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46m internet dongles ship in 2009

Mobile router Mi-Fi market set to rise

Shipments of cellular modems (commonly known as dongles), which provide direct Internet connectivity to laptops and other portable devices, are forecast to exceed 46 million this year.

According to new market data released by ABI Research there are four developments to watch:

  • The USB modem form factor is rapidly eclipsing the PC card format in popularity
  • Embedded modems will, over time, replace both those peripheral forms
  • This maturing market is led by two giant Chinese vendors
  • A new product category, the "mobile router," may eventually change this market's course of development

"In the past two years, USB modems have quickly eclipsed PC cards. 82 percent of all modem types are now USB," says senior analyst Jeff Orr.

"Their popularity is due to their simplicity - they resemble flash drives - and flexibility: they can be used on a wide variety of devices. The same conditions please the vendors as well."

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While only high-end computers currently offer built-in modems, over time they will be included in less expensive models.

"When world economies improve," says Orr, "there will be more devices with embedded connectivity. Embedded module shipments are forecast to exceed USB modem shipments by early 2013."

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Exiting 2008, the cellular module market had a distinctly Chinese flavour: Huawei accounted for 45 percent of all units shipped, while rival ZTE had captured a further 21 percent market share.

The degree of consolidation on the USB form means economies of scale, and we are reaching a stage at which price becomes more important than availability.

A new product class has recently debuted: the "mobile router," which provides online access via cellular connection and distributes it among nearby Wi-Fi-enabled devices. Orr characterizes these devices (best exemplified by Novatel's recently introduced "Mi-Fi" product) as "so far more hype than end users," but notes that they could, if widely adopted, slow the penetration rate of embedded modems.

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