Firstly let me clarify that the reduction of 55% was specifically for 2009. Also we do see 2010 being smaller (~2 million+) than what was previously expected, some of which is based on what we have seen in 2009. Operators are committed to deploying femtocells but seem to be doing it at their own pace. I have explained the reasons in the press release, although things are likely to improve not get worse.
Interestingly, we have also seen a number of femtocell market announcements in the past few weeks. Lets look at each one of them closely
1. NTTDoCoMo announces its femtocell service in Japan: Its being offered at an attractive price, as low as $5/month without any additional fee. They are also the first operator to offer a femtozone service with child presence notification. However on the negative side, a truck roll installation is needed. Although there could be a regulatory angle, this could also be because DoCoMo want to be in control and help educate the customer similar to what Starhub does in Singapore.
2. SFR in France have announced their femtocell service launch: Second femto rollout in Europe after Vodafone UK. Slick advertising on the SFR website. However, yet another example of an operator focusing on the most basic value proposition voice. Why not market data services? Also the cost of the femto is close to $300 which is not good for mass consumer uptake.
3. Ubiquisys announce wide area femtocell: We had spoken about this at the beginning of this year in our super femtocell report. Femtocells are not limited to the indoors, but will see outdoor deployments too. However the deployment numbers will be much smaller than consumer femtos. Again Japan most likely the first market for these.
4. Airvana announce high-capacity enterprise UMTS femtocell: Possibly only femto in market to support 16 to 24 users. Can do handovers also without breaking Iuh, although most of this is proprietary. On the whole the enterprise market should kick-start in 2010. There is already activity in North America and Europe which points towards rollouts next year. However we still need features like soft PBX to really drive this market. Also, there is increasing competition in this space from the likes of SpiderCloud (E-RAN), MobileAccess (Encover VE) and RFS (ClearFill Star) that can provide DAS like coverage (3G over Ethernet) without the high costs. Very promising technologies, and something the femtocell vendors need to worry about.
5. Ip.access, Airvana and Ubiquisys join hands in a femtozone application demo: Its good to see the femto market coming together in making femto applications possible across different vendors. Hopefully this soon converts into some standards-based activity to really kick-start a femto application market place. 2010 is likely to see a few other operators launch femtozone applications, but we expect it to be on a small scale.
6. picoChip gets $20 million financing from VCs and is planning an IPO in 2011: picoChip is undoubtedly one of the dominant chipset vendors in the femtocell space. Like many of the OEMs that it supplies chipsets to, it has bet its future on femtocells for the most part. The fact that their investors believe in them, which includes hard-nosed VCs, especially during a difficult financial environment, says a lot about where the market is headed. picoChip is also now supplying a complete solution for its vendors with the likes of Continuous Computing. This is good news for the less sophisticated, newer entrants like many of the Far East white label manufacturers who will be able to take advantage of the reduced time to market.
7. Samsung has finally come out with a 3G EVDO femtocell, two years after it launched its 1xRTT femtocell currently in operation with Sprint and Verizon. I would have expected a much more compact device for their second generation femto, also cheaper too. Samsung is slightly late in the EVDO game, and Airvana has beaten them in securing Sprints next 3G rollout.
2010 should be an interesting year with a lot that we can look forward to, but at the same time there will be teething issues. We expect the second wave of femtocell rollouts to start kicking in with the mobile data value proposition becoming a key driver. However, not all operators will kick into higher gear at the same time. There are suggestions that the cost is likely to drop below $100, however we dont expect all vendors to reach that cost point. Also the first set of IOT tests are likely to happen in March, although there is some doubt about how many of the large vendors will participate.
The important thing to remember is that the femto market is just beginning to take shape. We need to be patient and allow the technology and market to mature.