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Cellular PC Card Market Positioned for Robust Growth
Posted: 17-Dec-2003 [Source: ABI Research]

[ABI Research predicts substantial rise in use of CPC modems as more 3G networks launch around the world.]

Oyster Bay, NY -- The cellular PC card (CPC) industry features both IT-centric companies, like Dell computer, and those more closely aligned with the wireless industry, like Nokia and Sony Ericsson.. Although many players have tried and failed in this business, success rests with those who have strong relationships with both operators and IT product distributors. The industry currently stands at a high growth potential, with numerous high-speed 3G network launches planned across the globe in the next few years, forecasts technology research firm ABI.

Operators recognize the sustained ARPU (average revenue per user) boost that CPC modems bring. This is evident with recent announcements made by AT&T and Vodafone, which launched EDGE and UMTS networks, respectively, accompanied with an emphasis on CPC modems. "With the right target audience, CPC modems give operators immediate access to a pool of enterprise users who would like to capitalize on high-speed networks. This is an interesting twist compared to earlier adopters of 3G, where operators like NTT DoCoMo and Hutchison 3 focused on individual users," comments ABI analyst Kenil Vora. "CPC users tend to bring in a higher and sustained ARPU, unlike the pattern with individual users that tends to be cyclical."

In order to retain customers, operators subsidize handsets offered to individual users, sustaining lower ARPUs. On the other hand, with the CPC model, operators target price insensitive enterprise users, obviating the need for high device subsidies. Further, the high ARPU enterprise user brings in a larger, recurring stream of revenue for the operator. Data usage pricing remains an important aspect for the success of CPC modems; flat pricing adopted by a few operators in North American markets has worked well.

ABI expects substantial rise in volumes of CPC modems with the continued deployment of 3G networks across the globe. Over time, ABI expects GSM-family devices to comprise a much larger share of CPC modems shipments as 3G networks in Europe and Asia launch. Today, ABI estimates about two-thirds of the modems shipped today are based on CDMA technology, with this mix shifting radically towards GPRS/EDGE/UMTS shipments as these networks launch. With the acquisition of Airprime, Sierra Wireless leads the market with a hefty market share. Handset vendors like Nokia and Sony Ericsson also offer CPC modems and will likely be joined by other major players competing for a chunk of the market. Continues Vora: "Compared to the much larger handset market, the CPC market is relatively small. With a small market and many players, some consolidation is bound to happen in this industry."

Threat from Wi-Fi is obvious, but it does serve to increase the awareness of mobile computing, thereby working to expand the CPC market. Vendors like Sony Ericsson, Option and Nokia offer GPRS/Wi-Fi combo modems.

The ABI report, "Cellular PC Card Modems: Device Forecasts and Technology Assessment for Wireless Data Usage," tracks global trends in the CPC market and technology mix. The report includes in-depth analysis of shipments, market share, average selling price, technology mix, and a host of other data matrices.

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