Wi-Fi Smartphone Sales to Double by 2011: ABI

Wi-Fi is emerging as a critical component of the lucrative smartphone market as carriers increasingly realize benefits of the wireless technology, and data out today suggests the trend will continue.

This year, 144 million dual-mode cellular/Wi-Fi handsets are expected to ship, with forecasts for 2011 at just over 300 million units, according to a report released today by ABI Research.

The report claimed that mobile operators’ changing attitudes are fueling the trend toward Wi-Fi-enabled handsets.

“At first many feared that Wi-Fi would take traffic off their networks, resulting in lost revenue,” ABI analyst Micheal Morgan wrote in the report. “Now they’re starting to realize that it may instead mean an increase in available network capacity.”

He noted that the way operators view Wi-Fi is largely a function of their particular circumstances.

“Verizon has not enthusiastically embraced Wi-Fi in its handsets, while AT&T has,” Morgan said. “AT&T was thrown into the pool by the iPhone. Previously people did access data, but the iPhone led people to use Wi-Fi to a degree never seen before. Traditionally cautious Verizon hasn’t been thrown into that situation yet, but they are warming up to Wi-Fi.”

Also, consider T-Mobile: a wireless carrier that owns no landline assets. Through the “Hotspot at Home” access points, it used Wi-Fi to deliver an improved in-home service that it couldn’t achieve before, Morgan said.

In contrast, AT&T does have landline assets, but Wi-Fi’s benefit is to take a load off AT&T’s cellular network, which is heavily taxed by the iPhone subscribers who generally use a lot of data.

“The picture may be unique to each carrier,” Morgan said, “but in the end Wi-Fi can offer most operators those two key benefits: extended reach and/or network load reduction.”

ABI’s research supports other studies showing that Wi-Fi use on smartphones is increasing at a rapid clip.

In its first “Wireless Census,” networking firm Meraki last week reported that the overall number of smartphones using its access points for hotspots quadrupled over the past year.

Meanwhile, new sales figures from NPD Group also help quantify the red-hot smartphone market. Smartphones accounted for 28 percent of all handset sales in the U.S in the second-quarter, a staggering 47 percent increase in the category’s market share since the same period last year, the research firm reported. Twenty percent of those devices sported Wi-Fi connectivity.

The surge in Wi-Fi usage on smartphones comes as carriers try to maintain their overloaded 3G networks buckling under the heavy data traffic, as suggested in the ABI report.

As a result, some carriers are acquiring Wi-Fi companies to expand their hotspot coverage in an effort to redirect heavy data users to those wireless access points.

Verizon, for instance, announced in July that it would partner with Wi-Fi firm Boingo Wireless to allow its broadband customers to use Boingo hotspots.

Similarly, AT&T, the exclusive operator for the iPhone, purchased Wayport in November 2008.

Carriers are also embracing Wi-Fi for another reason. When mobile applications threaten to compete with the carrier’s network or duplicate the phone’s functionality, access is sometimes limited to Wi-Fi, as was the case with VoIP provider Skype’s app for the iPhone.

Also highlighting the role of Wi-Fi in the mobile market is the support for auto-authentication in the iPhone’s software, OS 3.0, designed to let users seamlessly switch from the AT&T 3G network to hotspots without having to manually enter any information.

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