LTE Devices: Where's the Lust?
Let's face it: People just don't lust and line up for USB modems. That reality highlights the importance of smartphones and tablets when it comes to convincing consumers to switch to Long Term Evolution (LTE).
So it's no surprise that at the CTIA Enterprise & Applications 2010 show earlier this month, Verizon Communications Inc. (NYSE: VZ) COO and president Lowell McAdam said, "I want to dispel the notion that LTE is just about USB modems."
Nevertheless, when Verizon starts rolling out LTE later this year, its inaugural devices will be USB modems. But by the Consumer Electronics Show in January, McAdam said, "Verizon will unveil half a dozen smartphones and tablets that will be available in LTE in the first half of next year."
Delivering on that promise is a challenge that won't necessarily get easier over the next couple of years. For handset and tablet vendors, one big headache is developing and then shoehorning in the hardware to support multiple LTE bands – there are more than 40 choices – plus the bands for WiFi, GPS, and 2G/3G fallback.
As discussed in the new Heavy Reading 4G/LTE Insider, "The LTE Device Ecosystem: 2011-2012 Market Outlook," many carriers are requesting first-generation LTE devices that support eight to 13 bands in order to accommodate all these technologies.
"Your eyes cross when you think about designing that RF [radio frequency] front end," says Craig Miller, VP of marketing and business development at Sequans Communications . "It's a huge challenge. That's where the most innovation has to happen."
This challenge is a major reason why data-only devices, such as dongles, tablets, routers, and embedded laptops, will make up the lion's share of LTE shipments through the end of 2012. "We will ship tens of thousands of units this year to commercial deployments, all in the form factors of dongles and customer premises equipment (CPE)," one semiconductor manufacturer says. "Ninety percent of the dialogue between us and our customers has to do with dongles and CPEs."
Part of their appeal is that, as data-only devices, they're relatively inexpensive for carriers to market and support compared to handsets. Their downside is few differentiation opportunities aside from price and how they're bundled.
With data-only devices the norm over the next two years, smartphones are a way for LTE carriers to stand out from the pack – just as Sprint Corp. (NYSE: S) used the HTC Evo to make a splash earlier this year on the WiMax front. To compete with WiMax and HSPA+ – both of which have a head start in rolling out handsets – LTE will need lust-worthy smartphones sooner rather than later.
Many vendors expect major carriers to have at least one LTE handset at or shortly after launch. This expectation has handset vendors rushing to proffer marquee devices, both to establish or maintain a relationship with certain carriers and to create a perception in the marketplace that they are innovative.
There's also pressure from upstart carriers such as MetroPCS Inc. (NYSE: PCS), not just because it was able to get Samsung to produce what may be the world's first commercial LTE-CDMA handset – albeit not a smartphone – but also because the carrier believes its move will force other carriers to accelerate their handset plans. "We're really challenging the Tier 1 carriers' thought process," says Tony Lau, director of handset product management at MetroPCS.
Nevertheless, LTE won't have a handset selection on par with 3G until the LTE camp agrees on how to handle voice. That's part of the reason why 2G/3G fallback is so important: to support calling, which remains one of wireless's killer apps.
All of this should sound familiar to anyone who's been in wireless since the dawn of GSM. That technology's initial handsets were so late and so few that executives, such as George Schmitt, said – not entirely jokingly – that GSM really stood for "God Send Mobiles."
And now? LTE is in relatively better shape, but it's not too soon to start praying.
— Tim Kridel, Contributing Analyst, 4G/LTE Insider
This report,"The LTE Device Ecosystem: 2011-2012 Market Outlook," is available as part of an annual subscription (6 issues per year) to Heavy Reading 4G/LTE Insider, priced at $1,595. Individual reports are available for $900. To subscribe, please visit: www.heavyreading.com/4glte.