in attach rates (this is the number of laptops that are sold with a wireless network activation) from 17 percent in the past to the current rate of 38 percent. Obenshain expects the attach rate to increase to 50 percent within the next nine months and rise to 70 percent in 2010.

But Obenshain says that the biggest challenge for laptop and other consumer electronics device makers is getting the devices provisioned and activated on the network. She strongly urged Lurie and other carriers to come up with connectivity managers to help streamline this process. Lurie assured her that AT&T is working on this issue.

One other area that carriers are trying to figure out is appropriate pricing and rate plan models for this new type of network connection. Lurie said that he expects there will be several different types of rate plans, similar to how customers today have a choice of prepaid, postpaid, family plans and more. However, he added that carriers will have to convince investors and financial analysts to look at these types of embedded network connections differently than they do other types of customers. In other words, devices that only connect to the network sporadically, such as digital cameras, may have an average revenue per month of $1 to $5. If those connections are tallied similarly to how subscriber ARPU is calculated than these types of connections will negatively impact a carriers' ARPU. Lurie thinks that eventually carriers will break out their "connected device" revenues separately (similar to how operators break out their wholesale revenues) so that this won't occur.

Judging from the overwhelming interest we received to this CES event-- and the fact that all operators are working to streamline provisioning and activation issues as well as come up with compelling price plans-- I think you'll be hearing much more about embedded wireless in the months ahead. --Sue