Multidevice Data Rate Plans Will Disrupt the U.S. Mobile Services Market
As the number of devices with cellular modems increases, consumers and small businesses in the U.S. will demand matching multidevice data rate plans, according to Gartner, Inc. Multidevice rate plans will be a key driving factor in the expansion of U.S. data revenue from $81.4 billion in 2011 to $151.9 billion in 2016.
"Data rate plan uptake in the U.S has grown dramatically in the past seven years due to the runaway success of the smartphone market and has become a key revenue source for U.S.-based communications service providers (CSPs)," said Hugues de la Vergne, principal research analyst at Gartner. "Historically, CSPs have strictly been focused on individual data plans. Now the U.S. data plan market is set to begin its first real transformation, with data plans poised to evolve from plans tied to an individual device to plans that share a specified amount of data between multiple devices."
CSPs should adopt these multidevice plans to take advantage of the dramatic expansion of cellular connectivity that connected consumer electronics (CE) devices offer, or they will find themselves at a considerable competitive disadvantage compared with other CSPs.
Connected CE devices are devices, such as media tablets and mobile PCs, that have embedded or removable cellular modems to access the CSP's cellular network.
"With personal cloud services moving to the forefront in 2012, cellular connectivity will be more important, as end users will want to be able to access their content at all times as opposed to just when they are in Wi-Fi areas," Mr. de la Vergne said.
Lowering churn is one of the most critical metrics for a CSP. By having multiple devices with different replacement cycles tied to a CSP's network, the end user is less likely to churn away from that CSP as opposed to a subscriber with just a mobile phone.
Device producers should embed cellular connectivity into more CE devices to obtain higher margins, or try to obtain CSP subsidies and use seamless integration between devices as a competitive differentiator. The launch of multidevice data plans by CSPs will be a key cause of the increase in sales of cellular-enabled devices, including smartphones, which Gartner estimates will reach 311.7 million units in 2016. Device vendors, which have had a growing threat of commoditization, need to continue to innovate to avoid the high level of competition that has engulfed the market.
"Although billing system customization will be expensive and CSPs' current data revenue streams could decline, the risks of not offering multidevice plans, and therefore being at a competitive disadvantage, are too great," Mr. de la Vergne said. "Data revenue is expected to expand to become 65 percent of total U.S. wireless service revenue as voice declines to 35 percent in 2106. Driving the explosion of mobile data will be the increase in demand for mobile video content, which will drive sales of larger-screen devices, such as media tablets."
Additional information is provided in the Gartner report "Multidevice Data Rate Plans Will Disrupt the U.S Mobile Services Market." The report is available on Gartner's website at http://www.gartner.com/resId=2000717.
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 8,300 associates, including more than 1,800 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.