Mobile Industry Winners and Losers, 2010

Consolidation among network vendors, greater demand for mobile broadband, and North America's revenge are among Bengt Nordström's 2010 forecasts

By Bengt Nordstrom

We enter 2010. Older, certainly. Wiser? Well, maybe. Much has happened this past year to change the face of the mobile industry. Mobile broadband has cemented itself as the route to global connectivity. Online Service Providers (OSPs) such as Skype, Facebook, and Apple's iTunes store (AAPL) have emerged as the key challengers to mobile operators in applications and services. Now we are giving birth to yet another new generation mobile technology, christened LTE for "Long Term Evolution." What labor pains will we suffer this time around?

Continuing consolidation of the infrastructure vendor community points to the disappearance of further well-known industry brands in the coming years. By contrast, today's mobile carriers look likely to survive, although some will find tougher going than others.

The industry watchers at Northstream have made predictions on what the year ahead holds for the mobile world. Let's consider them.

For broadband, the short version is that LTE (the fourth-generation mobile network successor to 3G) is good and HSPA (a high-speed data upgrade to 3G) is great. LTE will indeed be commercially launched in 2010 and it will be surprisingly good, considering that it is new technology. As with all new mobile technologies, confidence about the future will rise once systems are stable, coverage is built out, and a choice of devices is widely available. Our biggest concern for LTE is the shortage of spectrum in lower-frequency bands.

Kindle: A vertically inspired winner

The real blockbuster in 2010 will be HSPA, or High-Speed Packet Access. We know for sure that it adds top-line growth for mobile operators, though we wonder about margins, particularly in the light of the "iPhone impact," by which carriers transport much more data at typically flat rates. The competition in the HSPA chipset-and-device market is fierce, so look for crashing prices. HSPA connections will exhibit hockey-stick growth, globally reaching 400 million in the next 12 months. The epicenter will be Unicom (CHU) in China, already the biggest HSPA network in the world. Any and all device players need to be there.

Devices are another growth story for 2010. The success of connected devices is exemplified by the rapid growth of the Amazon (AMZN) Kindle e-reader in the U.S. The Kindle was developed by a vertical player for its own market, in this case content retailing. This increases the likelihood of success since the retailer is closer to customers and understands their needs better than traditional operators or handset makers do.

We are seeing the enormous impact of ubiquitous mobile broadband networks on a global scale. In the not-too-distant future, anything that can be connected will be connected. Networks are ready and operators have started to understand that this market requires a new business model. By the end of the next decade, mobile broadband will be far greater—not in revenues but in number of connections—than the traditional handset market.

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