Thursday, February 4th, 2010
Barbara Nelson, CTO
If, as the Apple enthusiasts would like you to believe, the iPad is going to create a whole new product category – the entertainment device – then the average consumer will have at least three connectable devices (their laptop, their phone, and their entertainment device). I say connectable, rather than connected, because it’s not clear that each of these devices needs to be connected to the internet all of the time. It’s also not clear that the consumer should have to pay for a separate subscription for connectivity for each of these devices.
The proliferation of Wi-Fi-enabled devices argues for a shift in how we approach connectivity, where the subscriber can pay for an internet connection, and then use it from any of their devices. The internet connection will no longer be attached to one device, but shareable across all devices. The MiFi personal Wi-Fi hotspot lets you do just that. It provides a shareable 3G connection for all your Wi-Fi enabled devices. Maybe you have three devices this year, but if this trend continues, you could have five or six distinct, connectable devices in the not-too-distant future. At that stage, it will make no sense to buy separate internet subscriptions for each device.
It is interesting that all these new devices are coming with Wi-Fi, whereas just a few years ago, a Wi-Fi enabled smart phone was an enigma. Who needs Wi-Fi when you can have 3G? We heard that battle-cry for a long time, until people began to realize the critical difference in financial models for Wi-Fi and 3G. You pay for Wi-Fi when you need it. You pay for 3G all of the time. It is even more interesting that the first release of the Apple iPad is a Wi-Fi-only device. I will be very curious to see the adoption rates for the Wi-Fi-only device, versus the Wi-Fi + 3G device. Will you pay an extra $130 for a ‘3G-ready’ entertainment device, and an ongoing subscription of $15 to $30 per month?
If so, let me know why.
Connectable, rather than Connected –iPad challenges pricing >>
Wednesday, January 20th, 2010
Barbara Nelson, CTO
Yesterday in Part 1, I talked about the changing business model for commercial Wi-Fi. So, when will a 3G user willingly pay for Wi-Fi?
I believe that there are lots of scenarios where a 3G user will willingly pay for Wi-Fi access:
- Lack of coverage on their 3G network – the goal of the 3G network providers may be ubiquitous 3G, but the reality is that we are far from there. There may be 3G service in major metropolitan areas, but try downloading a large powerpoint presentation or watching a video when you are travelling in the wild, wild west, and you may be more than happy to drive into town to a coffee shop to use a commercial Wi-Fi network. The dueling ads between AT&T and Verizon focus on where they do have coverage, but both of the maps have lots of white space, where neither carrier provides 3G coverage.
- International use – 3G roaming rates are still extremely high, and many an employee has incurred the wrath of IT by incurring high roaming charges when travelling internationally. Users travelling internationally will certainly pay for Wi-Fi, so the commercial Wi-Fi networks in airports will continue to see strong demand.
- Airplanes – Recently, we have seen tremendous growth in Wi-Fi on airplanes. A few years ago, early attempts at offering Wi-Fi on airplanes were not successful, mostly due to the high cost of deploying Wi-Fi on each plane. Recent technological advances have made this more feasible commercially, so we are now seeing airplane-based Wi-Fi getting broad adoption. The airplanes provide a tremendous opportunity, where users are willing to pay for internet connectivity.
- Slow performance on 3G network – for bandwidth-hungry applications (such as videos), the user experience on a 3G network is barely tolerable. Users of bandwidth-intensive applications will pay for the higher performance of a Wi-Fi network.
So, I do believe that there are many opportunities for commercial Wi-Fi to be successful, but the Wi-Fi providers cannot ignore the competition from the 3G network providers. The opportunities for commercial Wi-Fi will change, as the 3G networks provide acceptable service and acceptable performance for many users in many of the tried-and-true Wi-Fi locations (e.g. coffee shops in major metropolitan areas). I look forward to watching the Wi-Fi providers continue to re-invent themselves.
Is Commercial Wi-Fi Going Away? – Part 2 >>
Tuesday, January 19th, 2010
Barbara Nelson, CTO
As Mark Twain once said, “the reports of my death are greatly exaggerated”. We could say the same about commercial Wi-Fi.
Over the past few years, as more and more users have gained access to 3G networks (either via their smartphones or 3G devices for their laptops), the death of commercial Wi-Fi services has been predicted. Why would a user pay for access to a Wi-Fi network, when they have ubiquitous coverage on 3G? The future of Wi-Fi is being portrayed solely as a free alternative, to offload traffic from commercial 3G networks. But, is Wi-Fi really going to become a niche play, just for the home or campus networks? Will nobody make money deploying and running a Wi-Fi network? Are ad-supported networks the only Wi-Fi networks of the future? Will commercial Wi-Fi providers give up on charging users for the service, and toss it in for free with a cup of coffee or a hotel room? I don’t think so.
It is certainly true that the business model for commercial Wi-Fi is changing. The growth of alternative wireless networks (3G, WiMAX, LTE etc.) introduces new challenges to the Wi-Fi providers. Gone are the days when a Wi-Fi provider can simply deploy an access point in a coffee shop, charge $10 per session, and sit back and collect revenue. The Wi-Fi providers need to re-invent themselves.
Eight years ago, Wi-Fi represented a new opportunity, where the connected user could be untethered, no longer tied to a dial-up phone line for internet access. At the time, this was a major step forward. A user could check their email in the comfort of a coffee shop, or the relative comfort of a departure gate as they waited for their flight. For this luxury, users (or their companies) were willing to pay up to $10 per session (or even more in Europe). For some occasional travelers, this business model still works. For the user who travels regularly, though, it makes more sense to buy a subscription to a 3G network. Those users don’t have to pay $10 to check their email, when they can check their email all month on their home 3G network for a monthly subscription fee of $40.
So, when will a 3G user willingly pay for Wi-Fi? See Part 2, tomorrow.
Is Commercial Wi-Fi Going Away? – Part 1 >>
