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Sunday - July 6, 2008

Research Brief Research Briefs provide focused and timely analysis on key industry topics. These short reports, typically 5-7 pages in length, blend both qualitative and quantitative market analysis from ABI Research’s industry experts in their examination of key business issues, competitive dynamics, emerging technologies, regulatory matters, and market demand factors.

Mobile Wireless The Gobi Effect Embedded modems, called miniCards, provide laptops with the RF link to GSM and CDMA networks. They are more convenient, more durable and have better performance than PC cards and USB modems. But embedded modules have not been a prominent feature, nor highly requested by customers. Greater availability of 3G networks and modest decreases in cellular broadband pricing are now greatly improving the value of these devices. However, the main issue affecting embedded module sales is the inherent supply chain friction resulting from the modem certification process. Supply chain friction results because operators want to test every device used on their network. As the number of laptop models with embedded modules increases, more testing is required. Qualcomm – fully aware of these limitations and in a position to address the issues – answered with Gobi, a multiprotocol, multi-band chipset that allows connectivity to both CDMA and GSM networks. Gobi is certainly an antidote to the ills affecting the embedded module and cellular-enabled laptop market. However, Qualcomm and Gobi cannot change all the factors affecting uptake of these devices in the market. The following Research Brief explains the current opportunities and challenges for adoption of internal laptop modems, and details Qualcomm’s solution and its effectiveness for correcting market roadblocks. The brief will also outline other competing solutions and the effect of Gobi on existing cellular modem vendors. The Gobi Effect Cross-published RB-BMO-102 Mobile Broadband Needs FMC and 4G Data utilization is quickly increasing on smartphones and laptops. In addition, newer mobile devices such as Mobile Internet Devices and mobile consumer electronics devices are starting to appear, which will further drive up data traffic on mobile wireless networks. This Research Brief examines mobile device growth and the two solutions that are required – fixed-mobile convergence and the use of 4G networks – and assesses the importance of each. It also discusses the revenue opportunity that will come from convergence gateways, ASN gateways for mobile WiMAX, and SAE gateways for LTE. Wireless Subscriber Profiles and Preferences In late January, 2008, ABI Research conducted an online survey of 1402 adult mobile phone users. Respondents from seven different countries were included in the research: the United States, the United Kingdom, France, Germany, Japan, South Korea, and Taiwan. The survey was designed to capture details of respondents’ mobile phone usage, including monthly expenditures and frequency of device replacement, as well as features used and desired. Respondents were also probed regarding their mobile service providers; among the issues explored were satisfaction with providers, length of contracts, selection criteria, and potential reasons for switching providers. Questions were also included to determine demographic profiles. The survey also queried respondents’ reactions to femtocell units, including purchase likelihood and barriers to purchase. Finally, respondents’ telecommunications service bundling behavior and expenditures, including fixed line phone, broadband, Wi-Fi, and TV services, were examined. The results are broken out by country, presented in chart form, and summarized in text. Wireless Subscriber Profiles and Preferences: In late January, 2008, ABI Research conducted an online survey of 1402 adult mobile phone users. Respondents from seven different countries were included in the research: the United States, the United Kingdom, France, Germany, Japan, South Korea, and Taiwan. The survey was designed to capture details of respondents’ mobile phone usage, including monthly expenditures and frequency of device replacement, as well as features used and desired. Respondents were also probed regarding their mobile service providers; among the issues explored were satisfaction with providers, length of contracts, selection criteria, and potential reasons for switching providers. Questions were also included to determine demographic profiles. The survey also queried respondents’ reactions to femtocell units, including purchase likelihood and barriers to purchase. Finally, respondents’ telecommunications service bundling behavior and expenditures, including fixed line phone, broadband, Wi-Fi, and TV services, were examined. The results are broken out by country, presented in chart form, and summarized in text. Mobile Broadband Needs FMC and 4G Data utilization is quickly increasing on smartphones and laptops. In addition, newer mobile devices such as Mobile Internet Devices and mobile consumer electronics devices are starting to appear, which will further drive up data traffic on mobile wireless networks. This Research Brief examines mobile device growth and the two solutions that are required – fixed-mobile convergence and the use of 4G networks – and assesses the importance of each. It also discusses the revenue opportunity that will come from convergence gateways, ASN gateways for mobile WiMAX, and SAE gateways for LTE. Femtocell Network Management and Integration Traditional views of the femtocell market hold that the key differentiators between solution providers are focused on box-centric notions such as price, channel support, and integrated features, among others. However, the market is evolving significantly, and the ability to provide a complete end-to-end solution is now becoming the most important differentiator between solution vendors. Network management and integration are key aspects of a full turnkey approach and make up some of the most significant areas where solution vendors can also distinguish themselves. This Research Brief outlines the critical considerations for a network management solution and provides a forecast for network management and control revenues. Femtocell Semiconductors The femtocell semiconductor market is characterized by high innovation, low volumes and significant posturing. Contracts are beginning to be awarded and trials continue to taper off. The number of leading box vendors is beginning to contract, and there is a greater notion of standardization in terms of interfaces and architectures. Although a lot of the front-running in this market has been done by the younger, nimbler start-ups which are willing to take on considerable risk, these solidifying factors are beginning to draw the larger vendors closer to the fold and it is likely that some of them will enter very soon. This Research Brief provides a clear outline of the major semiconductor providers and their femtocell-specific products. It also includes a forecast for total value of the market for femtocell semiconductors. Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. Deploying UMTS in the 900 MHz Band National and regional regulators and standards bodies have started modifying mobile phone service legislation to allow the roll-out of WCDMA access in the 900 MHz band. Why is this critical? WCDMA deployments have achieved reasonable coverage in most markets but the economics need to be addressed. Competition and lower than expected returns on investment are decelerating the rate of additional coverage. This Research Brief investigates: • Benefits and challenges of UMTS 900 MHz refarming • Engineering and site deployment • Load balancing between 900 MHz and 2100 MHz • Making the most of spectrum allocations • Challenges of cell-site equipment sharing • Global UMTS/GSM-900 refarming initiatives The Gobi Effect Embedded modems, called miniCards, provide laptops with the RF link to GSM and CDMA networks. They are more convenient, more durable and have better performance than PC cards and USB modems. But embedded modules have not been a prominent feature, nor highly requested by customers. Greater availability of 3G networks and modest decreases in cellular broadband pricing are now greatly improving the value of these devices. However, the main issue affecting embedded module sales is the inherent supply chain friction resulting from the modem certification process. Supply chain friction results because operators want to test every device used on their network. As the number of laptop models with embedded modules increases, more testing is required. Qualcomm – fully aware of these limitations and in a position to address the issues – answered with Gobi, a multiprotocol, multi-band chipset that allows connectivity to both CDMA and GSM networks. Gobi is certainly an antidote to the ills affecting the embedded module and cellular-enabled laptop market. However, Qualcomm and Gobi cannot change all the factors affecting uptake of these devices in the market. The following Research Brief explains the current opportunities and challenges for adoption of internal laptop modems, and details Qualcomm’s solution and its effectiveness for correcting market roadblocks. The brief will also outline other competing solutions and the effect of Gobi on existing cellular modem vendors. The Gobi Effect Embedded modems, called miniCards, provide laptops with the RF link to GSM and CDMA networks. They are more convenient, more durable and have better performance than PC cards and USB modems. But embedded modules have not been a prominent feature, nor highly requested by customers. Greater availability of 3G networks and modest decreases in cellular broadband pricing are now greatly improving the value of these devices. However, the main issue affecting embedded module sales is the inherent supply chain friction resulting from the modem certification process. Supply chain friction results because operators want to test every device used on their network. As the number of laptop models with embedded modules increases, more testing is required. Qualcomm – fully aware of these limitations and in a position to address the issues – answered with Gobi, a multiprotocol, multi-band chipset that allows connectivity to both CDMA and GSM networks. Gobi is certainly an antidote to the ills affecting the embedded module and cellular-enabled laptop market. However, Qualcomm and Gobi cannot change all the factors affecting uptake of these devices in the market. The following Research Brief explains the current opportunities and challenges for adoption of internal laptop modems, and details Qualcomm’s solution and its effectiveness for correcting market roadblocks. The brief will also outline other competing solutions and the effect of Gobi on existing cellular modem vendors. Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. 2G Femtocells Although much attention has been focused upon 3G femtocells, a number of factors appear ready to drive the uptake of GSM based femtocells. These products may provide a cost-effective challenge to existing Vo-Wi-Fi solutions and should benefit from reduced interference due to new spectrum license awards and free spectrum that is currently not being utilized in the GSM band. This Research Brief provides an analysis of the strengths and weaknesses of the GSM femtocell offering, and includes a forecast of GSM femtocell shipments by major global region. The Digital Dividend UHF spectrum is highly valued, because of its reach and capacity. Broadcasters and wireless service providers use it, and would like more. When analog terrestrial TV is switched off, it will clear around 100 MHz of UHF spectrum for primary applications. However, if harmonized mobile services, including mobile TV, as well as the introduction of terrestrial HDTV, are deployed, this could be reduced. Interleaved spectrum, also known as white space, could add a further 200 MHz for secondary applications, and a new era of sharing spectrum using smart radio technology could emerge. Mobile Infrastructure Vendor Consolidation The IT industry, in the shape of IBM, HP and Microsoft, with combined revenues of $224 billion in 2006 (as well as Cisco on $29 billion), is working hard to expand its role in telecoms with multimedia-related products for network control and content delivery. ABI Research concludes that the telecom network industry is reacting to this by realigning and refocusing to ensure its long-term survival. It is also positioning itself for new opportunities in China and India, as well as protecting against competition from these countries. WiMAX in Europe Spectrum at 3.5 GHz has been allocated across Europe for fixed wireless services using WiMAX. In the next few months we will see new spectrum being licensed for mobile WiMAX services at 2.6 GHz. If the European Commission gets its way, this may become a pan-European trend. Mobile WiMAX will then be able to compete against 3G as well as cable and DSL. But for the moment, the future remains uncertain. Mobile WiMAX in the United States Sprint has been driving the global market for mobile WiMAX as the first large mobile operator to support the technology. Clearwire has also seen its share of the spotlight. But Sprint and Clearwire are by no means the only service providers involved with mobile WiMAX in the United States. There is a lot of solid activity from NextWave Wireless and from a range of wireless ISPs which will also be providing mobile WiMAX services, making the US market a vibrant one. This Research Brief provides detailed analysis of these service providers’ past and present efforts, and future directions. Pseudowires for Core/MPLS, Access, and Mobile Backhaul This research brief analyzes the development of the pseudowire market and the use of the technology in core, access, and mobile backhaul applications. The report addresses engineering standards issues about pseudowires, identifies key players in the market, and forecasts the market value for pseudowires in each of the three application categories noted above. Migrating Mobile Networks to IP Mobile networks currently use a mixture of CS (circuit switching, using TDM) and PS (packet switching, using IP) for voice and data traffic respectively. This is changing. VoIP services will be supported in HSPA networks and will be improved by the more advanced HSPA+ and LTE. Over the next few years 3GSM networks will start the migration to all-IP, beginning in Japan in 2010 and moving into other markets shortly after. Many operators are already using separate softswitches and media gateways in preparation for the transition. WiMAX will be under increasing pressure to deliver if it is to maintain its lead. Verizon’s recent decision to use LTE casts a shadow over UMB’s future. Ultra-Mobile Broadband (UMB) Might Be Dead on Arrival There is much hype in the wireless industry about WiMAX and Long Term Evolution (LTE), but not much discussion about the third OFDM/OFDMA technology, Ultra Mobile Broadband (UMB). Many dismiss UMB as being dead since it has so little traction with the operators. This research brief provides a detailed analysis of the state of CDMA, Qualcomm’s current wireless technology, and the potential opportunities for UMB. CDMA would provide the bulk of subscriber and operator base for UMB similar to the role played by GSM/UMTS for LTE. CDMA’s subscriber base is growing in its two strongest markets, Asia Pacific and North America. By 2012, the number of CDMA2000 subscribers is expected to reach over 2.4 billion in the Asia Pacific region and 350 million in North America. The research analyzes why Qualcomm and 3GPP were not able to leverage this base of subscribers and operators to gain traction for UMB, and discusses Qualcomm’s strategy to diversity its product portfolio and guarantee its future opportunities outside of UMB. Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. Motorola Mobile Devices Strategic Review This Research Brief provides a strategic review of Motorola’s Mobile Devices Business. It highlights Motorola’s strategies for the handset market and assesses the company’s performance in recent years and quarters. It also provides comparison of Motorola’s performance to those of Nokia, Sony Ericsson, Samsung and LG. Key performance indicators including handset shipments, ASPs, and market-share, are broken down by region. Other topics include Motorola’s success factors and limitations, and the penetration of key features in handsets announced by Motorola in 2006. Sony Ericsson Strategic Review This Research Brief provides a strategic review of Sony Ericsson’s performance in the handset market. It highlights Sony Ericsson’s strategies and assesses the company’s performance in recent years and quarters. It also provides comparison of Sony Ericsson’s performance to those of Nokia, Motorola, Samsung and LG. Key performance indicators including handset shipments, ASPs, market-share and breakdown of these indicators by different regions are included. Other topics include Sony Ericsson’s success factors and limitations, and penetration of key features in handsets announced by Sony Ericsson in 2005/2006. Mobile Phone User Interfaces This Research Brief analyzes the current market trends in mobile device user interface design. It highlights the key considerations in handset UI design, assesses the elements of advanced UIs, and discusses the position of handset manufacturers in the OS market. It also explores in detail the growing trends in developing touch-based UIs in handsets. The study also focuses on the companies licensing advanced UI engine for handsets, and highlights the key features of their solutions. Based on current market developments, it further describes the likely features and benefits of handset UIs in the future. Research in Motion Strategic Review This Research Brief provides a strategic review of RIM’s performance in the smartphone market. It highlights RIM’s strategies and assesses the company’s performance in recent years and quarters. It also compares RIM’s performance to that of other key smartphone vendors including Nokia, Motorola, Sony Ericsson and Palm. The study also provides key performance indicators including handset shipments, ASPs, and market-share data. Further, it discusses the key success factors and limitations of RIM in the smartphone market. Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. Low Cost 3G Handsets This Research Brief evaluates the market for low cost 3G handsets with respect to the recent announcement of GSM Association’s “3G for All” Campaign. It highlights the key industry developments and analyzes the drivers for, and likely barriers to, the growth of the low cost 3G handset market. It also discusses the critical considerations for handset vendors, mobile operators and semiconductor vendors likely to address the market. Finally, a forecast for low cost 3G handsets, both for WCDMA and CDMA2000 (1xEV-DO) is also provided. 3GSM Mobile Devices Review This Research Brief analyzes the Mobile Handset related announcements at the 2007 3GSM Conference and evaluates the likely impact of these announcements and developments for the industry in the near future. It assesses the handset-related initiatives by mobile operators, semiconductor vendors, handset manufacturers and OS vendors, and provides the likely outcome of these initiatives. Other topics covered include key highlights of the 3GSM Conference. Connectivity IC Integration in Mobile Devices Handset vendors are faced with the very difficult task of having to balance two diverging trends: the push towards devices with more and more features, and the need to sustain margins in a market where average selling prices are decreasing dramatically every year. The integration of connectivity ICs, alongside features such as FM radio and GPS, provide device OEMs with the opportunity to save on cost, space and power. This Research Brief outlines the motivation for IC integration in the handset, and provides an analysis of the penetration of 12 different combination IC types into the handset market as well as an assessment of the relative benefits these can bring to the handset vendor. 2G Femtocells Although much attention has been focused upon 3G femtocells, a number of factors appear ready to drive the uptake of GSM based femtocells. These products may provide a cost-effective challenge to existing Vo-Wi-Fi solutions and should benefit from reduced interference due to new spectrum license awards and free spectrum that is currently not being utilized in the GSM band. This Research Brief provides an analysis of the strengths and weaknesses of the GSM femtocell offering, and includes a forecast of GSM femtocell shipments by major global region. Mobile Device Security Managed Services Over the past two years, the appearance of malware for mobile devices has established a market for packaged security software. Now a new market, managed mobile device security services, is emerging as a significant revenue opportunity for mobile operators as well as for security software companies supporting these services. These managed services have already been established in Europe and in Southeast Asia and now Sprint has started one in the United States. Mobile operators will need to meet a variety of very specific needs listed in this report as well as establishing price points consistent with those already offered by early players in this market. This Research Brief spells out the conditions required for a consumer-specific mobile device security managed service to emerge. It also provides a worldwide forecast of mobile device managed security services revenue for the period 2006-2011. Next Generation Networks Next Generation Networks (NGN) are being developed to take advantage of the opportunities promised by IP-based networks. Progress on fixed and mobile networks is slowly gathering pace so that operators can Reduce operating expenses by having a single IP network for all services Increase the network capacity to support bandwidth-hungry services such as IPTV Create a platform for fixed–mobile convergence Introduce Service Delivery Platform (SDP) and IP Multimedia Subsystem (IMS) architecture to enable a more rapid and responsive introduction of new services This Research Brief outlines progress on NGN standards and deployments in a number of markets. Nokia: A Strategic Review Nokia remains the dominant force in the cellular handset market, with a market share that has grown over the last 12 months despite a significant level of competition. This Research Brief outlines the key success factors that have helped Nokia to this position of strength. It also includes in-depth analysis of the current limitations the company faces in its quest to realize its vision and mission. An analysis of the global and regional market shares is also included. Mobile Handsets Market in India This Research Brief examines the market for mobile handsets in India. It highlights the rapid growth of the past three years, and presents five-year forecasts for the key handset-related benchmarks. It also provides information on the current challenges faced by handset vendors, their market-share, and their present as well as planned handset manufacturing activities in India. The other topics covered include a handset feature analysis, handset royalties and subsidization, and the second-hand and gray market for handsets in India. CDMA and GSM at 450MHz: Deployments and Opportunities CDMA, operating at 450MHz in spectrum vacated by analog systems, has now begun to flex its muscles. This is a market abandoned by GSM. Is GSM about to lose out on a lucrative growth opportunity? Is CDMA450 going to bridge the digital divide in developing countries? And is there a plot by China to use its huge financial resources to make investments the West is unable or unwilling to make? WiMAX Security Issues Fixed WiMAX offers enhanced security compared with early Wi-Fi products that were based on Wire Equivalent Protection (WEP). It does have some security flaws, though. Its vulnerabilities offer ample opportunities for vendors to fill these gaps with value-added features. Mobile WiMAX offers far stronger security than Fixed WiMAX, but there are still some significant security gaps. These security holes are found in each of the three parts of WiMAX’s architectural design: User Terminals, Access Service Networks, and Connectivity Service Networks. Vendors’ security enhancements are likely to take many different forms ranging from enhanced antenna designs to protection from interference, malware, and denial of service attacks. Back-end services will also need to be beefed up to handle the special loads imposed by roaming WiMAX users. Mobile Social Communities Mobile social communities are sites where mobile subscribers can communicate with groups of like-minded individuals. These sites are growing in importance as more users of PC-based social communities discover similar communities that they can reach via their mobile phones. Recognizing that there is a growing demand from consumers to access communities, many major online social networking sites are moving to mobile as well. Streaming Mobile Music Much of the attention given to mobile music is devoted to ringtones, ringbacks, and over-the-air full track music downloads. Another form of mobile music, streamed music, is steadily gaining attention in many markets around the world. Streaming music services let mobile subscribers choose the type of music they want to listen to, and give operators a steady monthly revenue stream. These services can also let subscribers purchase songs they hear, providing an additional source of revenue for service providers that offer this type of music subscription. Removable Memory in Handsets Cellular handset features and the services they support have evolved rapidly over the last two years to the extent that memory capacity is fast becoming a major consideration in handset design. Removable memory provides a cost-effective way to allow customized approaches to handset memory without requiring carriers to spend heavily on subsidizing phones with greater capacity. This Research Brief explores the market for cellular handsets with removable memory slots by SD, MMC and memory stick formats, and provides analysis of the major competing approaches to memory in mobile phones. NFC for Mobile Payments The use of NFC in cellular handsets for contactless payment schemes shows great potential from a customer and transaction provider perspective, but is fraught with huge potential drawbacks from a cellular carrier’s perspective. A major issue for carriers is that they are struggling to see where they can generate revenues sufficient to counteract the additional cost of incorporating NFC into handsets. A second major issue is that of control. Carriers like to control the whole cellular service ecosystem. Contactless payment revenues fall outside that value chain, and the secure element and application management of the transaction system needs to be controlled and implemented at security levels that are currently not familiar to cellular carriers, and are not supportable in current SIM designs. This situation brings carriers into direct conflict with banking organizations, both in terms of control over markets, and in terms of the relationship between the two types of company regarding revenue shares. Smart Antenna Systems Mobile operators are facing a demand for increasing bandwidth in their radio networks from the growth of high-speed data services, including video, on broadband wireless (3G, WLAN and WiMAX) networks. Smart antenna systems (SAS) will help operators to improve spectral efficiency, leading to a more robust business case. In-building coverage will also be much improved. Evolved EDGE Mobile operators have invested billions in GSM networks, many of which are already capable of supporting EDGE data speeds up to 200kbps. With a software upgrade and a new device for the user, these data rates can be boosted to speeds approaching 1 Mbps while rivaling the spectral efficiency of HSDPA, using Evolved EDGE, a new 3GPP standard. With close to 3 billion GSM users in the world, it seems a logical step to make this investment in order to increase ARPU and avoid a service discontinuity with HSDPA. Mobile WiMAX Equipment Vendors Mobile WiMAX (802.16e-2005) equipment will soon form the majority of WiMAX equipment shipments, since it can enable fixed, portable, and mobile services. 802.16-2004 equipment will still be used for more robust point-to-multipoint networks in the enterprise space, but 802.16e-2005 will be necessary to enable fixed access for consumers as well as services requiring mobility. This research brief examines some of the well-positioned WiMAX equipment vendors with an eye to their current and upcoming products, existing customers, differentiation, and other strengths. ABI Research considers the South Korean vendors, companies with very high profile customer wins, and other companies to watch out for. Additionally, the Taiwanese ODMs in this market are discussed, and their intentions are analyzed. Moblogging Moblogging is the posting of blog entries from a mobile phone. Currently most moblogs are image-based. Camera phone image quality may be a major factor in limiting moblogging and contributing to high abandonment rates among new mobloggers. Moblogging can contribute additional data revenue through heavy MMS use by mobloggers. Operators and handset vendors should work with popular moblogging web sites to encourage mobile subscribers to moblog. Low Cost CDMA Handsets The current plethora of legal proceedings, and threats from carriers such as Reliance and Vivo to switch to GSM, are a natural manifestation of market forces pressuring Qualcomm to redress the price differential between low-cost GSM terminals and CDMA terminals. Currently the assumption is that this price differential is primarily due to the royalties demanded by Qualcomm. However a comparative analysis of the bill of materials between GSM handsets and CDMA handset shows that this may not be the case. This Research Brief clearly outlines the major factors contributing to CDMA terminals’ higher cost. It also profiles the market for low-cost CDMA terminals. Mobile Search Services Mobile search is a relatively new way for mobile subscribers to access information about their mobile environment. It allows them to discover operator-supported mobile content, third party content and services, and other information. Mobile search is currently dominated by text messaging-based search, but browser-based search is becoming more common. The major Internet search companies such as Google, Yahoo! and Microsoft are actively supporting mobile search, as are many smaller, specialized companies. Specialized search based on user interface, local search, and other specific needs will become more common. Prosumer Mobile Handsets A prosumer is “a cellular subscriber who may have a portion of the cellular service paid by their employer, but purchases a device with their own money with a view to supporting better access to corporate data and email as well as lifestyle needs.” The prosumer market will need to develop in two stages as it moves from niche segment to mainstream status. Its initial focus must be on meeting basic requirements for corporate email access that incorporates high levels of security, interfaces with IT equipment and is handset-agnostic. The second stage, most fundamentally important to the long term development of this market, is the layering of high quality consumer and entertainment services into devices—capabilities such as 500-track MP3 players, mobile broadcast TV, contactless payments and Wi-Fi connectivity. This research brief profiles the size of the market, clearly defines the drivers and barriers to growth and provides some strategic recommendations as to how the handset ecosystem can move to ensure a successful transition through the stages outlined above. The AWS Spectrum Auction The Advanced Wireless Services auction in the United States is reaching its conclusion. The spectrum in question is intended for value-added multimedia voice and data wireless services. What has been the outcome of the exercise? This research brief compares the current auction to European auctions and previous auctions in the US, identifies the winners and losers, and highlights the consequences for the North American wireless market. Handset Market Booms in 1Q06 This market update delves deeply into three major aspects of handset market segmentation and provides considerable qualitative and quantitative analysis of current market trends and their likely impact on all players throughout the value chain. The first part of the update considers a new market segment based around usage orientation rather than functionality alone. It presents market forecasts for devices such as business phones, music phones, “lifestyle devices” and voice-centric handsets. The report also includes a detailed look at mobile email devices and how they fit into the wider concept of business enablement. The final focus is on ultra-low cost handsets. This is an incredibly important sector of the market to understand, as it is the major driver behind future subscriber and handset market growth. These analyses form part of an ongoing study program from ABI Research that tracks handset market fragmentation and adds valuable insight on likely segmentations and on the impacts that segmentation has upon handset vendors, silicon vendors and cellular operators alike. 2G/2.5G is Still Alive and Kicking 3G systems continue to race ahead and are grabbing much of the limelight today. Profound changes are also occurring in the 2G/2.5G worlds -- changes that have important implications for wireless infrastructure equipment. The highest growth areas for cellular services are in the developing world, which includes large swaths of Africa, Asia and Latin America. These regions can be generally be classified into two network scenarios: remote and sometimes inaccessible areas with low subscriber densities (also applies to some rural regions of the United States, Canada, Australia and Northern Europe), and urban centers that need capacity expansion. This Market Update brings earlier forecasts up to date; it assesses the 2G/2.5G sector’s approach to the market; and it examines fixed-mobile convergence as it applies to wireless infrastructure. Mobile RAN Optimization Mobile operators are facing increasing demand for bandwidth in their radio access networks as users take up high-speed data services on 3G networks. RAN optimization can allow the RAN to cope with this demand without a substantial increase in backhaul and transport costs. Handset Market Segmentation This market update delves into four major aspects of handset market segmentation and provides deep qualitative and quantitative analysis of current market trends and the likely impact of these developments on players throughout the value chain. The update starts with a comprehensive analysis of the slimphone and asks whether the slimphones of today are merely an expression of transient fashion trends, or are here to stay. It continues with analysis of TD-SCDMA handset readiness, the case for operator branded handsets, and new music phone implementations, their relative merits and chances of success. These analyses form part of an ongoing study program from ABI Research that tracks handset market fragmentation and adds valuable insight on likely segmentations and the impacts those segmentations have on handset vendors, silicon vendors and cellular operators alike. The Ever-Changing Face of 3G The Wireless Base Station Market Update provides information, in Adobe PDF format, about the most recent quarter’s developments in this field. It details major events that have occurred in the industry in the previous three months. It summarizes, in qualitative form, the changes that may have been made to our market forecasts, and explains the reasoning behind the altered estimates. Any new forecasts forming part of the associated Research Service are also explained. The Update also details recent news from leading companies in the sector, and when appropriate, explains new technological developments in the space. Base Station TAM and ASP Likely to Continue Their Decline Base station ASP is continuing to fall. This and other factors such as network build-out, air-interface mix changes, service provider focus on financial fundamentals, industry consolidation, new and aggressive infrastructure vendors and ARPU issues are all driving wireless infrastructure TAM downward. This review examines both direct and ancillary drivers via recent happenings in the base station marketplace which are affecting this important business segment. The Ongoing Quest for More Capable, Compact and Cost Effective Base Stations The base station market for the mobile wireless infrastructure has certainly not been the flashiest business during the last several years. Wireless terminals, multimedia and the roll out of 3G have captured most of the industry’s and the public’s mindshare. Nevertheless, a virtual revolution has occurred in the base station industry. The maturation of 3G and the increasing pressures on service providers have forced wireless infrastructure equipment vendors to adapt as well. Operators are now exercising much more discretion over how they spend their money. Huge Greenfield installations are a thing of the past except in a few select situations. Shareholders are demanding more return, and cost is driving everything in the food chain. If this were not constraining enough, new technologies are now passing into commercial use and the transition to these new standards needs to be made in an easily upgradeable fashion that minimizes time to operation, size and expense. The classic picture of forklifts and cranes moving equipment into large climate-controlled buildings has become an anachronism. Multiplayer Mobile Gaming Mobile gaming has become an extremely popular way for people to entertain themselves, with major game developers now focusing extensive resources on the mobile space. One area that is beginning to grow in importance is multiplayer mobile gaming, particularly in parts of the Asian Pacific region. Several barriers still limit the growth of multiplayer mobile gaming, particularly high latency and limited access to high bandwidth mobile data networks. These barriers are falling and over the next few years will not be major factors limiting the growth of this style of game play. In the near term mobile game developers should focus on casual turn-based games over action games, and should pay attention to developments in the Asian Pacific market, where multiplayer mobile gaming will see greatest growth. Wireless Connectivity Mobile World Congress Key Findings Home from the Mobile World Congress (MWC) 2008, a quartet of analysts from ABI Research reflect on their observations during a week of information blitz from major players in the market. A common thread among our analysts’ observations was that behind the glitzy exhibits and lurking below the hype were some interesting undercurrents. One of the real, if subtle themes of the show lies in past promises that are finally becoming reality. Mobile Linux headed that list, with femtocells not far behind. Location, which was found only in isolated products previously, has now become an integral part of the wireless ecosystem, adding an important element to wireless service offerings and data applications. Now, everyone has an LTE strategy. The divergence of mobile devices is sending ripples through the whole value chain. Mobile operators and other service providers are examining the transition to 4G and figuring out the accompanying expansion into new device types. Underlying this trend is an undercurrent of activity in the form of the platforms that are becoming available to support MIDs and mobile CE devices. In this Research Brief, we examine these themes as well as other trends from MWC 2008. Bluetooth Over 802.11 This Research Brief examines the opportunities for integrating short range wireless technologies Bluetooth and 802.11. It includes analysis of the market motivation and conditions that are required to justify technology integration, as well as a specific look at the cellular handset market criteria. At the core of the Research Brief is the evolution of high speed Bluetooth, from the initial software upgrade approach to the future hardware integration. Additionally, the impact of high speed Bluetooth on the Ultra Wideband, or UWB, market is discussed and analyzed. RFID Asset Tracking and Management Hotter Than Ever In contrast to the more widely publicized, retail supply-chain pallet, case, and item-level tracking initiatives, asset tracking and management is a veteran RFID application that is experiencing a resurgence. RFID tags and assets are not strangers, but today more than ever, RFID-based asset tracking and management solutions are helping companies in multiple industry sectors solve strategic business problems and lower operating costs. Historically the domain of active RFID technologies, the landscape of asset tracking and management is changing. Passive UHF alternatives now add to the scenery, offering viable, reliable, flexible, and cost-effective solutions. This Research Brief examines the increasing appetite of end-users for RFID-based asset tracking and management solutions, with an emphasis on passive UHF. The Brief offers two application use examples and insights as to end-user support for passive UHF asset management solutions, including RFID end-user survey results. Fixed Wireless Terminals This Research Brief examines the market for Fixed Wireless Terminals, also sometimes referred to as Wireless WAN Routers, segmenting this often ill-defined market, discussing the vendor landscape, and providing a five-year forecast segmented by application, air interface standard, and region. FWT devices used for traditional Wireless Local Loop (WLL) applications have traditionally comprised the largest share of this market, with the majority being used in the Asia-Pacific region. However, new market applications, such as Mobile and Temporary and Remote-Office-Branch-Office, are gaining traction in addition to WLL and Industrial applications. The growth of 3G network availability is a key factor behind the rise of these newer uses for FWT devices. The K-12 Wi-Fi Market Opportunity The top 100 school districts represent 20% of the total US K-12 Wi-Fi market and represent a good place for vendors to focus their energies. This research brief sizes this very lucrative market and also forecasts how rapidly the ratio of students to PCs will decline as well as the percentage of K-12 students who are Wi-Fi-enabled. It also describes the major drivers behind growth in the sale of Wi-Fi equipment to K-12 schools, as well as the obstacles to even more rapid growth. Several vendors are focusing significant resources on this market, so this report provides a SWOT analysis of several leading players, Cisco, Aruba, and Trapeze. PAN Technology in Gaming This research brief examines the opportunities for personal area technologies in the gaming console, aftermarket gaming controller, and handheld gaming device markets. The brief includes analysis of the applications, market drivers, and market barriers that are likely to affect the uptake of technologies such as Bluetooth, ULP Bluetooth, and proprietary solutions. Returnable Transport Items (RTI) Market Opportunity Assessment The potential for RFID RTI tagging is significant. There are around 1 billion RTI’s in use around the world in supply chains where they represent a simple but key element for supply chain operations on a daily basis. Shrinkage alone is a major driver of RFID RTI tagging, and asset management will be the foundation application for RTI tagging over the next few years. However, it is not the only application that deployed systems will be expected to deliver. Further out, as customers and supply chain partners are won over to the added value of supply chain visibilty possible with RFID, the same RTI tracking systems will provide a key platform for tracking shipments transported on tagged RTI's. Trials have taken place around the world and there are signs that over the next 12 months several large scale deployments will be underway. Retailers, postal operators, manufacturers and RTI pooling companies are increasingly confident that a UHF Gen 2-based system can deliver a stable platform. ABI Research believes that the next 12 months will see a strong rise in RTI tagging with a number of projects under consideration that could result in many millions of RTIs being RFID tagged in 2008. While UHF tagging will predominate whether tags are retrofitted or embedded within new RTIs remains an issue to be solved on a case-by-case basis. This research brief examines the drivers of and potential for RFID adoption in RTI tracking. It includes case study examples and discusses key considerations for potential project planning Mobile and Contactless Payments: End-User Survey Analysis This survey of U.S. mobile users reveals key NFC market drivers and users’ concerns regarding the potential of contactless mobile payments using NFC in mobile handsets. Through a series of structured questions and open-ended comments, respondents indicate readiness for NFC payments as well as their main concerns about its potential misuse and vulnerability. NFC protagonists and companies targeting mobile subscribers with NFC payment applications and services will benefit from the findings as they construct and develop their own NFC product rollout strategies. The survey was a structured online questionnaire, completed by 1005 respondents in the United States. Respondents were required to be current mobile phone users and to have Internet access in their homes. Only people aged 14 to 59 participated in the study. Respondents were grouped in five age and five income categories. On some topics, age and income demographics make a clear difference in the perception and desirability of mobile contactless payments. What emerges is a picture of NFC-enabled handset readiness that very much depends on consumers’ satisfaction that the technology meets key criteria and concerns before it will be widely used. As NFC continues to be largely restricted to trails, this report underscores some of the key issues that must be considered as NFC payment applications come to market, as well as providing direction and analysis of how best to meet consumers requirements. PAN Technologies in Medical/ Exercise and Wellbeing Applications This research brief examines the opportunities for personal area technologies in the wellbeing, health and sports and exercise markets. The brief includes analysis of the applications, drivers and barriers that are likely to affect the uptake of technologies such as Bluetooth, ULP Bluetooth, 2.4GHz proprietary solutions, and 5KHz proprietary solutions. RFID Item-Level Tagging in Fashion and Apparel Item-level tagging in the apparel market is an application already consuming 100 million tags a year in a single limited but industry-leading deployment. Marks & Spencer in the UK has successfully demonstrated a model for RFID use in the apparel space, but there have also been a number of well publicized trials in the United States, Japan and elsewhere. However, adoption within the industry remains extremely limited. Even some companies that have led with their own RFID pilots and have witnessed positive results have failed to move into adoption and rollout. The technology provides a platform for multiple applications but its prime benefit in the retail market is in providing a quick, automated, cost efficient and accurate way to track inventory through the supply chain and in the retail environment. These benefits are not the sole preserve of large stores or chains, because the issues that create poor inventory control are common across the retail market. Slow adoption has been blamed on the technology – either the cost, the lack of a common standard or both – but early trials and deployments have shown not only that a strong return on investment is possible, but also that closed loop applications require no standardized technology. This study explores the potential for both closed and open loop deployments of item level tagging in the fashion and apparel market. It also examines some of the issues that have held back adoption so far, and how they should be tackled. In addition, a number of leading trials and deployments from around the world are assessed. RFID and Contactless Payments in Japanese Consumer Markets This research brief discusses contactless and RFID applications in the Japanese consumer environment, and explores the implications of each. FeliCa is widely deployed in the transportation and payment fields in Japan. Japanese manufacturers and other users of FeliCa are now seeking new ways to offer this solution where it will have the most impact on consumers. In the RFID space, recent ‘future store’ projects sponsored by the Japanese government have delivered positive results. They promise to speed transactions and enhance the purchasing process with additional information, as well as helping merchants manage inventory and distribution effectively. Further, contactless and RFID systems allow enterprises to augment CRM strategies by improving inventory accuracy and potentially by storing customers’ historical data through FeliCa/POS connections with databases. This study explores the high level implications and lessons to be learned from these real Japanese case-studies. Video to the Car Video in the automobile is a subset of mobile video, with unique challenges. This Research Brief covers the similarities (delivery methods, content ecosystem) and the differences (automotive requirements, driver safety, RSE system popularity and users). Several technologies are in place that could deliver video to the car: cellular, digital terrestrial, satellite, Wi-Fi. Content is also available. The market ecosystem and consumer demand are unclear, however. As a result, automotive OEMs will be very slow to adopt mobile video. Wi-Fi Vertical Market Segmentation in the United States ABI Research’s model for assessing Wi-Fi in the US market makes it possible to examine vertical segmentation. Even though certain verticals such as healthcare and education show substantial penetration, the statistics also reveal enormous opportunity. The SMB market is actually far more complex than it might appear at first glance. Single-employee establishments obviously are not good candidates for Wi-Fi. Still, the sheer number of professional offices that have not yet seen Wi-Fi penetration presents an opportunity as well as a channel challenge. The ABI Research market model reveals that higher education and healthcare represent the best opportunities for early adoption of 802.11n products, and provides insight into which key sub-segments of these markets are likely to be the earliest adopters. PAN Technologies in Medical/ Exercise and Wellbeing Applications This research brief examines the opportunities for personal area technologies in the wellbeing, health and sports and exercise markets. The brief includes analysis of the applications, drivers and barriers that are likely to affect the uptake of technologies such as Bluetooth, ULP Bluetooth, 2.4GHz proprietary solutions, and 5KHz proprietary solutions. Contactless Government Identification Documents Contactless-enabled documents such as e-Passports and eID cards are seeing significant adoption around the world, driven by the US mandate to Visa Waiver countries as well as by the increased security and functionality of documents carrying biometric data that can be checked. About 50 countries are now delivering or testing e-Passports, but the real market potential lies in the ability of contactless to bring multi-applications to national ID schemes. However, despite global standards for data storage, data exchange and RF interface for HF contactless systems, some rival technologies are still being considered for applications better suited to contactless technology. This study examines the current status of the e-Passport and eID markets as well as examining the projects where rival technologies such as UHF RFID or 2D barcodes are being considered. Bridging the Wireless Sensor Networking Divide This Brief analyzes three turnkey wireless sensor networking system vendors: Dust Networks, Millennial Net, and Sensicast Systems. These vendors are compared on the basis of application focus, go-to-market strategy, and networking technology. In addition, an overall discussion of the WSN market is provided, with an emphasis on the differences between the (currently) proprietary protocols of the turnkey WSN vendors, and ZigBee. Wi-Fi in the Healthcare Vertical Market There are a number of key applications driving Wi-Fi equipment into the healthcare vertical in the United States. These applications tend to center around greater efficiency, cost savings, or improved customer relations. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) has created a demand for Wi-Fi equipment that meets its security requirements. The unique mobility demands of the hospital environment have made it an early adopter of voice over Wi-Fi. ABI Research believes there are 276,000 healthcare establishments within the United States that still do not have Wi-Fi networks. While a majority of these establishments have fewer than 100 employees, there are several sweet spots that WLAN equipment vendors should target. Aruba Networks: A Strategic Assessment Aruba Networks is in the process of going public. This Research Brief provides an assessment of the company’s major strengths as well as the challenges it faces if it wants to become the clear alternative to Cisco in the wireless LAN equipment market. It evaluates Aruba Networks’ progress in attacking specific verticals such as retail and healthcare, as well as its success in plugging security gaps where standards do not yet exist. Finally,the research examines some major obstacles the company faces, including some key channel and technology issues. Going Beyond Public Wi-Fi in the Hospitality Industry Wi-Fi in public areas is now common in the hospitality industry. The real key to success for Wi-Fi vendors is how well they can penetrate other areas such as guest rooms, and also how well they can become part of the back office networks. Convergence has been a major driver, as has gaming and a desire for increased customer satisfaction. While hotels have led the hospitality charge, restaurants have been slower to follow, due in part to a lack of consensus as to which business model works best. Wi-Fi Tackles the Financial Vertical The financial vertical has long been a Wi-Fi laggard due to pressing security concerns. The passage of IEEE 802.11i and its widespread adoption has eased some of these concerns, and the result is a growing market. The branch office is the source of most of this growth, fueled by customer demand and the need for guest access. Brokerage houses have been early adopters. With only around a third of financial establishments penetrated by Wi-Fi, this market segment has tremendous potential for Wi-Fi equipment vendors. Unlicensed Mobile Access (UMA) Despite the impending market for consumer SIP-based VCC solutions and cellular femtocells, the market for fixed-mobile convergence services based on UMA is moving forward quickly. This Research Brief considers the major vendors in the UMA ecosystem and tracks the way UMA is working its way into new products, including cellular femtocells. Several major mobile operators’ UMA rollouts are discussed, and the report includes charts of UMA-based cellular/Wi-Fi subscribers and handsets. Forecasting Wi-Fi’s Future Growth This Research Brief examines the key verticals that now drive the majority of enterprise Wi-Fi revenue, and describes the key applications that are starting to drive more horizontal Wi-Fi adoption. It forecasts Wi-Fi growth by type including chips, enterprise, consumer, and hotspot markets. Equally important, the Brief forecasts global Wi-Fi revenue growth for the digital home. There are a couple of key pitfalls that must be avoided for Wi-Fi to reach its full potential, and this Brief discusses what must be done to achieve maximum growth. Finally, it factors in the potential growth of the new IEEE 802.11n draft products. Contactless Payments in South Korea In this market update, ABI Research examines recent activity in South Korean contactless payment markets, particularly focusing on strategic issues, major players, and forecasting. Starting in 2006, Visa Wave and MasterCard PayPass began competing in the South Korean market. Starting in February, 2007, South Korean card companies can directly issue credit cards over the air. ABI Research believes that this signals the start of a period of growth for the South Korean contactless market. This Research Brief is designed to provide readers with a high-level understanding of how the South Korean contactless market is evolving. It offers a level of detail and segmentation across environment and applications that makes it useful for focused or advanced contactless payment research, planning, and development efforts. The report includes market forecasts for shipments and revenue by transponders, readers, and environment from 2006 to 2012. Other highlights include analyses of the current market landscape, transponder and reader adoption, merchants’ and issuers’ activities, mobile operators’ strategic approach for USIM (Universal Subscriber Identity Module) for payment devices, contactless credit cards on the mobile phone, market drivers. It also profiles leading South Korean market players and their competitiveness. Contactless Payments in Japan In this market update, ABI Research examines recent activity in Japanese contactless payment markets, particularly focusing on strategic issues, major players, and forecasting. Compared with other regions, Japan has seen the fastest deployment of contactless transponders and readers. One key reason is its commitment built around FeliCa development and affluent merchants. The Japanese contactless market has been evolving quickly, with competitive market conditions and new market entrants. This Research Brief is designed to provide readers with a high level understanding of how the Japanese contactless market is evolving. It offers a level of detail and segmentation across environment and applications that makes it useful for focused or advanced contactless payment research, planning, and development efforts. The report includes market forecasts for shipments and revenue by transponders, readers, and environment from 2006 to 2012. Other highlights include analyses of the current market landscape, The ‘Four Giant’ contactless schemes – iD, Suica, QUICPay, and Edy – and the Common Reader Program which debuted in January, 2007. It profiles of new entrants, especially Pasmo and Nanaco, and evaluates market players’ strategic approaches to developing the Japanese micro-payment market. Finally, it highlights the lessons to be learned from market drivers, discusses Sony’s and bitWallet’s strategies, and more. RFID in South Korea This Research Brief examines recent RFID market activity in South Korea, particularly focusing on strategic issues and market dynamics. As of November 2006, 97 RFID projects have been deployed in logistics, retail, publishing and libraries, supply chain management, and government and defense sectors. With deployment experience in government RFID projects and newly developed items such as metal mount-on-metal and liquid tags, South Korean vendors are seeking business relationships in China and with leading multi-national RFID players such as Texas Instruments. Along with strategic movement towards HF reader-enabled mobile phones for consumer-oriented applications, they have been strengthening the passive UHF segment with an eye to finding opportunities in global market in the near future. The study presents a detailed market matrix of over 30 vendors by frequency and product portfolio. It contains market forecasts of shipments and revenue by frequency, vertical markets, and applications from 2006 to 2012. Other highlights include ABI Research’s analyses of customized tag markets in South Korea, the “MobiOn” strategic approach to mobile RFID, Samsung’s and LG group’s efforts for a Ubiquitous Sensor Network, and the participation of global players, including Alien, Avery Dennison, Impinj, and Thingmagic in the South Korean market. RFID in Japan This Research Brief examines recent RFID market activity in Japan, particularly focusing on strategic issues and market dynamics. To date, manufacturing applications dominate RFID’s adoption in Japan, not at the corporate level, but in particular segments and processes. With diverse manufacturing solutions, Japanese RFID applications have also been widely adopted in smartcard and FeliCa-based solution such as access, transportation, and contactless payment. By introducing UHF spectrum in the Japanese market in early 2006, vendors have accelerated the development the segment. But given the narrower 6MHz bandwidth and interference issues, ABI Research believes that near-term passive UHF technical barriers will be high, resulting in an increased focus on standards and technology performance optimization. The research presents a market matrix and market forecasts of shipments and revenue by frequency, vertical markets, and applications from 2006 to 2012. Other highlights include analyses of the Hibiki project for 5-cent tag realization, Japan’s strategy for new standards through cooperation with other Asian countries, reader-enabled RFID applications from KDDI and Hitachi, and diverse application and adoption case studies. The Pending Ratification of ISO 18185 For all practical purposes, the ISO 18185 e-seal standard is virtually complete, within weeks of being available as a useful tool for solution developers and end users. ISO 18185 is an application standard for electronic container seals developed by Technical Committee ISO/TC 104, Freight containers, Subcommittee SC 4, Identification and communication. The looming ratification of ISO 181815 represents a major step forward for the industry toward the realization of the value of event-driven RFID data and full capitalization on that value. This will be an important market driver. This Research Brief defines and outlines the ISO 18185 standard and discusses its impact on the e-seal market. ABI Research also highlights key drivers for e-seal adoption in the Brief, including the availability of lower-cost tags, the need to address vulnerable supply chains, and the importance of mandates. RFID in India ABI Research believes the potential for RFID in India is very significant; but challenges remain. Among the core market challenges are pricing, limited awareness, standards, and the lack of “compliance as a driver.” Admittedly, these challenges are similar to those found in any maturing technology market and are familiar to RFID on a global scale. The level of activity today indicates that end users are testing, evaluating, and deploying RFID to varying degrees across a broad set of applications, including supply chain management, library management, animal identification, asset management (using both active and passive), access control, and others. While we do not expect RFID adoption to happen at a breakneck pace over the short term, the mid-to-long-term opportunity cannot be ignored. We believe the Indian marketplace is a ripening opportunity. However, the Indian market requires nurturing (via strong market and solution development) during these formative years in order to blossom fully. Contactless Transportation Ticketing Systems in China In 2007, there will be 58 million transponders for transportation payment issued in the Chinese market. Due to the strong support of the government and the requirements of the e-ticketing systems, contactless transponders and readers have been widely deployed in China. This report assesses the development status of contactless transportation ticketing systems in local regions, discusses the market drivers and opportunities, profiles local transponder and reader providers, and presents contactless transportation payment forecasts for shipments, revenue, and total values. The Transition from FeliCa to Near Field Communication (NFC) in Japan FeliCa-based capabilities in transit, coupon and ticketing, credit, and prepaid accounts may be seen as precursors that demonstrate NFC’s potential demand in Japan and around the world. The recent introduction of Sony's FeliCa 2.0 chip and services has pushed the FeliCa-based offering closer to NFC functionality. This Brief is designed to provide readers with a high level understanding of how FeliCa and applications in Japan are evolving. The research also examines recent FeliCa developments around FeliCa 2.0 chipset, and applications with new features. Other highlights include ABI Research’s analyses of the current market landscape, advanced applications such as ‘Touch Message’ by KDDI, Sony’s efforts in consumer electronics by using ‘FeliCa Port’, the concept and requirements for future-oriented contactless payment systems in Japan, and the outlook for FeliCa and NFC evolution. Wireless Sensor Networking System Software The Wireless Sensor Networking (WSN) market is growing rapidly in a number of commercial and industrial application segments. However, the RF engineering embedded programming requirements of developing a WSN application are still daunting for many OEMs. WSN system software vendors provide a software framework including middleware, embedded node software, application development and operational management platform, to ease the burden on OEMs developing WSNs. This research brief examines this market segment, including market conditions, drivers, and challenges, and profiles five key vendors: Arch Rock, Atalum, Crossbow Technology, MeshNetics, and Tendril. Wi-Fi Hotspot Voice Service Wi-Fi hotspot operators and mobile operators are beginning to offer voice service; demand will soon increase due to the proliferation of Wi-Fi and dual mode phones. There are major challenges as well as major revenue opportunities for the group of vendors that constitute the Wi-Fi food chain: handset manufacturers, hotspot operators, mobile operators, and Wi-Fi equipment manufacturers. What Will It Take to Kick-Start Draft 802.11n Sales? It’s no secret that sales of draft IEEE 802.11n products have been below both manufacturers’ and retailers’ expectations. There are many reasons for this. This Research Brief examines the dilemma the two groups have created by some very careless market messaging. It also explores the price differential between 802.11g and 802.11n in terms of what it will take for customers to understand the value proposition of 802.11n products. The research also considers the challenges draft 802.11n products face in the commercial marketplace, in both SMB and large enterprise market segments. Finally, it discusses some of the concerns resellers have with the selling of draft “n” products, as well as the most likely time frames for large enterprises to adopt 802.11n products. Wi-Fi in the Retail Vertical There are a number of key applications driving Wi-Fi equipment into the retail vertical in the United States. These applications tend to center around greater efficiency, increased sales, or increased security. Traditional back office applications such as inventory management are now joined by such exciting approaches as dressing room assistants, line busting, mobile POS, and security surveillance. The PCI DSS security specification requirements are also driving adoption of Wi-Fi equipment. There are 578,000 retail establishments in the United States that still do not have Wi-Fi networks. While a majority of these establishments have fewer than 100 employees, there are several sweet spots that WLAN equipment vendors should target. This Research Brief describes the major forces driving Wi-Fi networks in the retail vertical. It sizes this market and provides a demographic break-down of its major sweet spots for vendors as well as those market segments that will require targeted applications. Wireless PAN Technologies in PC and Mobile HID (Human Interface Devices) HID such as mice, keyboards and remote controls play an important role in providing a good user experience for both personal computers and mobile devices. Wireless HID provide an intuitive way to add value and convenience to the user experience. This Research Brief profiles market trends affecting the uptake of wireless HID in both mobile and computing environments. It addresses issues including the market mix of 27MHz and 2.4GHz products, the impact of standardized products such as Bluetooth and Wibree, and rich navigation scenarios stemming from Media Center and Vista uptake. Wireless Connectivity IC Integration As connectivity ICs become more common in devices and start to develop as de-facto features, OEMs are increasingly applying pressure to their silicon vendor partners in order to bring about savings in price, power and space. This Research Brief provides a detailed insight into how silicon vendors can leverage their positions to provide integrated IC products that capitalize on the trend to further IC integration. It presents qualitative analysis of the motivation to create integrated products, and evaluations of various integrated IC combinations. This qualitative analysis is complemented by a forecast for 10 different combination IC types. Contactless Payments in Europe Europe has until now remained a barren market for open contactless payment systems. But with the first contactless open payment system in Europe set to roll out in the UK next year, European companies in the transaction value chain will have to address the alignment of their services with emerging contactless capabilities. EMVCo – the company charged with maintaining and developing the single, global EMV implementation standard – is at least a year away from publishing an EMV Contactless specification, and certified products will not be ready until 2008 at the earliest. However, the leading card associations including VISA, MasterCard and JCB have developed their own EMV with contactless specifications, and card and terminal manufacturers have recently unveiled a range of matching equipment. This Research Brief assesses the position of contactless EMV in the context of the European payment environment, reports on early trials, and forecasts contactless banking equipment shipments and revenue by region to 2011. Advanced Metering Infrastructure (AMI) This Research Brief provides an overview of the market opportunity for advanced metering technology in utility electric, gas, and water distribution infrastructure. It specifically focuses on the role that cellular M2M and ZigBee can have in AMI deployments. While the Brief focuses on the North American market, European and Asia-Pacific markets are also discussed. Three key vendor profiles are provided. Wibree: Wireless PAN Sensors Wibree, developed by Nokia, is the first step towards bringing standardization to the largely proprietary wireless personal area network sensor market. The technology will neither compete with Zigbee nor replace Bluetooth, but will extend the reach of Bluetooth into low power and low cost applications. This Research Brief charts the progress of Wibree into sports, medical, entertainment and office markets. It clearly outlines the TAM for the technology along with the major barriers it faces. NFC for Mobile Payments The use of NFC in cellular handsets for contactless payment schemes shows great potential from a customer and transaction provider perspective, but is fraught with huge potential drawbacks from a cellular carrier’s perspective. A major issue for carriers is that they are struggling to see where they can generate revenues sufficient to counteract the additional cost of incorporating NFC into handsets. A second major issue is that of control. Carriers like to control the whole cellular service ecosystem. Contactless payment revenues fall outside that value chain, and the secure element and application management of the transaction system needs to be controlled and implemented at security levels that are currently not familiar to cellular carriers, and are not supportable in current SIM designs. This situation brings carriers into direct conflict with banking organizations, both in terms of control over markets, and in terms of the relationship between the two types of company regarding revenue shares. Extending the Reach of Cellular M2M The term “Machine-to-Machine (M2M)” refers to a broad array of wired and wireless technologies and applications typically used to interconnect machines and other non-computing devices. Wireless Sensor Networking (WSN) comprises one key sub-set of M2M, utilizing such short-range wireless (SRW) technologies as ZigBee and Wi-Fi to enable M2M connectivity over a limited, localized area. Cellular M2M is another important M2M segment, albeit utilizing technologies such as GSM and CDMA to provide M2M connectivity over wide area distances. Increasingly, ABI Research is seeing a confluence of these two M2M technology segments. Specifically, SRW WSN technologies are being used to extend cellular M2M connectivity “deeper” into a localized area, in a more efficient and cost-effective manner than would otherwise be possible if every locally-connected node contained its own cellular M2M modem. In this scenario, one local node contains a cellular M2M modem and acts as a gateway to other local nodes via SRW technologies. Not all cellular M2M applications benefit from the addition of local SRW connectivity. ABI Research believes that telematics, automation and control, metering, and security are the applications most likely to benefit from bundling with SRW technologies to extend the wide area connection to other, local nodes. On the other hand, telemedicine, information displays and wireless local loop, vending, and ATM-POS are applications that do not require the wide area cellular M2M connection to be extended to adjacent local nodes. Consequently, we expect very little traction for SRW technologies in conjunction with these cellular M2M applications. Focus on RFID Software In this Market Update, ABI Research provides a look at recent market activity, particularly in the realm of RFID software. As RFID pilot programs move into new phases of deployment, vendor and user attention is shifting toward software and infrastructure. With recent technology performance improvement, end users’ requirements for more mature software platforms to manage business processes and integrate into enterprise applications are sharply increasing. As a result, vendors are responding with new offerings and approaches. On-demand solutions and services are being developed and released by a host of players specializing in RFID traceability, ERP, SCE, WMS, data analytic, and plug-and-play infrastructure solutions. This Update focuses on new software packages and solutions from vendors such as AC Nielsen, Microsoft, Navis, SAP, Supplyscape, T3Ci, and TR3, including analysis of their potential impact on the RFID market. ABI Research also discusses the emergence and importance of RFID partner ecosystems and their ability to deliver end-to-end, complete RFID solutions within the supply chain and beyond. Other highlights of this Update include ABI Research’s analyses of the Intermec-Alien patent infringement lawsuit and the European Union’s creation of, and roughly $14 million investment in, the BRIDGE project which includes a mix of 31 vendors and users within Europe. Voice Over Wi-Fi’s Dirty Little Secret: With the adoption of a tough security standard for wireless LANs (IEEE 802.11i) and the recent adoption of a standard for quality of service (QoS), it is easy to assume that Voice over Wi-Fi is now ready for prime time. It’s not. There are still gaps in standards-based security and reliability specifications that are large enough to drive a truck through. The dirty little secret is that currently the only way for customers to build a secure and reliable VoWi-Fi network is to use proprietary extensions and, in some cases, add-on products from third party vendors. For early adopters, the trade-off of being locked into a proprietary solution with a single vendor is worthwhile. VoWi-Fi equipment manufacturers need to address several issues to help this market take off: ZigBee for Lighting Markets Rising energy costs have made ZigBee an economical option to deploy on a retrofit basis, which will significantly increase its adoption rate. The true value of ZigBee lighting control systems becomes apparent only when they are integrated with wider building automation systems as well as with external sensor networks such as meter reading systems that are owned by other parties. This need to integrate with multiple sensor networks across different equipment systems and environments is a major driver for the adoption of ZigBee over other proprietary technologies. Unlike the commercial sector, where energy costs and financial considerations will drive the uptake of ZigBee in lighting, the residential sector will initially be driven by “lifestyle enhancement” scenarios that assist entertainment systems and relate to mood. These systems will initially be implemented in high value homes, integrated into wide home automation systems. Initial “Draft 11n” Wi-Fi Products Off to a Shaky Start This Market Update examines the recent introduction of equipment by both Meru and Xirrus to make the LAN distribution network wireless. It also analyzes the recent introduction of “Draft N” equipment based on EWC-compliant Wi-Fi semiconductors. Despite the interoperability rationale espoused at the founding of the EWC consortium, the initial equipment coming to market based on EWC technology has not fared well in independent tests and reviews. Finally, the update examines how MIMO technology is being introduced to the market. Bluetooth, UWB, NFC, ZigBee and Wi-Fi The majority of market research reports and services tend to view technology markets in isolation. Short range wireless connectivity technologies can no longer be treated in this way, because the uptake and proliferation of one has a radical impact upon the others. This Market Update provides a holistic view of the connectivity ecosystem and the complex dynamics affecting the markets. This highly original service includes comprehensive market data for Bluetooth, UWB, NFC, Wi-Fi and Zigbee. The update profiles hot news, end-equipment market saturation and dollar values, and provides a comprehensive picture of the equipment sectors and market verticals where multiple connectivity standards are likely to proliferate. It takes an in-depth look at connectivity IC integration and embedding, and provides significant qualitative analysis on market drivers, the choices vendors need to make, and opportunities for silicon vendors. Unit shipment volumes are analyzed in terms of the type of equipment being shipped, the inherent connectivity enablement and the user group purchasing the equipment. The section also details major usage scenarios driving growth today and those that are forecast to do so in the future. The user segments covered are Business/Prosumer, High Income/High Need Consumers, Enhanced Need Consumers, Teens and Basic Need Consumers. Ease of Use: the Consumer Wi-Fi Security Challenge This market update examines the efforts of Wi-Fi semiconductor and equipment vendors to make it easier for consumers to enable the security features that exist on their equipment. From a technology standpoint, current equipment is quite secure; however, the complexity of enabling these security features means that many home Wi-Fi networks are still left open to unauthorized access. This update also examines the resurgence in activity in Wi-Fi-enabled consumer electronics equipment markets. EWC Impacting 802.11n Developments This market update analyzes the Enhanced Wireless Consortium’s impact on Wi-Fi semiconductors and the IEEE standardization process. It also examines the ratification of 802.16e for QoS and how it affects the Wi-Fi market. It concludes with an assessment of the market for Wi-Fi embedded in consumer electronics. IEEE Finally Gets an 802.11n Draft Standard A draft version 1.0 of the proposed Wi-Fi 802.11n standard was formally adopted for consideration on 19 January 2006 at the IEEE’s bimonthly meeting. The draft must still pass multiple votes before becoming a ratified standard. But the adoption of the draft effectively assures that an IEEE 802.11n standard will be ratified, most likely in the first quarter of 2007. This Market Update analyzes the process the draft standard has undergone to date and identifies likely future developments in this process and their impact on key players in the market (such as members of the Enhanced Wireless Consortium, and Airgo). In addition, it discusses market opportunities for MIMO and 802.11n, which is expected to provide over 100 Mbps of throughput and roughly four times the range of 802.11b/g. The Update contains quantitative market forecasts through 2010. 802.11n Standards Efforts Make Progress The Wi-Fi Market Update provides information, in Adobe PDF format, about the most recent quarter’s developments in this field. It details major events that have occurred in the industry in the previous three months. It summarizes, in qualitative form, the changes that may have been made to our market forecasts, and explains the reasoning behind the altered estimates. Any new forecasts forming part of the associated Research Service are also explained. The Update also details recent news from leading companies in