The technology adoption of some new communications innovations have increased exponentially in recent years. The following graph shows that while it took around 75 years to the fixed line to reach 50 million customers, it took only 12 years to the mobile phone, 5 years to the iPod, 4 years to the e-mail and only 3 years to the Skype’s VoIP software. It can be explained by the fact that several communications networks are already in place and new innovations can leverage existing infrastructure. Another reason is the fact that communications consumers are more “technology educated” than before. The fastest growing tech firm at the convergence of social networks, and mobile commerce is Groupon, which has reached 2 billion in revenue in two years of existence and the key mark of 50 million subscribers.

Source: debitel

A recent report by In-Stat indicates that smartphones are becoming the "standard" in mobile devices. Particularly the demand for advanced mobile handsets that contain significant processing power, robust memory, large screens and open operating systems will drive the sales of mobile manufacturers.

Their forecast is that unit shipments of smartphones will be nearly 850 million by 2015. Among the critical factors for the smartphone success, there are powerful browsers, a wide variety of apps, easy to navigate user interface, and a good keyboard or touchscreen. Furthermore, other intangible attributes, such as being "fashion object" and that "your friends or relatives have one" are also important.

In-Stat also predicts that the majority of U.S. handset shipments will be smartphones by 2012 while Android would maintain its momentum and will continue to be the leading OS. In-Stat suggests that by 2015, over two-thirds of smartphones will still be WCDMA-based, with LTE smartphones representing only a small minority of annual handset shipments, even in four years.

What other communications devices will reach the fastest 50 million users?

Tablets represent a challenger with the penetration in the business sector. According to Gartner, nearly 20 million tablets have been sold in 2010, and around 54.8 million will be in 2011 and it should reach 208 million in 2014. In addition to Apple iPads, tablets include those based on Android, RIM, WebOS and other such operating systems. It appears that Apple iPads and other tablets are cannibalizing e-readers, gaming devices, and mini-notebooks.

“Mini notebooks will suffer from the strongest cannibalization threat as media tablet average selling prices drop below $300 over the next 2 years,” says Carolina Milanesi, research vice president at Gartner. Gartner suggests that the North American market will account for 61% of the total market this year but that the percentage will fall to 43% in 2014 as tablets become more widely available across the world. More than half of tablets sold in 2010 supported WiFi.

It appears that Android tablets are gaining interesting market shares over iPad in the last quarter. They gained 22% of the Q4-2010 market. The iPad had 95% and decreased to 75%. Galaxy, Samsung’s tablet with Android is the main contender for the iPad. Strategy Analytics forecast that Apple’s iPad will decrease below 50% market share in the next 2 years.

Growth opportunities

· Firms which should heavily benefits from the growth of tablets are:

o online publishers (the ones who will bet on e-Books growth and sell directly to the public: i.e. Amazon)

o devices manufacturers (Apple, Samsung, RIM)

o technology suppliers (Tech SMEs, Publishing Technology plc [PTO.L])

Google just bought eBook Technologies 3 weeks ago. It provides an end-to-end electronic book platform offering a full range of eBook products and services. It includes electronic reading devices, an online bookstore where readers can buy eBooks, an online "bookshelf" that lets users store their purchased content, and software that converts content to the company's eBook format.

· Some experts suggest that new entrants in the tablet market should appear such as Amazon. If it is the case, Amazon would enjoy growth again as an online publisher and manufacturer, which it is already doing with the Kindle.

Louis Rhéaume
Infocom Intelligence
louis@infocomintelligence.com