FROST & SULLIVAN/ Modem markets characterised by
increasing speed and functionality
[[...many customers will choose to move directly
to the high speed technologies, gradually pushing ISDN out
of the market. ]]
August 4, 1998
M2 PRESSWIRE via NewsEdge Corporation : The European
Market for PC Modems -- Report 3293
Modems have quickly become the second best-selling PC
peripheral device after printers. The popularity of the
Internet has driven this growth and new solutions for
connecting telecommuters and other branch offices to
central LAN sites are further catalysing demand.
According to a new study by Frost & Sullivan, the
international marketing consulting company, the applications
for which modems are used are requiring increased
bandwidth. It seems that analogue modem technology has
hit its speed limit, and consequently the market will begin to
shift to higher speed digital technologies such as ISDN,
cable and ADSL.
Frost & Sullivan's study expects the total modem market to
display continued growth throughout the forecast period,
with revenues rising from US$1.29 billion in 1997 to US$2.20
billion by the year 2004. "The shift to the new high speed
technologies will begin slowly, but with standards being set
and the telecommunications market becoming increasingly
open, these technologies will make up a significant share of
the total market. At the end of the forecast period, we expect
four in every ten modems sold to be either cable or ADSL
technology," adds Jan ten Sythoff, Industry Analyst at Frost
& Sullivan.
The major factors impacting the national modem markets in
Europe include the degree of PC penetration, degree of
telecommunications deregulation and the policies of the local
telecoms operator, cable TV penetration and overall standard
of living and economic growth. There are still significant
local competitors in many markets with substantial shares of
their home markets.
Price pressure is expected to remain significant throughout
the forecast period -- not only will manufacturers have to
plan a strategy for the new digital technologies, but cost
reduction will also be an important factor, particularly as the
cable and telecommunications operators are under strong
cost pressures.
Also, product differentiation is difficult as the chipsets used
are all very similar, and standards specifications must be
adhered to.
Mr ten Sythoff comments: "The continuing shift to
combination cards offering integrated mobile solutions and
steady growth in the mobile PC market are expected to push
sales of PCMCIA modems. Higher speed GSM data
communication and integrating LAN and ISDN connectivity
are set to rise in popularity."
Frost & Sullivan's study observes a district trend towards
bundling. An increasing number of mobile PCs will be sold
with a PCMCIA modem of some kind. This has been
highlighted by the recent deal between Dell and Psion
Dacom. Competition is still relatively fragmented with local
manufacturers dominating their home markets. Also, the
trend to combination cards has drawn more companies into
the marketplace. Frost & Sullivan's study therefore expects
significant consolidation in the industry in coming years.
ISDN is presently enjoying significant growth as
telecommunications operators are intensifying efforts of
promoting the technology, and whilst remote access demand
increases and the availability of external USB devices
become more widespread. The market for ISDN modems is
expected to decline in the later years of the forecast period
because of strengthening competition from the high speed
technologies. Many customers will choose to move directly
to the high speed technologies, gradually pushing ISDN out
of the market.
Following a year of sluggish growth due to the delays in the
V.90 standard, the analogue market is expected to pick up in
1998, with shipments set to increase in 1999. Analogue
modems still provide the easiest and lowest cost method of
Internet access. However, strong competition is forcing
prices down, and many companies have been hard hit,
resulting in significant changes in the competitive
environment.
The approval of the new DOCSIS standard is paving the way
for the development of the cable modem markets. The first
commercial shipments are expected to begin in 1998. In the
following year, Frost & Sullivan's study expects shipments
to reach 320,200, a small proportion of the 35 million or so
households who subscribe to cable.
Competition is expected to quickly become fierce and prices
will fall accordingly. Alcatel and Hayes look well positioned
to take advantage of this strong growth, but many other
manufacturers are also developing products for this market.
Frost & Sullivan's study concludes: "Virtually all desktop
modem manufacturers are looking at how to penetrate the
new, high speed markets. The huge potential of the market is
attracting many new entrants and competition will be
intense."
Frost & Sullivan is an international marketing consulting
company that monitors a comprehensive spectrum of
high-tech markets, including the Information Technology
industry for market trends, market measurements and
strategies. This ongoing research is utilised to complement a
series of research publications such as the forthcoming title
on European ISDN Markets (3647) to support industry
participants with customised consulting needs. Free
executive summaries of all Frost & Sullivan reports are
available to the press.
Report Code: 3293 -- Publication Date: August 1998 --
Price: US$3,950
<<M2 PRESSWIRE -- 08/03/98>>
CONTACT: Frost & Sullivan Public Relations Department
Tel: +44 (0)171 915 7824
Fax: +44 (0)171 730 3343
e-mail: kristina.menzfricke@fs-europe.com
WWW: frost.com
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