| 3G or Not 3G?: Actually, the title that Merrill Lynch strategist Steve Milunovich opted for was: "We Don't Need No Stinkin' 3G Data Rates". In an interesting report that Merrill issued this morning, Milunovich makes a persuasive case against 3G. The premise of the argument is that there aren't any applications that will drive demand for 3G. Instead, most of the portable applications that are likely to gain popular acceptance in the coming few years will be better suited to wireless LAN applications than to 3G mobile applications. The mobile versus portable distinction is key to Milunovich's argument -- that the killer apps of the non-desktop world will not generally need to be mobile, but instead will be portable. Mobile indicates that the user is actually in motion, typically with a cellphone. Portable indicates that the user is taking his PDA or laptop on the move, but is stationary when using the device. The applications most suited to mobile will be based on voice, audio, and short-text, all of which do not require higher bandwidth. Video applications requiring higher bandwidth will most likely be suited to portable but not to mobile, where the eyes are typically/hopefully focussed on the user's movement (ie, the road, the sidewalk) rather than the cellphone or PDA. If you buy this assumption, then Milunovich's conclusions are tough to dispute. The future of the wireless LAN has been given a boost by the IEEE 802.11b wireless LAN standard, which is allowing for interoperability between competing vendors' wireless systems. The key is that the money to be made by service providers from portable applications will primarily be made in a few select locations. Already, Wayport is focussing on wireless LANs in airports and Starbucks (SBUX) has joined Microsoft (MSFT) to offer wireless LANs in its coffee shops. It will be much easier and cheaper for service providers to offer wireless LANs in these locations where the vast majority of portable service will be demanded as opposed to offering omnipresent mobile service which will be in less demand and will be far more expensive to implement. This conclusion seems very sound to us. For those who disagree and believe in 3G, the question they must answer is this -- what is the killer app that will require mobile as opposed to portable high bandwidth? Because if the portable market for high bandwidth does dwarf the mobile market, wireless LAN offers a more sensible and faster solution than 3G. - Greg Jones, Briefing.com |
