Mobile communications, including mobile entertainment, remains one of the hottest sectors in the InfoTech market. There were an estimated 3.3 billion global cellular telephone subscribers by the beginning of 2009, including more than 270 million in the U.S. alone. This means that global market penetration is currently about 47.8%. Rapid growth will continue to occur, although the global recession definitely slowed the cellular market.
New cellphone handsets have been selling at a rate of about 1.2 billion yearly—making the cellular phone the fastest-selling single item of consumer electronics by far. These handsets are purchased by new users (those who are getting cellular service for the first time ever) and by those who are upgrading to newer, more powerful phones. Most new cellphones carry numerous advanced features. More MP3-capable cellphones are sold each year than stand-alone MP3 players. More digital camera-equipped cellphones are sold than stand-alone digital cameras. In addition, new cellphones are likely to be Internet-capable, and increasingly able to take advantage of 3G (third generation) high speed access, and very fast 4G systems such as LTE will soon become widespread. In fact, there are hundreds of millions of consumers accessing the Internet via some type of wireless access worldwide.
Cellular service companies have been investing heavily in an effort to improve coverage and service. A good example in the U.S. is the fact that the nation was sprinkled with 242,100 cellular telephone towers as of December 2008, up dramatically from 213,300 at year-end 2007.
The American cellphone industry provides direct employment for 268,500 people, as of the end of 2008. Total U.S. wireless service company revenues were about $148.1 billion 2008, according to CTIA, up from $138.8 billion in 2007, and $125.4 billion in 2006. Approximately 87% of Americans had a cellphone subscription at year-end 2008 (up from only 79% at the end of 2006). They spend an average of $50.07 monthly on their cellphone bills according to the CTIA. (Ten years ago in 1998, the average monthly bill was $98.02, but intense competition forced prices to plummet.) U.S. text messages via cellphones totaled one trillion in 2008, triple the level of 2007.
Advanced services, such as text messaging, Internet access and access to entertainment including videos make up a growing portion of that monthly bill. Cellphones continue to replace traditional landlines in U.S. homes, to the extent that 17.5% of households have cellphones only.
Worldwide, cellphone use continues to experience extremely rapid growth, particularly in China, Africa and India. In some nations, particularly in Scandinavia, market penetration exceeds 100% of the population as some people have more than one cellphone subscription. Globally, online entertainment, game playing and mobile entertainment such as music and video continue to make great strides. Cellphones are rapidly becoming payment and financial services devices, particularly in Japan, Korea and parts of Europe; that trend will move to the U.S. over the mid-term.
The wireless world incorporates a great deal more than cellphones, ranging from satellite-based services and Wi-Fi hotspots to remote wireless sensor networks (WSNs) and vast wireless networks on corporate and college campuses. Research In Motion (RIM) continues to grow very rapidly due to its sophisticated mobile email services. The firm added 3.3 million new BlackBerry subscribers in the fiscal quarter ending May 30, 2009, and the total number of BlackBerry users topped 28 million. Whether it is access through Bluetooth, the fast data transfer speeds of upstart ultrawideband (UWB), satellite, cellphone or Wi-Fi, consumers and business users alike are becoming more and more reliant on wireless-based services and devices in their daily tasks. There is no end in sight to the rapid acceleration of wireless.
There are certain things you can count on when considering the wireless market over the mid-term:
a) Cellphones will continue to morph into ever more complex, multi-purpose personal communication devices (including the growing use of the cellphone as a financial transaction device). Cellphone circuitry will become much more powerful, piggybacking off the revolution in screaming-fast, multi-processor power in handheld game machines. Additionally, tiny high-density hard drives are now being manufactured specifically for use in cellphones. Batteries for wireless devices will become much stronger, while chips will become more energy efficient.
b) Although cellphone markets are relatively well established in the U.S. and in major developed nations everywhere, the number of subscribers continues to grow in these countries nonetheless. In the U.S., new subscribers tend to be those on lower-cost plans and accounts set up by parents for their children.
c) Meanwhile, hundreds of millions of cellphone subscribers will be added in short order in less developed nations worldwide. More than 6 million new cellphone subscriptions are opened in India every month. Over the mid-term, emerging markets in lesser-developed nations will add about 2 billion new subscribers to today’s global base of more than 3.3 billion.
d) There is no end to the ways to make money out of wireless trends. For example, look at the rapidly growing market for iPhone applications.
e) Ever better, higher-speed, longer-distance standards will continue to emerge and be fully developed for wireless network access systems such as WiMAX and Bluetooth 3.0. Ultra-high speed LTE is quickly gathering advocates, as is HSDPA. Download speeds on the most advanced cellular networks are already in the range of 7.2 Mbps, and 14 Mbps will be available on some networks after additional infrastructure investment.
f) Security issues such as eavesdropping on Bluetooth conversations, hacking into Wi-Fi networks and viruses spread among cellphones will require more attention and investment from the technology and telecommunications sectors.
g) RFID (radio frequency ID tags used to track inventory) will continue rapid adoption by manufacturers, logistics centers, shippers and retailers, thanks largely to an early initiative by Wal-Mart to require its largest suppliers to use RFID to wirelessly transmit data from cases of merchandise. Second and third-generation RFID will eliminate most of the disappointments of earlier RFID implementations.
h) The Apple iPhone sets the standard for consumer expectations for high-end handsets, and is launching a new industry for developers or iPhone applications.
i) Wireless Sensor Networks (WSNs) will proliferate, providing exciting new ways to gather environmental and industrial data, and to foster home automation and monitoring.
j) “Contactless payment” systems, utilizing nearfield communications to wirelessly debit or charge accounts by waving a cellphone at a cash register or vending machine will grow quickly.
k) Yes, the global economic slowdown of 2008-09 dampened consumer purchases of all types. However, the cellphone industry is relatively immune, as consumers consider their mobile communications to be as much of a basic need as transportation. Gartner estimated that global cell phone handset sales would be down approximately 1% to 4% for 2009. Even if this decline occurs, handset sales will still be in the 1.2 billion range for the year.
l) Netbooks, that is, lightweight, inexpensive portable computers that typically have 10 inch screens and cost from $250 to $600, are rapidly becoming the wireless Internet access platform of choice for consumers of all types on a worldwide basis. Some of the latest models of netbooks are being shipped with WiMAX chips installed as well as Wi-Fi chips.
Accessing and transferring data and entertainment via cellphone is growing at a rapid clip. Worldwide, more than $3 billion is spent on accessing games via wireless handsets. Meanwhile, the rapid development of Wi-Fi, the potential spread of longer-range WiMAX and the eager adoption of VOIP all threaten to turn the cellphone and landline industries upside down. Already, leading cellphone providers are marketing phones that work on standard cellphone circuits and, when they sense the presence of Wi-Fi, can switch over to VOIP, wirelessly making calls over the Internet via the Wi-Fi connection.
Consider this: Wi-Fi is only good for a range of about 150 to 300 feet. WiMAX, on the other hand, may be good for up to 30 miles. When WiMAX gets rolling, the eventual effects on cellphone service and markets could be profound. What firms will be leaders in providing Wi-Fi and WiMAX access? What revenue streams will be generated? How will cellphone subscription use and revenue be affected? The answers are not yet clear, but Clearwire has already announced a massive, multibillion dollar commitment to WiMAX systems, including funding from Intel, Google and Comcast. Thanks to WiMAX, the competition for mobile customers may become much more intense. Hold onto your hats—it’s going to be wild, wireless ride!