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A Big Boost for Mobile Laptops



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A Big Boost for Mobile Laptops
cyrano Offline
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A Big Boost for Mobile Laptops

By bundling support for mobile data service into new notebook PCs, the tech industry hopes to do for 3G broadband what Intel's Centrino did for Wi-Fi

by Jennifer L. Schenker

Some of the world's biggest mobile operators, PC manufacturers, and chipmakers will reveal on Sept. 30 that they are uniting to pre-install support for high-speed mobile data services into notebook PCs. Backers hope the move will result in wider consumer use of so-called "mobile broadband" that could rival or even surpass use of Wi-Fi hotspots.

If the plan works, it could boost third-generation (3G) mobile broadband in much the same way that Wi-Fi exploded after Intel (INTC) built support for it into the Centrino chipset. Consumers will have an easier time getting online while on the move: Instead of having to search for a Wi-Fi hotspot, owners of laptops equipped with the new technology will be able to connect wirelessly to the Internet wherever they are, as long as they're within coverage range and have a mobile subscription with data service.

The industry alliance is about much more than just bundling technology, though. As a result of the shift, some mobile operators will start selling laptops in their phone shops—with big price incentives. That adds a significant new distribution channel, which could boost not just mobile broadband use but also sales of laptops, especially in emerging economies.

SUBSIDIZED LAPTOPS
Starting this Christmas, consumers in more developed parts of the world, such as Western Europe, will start seeing laptops for sale in mobile-phone stores. These customers, who are already used to paying as little as €1 ($1.45) for a subsidized handset, could start seeing similarly aggressive deals from mobile-phone operators for entry-level laptops, analysts say.

An even more radical business model will likely emerge in developing countries, where consumers tend to have less disposable income. Some operators will start offering both laptops and mobile data service on a subscription basis, allowing people to pay for the package over a period of months or years, says Mike O'Hara, chief marketing officer at the GSM Assn., a global trade group representing more than 750 mobile operators using the GSM wireless standard.

Laptop makers Dell (DELL), Lenovo, and Toshiba (6502.T) are among those supporting the initiative. Chipmaker Qualcomm (QCOM), software giant Microsoft (MSFT), and telecom gear marker Ericsson (ERIC) also are aboard, as are mobile-phone operators Vodafone (VOD), Orange (FTE), T-Mobile (DT), Telefònica (TEF), Hutchison 3G, TeliaSonera (TLSN.ST), and Telecom Italia (TI). "We think this is a huge play," says O'Hara.

To help drive sales, laptops with integrated 3G mobile broadband will carry a "service mark"—a logo emblazoned with the words "Mobile Broadband" and two flying birds. The mark should help consumers easily identify PCs ready to connect to 3G out of the box.

Only a few hundred thousand such laptops likely will be sold by the end of this year, but in 2009 the GSMA figures sales through mobile operators will command a much larger share of the annual $50 billion laptop market.

LEAVING WI-FI BEHIND
In some ways, it's surprising the industry has taken this long to devise a bundled solution. Until now consumers interested in using 3G connections from their laptops had to buy an external PC card—often referred to as a dongle—and install it themselves. Despite that, some 19 million laptop users in Europe connected to cellular services as of 2007, according to market researcher CCS Insight. That number should rise to 25 million this year and 43 million by 2010.

The new initiative to promote mobile broadband also comes as the technology is starting to push ahead of Wi-Fi in Europe as the most popular way to access the Net on the go. Recent surveys by researcher Point Topic show that in Britain, for instance, mobile-phone companies have managed to up their market share to 47% of users accessing the Net away from home or work. That compares with 42% who use Wi-Fi hotspots. A year earlier it was 40% to 30% in favor of Wi-Fi.

"We are seeing a huge boom in mobile broadband," says Philip Kendall, a mobile analyst at tech consultancy Strategy Analytics.

Mobile operators may continue to grow their share because they enjoy a size advantage over Wi-Fi service providers, most of which are relatively small and fragmented. But carriers still suffer several disadvantages. It remains a lot cheaper to send data over Wi-Fi on a cost-per-megabyte basis, and unlike mobile networks, Wi-Fi suffers little in the way of capacity constraints, notes Point Topic. What's more, most mobile operators often charge hefty roaming fees for connections made out-of-country, so analysts say many consumers may opt to continue to use Wi-Fi when they travel across borders.

Still, the price advantage may soon disappear. Some operators now offer a flat data fee for mobile broadband across several countries, and regulators in Brussels could force the rest to cut their fees (BusinessWeek.com, 9/24/08). Worldwide, consumers now pay an average of around $46 a month for unlimited in-country mobile data usage. That amount is expected to drop to somewhere between $20 and $25 by 2011, says the GSMA's O'Hara—making mobile broadband more competitive against Wi-Fi services that sometimes cost more than $7 per hour.

WATCH OUT FOR WIMAX
In a survey by Pyramid Research commissioned by the GSMA, 88% of consumers who purchased notebook PCs this year costing between $500 and $1,000 said they would have preferred if mobile broadband were built in. The study also showed that three-fifths of consumers now want to buy a voice and data package from an operator with a mobile broadband network.

Even so, some analysts are skeptical that the "Mobile Broadband Inside" initiative will be as successful in the developing world as the GSMA hopes. "In Western Europe, mobile broadband will be huge, but as we move around the world the picture is very different," says John Arber, a senior analyst in the London office of technology consultant IDC.

For one thing, new wireless alternatives to traditional wired phone networks may be stronger in developing economies—posing a threat to getting online via mobile. In Eastern Europe, for instance, the highly anticipated WiMAX technology backed by Intel is starting to gain some traction. WiMAX, which uses state-of-the-art microwave radio to span distances as great as 30 miles, has been a disappointment so far in many places. But Intel promises someday to build support for it into laptops, which could boost its fortunes significantly.

Indeed, that will be the case for any wireless technology built directly into computers. "The importance of notebooks is going to be massive in wireless," says CCS Insight director of research Ben Wood. That's because mobile data is increasingly important for mobile operators. "Without 3G data, and dongles in particular, 2008 would be a pretty disappointing year for a lot of network operators in Europe," Wood notes. The challenge they still face is that "a disproportionately small number of users drives a huge amount of traffic on data networks." Expanding the universe of users could go a long way toward improving that ratio.
09-30-2008 06:56 AM
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