E-Reader Sales Grow Connected Devices Opportunity

A new report by analyst firm Juniper Research forecasts that e-reader shipments will reach 67 million by 2016, nearly triple the 25 million devices the company expects to reach the market in 2011.

While this is less than half the 55.2 million tablets that will be shipped this year, the price of the market-leading Kindle has fallen significantly (from $349 to $79) since it was launched, and electronic ink technology will ensure that the device continues to carve out a niche for itself in the wireless device ecosystem. eReader Shipments to Reach 67 million by 2016

Separately, Machina Research predicts wireless wide-area connected tablets and e-readers will grow from 66 million in 2011 to 230 million in 2020. Mobile service providers gain two ways from e-reader usage. There is the business-to-business revenue contributed by the e-reader partners, who use mobile networks to deliver content to the readers. 


There also is end user revenue supplied by connected devices. If half of the 2020 devices are e-readers, and just 15 percent of e-readers actually are mobile broadband connected, that is 17.25 million incremental broadband accounts in service. If, by 2020, half of the e-readers are capable of network connections, and are used as part of "family"-style mobile data plans that represent incremental revenue, then as many as 57.5 million new broadband accounts could be in service. 

Such trends are directly important for mobile service providers as many of those devices are equipped to work on mobile networks, and therefore represent a new class of devices that can be converted into new and incremental mobile broadband accounts. Greater use of Wi-Fi-only devices has relevance for fixed-network broadband providers to the extent that use of such devices increases the value of a fixed broadband connection.

Mobile Data Revenue Drivers Continue to Change

Most mobile service providers in developed markets have moved past the point where text messaging revenue is the primary “data service” augmenting declining voice revenues. That was not the case in the late 1990s or most of the first decade of the 21st century. These days it is mobile data plans for smart phones that have taken that role. Messaging drove revenue in mid-2000s

Mobile data revenue trends

In 2007, for example,  more than $28 billion was generated by mobile short message service (SMS), multimedia message service (MMS), and instant messaging (IM) services

between Western Europe and the United States alone. 

If email is also included, more

than half of all mobile data revenue in these regions was derived from messaging. It was true that mobile messaging was the foundation of most data strategies.

These days, it is smart phone data plans, augmented by data services for other connected devices, which is more strategic. Worldwide mobile connections will reach 5.6 billion in 2011, up 11 percent from five billion connections in 2010, according to Gartner. 


Mobile data services revenue will total $314.7 billion in 2011, a 22.5 percent increase from 2010 revenue of $257 billion. “Mobile data traffic will increase significantly as more people will have access to mobile data networks, there is a migration toward smart phones and an increase in sales of media tablets,” said Jessica Ekholm, principal research analyst at Gartner. 

Early in 2011, for example, Vodafone Group hit a milestone. Vodafone's latest quarter data revenue exceeded messaging revenue for the first time. 

Mobile data forecast

Vodafone's emphasis on sales of smart phones and associated data plans seems to have been the driver. Mobile data tops SMS

Right behind that strategy is expected revenue from connected devices that will include sensor applications of various types. Connected device revenue forecast

Machina Research, for example, estimates that connected devices will grow from nine billion in 2011 to 24 billion in 2020. The lion’s share of the growth will come from machine-to-machine connections, which will grow from two billion at the end of 2011 to 12 billion at the end of 2020.

That doesn’t directly translate into mobile service connections, though. The majority of those devices are expected to be connected using  Wi-Fi, which really is an untethered use of a fixed broadband connection. Machina Research expects 2.3 billion of those device connections will use the mobile network in 2020, accounting for 19 percent of all cellular connections.

That implies M2M revenue will grow to EUR714 billion ($979 billion) in 2020.

PC and laptop mobile broadband will grow dramatically, from 215 million connections at the end of 2011 to 1.5 billion in 2020. By 2020 most PC/laptop broadband connections globally will be mobile, the firm suggests.

Wireless wide-area connected tablets and e-readers will grow from 66 million in 2011 to 230 million in 2020, as well.

Growth in handset data users will also be significant, with 3G+ devices set to grow from two billion at the end of 2011 to nine billion by 2020.

Machina Research forecasts that global mobile data traffic will increase from four

exabytes in 2011 to 42 exabytes in 2020, with 60 percent coming from PC/laptop connections and 37 percent from handsets.

Machina Research expects mobile network  operator data revenue to grow from EUR130 billion ($178 billion) in 2011 to almost EUR500 billion ($685 billion) in 2020.

The basic evolution is from data revenues based on text and email services to mobile data plans to support smart phones, to be followed by connected devices. Initially, connected devices will be tablets and similar devices such as e-readers, but sensor applications will grow over the longer term.

Connected Device Market Potential Dwarfs Phones

Aside from notebook PCs, many Americans now own portable or mobile devices that already are capable of mobile communications, or increasingly will be capable of mobile communications.

According to Nielsen, the typical owner of any one of these devices actually also owns three to five additional devices within these categories.

That means a large potential base of mobile and portable devices that will be candidates for Wi-Fi and mobile broadband services in the future, in numbers that dwarf the installed base of "phones."

What remains to be developed are pricing plans that account for ownership and use of multiple devices, most of which are designed for content consumption or entertainment more than communications. Broadband plans that allow a user to connect multiple devices at various times, at prices deemed reasonable, will be a huge opportunity, going forward.

So far, most consumers have shown only modest interest in $60 a month plans that connect PCs, though mobile service providers now are experimenting with demand for $15 to $45 a month plans for tablet devices and smartphones.

Those are steps in the right direction, but what ultimately will be needed are the equivalent of family plans for data devices, where the "family" might be a single user or household wanting to use multiple devices on a single access account.