News
Issue #2002 - 42 (November 2002)
(Updated Nov. 5, 2002)

MARKET OUTLOOK & TRENDS

In-Stat/MDR Reports Somewhat Brighter Outlook for Wireless Data

SCOTTSDALE, Ariz., October 30, 2002 Although the wireless data/Internet market has had to bear the brunt of some tough public criticism, it is steadily progressing, according to In-Stat/MDR. The high-tech market research firm reports that there are some very bright spots in the wireless data market. The availability of the proper infrastructure and color handsets, and the rollout of next generation services such as CDMA 1xRTT and General Packet Radio Service (GPRS), is aiding the market's growth. Overall, the messaging market (thanks to the newer Enhanced Messaging Service (EMS) and Multimedia Messaging Services (MMS) that support graphics and video) will continue to outstrip the wireless Internet market, in terms of subscribers, through 2006, growing from an estimated 305 million at the end of 2001 to more than 1 billion by the end of 2006. While smaller than the messaging market, the wireless Internet market is growing at the same pace.

"Going forward, the wireless Internet market's future rests largely on service pricing," says Becky Diercks, a Director with In-Stat/MDR. "In most regions, service pricing is completely inconsistent and far too expensive for the average consumer. However, Orange's announcement of bargain basement GPRS pricing in Europe and Nextel and Verizon Wireless' flat pricing in the US are definitely steps in the right direction. Sprint PCS launched a challenge to other US providers just last week with extremely aggressive pricing for PCS Vision." Beyond service pricing, more compelling applications need to come to market and carriers need to do a better job of tying applications to services for the market to really take off. Thus far, the CDMA-based carriers are experiencing more success tying applications to services than are the GPRS carriers.

In-Stat/MDR also found that:

• The wireless Internet market will grow from 74 million wireless Internet subscribers, at the end of 2001, to more than 320 million subscribers by the end of 2006. 
• Japan is the obvious early leader in the wireless Internet market, primarily due to the innovations of NTT DoCoMo, based on Personal Digital Cellular (PDC) technology. However, competition is growing in Japan, and DoCoMo's next hope, its Wideband Code Division Multiple Access (W-CDMA)-based Freedom of Mobile Access (FOMA) service, is largely failing due to minimal coverage, high device and service pricing, and a lack of applications that set that technology apart from the earlier generation's service. 
• The Korean market is now coming on strong in the Wireless Internet space, largely fueled by CDMA technologies, and the US is not performing as badly as some might expect
• Europe is largely failing with GPRS technology and, not including SMS and other messaging services, is falling behind the rest of the world in terms of wireless data adoption. W-CDMA technology will likely not be its savior.
• The Wireless Internet market is receiving a further caffeine jolt from Sun's J2ME and even Qualcomm's Binary Runtime Environment for Wireless (BREW) technologies. Even WAP is performing satisfactorily, when integrated with these technologies, in certain markets.

For more information: http://www.instat.com

MobileInfo Comments and Advisory: In-stat/MDR's findings stand to sound rationalization and are being confirmed by other sources as well. Developers should keep on bringing new applications on the street. Enterprises CIOs should loosen purse strings for wireless projects. Do not wait for fully-matured solutions and the ultimate infrastructures to arrive. Carriers need to have realistic expectations, though. They can not recover their capital costs in a short time. You have to educate your investment banker and VCs. The research firm was very clear on the bottom line for the success of wireless data  - pricing is key. Some carriers have started listening. Enterprises should strike a deal with carriers for fixed prices with certain bounds on amount of data and pooled minutes or megabytes.

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