Krishna Baidya’s Random Musings

Netbook Pricing is Key to the Embedded Future

Posted on: May 27, 2009

Thought of sharing this write up that talks about how netbook pricing holds key to the embedded future. Has some good arguments that is in align with my thought too.

“The fledgling market for 3G-enabled netbooks was given a big boost this month as the leading U.S. operators moved to embrace this new device class. AT&T announced that this summer it will begin selling mini-laptops with embedded 3G modems from Acer, Dell, Lenovo and others in 2,200 stores nation-wide and online, while Verizon Wireless Communications stores began selling their first netbook – the HP Mini 1151NR.

For AT&T, Verizon and other operators in Europe and Asia, rolling out netbooks is another step towards the creation of a potentially much larger and more strategic market for mobile broadband connectivity in a wide range of consumer electronics and industrial devices, from cameras to games consoles to energy meters to environmental sensors. In a sign of operators’ growing interest in this opportunity, there will be a panel session devoted to the “The New Embedded Mobile Economy” at the GSMA’s Telecoms Marketplace at HiT Barcelona on June 18th.

But the size of the embedded mobile economy is going to depend heavily on the cost of the mobile broadband modules, which is going to depend on the economies of scale available to module manufacturers. In other words, it is a bit of a chicken or egg situation.

Although there are already 68 HSPA embedded modules available from more than a dozen suppliers, according to the GSMA, the market itself is still relatively small. The mobile broadband modem market in Europe, including USB modem devices, PC Cards, ExpressCards, and internal cellular modems for laptops and mini-laptops, reached only 10.5 million units last year, according to Telecompaper. The market research group didn’t break out how many of these units were internal modules, but it doesn’t expect sales of computers with embedded modems to overtake external modems until 2012.

Of course, independent of the PC connectivity market, mobile broadband modems are being added to other devices today. Amazon’s successful Kindle electronic reader is spawning imitators, while the GSMA has identified 15 consumer electronics devices, including cameras, watches and media players, with built-in HSPA modems.

Even so, it is still laptops, and particularly the netbook segment, that is most likely to create the initial scale needed to bring down module prices significantly. While there are signs of strong latent demand for 3G netbooks, potential buyers are bound to be very price-sensitive in the current economic climate. If mobile operators want the wider embedded market to emerge in a significant way in the short-to-medium term, they are going to have to price and promote their 3G netbooks aggressively.”

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