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1) Introduction
to the Wireless Industry.
Mobile communications and entertainment remains one of the
hottest sectors in the InfoTech market. About 700 million
cell phones will sell worldwide during 2005—making the
cellular phone by far the fastest-selling single item of consumer
electronics. Most new cell phones carry numerous advanced
features. More MP3-capable cell phones are sold than stand-alone
MP3 players. More digital camera-equipped cell phones are
sold than stand-alone digital cameras. And new cell phones
are likely to be Internet-capable, and to a growing extent
able to take advantage 3G (third generation) high speed access.
In fact, by 2007, there will be 1.2 billion consumers accessing
the Internet via some type of wireless access worldwide.
The wireless world incoporporates a great deal more than
cell phones, ranging from satellite-based services to Wi-Fi
hotspots in Starbucks to avid BlackBerry owners sending wireless
e-mail, to vast, wireless networks on corporate and college
campuses. Whether its through Bluetooth (with about 400 million
Bluetooth-enabled devices to be sold worldwide in 2005), upstart
ultrawideband (UWB) with much faster data transfer speeds,
satellite, cell phone 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) Cell phones will continue to morph into ever
more complex, multi-purpose personal communication devices
(including the growing use of the cell phone as a financial
transaction device). Cell phone circuitry handset will become
much more powerful. (For example, study the revolution being
introduced now in screaming-fast, multi-processor power in
handheld game machines.) Batteries for wireless devices will
become much longer lasting.
b) Although cell phone markets are relatively mature in the
U.S. and in major developed nations everywhere, the number
of subscribers nonetheless continues to grow in these countries.
In the U.S., new subscribers tend to be those on lower-cost
plans and children. Already, 40% of 12- to 14-year-old Americans
carry cell phones. The rest of them will soon follow.
c) Meanwhile, hundreds of millions of cell phone subscribers
will be added in short order within less developed nations
worldwide.
d) There is no end to the ways you can make money out of wireless
trends. For example, look at the $3- to $4-billion yearly
global market in downloadable cell phone ring tones.
e) Ever better, higher-speed, longer-distance standards will
continue to emerge and be fully developed for Wi-Fi and other
wireless network access systems.
f) Security issues such as eavesdropping on Bluetooth conversations,
hacking into Wi-Fi networks and viruses spread among cell
phones will require more attention and investment from the
technology and telecommunications sectors. (Analysts at IDC
estimate that the global market for mobile phone security
software will reach $1 billion by 2008.)
About 6% of U.S. homes have cancelled landline service entirely,
as of the beginning of 2005, relying on their cell phones
instead. Cellular phone system revenues were up about 13%
during 2004.
Over the mid-term, emerging markets in lesser-developed nations
will add about 1 billion new subscribers to today’s
global base of nearly 2 billion (as of mid-2005). While cell
phone market penetration is at 100% in some nations, including
Sweden, the U.K. and the Netherlands, it is only a bit more
than 61% in America. The market penetration is 71% in Japan,
and much lower in many underdeveloped parts of the world.
Sales and subscriber growth will continue to boom in places
like China and India.
Accessing and transferring data via cell phone is growing
at a rapid clip. In the U.S. alone, $4 billion was spent by
consumers on cell phone data services in 2004. In the U.S.,
there are more than 190 million cell phone subscribers (as
of mid-2005). About 2.5 to 3 billion wireless text messages
are sent monthly. For example, Verizon’s U.S. cell phone
subscribers total about 26 million. Nearly one-third of them
paid extra for data services as of the beginning of 2005.
Built-in cameras are extremely popular with Verizon’s
customers. In total, they use data services to e-mail about
300 million digital photos yearly.
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 cell phone and landline industries
upside down. Already, the leading cell phone provider in Japan,
NTT DoCoMo, is marketing a cell phone manufactured by NEC
that both works on standard cell phone circuits and, when
it senses the presence of Wi-Fi, can switch over to VoIP,
wirelessly making calls over the Internet via the Wi-Fi connection.
Motorola has developed a comparable phone, and BT recently
launched similar features in the U.K. market.
Consider this: Wi-Fi is only good for a range of a few feet.
WiMAX, on the other hand, may be good for up to 30 miles.
When WiMAX gets rolling, the eventual effects on cell phone
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 cell phone subscription
use and revenue be affected? The answers are not yet clear.
EarthLink, Sprint, MCI, AT&T and other leading telecommunications
sector companies are testing, or plan to test, Wi-Fi offerings.
As a result, the competition for wireless customers will become
much more intense. Hold onto your hats—it’s going
to be wild, wireless ride!
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