Watch for a Marked Acceleration of Gigabit Home Broadband Subscriptions in 2021

When will gigabit home broadband hit an inflection point? Probably in 2021. The inflection point is important, as it has in the past been the point at which slow or low adoption of a product accelerates, growing at a faster clip. 

Gigabit home broadband, on the other hand, might be nearing an inflection point. Important consumer technologies tend to hit an inflection point at about 10 percent adoption. And Openvault data suggests gigabit home broadband reached 8.5 percent adoption at the end of 2020. 

That means gigabit accounts will hit 10 percent of the home broadband installed base in 2021. And if the pattern holds, that means the adoption rate will shift to a higher gear, growing much more rapidly than we have seen over the last five to 10 years.

The reason 10 percent seems to be the trigger, one might argue,  is that it is the point where early adopters have become customers and users, setting the stage for behavior to extend to the majority of consumers. 

source: Engineering.com 

When will U.S. 5G hit a subscriber inflection point? Not this year.

In January 2021, 5G coverage reached 75 percent of potential U.S. users, albeit mostly using low-band spectrum, so performance improvement is slight. Coverage refers to availability, not subscriptions or usage. By July 2021, 80 percent  of the U.S. population is expected to have 5G coverage, says PwC. 

PwC forecasts that 12 percent of mobile devices in use by U.S. customers in July 2021 will be 5G enabled. That might or might not mean all those devices are used on the 5G network, however. 

Possibly for that reason, PwC suggests the 5G inflection point for adoption will happen later, in 2023.

One can see an example in cell phone adoption by U.S. households. About 1994, household adoption reached 10 percent or so, after a longer period of slow adoption. An analogous pattern happened with smartphone adoption as well. 

 

source: Our World in Data 

The adoption pattern perhaps is easier to visualize with a longer time frame. Here is a chart showing cell phone adoption in the United Kingdom.

source: Our World in Data

A wide range of physical products have shown the same pattern. Automobile adoption shows adoption accelerating once the 10-percent threshold was hit. 

source: Our World in Data

Most Consumer Devices More Like iPods than PCs

Parks Associates says more than 60 percent of U.S. tablet owners use the device weekly to listen to music. That is just one more bit of evidence that tablets are "content consumption" devices.


In fact, both consumer and business content consumption patterns appear to be changing as tablet and e-reader ownership grow fast. In fact, one might argue that tablets and e-readers are being adopted faster than any other consumer electronics or communications products of all time.

The share of adults in the United States who own a tablet of some sort nearly doubled from 10 percent to 19 percent between mid-December 2011 and early January 2012. That’s a doubling of mass market adoption in just 30 days, from a significant base.

The ownership of e-readers also surged from 10 percent to 19 percent over the same time period. Tablet ownership doubled in two months

That is an unprecedented growth rate for any consumer electronics device. Tablet ownership also had been on a strong adoption path earlier in 2011 as well, but doubling in 30 days from a base of 10 percent seems never to have occurred before.

And it appears that strong adoption is occurring both in the consumer and business markets.
Fully 51 percent of IT decision-makers surveyed by IDG say they “always” use their iPad at work (and a further 40 percent say they sometimes use it at work), IDG reports after conducting a survey on tablet use for work. Tablet business use

Though iPads seem to be used for a variety of purposes, content consumption seems to be a dominant business application, though significant percentages of business users also say the tablet displaces some amount of smart phone use as well.

Web browsing, reading and news consumption are the top three usage contexts identified by professionals worldwide.

Whether tablet ownership “revives” the print newspaper and magazine market remains to be seen. But it already is pretty clear that tablets and e-readers are changing the function of “reading.”

The survey suggests that tablet computing is transforming patterns of content consumption. iPad-owning IT and business professionals are rapidly migrating away from newspapers and printed books, toward digital alternatives.

Nearly three quarters of iPad owners say that owning an iPad has reduced the frequency with which they purchase newspapers and books. Whether that helps or harms print content providers remains to be seen.

What is very clear, though, is that tablets and e-readers are being adopted faster than any other personal device, period.Historically, 10 percent adoption historically has been an inflection point: it is the point in an adoption process that represents critical mass, after which adoption accelerates.

You’ll have to click on this chart to view it in more detail, but it is one of the most useful bits of historical evidence you can use to estimate how long it might take an application, service or device to reach 10 percent penetration of U.S. households, for example.

There are some caveats. Not every innovation succeeds. This chart only shows you what happened with the most-popular consumer electronics services and products.

The point is that it can take quite a significant amount of time, between three and 10 years, for a successful and mass-adopted innovation to reach the crucial 10-percent-of-homes threshold, which seems to be the point at which any innovation really begins to accelerate, in terms of adoption.  Consumer adoption patterns

Tablets not only reached that level in a couple of years, they then exploded, doubling from 10 percent to nearly 20 percent, in literally 30 days. That is unheard of.

Also, it appears that Amazon might be winning its bet that if it sold Amazon Kindles almost at cost, it could grow content sales substantially.

RBC Capital analyst Ross Sandler polled 216 Kindle Fire owners and concluded that Kindle Fire tablets are making Amazon more money than was originally expected. Sandler originally had estimated that each Kindle Fire unit would generate about $136 in content purchases over the useful life of the device.Content purchases on Kindle Fire

But Sandler’s most-recent survey of 216 Kindle Fire owners suggests content revenue might be higher than that.

The survey found that roughly 80 percent of users already have purchased ebooks, with 58 percent of respondents buying more than three e-books within the first two months of owning the tablet.

Averaged out, that’s five e-books per quarter, which nets Amazon $15 per Fire owner per quarter, assuming an average selling price of $10 for ebooks. That further implies revenue from e-books of about $60 a year.

About 41 percent of Fire owners also say they have bought at least three apps. This will put another $9 per Fire owner per quarter into Amazon’s coffers, or $36 a year of net revenue (after splitting gross revenue with content owners).

That implies possible gross sales of about $30 a quarter worth of apps, assuming Amazon’s share of revenue is 30 percent.

Those figures suggest annual Kindle Fire revenue of about $96 a year. Over three years, that suggests $288 of revenue for Amazon, even if users do not buy any video or audio products, which seems unlikely.

Cloud Computing Inflection Point?

If the predictions of a new Vanson Bourne study prove accurate, enterprise use of cloud computing in the United States, Canada, United Kingdom, Germany, Japan, Hong Kong and Singapore already has passed an important adoption inflection point, and is entering a phase of rapid majority enterprise adoption.

In fact, though 65 percent of surveyed organizations now use on-premises, owned and operated computing facilities, the study suggests we are but two years away from a situation where where cloud and in-house approaches briefly are equal, followed just three years later by dominance of cloud computing.

Also, the study suggests enterprises will outsource nearly 70 percent of their information technology  infrastructure by 2018, almost a complete reversal of the present practice, where about 65 percent of enterprises operate using internal and owned facilities, according to a new study by CenturyLink-owned Savvis.

That rate of adoption might strike some as implausible, suggesting that the Savvis-sponsored study includes a disproportionate share of early adopters. But the findings will make more sense if public cloud adoption is considered.

The study suggests adoption of public cloud approaches in fact has not yet hit the 10-percent threshold, even if private cloud, colocation and managed services already have passed the inflection point, using the 10-percent standard. 

That would be a major shift in virtually any industry, and will happen in just five short years, the study suggests. At the end of that period, enterprises in the studied countries will have shifted largely to use of outsourced cloud facilities as the dominant model, where today most operate internal facilities.

In fact, the study found that just five percent of enterprise respondents surveyed today depend on the outsourced cloud for the bulk of their IT resources. The shift to an outsourced, cloud-based model will represent the majority of organizations within about three years, the study suggests.

In 2009, about 60 percent of respondents said cloud would be a priority for their organizations at some point in the future, but 71 percent said it wasn’t near the top of their current list.

In 2010, 63 percent of organizations had started to use a cloud solution of some kind. By 2012 85 percent of respondents had some cloud apps in use.

In 2013, 89 percent of survey respondents reported that they are using at least some cloud apps. That suggests the next wave of growth will come from organizations that start to use cloud for additional apps that are more crucial.

Most organizations will use hybrid approaches to colocation and managed-service models, the study also suggests.

"The next five years will bring a dramatic shift in the way organizations approach IT," said Jeff Von Deylen, president, Savvis. "Clearly, cloud is part of the picture but it's not the whole picture. As businesses grow and move more IT infrastructure to outsourcing providers, they will adopt a strategic mix of colocation, managed-hosting and cloud services."

That is a classic case of non-linear adoption of a new technology, once an inflection point is reached.

But some might view the projection as unusually aggressive.

Most successful consumer technologies, for example, do experience a more-rapid adoption curve after the point where 10 percent of households have adopted. Cloud computing, if the new survey is characteristic of all enterprises in the studied countries, passed that threshold sometime before 2010.

After the 10-percent adoption threshold, the adoption rate dramatically accelerates.

But that is the issue. Does the sample survey represent all similar enterprises in the markets studied? And does the adoption of cloud technology represent the use of on-premises data centers, use of full cloud apps, volume of usage across all apps or volume across the mission-critical apps? There is much room for interpretation on that score.

Other forecasts are significantly less robust, at least measured as a percentage of total IT spending.

Savvis commissioned research firm Vanson Bourne to conduct the survey of  550 IT decision 

makers in the finance, media and entertainment, retail, healthcare, software and automotive industries.

Respondents generally report they have been outsourcing applications that are not mission critical. Up next are data-center facilities, storage and content-management applications, the study said.

Though in-house IT infrastructure models are most common today, colocation becomes the environment of choice in two years, managed services take the lead in five years and cloud eclipses all forms shortly thereafter, the study suggests.

As you would expect, while the top benefit of IT outsourcing remains "cost reduction or containment," said to be important by 42 percent of respondents, "improved quality of service" and "infrastructure scalability and flexibility" also rank high on the list of advantages, with each indicated "important" by more than 35 percent of survey respondents.

Nearly 90 percent of respondents say they use some type of cloud service today, with more than half doing so for storage and email applications. Slightly less than half of IT leaders employ cloud for intranet, website and microsite applications.

Tablets are Changing Content Consumption Habits

Consumer and business content consumption patterns appear to be changing as tablet and e-reader ownership grow super fast. In fact, one might argue that tablets and e-readers are being adopted faster than any other consumer electronics or communications products of all time.

The share of adults in the United States who own a tablet of some sort nearly doubled from 10 percent to 19 percent between mid-December 2011 and early January 2012. That’s a doubling of mass market adoption in just 30 days, from a significant base.

The ownership of e-readers also surged from 10 percent to 19 percent over the same time period. Tablet ownership doubled in two months

That is an unprecedented growth rate for any consumer electronics device. Tablet ownership also had been on a strong adoption path earlier in 2011 as well, but doubling in 30 days from a base of 10 percent seems never to have occurred before.

And it appears that strong adoption is occurring both in the consumer and business markets.
Fully 51 percent of IT decision-makers surveyed by IDG say they “always” use their iPad at work (and a further 40 percent say they sometimes use it at work), IDG reports after conducting a survey on tablet use for work. Tablet business use

Though iPads seem to be used for a variety of purposes, content consumption seems to be a dominant business application, though significant percentages of business users also say the tablet displaces some amount of smart phone use as well.

Web browsing, reading and news consumption are the top three usage contexts identified by professionals worldwide.

Whether tablet ownership “revives” the print newspaper and magazine market remains to be seen. But it already is pretty clear that tablets and e-readers are changing the function of “reading.”

The survey suggests that tablet computing is transforming patterns of content consumption. iPad-owning IT and business professionals are rapidly migrating away from newspapers and printed books, toward digital alternatives.

Nearly three quarters of iPad owners say that owning an iPad has reduced the frequency with which they purchase newspapers and books. Whether that helps or harms print content providers remains to be seen.

What is very clear, though, is that tablets and e-readers are being adopted faster than any other personal device, period.Historically, 10 percent adoption of a consumer product has been an inflection point: it is the point in an adoption process that represents critical mass, after which adoption accelerates.There are some caveats. Not every innovation succeeds. This chart only shows you what happened with the most-popular consumer electronics services and products.

The point is that it can take quite a significant amount of time, between three and 10 years, for a successful and mass-adopted innovation to reach the crucial 10-percent-of-homes threshold, which seems to be the point at which any innovation really begins to accelerate, in terms of adoption.Tablets not only reached that level in a couple of years, they then exploded, doubling from 10 percent to nearly 20 percent, in literally 30 days. That is unheard of.

Also, it appears that Amazon might be winning its bet that if it sold Amazon Kindles almost at cost, it could grow content sales substantially.

RBC Capital analyst Ross Sandler polled 216 Kindle Fire owners and concluded that Kindle Fire tablets are making Amazon more money than was originally expected. Sandler originally had estimated that each Kindle Fire unit would generate about $136 in content purchases over the useful life of the device. Content purchases on Kindle Fire

But Sandler’s most-recent survey of 216 Kindle Fire owners suggests content revenue might be higher than that.

The survey found that roughly 80 percent of users already have purchased ebooks, with 58 percent of respondents buying more than three e-books within the first two months of owning the tablet.

Averaged out, that’s five e-books per quarter, which nets Amazon $15 per Fire owner per quarter, assuming an average selling price of $10 for ebooks. That further implies revenue from e-books of about $60 a year.

About 41 percent of Fire owners also say they have bought at least three apps. This will put another $9 per Fire owner per quarter into Amazon’s coffers, or $36 a year of net revenue (after splitting gross revenue with content owners).

That implies possible gross sales of about $30 a quarter worth of apps, assuming Amazon’s share of revenue is 30 percent.

Those figures suggest annual Kindle Fire revenue of about $96 a year. Over three years, that suggests $288 of revenue for Amazon, even if users do not buy any video or audio products, which seems unlikely.

"Fast Follower" Strategy Might Not Work in Video Streaming Business

As a rule, major transitions in technology and revenue models are slower to develop than most predict.

In other words, the amount of change tends to be overestimated in the near term, and underestimated in the long term.

That has direct implications for would-be suppliers. Overestimating near term demand means some firms will enter too early, and fail before the opportunity can be realized.

Others simply will over-invest in promotion, before conceivable sales justify that level of investment.

Other potential constants will wait too long to enter the market, and fail to gain a foothold at all.

In fact, some common business strategies, such as the “fast follower” model, will fail, in part because brand-new markets, after an inflection point, are created so fast that there is no time to use that strategy.

In fact, that illustrates the tension between the “first to market” and “fast follower” strategies overall. The “first to market” principle suggests that firms entering a new market need to move quickly, so they are in position to dominate the new market.

Others argue that, generally speaking, a “fast follower” strategy works better, and that the benefits of being a first mover are over-rated.

That might not be true for every market, and almost certainly will not be the case for over the top video. The reason is that big new markets often develop so quickly, once an inflection point is reached, that contestants not already in the market do not have time to get in.

So maybe, somewhere between “first mover” and “fast follower” is a position that might be termed “early mover,” where a contestant perhaps is not first, but is early into a developing market, without waiting for the market to develop to the point where a “fast follower” strategy works.

The other issue is what qualifies as “fast.” Some firms, especially those facing disruption of their core legacy businesses, simply wait too long to respond, and might be called “lagging followers.”

Others who might say they are “fast followers” wait until they are fairly certain a sizable market exists before jumping in. That can make them “faster, but not fast enough” contestants, if the market goes from a small number of early adopters to mass market too quickly.  

Such decisions are tough because inflection points, where adoption of any new product dramatically increases, are tough to spot, in advance.

In the consumer electronics industry, the inflection point often occurs when the innovation is adopted by about 10 percent of homes. As slow as adoption might have been before the inflection point, adoption often is quite rapid after the inflection point.

Seven years after the iPhone was launched, 70 percent of the US population is using smartphones.

Smartphones existed before the iPhone so the category is older than seven years but as far as adoption goes this is nearly the fastest ever.

The CD Player reached 55 percent adoption in seven years and the Boom Box about 62 percent. If measuring the period between nine percent penetration and 90 percent, Asymco estimates a nine-year period between smartphone inflection point and saturation.

So if market saturation is reached in nine years, one might reason that a firm has to be ready to scale up in the first years of a new market where global distribution and manufacturing are required.

The reason is simply that the market will be saturated in just nine years. Any firm that requires four years to build a global capability will already have missed half the potential market before it is ready to compete fully.

More to the point, it took only six years for smartphone penetration to grow from 10 percent to 70 percent in the U.S. market.

Even competitors already in the smartphone market were not assured of success. “Late” in this case was tantamount to “never.”

Something like that could happen in the over the top video streaming market. Consider the effort, time and money Netflix is spending to build a more-global capability, as much as it dominates the U.S. market.

Netflix, which operates in about 40 countries, has to spend money to add local programming in many of those countries, and local content really does not scale. And Netflix points out that 80 percent of the potential market lies outside the United States.

Whether you consider Netflix a first mover or a fast follower, it is in the market at a point where the broader inflection point--a shift of most major channels to over the top delivery--has not yet occurred.  

The larger point is that the inflection point is approaching. Would-be leaders in the video streaming market essentially need to be in the market, or get into the market soon, to ensure they are in position once the inflection point is reached.

The National Basketball Association and ESPN are planning a new online video service that would stream regular season games, apparently on an over the top basis, without requiring purchase of a linear video subscription.

The contract rights for such a move have been approved by the NBA, which means we might eventually see a direct-to-consumer NBA package similar in revenue model to

HBO's over the top streaming service and the CBS All Access over the top streaming service.

Starz likewise is launching an over the top video streaming service for Asia, Africa, the Middle East and Latin America.

It seems only a matter of time before other channels and networks also decide it is time to launch their own OTT services as well.

You might wonder why the inflection point, and which firms are in the market when that happens, matters.

The “fast follower” strategy might not to work.

In brand-new markets, adoption grows so quickly after the inflection point that there simply is not time for a new contestant to gear up to meet the demand.

If a firm has not already positioned in the new market space, it often takes too long to respond to the new market’s sudden emergence.

And that means market leadership goes to one or more firms that already have invested in the new space, and are poised to scale up operations quickly once a mass market develops.

Once the inflection point is reached, contestants might have only six to nine years before most of the market is taken by one of the suppliers.

Tablet, E-Reader Ownership Doubles in One Month: Unprecedented

The share of adults in the United States who own a tablet of some sort nearly doubled from 10 percent to 19 percent between mid-December 2011 and early January 2012.

The ownership of e-readers also surged from 10 percent to 19 percent over the same time period. Tablet ownership doubled in two months

That is an unprecedented growth rate for any consumer electronics device. Tablet ownership also had been on a strong adoption path earlier in 2011 as well, but doubling in 30 days from a base of 10 percent seems never to have occurred before.

To be sure, 10 percent adoption historically has been an inflection point: it is the point in an adoption process that represents critical mass, after which adoption accelerates.

You'll have to click on this chart to view it in more detail, but it is one of the most useful bits of historical evidence you can use to estimate how long it might take an application, service or device to reach 10 percent penetration of U.S. households, for example.

There are some caveats. Not every innovation succeeds. This chart only shows you what happened with the most-popular consumer electronics services and products.

The reason for sharing the chart is that a panel I was recently on was asked how long it might take for near field communications technology to be adopted by a significant number of U.S. consumers.

My response, based on past work studying consumer electronics adoption rates, was that it can take quite a significant amount of time, between three and 10 years, to reach the crucial 10-percent-of-homes threshold, which seems to be the point at which any innovation really begins to accelerate, in terms of adoption.  Consumer adoption patterns

Also, the more complicated the ecosystem, the longer it will take. Apple iPhones and iPads did not take long to reach the 10-percent penetration mark, because they operate in a fully-developed ecosystem where all that is required is purchase of a product, to obtain the value.

5G Adoption Seeingly Follows Old Consumer Electronics Adoption Pattern

5G seems to be following a traditional consumer electronics rule of thumb, which is that adoption reaches an inflection point at about the point that 10 percent of households have bought. 

According to researchers at Omdia, the important inflection point for 5G is is “the point where 5G starts being revenue positive.” Omdia says about 14 percent of 5G networks have reached that point of 10-percent subscriber penetration. 

Of 150 mobile operators with at least some 5G coverage by June 30, 2021 only 21 had managed to get to a point where at least 10 percent of their subscribers had regular 5G access, according to Omdia. 

The reason 10 percent seems to be the trigger, one might argue,  is that it is the point where early adopters have become customers and users, setting the stage for behavior to extend to the majority of consumers. 

source: Engineering.com 

One can see an example in cell phone adoption by U.S. households. About 1994, household adoption reached 10 percent or so, after a longer period of slow adoption. An analogous pattern happened with smartphone adoption as well. 

 

source: Our World in Data 

The adoption pattern perhaps is easier to visualize with a longer time frame. Here is a chart showing cell phone adoption in the United Kingdom.

source: Our World in Data

A wide range of physical products have shown the same pattern. Automobile adoption shows adoption accelerating once the 10-percent threshold was hit. 

source: Our World in Data