As part as its M2M Research Series, Berg Insight has just released a report on the adoption of embedded cellular connectivity in consumer devices.
The consumer device market has seen an incredible growth in the last decade and notebooks, smartphones, Internet tablets and LCD TVs are increasingly popular product categories. Important growth factors have been the digitalisation of consumer devices and the rise of the Internet. To have the ability to access the Internet, use social networks and to consume and share media are becoming important parts of people’s digital lifestyles. Personalisation is one of the current main drivers for market growth. Instead of buying one notebook, tablet or digital camera per household, consumers are to a higher extent purchasing devices for each family member. Due to maturing markets and stunted ARPU growth, mobile operators all over the world are showing an increasing interest in the consumer electronics market. The growing desire for people to stay connected makes emerging wireless consumer devices an opportunity for the telecom industry to expand their market beyond mobile handsets.
The need for Internet access, mobility and always accessible content delivery systems stand out as the most important factors when deciding to equip consumer devices with cellular connectivity. The product segments covered in this report are personal computing, media and entertainment, imaging and automotive. For personal computing devices such as mobile PCs, Internet tablets and smartbooks, Internet connectivity is a fundamental part of the user experience and embedded cellular connectivity will soon be a given feature. For media and entertainment devices, comprising of e-readers, portable media players and dedicated gaming devices, cellular connectivity can be a strategy for vendors to streamline the distribution of digital content. Equipping imaging products such as digital cameras with cellular connectivity can accommodate the demand for instant sharing of pictures and video on social networks and other online services. Cellular connectivity can also simplify the setup process and facilitate the uploading of new pictures to digital photo frames.
The automotive segment for consumer products comprises of in-car Internet and personal navigation devices (PNDs). There are already today many PND models on the market with embedded connectivity offering online services such as real time traffic information.
The market for emerging wireless consumer devices is still in its early stage. Until now, the most connected device categories are mobile PCs, Internet tablets, e-readers and PNDs. The market for Internet tablets with embedded connectivity took off during 2010 and tablets, together with mobile PCs, will be the major product categories embracing embedded cellular connectivity in terms of shipped volumes. Berg Insight estimates that 22 million connected consumer devices were shipped in 2010 and forecasts that this number will almost double during 2011 to reach 39 million units. In 2015, Berg Insight forecasts that more than 270 million consumer devices with embedded cellular connectivity will be shipped and that mobile PCs, tablets, e-readers and PNDs then will have substantial cellular attach rates with figures around or above 50 percent. Handheld gaming consoles will also be a product category for cellular connectivity to count on due to the introduction of the next generation of Sony’s handheld gaming console with embedded 3G at the end of 2011.
Berg Insight predicts that portable media players and digital cameras with cellular capabilities will be launched in the upcoming years, but these product categories will have to wait for after 2015 before embedded connectivity becomes a commodity.
Continuously decreasing prices of cellular modules and chipsets are important factors for growth on the connectivity market. The deployments of high-speed cellular networks such as HSPA+ and LTE on most markets globally are another important driver enabling bandwidth-hungry applications. Simplified certification procedures of new devices with embedded cellular connectivity are also beneficial to the market. High profile marketing of the increasing number of available devices with embedded connectivity such as popular Internet tablets heightens consumer awareness and further illustrates the benefits with cellular connectivity.
The telecom industry is depending on multiple connections per consumer for growth but if a majority of consumers is going to consider having multiple devices with cellular connection, a great deal of business model innovation is required. In order for the wireless consumer device market to take off, prices on mobile data have to decrease and subscription fees for every single connection need to be lowered substantially. Instead, every consumer can open up to having multiple connections, which will still allow for an increased total ARPU.