Femtocell Shipments will Reach 31.8 Million by 2014

Femtocells and enterprise femtocells are going to help mobile phone operators provide indoor coverage to their subscribers, while at the same time, relieve network backhaul and infrastructure costs, according to the latest market study by In-Stat.

Although all segments of the emerging compact base station market -- which includes indoor and metropolitan picocells as well as microcells -- are expected to show growth, femtocells and enterprise femtocells will have the most significant increase in unit shipments.

In-Stat forecasts that annual femtocell shipments will reach 31.8 million by 2014.

"Enterprise femtocells may even save businesses money. If PBX features are incorporated into enterprise femtocells, they could displace many wireless PBX and IP PBX installs, as well as the purchase of wireline phones," says Allen Nogee, Principal Analyst at In-Stat.

Additionally, In-Stat expects consumer demand for femtocells to be strong, because they allow better in-home cell coverage, which has been especially lacking in the U.S. market.

In-Stat's market study found the following:

- Worldwide annual enterprise femtocell revenue CAGR will be 125.7 percent from 2009-2014.

- Worldwide metropolitan picocell (carrier installed) unit forecast CAGR is projected at 378 percent from 2009 to 2014.

- Microcell base stations will also increase but at a slower CAGR of 14.2 percent over the same five-year period.

- By 2014, several million metropolitan picocells will be shipped to operators worldwide.

Growth Opportunities Shift in Set-Top Box Market

The legacy cable TV set-top box (STB) market grew in 2009. However, growth slowed significantly last year and 2010 is on track to be the first year of negative growth since 2002, according to the latest market study by In-Stat.

Despite the overall market slow-down, some regional markets are poised for growth. Examples of these regional markets are Europe, where the demand for high-definition (HD) cable STBs is fueling growth, and Latin America, where the shift from analog cable TV to digital cable TV is spurring unit shipment growth.

"Even in a soft year, the cable STB market continues to offer solid growth opportunities for cable set top box manufacturers," says Mike Paxton, Principal Analyst.

This growth is particularly true for manufacturers target emerging regional markets or if they focus on high-margin product categories -- such as HD or PVR-enabled cable STBs.

I believe that high-growth opportunities could quickly migrate to the low-cost purpose-built IP digital video player market, as consumers continue to embrace alternative VoD pay-TV service delivery models.

In-Stat's market study revealed the following:

- Worldwide digital cable set top box unit shipments are forecast to decrease to 44.1 million in 2010, down 8 percent from 2009.

- Low-cost, digital terminal adapter (DTA) devices are having a big impact on the U.S. cable market. In-Stat is forecasting that over 7 million DTA devices will ship in 2010.

- The value of semiconductor components used in cable set top box products was $2.8 billion in 2009, only fractionally higher than in 2008.

- In 2009, the top three digital cable set top box manufacturers in total unit shipments were (in rank order) Motorola, Cisco Systems, and Technicolor (formerly Thomson).

- However, the combined market share of the top three manufacturers decreased to 41 percent of total worldwide unit shipments, down from 50 percent in 2008.

U.S. Social Media Marketing Budgets Rise Slowly

According to a June 2010 survey by King Fish Media, HubSpot and Junta42, a remarkable 72 percent of the polled American business leaders said that they now had a social media marketing strategy.

eMarketer reports that the companies surveyed 457 U.S. marketers and managers -- 52 percent of respondents were in the publishing, media, advertising and marketing industries.

Those findings are among the highest percentage from surveys that polled whether U.S. marketers had a social strategy. In May 2010, Digital Brand Expressions found that 52 percent of marketers had no plan -- similar to the 50 percent of poll participants in an April 2010 study by R2integrated.

King Fish and its partners found that 75 percent of the companies with a social strategy said they planned to increase their marketing budget investment in the coming year.

A February 2010 survey by Duke University's Fuqua School of Business found that survey respondents were devoting 5.6 percent of their marketing budget to social media -- up from 3.5 percent six months prior.

Furthermore, marketers expected the allocation to increase to 9.9 percent in the next 12 months and 17.7 percent within five years.

Companies in the King Fish survey were divided on where the budget for social initiatives would come from, however.

While 35 percent thought that funds would be allocated to a specific custom project, 33 percent said their company would increase marketing expenditures to focus more on social media.

SuperSpeed USB is a Bonus for Videographers

USB connectivity has been extremely successful in the digital still camera and digital camcorder markets. Most people want to use it to transfer images to PCs, to store video recordings, or to print their pictures.

As picture file sizes increase with digital camera image resolution, and as camcorders move from standard-definition (SD) to high-definition (HD), the desirability of SuperSpeed USB becomes even more apparent, according to the latest market study by In-Stat.

As a result, adoption of SuperSpeed USB into digital cameras and camcorders will be much more rapid than other CE device segments -- with penetration levels reaching 50 and 60 percent respectively, by 2014.

"SuperSpeed USB can move 25GB of data in 70 seconds, the same amount of data would take nearly 14 minutes using high-speed USB,” says Brian O’Rourke, Principal Analyst.

This dramatic leap in download times makes the adoption of SuperSpeed USB into digital camcorders and cameras a natural migration. In-stat expects to see the first SuperSpeed USB camcorders reach the market in the second half of 2011.

In particular, prosumer videographers will greatly benefit from this multimedia data transfer enhancement.

In-Stat's market study found the following:

- Nearly 160 million digital TVs will ship with USB in 2014.

- By 2014 nearly 7 million set top boxes will be have integrated SuperSpeed USB.

- SuperSpeed USB will reach 40 percent penetration in the portable digital media player market in five years.

- 225 million SuperSpeed USB flash drives will ship in 2014, representing a CAGR of 791.8 percent from 2009 to 2014.

- More than 3 billion USB-enabled devices shipped in 2009; over 4 billion will ship in 2012.

Video Use Prompts Telcos to Deploy more FTTH

Infonetics Research released excerpts from two new market studies of broadband access services. Most FTTH equipment vendors may be surprised to learn that many operators are already evaluating next generation technologies to solve their current and future bandwidth requirements.

In most cases, the accelerated adoption of online video entertainment services has been a primary driver of new broadband infrastructure investment planning.

When Infonetics recently surveyed global service providers about their Fiber-to-the-Home (FTTH) deployment strategies, almost half said they are evaluating 10G GPON, and a small but significant number are already evaluating WDM PON, asymmetric 10G EPON, and symmetric 10G EPON.

With this in mind, "FTTH equipment vendors need to step up efforts to educate their customers about the advantages of next gen technologies," notes Jeff Heynen, directing analyst for broadband and video at Infonetics Research.

In aggregate, the service providers surveyed represent 28 percent of worldwide public service provider capital expenditures (capex), and 19 percent of revenue, and include some of the world's largest fixed-line providers.

Infonetics market study highlights include:

- Service providers are interested in how they can employ next generation FTTH technologies to provide premium fixed broadband services to subscribers.

- The top 2 drivers named by service providers for deploying next generation FTTH technologies are the delivery of over-the-top video; and increasing bandwidth to each subscriber to enable multiple concurrent VoD streams in the home.

- When asked which FTTH optical network termination (ONT) features and capabilities they require, 73 percent of service providers surveyed said VoIP.

- Broadband access is the true growth engine for residential services, with annual revenue for North American service providers expected to grow at a 13 percent CAGR from 2009 to 2014, driven by both fixed and mobile broadband solutions.

TV Everywhere: Will it be Too Little, Too Late?

The growth of online video adoption and consumption is happening faster than most media industry analysts had expected. By 2014, it's forecast that there will be 57 million U.S. broadband households viewing full-length online video on the TV, according to the latest market study by In-Stat.

Revenue associated with this web-to-TV video content will grow at an accelerated rate, from $2 billion to over $17 billion during a five-year period.

"The over-the-top (OTT) video market represents a new distribution channel for digital entertainment. Content producers want to market premium video content directly to the consumer," says Keith Nissen, Principal Analyst, In-Stat.

That said, they have not yet decided the best way to monetize OTT video content and how to manage the "good enough" OTT video service opportunity in context with their legacy distribution partners -- the slow moving traditional pay-TV channel.

As incumbent pay-TV providers overcome their concerns regarding the cannibalization of existing service revenue, then perhaps they will eventually act to deliver competitive OTT streaming IP video services.

The question remains, however, will the promise of "TV Everywhere" offerings fully emerge to coincide with the current market opportunity, or arrive very slowly as a belated damage-control effort?

In-Stat's market study highlights include:

- The installed base of web-enabled consumer electronics video devices will grow from 70 million in 2009 to 237 million in 2014.

- The total number of U.S. broadband households that own web-enabled CE video devices will nearly triple to 98 million by 2014.

- Within five years, over 11 million operator-provisioned hybrid STBs will be delivering online video content directly to the TV.

U.S. Online Video Use Grows and Pay-TV Declines

To date, most media industry analysts still insist that consumer use of online video has no negative impact on traditional pay-TV service revenues. Even when there's mounting evidence that consumer behavior is shifting away from traditional linear broadcast programing, the denial continues. The recent disclosure of a huge decline in U.S. pay-TV subscriptions is the latest example.

Meanwhile, comScore released July 2010 data showing that 178 million U.S. Internet users watched online video content during the month -- for an average of 14.7 hours per viewer.

Google Sites, driven primarily by video viewing at YouTube.com, ranked as the top online video content property with 143.2 million unique viewers, followed by Yahoo! Sites with 55.1 million viewers. Facebook.com jumped one position to capture the #3 spot with 46.6 million viewers.

Google Sites had the highest number of overall viewing sessions with 1.9 billion and average time spent per viewer at 283 minutes, or 4.7 hours. Hulu also had high viewer engagement with an average of 158 minutes (or 2.6 hours) per viewer.

Americans viewed nearly 3.6 billion video ads in July, with Hulu generating the highest number of video ad impressions at 783 million. Tremor Media Video Network ranked second overall (and highest among video ad networks) with 452 million ad views, followed by BrightRoll Video Network (248 million) and Microsoft Sites (232 million).

Video ads reached 27 percent of the total U.S. population an average of 44.5 times during the month. Tremor Media Video Network delivered the highest frequency of video ads to its viewers with an average of 19.0 over the course of the month.

Other findings from the July 2010 study include:

- The top video ad networks in terms of their potential reach of the total U.S. population were: ScanScout Network at 40.5 percent, BrightRoll Video Network at 39.4 percent, and Break Media Network at 38.7 percent.

- 84.9 percent of the total U.S. Internet audience viewed online video.

- The duration of the average online content video was 4.8 minutes, while the average online video ad was 0.4 minutes.

- Video ads accounted for 9.8 percent of all videos viewed and 0.9 percent of all minutes spent viewing video online.

Worldwide Business Mobile Data Service Upside

According to the latest market study by ABI Research, healthcare, retail and manufacturing -- three sectors each with a double-digit share -- will command over 36 percent of all mobile business customer data revenues worldwide over the next five years.

By 2014, enterprise data revenues derived from messaging, mobile broadband access, and applications will reach nearly $27 billion.

Enterprise practice director Dan Shey says, "Manufacturing and retail are the second and third largest employment industries in the public/private sector worldwide (after agriculture). Healthcare also employs many people and is rapidly mobilizing -- it will experience one of highest growth rates in mobile data services revenue."

But, apparently mobile data services revenue share by sector will vary on a region-by-region basis.

The transportation and warehousing sector in North America has a smaller share of mobile data services revenue than more dominant verticals of government and healthcare.

However, it will experience the highest growth at 23 percent, as this sector expands use of data services to improve operations efficiencies.

Construction in the Middle East has slowed from its breakneck pace but it still an important sector maintaining 12 percent of mobile data service revenues through 2014.

Mobile data revenues from the manufacturing sector in Asia-Pacific will grow at a CAGR of 15 percent to increase its share of mobile data services revenues to 26 percent by 2014.

This region continues to be the dominant location for worldwide production of goods.

Growing U.S. Mobile Gaming Revenue Upside

 
Casual gaming has driven the adoption of mobile games to more than a quarter of mobile phone subscribers and more than one in five members of the U.S. population, according to the latest eMarketer estimates.

This year, 64 million people will play mobile games at least monthly, a number that will rise to 94.9 million by 2014. eMarketer's estimates exclude mobile users who play pre-installed games, which offer publishers decent brand exposure but little in the way of monetization opportunities.

While games are currently popular on both smartphones and feature phones, the composition of the mobile gaming audience will shift further toward smartphones as they increase in penetration across the population.

According to comScore, smartphone gamers now account for 42 percent of the total. Still, both groups of gamers tend to prefer traditional casual games like Scrabble and Sudoku, though heavier gamers enjoy advanced offerings that are beginning to converge with console games.

eMarketer expects revenues from mobile gaming to reach nearly $850 million this year, with the vast majority coming from paid downloads. By 2014, mobile gaming revenues will top $1.5 billion.

Over the same period, advertising support will nearly double in importance -- accounting for 6.5 percent of revenues in 2010 and 12.3 percent of the total in 2014.

That makes for a sizeable mobile gaming market, but mobile still makes up only a small amount of all gaming revenues. According to TNS and Newzoo, just 4 percent of U.S. video game revenues came from mobile devices.

Smartphone Design Challenges Create an Opportunity

Smartphone manufacturers need to focus on accommodating all seven core user-preferred applications in their next-generation handset designs, according to the latest market study by In-Stat.

These seven applications include email, games, social networking, instant messaging, mapping and travel directions, music and radio, and the always popular weather forecast app.

Combined, the big seven apps will account for 7 billion downloads worldwide in 2014.

"In-Stat tracks 26 different categories of smartphone applications," says Frank Dickson, VP of Research. "A designer can optimize a handset for any one of the application categories. However, it's the big seven applications that phone designers need to accommodate in each and every device."

I believe that independent software developers who are able to create valuable app capabilities that result in minimal data transfers will gain a competitive edge -- because mobile phone service providers will likely favor them in their own service promotion efforts.

In-Stat's latest market study found the following:

- The three applications that have the highest compound annual growth rates through 2014 are micro blogging, mobile banking and VoIP.

- The number of Android apps downloaded is growing at the fastest rate; however, Apple applications still dominate both free and paid downloads. 2012 witnesses the last of the Palm OS application downloads.

- The high growth of mobile applications has created a hyper-competitive market putting significant pressure on prices and margins.

- Productivity applications such as mapping, business and enterprise applications and phone tools and utilities generate 59 percent of all smartphone application revenue.

Broadband Infrastructure New Investment Avoidance

Some forward-looking mobile phone service providers are attempting to attract new smartphone customers with attractive feature-rich and truly economical offerings.

In a cross-country comparison of mobile data pricing, ABI Research found The United Kingdom, France and Indonesia to have among the lowest prices for mobile broadband plans.

In Indonesia, a 4GB data package for the BlackBerry Internet Service (BIS) costs as low as $17 monthly. Indonesia and other developing countries are driving mobile Internet usage through the use of low-cost prepaid mobile broadband and Internet plans, driven by the popularity of BlackBerry and other smartphones.

In contrast, mobile network operators in developed markets are struggling to cope with the new demand that exponential data usage increases have placed on their networks. Walled-garden access to content was the prior method to ensure that smartphone data usage was minimized. But, not anymore.

Today, apparently mobile service providers are now utilizing new price-centric approaches to drive their broadband infrastructure investment avoidance strategies.

"AT&T's adoption of tiered data pricing is already seen in many European markets, and will signal the end of unlimited data bundles," says ABI Research analyst Bhavya Khanna. This latest approach should help to limit smartphone subscriber service usage -- and therefore reduce network resource demands.

Other countries including Italy and the Philippines have experimented with pricing according to time rather than data consumption, allowing users a fixed number of hours of connectivity every month.

Since data usage will continue to grow, regardless of the ongoing attempts to curtail it, ABI believes that operators will need to introduce innovative data pricing and manage their bandwidth in order to deliver an "enjoyable" user experience.

There currently seems to be little concern, by those using this approach, that customers may resist these pricing changes and churn to other service providers that actually still encourage smartphone usage.

Hybrid STBs follow Digital Video Player Adoption

Digital video players, blu-ray disc players, game consoles, and now television sets are connecting to the Internet. Moreover, everything online is becoming accessible on smartphones and other connected mobile devices.

Internet video streaming is the new service that's in high demand. However, most TVs are not enabled to display these offerings. The hybrid Web-to-TV set top box (STB) will deliver over-the-top services to these TV sets -- by integrating Internet access capability into cable, satellite, telcoTV (IPTV), and digital terrestrial STBs.

Work is underway to create hybrid services that bring apps and widgets to TV programming, along with advanced advertising, according to the latest market study by In-Stat.

The market value of Hybrid STBs will reach $1.3 billion worldwide by 2014.

"TV programs have come to the Internet. Now, the Internet is coming back to TV, and savvy software engineers and smart TV producers are finding ways to create new hybrid services that bring it all together," says Gerry Kaufhold, Principal Analyst for In-Stat.

Most set top box manufacturers are scrambling to create designs that facilitate all these new features. The next 12 months will be important, since mainstream consumer adoption trends will likely surface that demonstrate where the greatest opportunity exists. Purpose-built low-cost digital video players have gained the market lead with early-adopters.

In-Stat's latest market research findings include:

- Hybrid-capable STBs are shipping today, but only a small percentage are using the capabilities.

- Digital terrestrial boxes will be the hybrid-box growth leader, with a CAGR of 42 percent between 2010 and 2014.

- Western Europe will be the hot bed for development of hybrid services, and the leader for early hybrid STB shipments.

- Intel’s x86 Instruction Set promises to be a key enabler, as Adobe FLASH, Windows Media, Microsoft Silverlight, DiVX, and VP8 appear first on an x86 Instruction Set.

- To date, each category of set top box and each geographic region is developing along unique trajectories.

Pico Projectors to be Integrated into CE Devices

Image projectors have been miniaturized over the past decade. Manufacturers are now actively embedding these pico projectors into a wide range of consumer electronics (CE) products, from cellphones to mobile TVs, according to the latest market study by In-Stat.

Forecast shipment growth of devices with embedded pico projector modules will grow to over 20 million devices by 2014, with mobile handsets share of that market moving from its current level of 15 percent to over 90 percent by 2014.

"Although the integration of pico projectors will occur across the entire CE device spectrum, the biggest push will come from the mobile handset segment," says Frank Dickson, VP Mobile Internet Research.

The mobile handset market is measured in billions, creating massive opportunities for component manufactures. For pico projectors, what makes it even more attractive is that the market is hyper-competitive, with manufacturers always aggressively looking to add new features to create differentiation.

While stand-alone or accessory pico projectors dominate the market, there is clear movement from plug-in to embedded. Moreover, the technology integration applications are rapidly evolving.

In-Stat's market study found the following:

- Standalone or accessory projectors market share will decline from roughly 37 percent in 2010 to less than 4 percent over the five year forecast period.

- While the number of personal consumer electronics leveraging pico projection will most certainly increase over the next five years, its overall share will reduce due to the size of the mobile handset market.

- The number of companies developing pico projectors for integration and/or as standalone products continues to expand, with 18 vendors now claiming to have the best technological solution.

Mobile Apps Market Expected to Peak in 2011

According to the latest market study by ABI Research, mobile phone application downloads for iOS and Android will account for 78 percent of all application downloads in 2010.

Apple iPhone iOS will take the majority share of 52 percent of all mobile applications. The numbers are downloads are driven by availability, variety and novelty in both the Android market and the iTunes App Store, which is currently unmatched by any other smartphone platform.

In addition, the sale of Android phones has accelerated in 2010, with over 160,000 activations being reported daily.

"The iTunes App Store's days of being the only game in town are over, although the store will continue to be the biggest player in the market," says Bhavya Khanna, wireless research analyst at ABI.

"However, downloads from other platforms, such as Blackberry's App Store and Nokia's Ovi Store remain sluggish, hampered by a lack of variety and fragmentation among both manufacturer's many devices."

Revenues from mobile app sales are beginning to reach a plateau, as high competition leads to a continued decline in total market value. Full-featured games are available from between $.99 and $5, and many popular application developers are adopting either an ad-supported or sponsor-supported business model.

Application store owners and mobile service operators will continue to support low-priced and free applications -- because they help them sell their smartphone devices. Making a profit will be a difficult proposition in a market that's expected to peak in 2011, with annual sales of just under $8 billion.

Marketing Metrics and Myopic Usage of Analytics

Most U.S. marketers are using analytics. They recognize the importance of measuring marketing effectiveness, especially when they are asked to justify their spending. However, according to a report by eMarketer, there is room for improvement in formalizing approaches and communicating results.

According to a survey of senior marketing executives by Forbes Insights and MarketShare Partners, nearly seven in ten said they used analytics to measure marketing effectiveness. Marketers with large budgets were significantly more likely to do so than those with spending of less than $1 million. But, many in that group planned to adopt analytics in the future.

Many marketers still take an informal approach to measurement. Among those with budgets over $1 million, while 85 percent said they used analytics, 71 percent said they had a formalized way of doing so.

Marketers focused most on internal resources to measure the success of their programs, with 86 percent using internal data, 74 percent relying on internal teams and 52 percent on internally developed tools.

In comparison, 58 percent used third-party data and only 35 percent employed outside professional services.

Much of this effort is directed toward justifying marketing programs, but the marketers surveyed often lacked an effective way of communicating the success of their campaigns to other executives. While three-quarters of marketers begin initiatives with clear goals set out, only 56 percent have a system for assessing the campaign's business impact.

I wonder what percentage of marketers actually use analytics reports to make ongoing changes to their marketing practices. I suspect that most companies only look at the historical data to assess past performance. Few use it for forward-looking projections, or as a basis for realigning marketing spending.

How Nations Promote Real Broadband Competition

Local loop unbundling -- when it's implemented correctly -- is a proven method to promote and enhance competition, broadband penetration and economic welfare, according to the latest market study by Pyramid Research.

Governments of developed and emerging countries have promoted the telecom sector by implementing public policies, such as local loop unbundling (LLU) to encourage service penetration, improve the competitive environment and increase their portfolio of services at affordable prices, notes Jose Manuel Mercado, analyst at Pyramid Research.

However, when privatization of the local loop happens, it's rarely accompanied by appropriate public policies and regulations to encourage the new private company to invest in infrastructure, as was agreed and expected.

Pyramid says that once the new company owned the local loop, without any competition to apply pressure, it typically didn't invest in the infrastructure at desired levels. Instead, the focus was more typically on short-term profit.

"Competition among operators is what has driven most infrastructure investment; through local loop unbundling, a liberalized market will see services being offered at affordable prices and coverage improving," Mercado explains. "The competitive behavior promoted by unbundling will put all competitors on level ground."

However, LLU is not a sufficient condition on its own for achieving higher penetration rates. The economic situation of each country, literacy level, and income distribution, as well as other economic conditions affect the development of the telecommunications sector -- but, LLU is a prerequisite for success.

Furthermore, accrding to Pyramid's assessment, price and cost adjustment is crucial for the entry of new telecom competitors, as part of rolling out LLU.

Some progressive nations, such as Chile, are moving forward with policies that totally separate incumbent service provider wholesale and retail operations, which is yet one more proven approach to meaningful telecom infrastructure investment progress.

Growth of HD STBs in North America is Subjective

As the world continues to migrate from standard definition (SD) to high definition (HD) television, the impact on the pay-TV digital set-top box (STB) market is somewhat subjective.

There will likely be a reduction in SD STB revenue from current levels of 1.4 billion, eventually declining to 438 million by 2014. Meanwhile, HD personal video recorder (PVR) set top box revenues could potentially increase by 61 percent over the same time period, according to the latest market study by In-Stat.

However, I believe that the continued adoption of purpose-built low-cost IP video players, such as Roko, could have a very significant negative impact on demand for traditional STB devices. Particularly in North America, where pay-TV service fees are very high and continue to rise.

In-Stat's market study findings include:

- Total worldwide digital STB unit shipments will decrease by 10 percent from 2009 to 2014.

- Digital PVR STB unit shipments will increase 57 percent by 2014.

- Of the worldwide total of all digital STB unit shipments, only Asia, Latin America, and Eastern Europe will see increases over the next 5 years.

- With a market share of 36 percent, Asia dominates the worldwide digital set top box market.

- Among the major geographic regions growth of HD set top boxes will be strongest in the Western European market.

Broadband is a Primary Means of Communication

The U.S. will add more mobile users -- about 80 million subscribers -- than any other developed nation. As a result, mobile revenue will surpass all wireline services by end of 2015, according to the latest market study by Pyramid Research.

With an estimated $362 billion in service revenue in 2010, the U.S. will continue to be more than twice as large as the next most sizable markets -- Japan and China -- throughout the forecast period.

Over the next five years, Pyramid expects total communications service revenue to grow at a CAGR of 2.53 percent to reach $410.2 billion in 2015.

By 2015, mobile broadband computing will comprise about 40 percent of total mobile subscription net adds.

"We believe embedded 3G, WiMax, and LTE devices, including M2M communications, e-readers, and telematics, will continue to drive adoption after the market exceeds 100 percent penetration," says Ozgur Aytar, Research Director at Pyramid Research.

All of the major broadband service providers already, or are beginning to, provide service bundles that integrate mobile broadband services, a key area of differentiation.

The U.S. fixed-line segment is in a stage of transformation in which broadband services, and no longer fixed voice, are rapidly becoming core services for network operators.

Pyramid expects broadband to surpass fixed voice penetration of households by 2011 as broadband becomes the primary means of communication, notes Aytar, enabling a combination of extremely popular value-added services, including social networking, online video and blogging.

Why Residential Broadband in U.S. Should Cost Less

According the the latest market study by Point Topic, there's a pattern of broadband access cross-subsidization across most parts of the world.

"Residential broadband is apparently being subsidized by businesses almost everywhere in the world -- the exception is North America," says Oliver Johnson, CEO of Point Topic.

Internet Service Providers (ISPs) in most markets are charging households considerably less than businesses for Internet access. This is a mechanism to cope with competitive pressure and gain residential subscriber market share.

"There are a number of differences of course. Business tariffs often are less contended than residential ones and come with better help desk services and guarantees of up-time but surprisingly not generally faster," continues Johnson.

Add to this the exchange rates, the relative buying power of a dollar in a particular market and so on and it's a very complex picture. As a simple exercise however we can examine the relative ratios of the average of 2000 residential and business tariffs in different regions of the world.

"By looking at just standalone tariffs, those without a VoIP or IPTV service, we can assume that between markets we are comparing similar products overall -- that is to say just the bandwidth," says Johnson.

In North America (USA and Canada) a business will pay 2.38 times as much for a DSL connection as a household. This compares to a multiple of 4.23 on average in the Rest of the World (RoW).

In North America a business will pay 1.13 times as much as a household for FTTx and 1.89 times as much for a cable service. In the RoW a business will on average pay 6.47 times as much for FTTx and for cable the multiple is 1.93 times.

The result is that households in the U.S. and Canada will typically pay between 10 and 20 percent more for their broadband service than their counterparts in other regions of the world.

The gap is at least partly due to the differential in residential and business tariffs. North American operators are extracting a better ARPU from their household services while sacrificing some revenue from companies.

"This approach may be more robust in the medium to long term but it's also an opportunity. Where there actually is competition in the North American region there is room for price cuts for residential customers and a gain in market share for the operators that are prepared to take the plunge," concludes Johnson.

Mobile Phone Web Browsers Going Mainstream

In 2015, 3.8 billion mobile handsets -- more than 60 percent of the total installed base worldwide -- will contain mobile web browsers, according to the latest market study by ABI Research. That doubles today's penetration rate.

"Mobile browsers are evolving along two paths," says senior analyst Mark Beccue at ABI Research.

On one hand, highly sophisticated browsers, which we are calling full Internet browsers, will be found in all smartphones and a growing number of enhanced (or feature) phones.

Such devices can host these browsers because they have advanced application processors, expanded memory capacity and adequate screen size and resolution. These full Internet browsers typically require about 64 Mb of memory to run.

A real key to the growth of full Internet browsers in higher-end feature phones is the falling cost of sophisticated applications processors. But there is also a second path.

Parallel to this development, a new family of browsers has emerged: the proxy-based (or client-server or compression) browser, which is epitomized by the Opera Mini.

These browsers move some caching and processing off the phone to a nearby server, allowing the browser to run on lower-cost processors and requiring as little as 4 Mb of memory. That means these browsers can be used on even the lowest-cost phones.

The ABI market study indicates that the installed base of full Internet browsers will exceed that of proxy-based browsers sometime in 2012.

Local Advertiser Supported Wi-Fi Hotspot Opportunity

eMarketer reports that mobile data traffic has grown because of the popularity of smartphones and unlimited-use mobile data plans for netbooks, laptops and other devices.

Coda Research predicted in March 2010 that data traffic from mobile handsets in the U.S. will surge to 327 petabytes per month in 2015, a compound annual growth rate (CAGR) of 117 percent.

And ABI Research reported in May that smartphones and connected computing devices would contribute 87 percent of all mobile network data traffic in the U.S. market.

The mobile service provider response was tiered pricing plans. As an example, after years of offering unlimited data at a fixed price, AT&T introduced tiered pricing for new customers.

Rather than risk losing subscribers that are resisting the change, Wi-Fi access is now being offered to remove some of the unwanted traffic from mobile networks.

An April 2010 survey from Kineto Wireless found that 78 percent of U.S. smartphone users were interested in using Wi-Fi. Currently, 70 percent of smartphone owners surveyed had Wi-Fi capabilities, and more than 90 percent of that group used Wi-Fi at least weekly. Nearly half took advantage of Wi-Fi networks every day.

The top reason for turning to Wi-Fi was ease in accessing the Web, thereby enhancing the user experience, followed by Wi-Fi superior speed -- when compared to the carrier's cellular network.

However, there were some drawbacks to Wi-Fi usage as well. The main one being a drain on smartphone battery life.

AT&T customers were least likely to complain about battery life, but most likely to say the problem was the lack of hotspots -- AT&T Wi-Fi is available in a limited number of locations.

eMarketer believes that higher usage of Wi-Fi could be a boon for marketers, who are beginning to get into bandwidth-intensive activities like mobile video. App usage will also benefit from the high-speed at Wi-Fi access points.

Subscribers who access the Internet at wireless hotspots are heavy smartphone app users. They are willing to give location targeting information and view the local ads that support these hotspots.

I actually suggested ad-supported carrier Wi-Fi hotspots back in 2004. But, the complementary Yellow Pages marketing opportunity is no longer an option, since most service providers divested those business units.

IP Video Multi-format Transcoder Market Upside

The continuing growth of video content that's delivered via the Internet and through mobile wireless services will drive the multi-format transcoder market to more than double its revenues by 2014, according to the latest market study by In-Stat.

Multi-format video transcoder products were developed to ingest content in one format and output it in another, often at varying resolutions and bit-rate profiles. This technology is vital to IP video distribution.

"Robust growth in the multi-format transcoder market will continue over the next several years as more tape archives are converted to digital files, more video content is uploaded or streamed over the Internet, and multi-screen TV delivery services move from lab trials in 2010 to deployments," says Michelle Abraham, In-Stat analyst.

The further out in the distribution network that video is transcoded, the more transcoders are needed.

In-Stat's latest market study found the following:

- The IP video market is mostly comprised of small vendors that were founded in the last 10 years.

- Worldwide revenues from enterprise-class multi-format transcoders will grow from $117 million in 2009 to $297 million in 2014.

- Multi-format transcoder products are often based on flexible software platforms, whether running on a server or contained in a hardware appliance, due to the need to constantly add new video codecs and wrappers.

Smartphones Drive Data Usage, Not Revenues

Mobile data usage continues to grow exponentially as 3G wireless network technology spreads globally, according the the latest market study by ABI Research.

From 2009 to 2015 data usage in Western Europe and North America is expected to increase at a compound annual growth rate (CAGR) of 42 percent and 55 percent respectively.

In 2010, the average North American user is expected to consume 159 megabytes of data -- that's up from 100 megabytes in 2009.

"Mobile voice has already been surpassed by mobile data traffic on some networks, and this trend will only accelerate, says ABI Research wireless analyst Bhavya Khanna. "This boom in usage is driven by the rapid adoption of smartphones in these markets."

However, the explosion in data traffic does not mean a corresponding rise in data revenues for mobile service providers, as the popularity of unlimited or fixed price plans caps revenue even as usage grows.

Mobile data revenues are expected to grow at a CAGR of about 18 percent in North America, in sharp contrast to the increase in usage. This presents a challenge for operators as they look to manage the demands on their networks without a corresponding increase in income.

The growth in data traffic comes at the cost of voice usage. Minutes of use are on the decline in developed markets in North America and Western Europe. However, in emerging markets there is still room for voice usage growth.

Increasing competition in Africa has reduced tariffs, resulting in minutes of use per user growing by 9 percent between 2009 and 2010. There is still much room for growth on the continent, as average usage per subscriber continues to be half of that of the Asia-Pacific region.

Growth of Consumer Electronics Wi-Fi Enabled Devices

The quest for connectivity continues to drive Consumer Electronics (CE) manufacturers to enable their products with Wi-Fi wireless technology -- both for incremental home networking applications and ongoing access to public hotspots while mobile.

The next 5 years will see an increase in the number of Wi-Fi-enabled devices, from over 500 million in 2009 to nearly 2 billion in 2014, according to the latest market study by In-Stat.

Devices leading the pace of adoption include Blu-ray disc players and recorders, e-readers, digital televisions with built-in IP connectivity and low-cost IP video set-top boxes -- such as the Roku digital video player.

"The reality of 802.11n-enabled devices being available is that many of the technical issues that constrained Wi-Fi adoption in video-centric CE devices in the past have been remedied," says Frank Dickson, Vice President of Research.

"As a result, we expect the adoption of Wi-Fi in the living room to accelerate. Across all 'digital living room' consumer electronics, which includes set-top boxes, game consoles, and other such devices, Wi-Fi-enabled devices will exceed 200 million units by 2014."

In-Stat's market study findings include the following:

- Mobile devices with Wi-Fi will still dominate shipments. In 2013, shipments of mobile phones with embedded Wi-Fi are projected to exceed three-quarters of a billion units.

- E-readers Wi-Fi attach rates will increase from 3 percent in 2009 to 88 percent by 2014.

- 29 million digital picture frames will be shipped in 2014 -- 53 percent will be Wi-Fi-enabled.

China Leading Asia Fiber Infrastructure Investment

While most nations are still debating their national broadband policy objectives and associated telecom infrastructure investment strategy, China will overtake Japan to become Asia's largest fiber optic communications market.

China will have more fiber access lines for broadband internet service at year-end 2011, versus Japan, according to the latest market study by Pyramid Research.

In Pyramid's last report on China, they projected that the Chinese market would overtake the Japanese market by 2011. But, the strengthening of the Japanese yen against the U.S. dollar means that the event will be delayed two years, to 2013, when China's $168.1 billion in service revenue generated surpasses Japan's $166.8 billion, notes Daniel Yu, Senior Analyst at Pyramid Research.

"However, China will still overtake Japan to become Asia's largest fiber market by 2011, with 25.9 million fiber access lines in service at year-end 2011, versus Japan's 25.2 million," he adds.

One of the main drivers behind the rapid rise in fiber is a strong commitment from the Chinese government to deploy the technology. Migration to higher speed, and thus higher-priced, fiber-optic connections, will ensure continued growth in China's fixed service revenue.

The industry as a whole expects to spend $22 billion over the next three years deploying a fiber network, increasing total ports from 20 million to 80 million.

China's networks follow predominantly the FTTB/N configuration in metro areas and newly developed multi-dwelling units rather than the more costly FTTH configuration. FTTx service is still considered expensive, however.

"As demand for high-speed access increases, economies of scale for both the equipment and the CPE costs will increase the affordability of the service," Yu explains.

FTTx will see its share of total broadband accounts rise from 14.8 percent at year-end 2010 to 30.9 percent at year-end 2015. Pyramid also expects broadband net additions to top 19 million in 2010 and climb to 24 million by 2015 as fiber technology gains acceptance in the market.

Smart Card and Embedded Security Market

Smart cards became more embedded within everyday life for most consumers in 2009. In total, 5.2 billion micro-controller and memory-based smart cards shipped into applications such as mobile device SIM cards, payment and banking, government ID, and transportation.

At the same time, the smart card related integrated circuit (IC) semiconductor market was worth $1.7 billion, according to the latest market study by ABI Research.

On the card side, Gemalto maintained its position as the number one manufacturer, with an estimated 33.8 percent market share, while Morpho (previously Sagem Orga) gained the most market share (up 1.8 percent) to consolidate its fourth position.

Meanwhile, with 26.3 percent, Infineon continued to account for the most revenue among the IC manufacturers while in unit terms, Samsung's strong position in SIM cards saw it capture 34 percent of IC volumes.

Principal analyst John Devlin at ABI says, "Last year's market conditions were unusual. While the smart card market largely weathered the recession in terms of consumer demand, the IC market took a hit on two fronts."

First, both card manufacturers and issuers ran down their inventories as they assessed the impact of the credit crunch. Second, price pressure increased greatly as IC manufacturers looked to fill plant capacity and maintain orders. Combined, these factors saw the value of the market fall by more than was expected.

New revenues are coming from contact-less or dual-interface cards and more applications require the greater security offered by smart cards. There remains a small but solid memory-based market but higher-end secure micro-controller ICs and embedded solutions are driving the new growth.

As a result of this and re-stocking inventory, ABI forecasts that IC revenues will grow nearly 14 percent in 2010.