Phones Pulling Away in Mobile Access Market

Mobile data will have a penetration rate among the US population of nearly 60 percent by 2007, up from its current 2 percent, according to a report released by The Strategis Group, which attributes the growth to aggressive deployment of high-speed services in the US.

In its study, “US Mobile Data Marketplace”, The Strategis Group examined wireless technologies, such as cellular/PCS, two-way paging, messaging, and mobile satellite and gauged their growth potential in the burgeoning mobile data market.

The projected size of the market will increase exponentially, the report found, with mobile data subscribers growing from 5 million in 2000 to 172 million in 2007. The highest growth will be in packet data over cellular/PCS networks, which will comprise 67 percent of the mobile data market in 2007.

“With AT&T’s announcement of plans for a GSM/GPRS network, the mobile data bandwagon has gathered steam,” said Naqi Jaffery, vice president and director, North American Wireless at The Strategis Group. “This follows Nextel’s launch of a high-speed, packet-data network, the launch of digital PocketNet service, the deployment of circuit-switched CDMA and the availability of two-way SMS on TDMA and CDMA networks. With all of these factors coming together, that bandwagon will only continue to accelerate.”

Market Share of Mobile
Data Technologies, 2007
Packet Data Cellular/PCS 67%
Dedicated Data 16%
SMS 14%
Circuit-Switched Cellular 3%
Mobile Satellite 0.4%
Source: The Strategis Group, Inc.

Wireless Internet access devices including handheld computers, wireless modems, and two-way pagers will boom in popularity over the next several years and eventually displace the PC as the preferred Internet access method, according to Cahners In-Stat Group, which also predicts shipments of wireless Internet access devices to sustain double- and triple-digit growth through 2004.

Sales of Internet-ready wireless phones, the most popular mobile access devices, will surpass 1 billion annually by 2004 and by the end of 2002, virtually all wireless phones will be pre-loaded with mini browsers and will be Internet enabled. Not all users will be able to access the Web wirelessly right away, however.

“Carriers throughout the world will roll out Internet access at different speeds,” said Ken Hyers, a Senior Wireless Analyst with In-Stat. “A few may never roll out data services.”

Nevertheless, In-Stat believes every market for wireless Internet access devices will see strong growth. Initially, the devices will be most popular for business use, but as access speeds, displays and interfaces improve, they will become popular with consumers as well.

Other findings from In-Stat include:

  • Internet-ready two-way paging unit shipments will exceed 10 million by 2004.

  • Much of the growth in the wireless modem market will come from after market upgrades to mobile computers built without wireless capability.

  • Users will be increasingly likely to rely on one device that incorporates both voice and data services instead of multiple devices offering only voice or data.

A study by Telephia examined the interest in mobile commerce (m-commerce) and found that nearly one-quarter of those who use their wireless device to access the Internet have purchased some type of produ

ct or service via that device. Beyond those making purchases, a much larger percentage of users express interest in the broader category of making secure transactions, which include purchases, online trading, online banking and other activities. A full 75 percent of the survey respondents from Telephia’s nationwide panel of wireless data users said they either use or are considering using their wireless device for such purposes.

The survey also revealed that while m-commerce activity among those who visit the Internet remotely is 22 percent for all devices combined, the percentage is highest for laptop users (50 percent), followed by PDA (17 percent) and wireless phone (12 percent) users.

Depending on which device they used, wireless data users who visited the Web but didn’t make a purchase cited various reasons for not doing so. Phone users reported complicated navigation (24 percent) as their primary barrier to m-commerce, while PDA users were chiefly concerned with connection speeds (19 percent) and security issues (18 percent). Laptop users who didn’t make purchases cited security-related issues (37 percent) as their main obstacle.

Primary Hurdles To M-Commerce
Hurdle All Devices Phone Users PDA Users Laptop Users
Security concerns 20% 18% 18% 37%
Complicated navigation 19% 24% 14% 2%
Takes too long 14% 13% 19% 15%
Source: Telephia, Inc.

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