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Monday, July 21, 2008

Embedded 3G laptop hype

OK, hands up which of you have got a laptop with an embedded 3G modem?

Right, now you can put your hands down again. Yes, both of you.

There are plenty of mobile technology areas that are getting hype at the moment, but the one which seems to represent the greatest triumph of marketing over reality is that of laptops with built-in 3G modules. It's probably the area where an onslaught of PR by Ericsson, the GSMA and assorted mobile operators has been most successful in skewing the industry's view of supposed inevitability. And of course, it's an amusing shot across the bows of the WiMAX fleet, which is only expecting a handful of Intel "Echo Peak" embedded PCs at the end of the year in the US only.

The laptop manufacturers have been partly complicit in this, but only because they're being bribed with the promise of subsidies, or possible cold hard cash in terms of "activation bounties" when customers sign up.

I've written extensively before about why the Embedded Emperor has no clothes. It's also something that regularly crops up in client meetings with operators and others. When I asked to explain why there's such as gap between promise and reality, I typically get as far as saying something like "....and seventeenthly...." before the penny drops.

One of the biggest issues is consumer ignorance and apathy. Compared with 3G dongles, embedded laptops don't even register on the radar screens of Mr Average Customer (especially in the UK, which is awash with dongle advertising). My perception is that the whole idea of "connectivity on a USB stick" is a nice easy concept for retailer and customer alike, especially given the ubiquity of USB memory these days.

A dongle is simply "broadband on a stick", with a cute & memorable name.

Just in case I was missing something though, I thought I'd do a quick check on the current retail marketplace.

First stop, Dell's UK website. Nothing obvious on the main consumer laptop page - no mention of mobile in the bullet points for the key Inspiron & other brands. No mobile filter in the "narrow your selection" filter. But right at the bottom of the page is a Vodafone "partner" link (as well as two Tiscali fixed-broadband ones). That goes through to a dedicated Voda page with 18 and 24 month contracts described. And a sidebar with "To see the full range of Dell products with built-in mobile broadband, click here". Which doesn't have a live link, but just a note to the webmaster saying "needs link". Clicking through to a couple of the PCs, I could add in the (Voda-only) 3.6Mbit/s HSDPA card for £89 (personal user) or £120 (business user, with some fiddly rebate offer). Alternatively, I could go to the Vodafone site & get the same dataplans, but get a dongle for free - including a 7.2Mbit/s stick if you take a 24-month contract.

So, £90 for embedded, or £zero for a faster external dongle. Same Voda data plans. Hmm, tricky decision, that.

Next stop, Carphone Warehouse. The "Home of Free Laptops" - subsidies all round! And about 6 or 7 different sorts of PC, on all sorts of fixed & mobile broadband contracts, including Orange, 3 and T-Mobile. Toshiba, Acer, Fujitsu-Siemens. All of them based on dongles.

And it's Dongle City on T-Mobile's UK website as well. Not an embedded PC to be seen - until I clicked down through 3 layers of the site and eventually found Internet-Ready Laptops on a sidebar. The page looks like it hasn't been updated for a year, citing 1.8MBit/s speed and roaming available in "18 countries in July 2007". The Toshiba PC on the page was introduced in Nov 2006.

Even on T-Mobile's German website I couldn't find a laptop - and they've probably been Europe's most enthusiastic operator about the whole concept. Although it has got a very cool dongle with HSUPA, HSDPA and DVB-T digital terrestrial TV as well. That's really innovative and certainly differentiated from the embedded 3G modules... guess I'll be getting to "eighteenthly" next time I'm discussing this in a meeting.....


max said...


Key reasons why no takeup is that the operators are wary of Dell, HP and the like. Why?

1. Erosion of margins - they know given the generic nature of the internal modems that the large OEMs will eventually play the operators off against each other bringing down the wholesale pricing.

2. Reduced branding - the OEMs will eventually take control of the software applet turning the operators into dumb pipes.

3. Lack of evidence that selling embedded laptops is likely to sell more broadband than stand alone singles.

The operators have proven they can mass sell these devices whilst keeping hold of branding rights, distribution channels and pricing levels. I suspect the OEMs need the operators more than the operators need the OEMs..

Anonymous said...

Future scenario
1) Laptops will include generic cellular broadband modem by default (just like WiFi).
2) Customers buys (or already has) Mobile Broadband Dongle
3) Swap out SIM card and install into laptop

It happened with WiFi, why won't this happen over the next few years with cellular broadband - which is now in the public conciousness as a standard service at a sensible price.

Dean Bubley said...

Max - thanks. Actually, I think neither side MNO / OEM particularly "needs" the other. While there are some theoretical benefits, they are outweighed by the practical headaches. There's lots of friction both ways.

The standalone dongles are acting as great technical & commercial lubricants.

Anon - there are numerous reasons "why this won't happen". Some of them are:
- cellular module pricing vs. cost of WiFi chip
- licenced vs. unlicenced spectrum impact on testing & conformance processes
- extra time-to-market means embedded module usually obsolete cf. dongles.

This is an area I'm advising clients on, so if you'd like a more comprehensive advisory answer or a workshop on this, please contact me via FIRSTNAME.LASTNAME AT disruptive-analysis.com

Paul said...


Dongles may be ubiquitous (I live in Canada and still have a 3 Pre-Pay one sat in a drawer) but I'd look pretty stupid having my Huawei pebble velco'd onto the back on an Eee, Wind etc. where it would look totally unbalanced.

IMHO this is where the embedded future lies, in the Nettop not the Laptop.

You also need to pay heed to coming technologies. Dual embedded antennas down the side of a screen are always going to outperform antennas in a dongle, and this translates into improved data-rates (and experience) particularly for HSUPA.

Dean Bubley said...

Thanks Paul

The embedded antennas are a double-edged sword, as while they may give better signal reception, they also mean that the whole PC has to go through the RF testing lab - maybe at each operator.

I agree that the "soap on a rope" form of dongle is a little awkward-looking, but nobody has problems with USB sticks for memory. There could well be a market for dongles in interesting shapes - they're already available in multiple colours.

I'm not yet convinced by the Nettop / MID hype. It strikes me that anyone who has one of those will probably have a fullsize laptop too - and therefore may well want a modem that works in both.


Paul said...

Hi Dean,

Have you any experience with laptop certification. Certainly if an 'industry body' took care of the RF parts of the laptop certification, there should be an element of trust that would allow an individual operator to only verify their dashboard and not the HSPA modem install.

Regarding the small module that slots in to provide HSPA for both my Laptop and Nettop, I already have it. It's light, portable and is called a SIM!

Edsard Ravelli said...

Dean and all,

I could not help respond to your post and responses on this article.

The simple truth is that this will happen, whether you, I and other like this or not.

"There is no demand without supply". And no this is not a typo.

These are the facts:
1. Ericsson and Qualcomm have invested in Mobile Broadband modules for Notebooks to lower the price into the 15-25 USD range. Not much more expensive then a WiFi chip.

Price is the only issue. Dean if it costs you an extra 15 dollars on your next notebook, you will take it. its that simple.

2. The middle men like Sierra Wireless, Huawei, Option, Novatel Wireless are being cut out to lower these prices - cutting out their margin and the modules are being standardized to increase Time to Market.

3. Dell, HP, Acer and Lenovo have all embraced 3G modules and will include these in their notebooks.

4. USB Dongles will replace PC data cards this is true. But you can't expect a user with an MID to use a USB Dongle. Do you still use a WiFi datacard? Why not?
Because it comes standard in the notebook!

5. Mobile Operators are indeed going to be forced to become Wholesale bitepipes. its their own fault.

6. The RF testing is being addressed because of Gobi. Only one model (just like a mobile phone) will need to be tested. Not like today's case where every notebook model has to be tested.

In short, it does not matter whether you are convinced. The RFI's, RFP's from these OEM's and Operators (which we get) all say the same.

Dean Bubley said...

Hi Edsard

Thanks for your post.

"if it costs you an extra 15 dollars on your next notebook, you will take it"

But it won't. It'll cost $15 plus a monthly subscription. Or there has to be a convenient way to use it on an ad-hoc basis like WiFi (ie without a physical SIM, which in a mobile broadband context is a legacy dinosaur deserving of extinction anyway).

And if nobody uses it, the margins on laptops are so thin that the manufacturers won't build it in by default, the same way that disk drives, infrared and (soon) rotating disks have disappeared.

This is the paradox, and it is why I still think that 3G is utterly different from WiFi in laptops. (Not to mention the fact that $15 is probably still 10x the incremental cost of WiFi on a wholesale motherboard these days)

The one possible option I see is if the user does not have to sign up for a mobile broadband service at all, but the *laptop purchase subsidises the connectivity* not the other way around. You buy a laptop, and it's connected - "for free" - for its working life. No signups, no subscription, no extra SIM. It just connects. Like the Amazon Kindle, or a car Tracker.

Sure, we'll see a fair number of PCs ship with 3G onboard. But what do you think happens if the activation rate stays in the single-digit % range?


Anonymous said...

Hi Dean,

I have had the pleasure of meeting Edsard Ravelli. Although Edsard has intimate knowledge of what is happening with the embedded market place the pricepoints described are unrealistic. The price of the chipsets in addition to the Qualcomm licensing will prevent the those price points from becoming a reality. The manufactures may eventually absorb the cost due to "amentity creep" making it appear less expensive to the consumer however let's be serious Qualcomm gives nothing away!

I would like to comment on a couple of points that neither of you have touched on in this laptop discussion:

1. As long as my account is attached to a "dongle" I can share my account or lend my modem to someone. Usually a realtive or friend. They can then use that account/dongle and return it to me a later date and time. I'm certainly NOT going to lend my laptop to a relative or friend so that they can surf the internet while traveling.

Moreover by plugging into a 3G router I can share my account with a whole room of people which I have done many times while traveling saving BIG money while at conventions and tradeshows.

Let's be serious it's all about mobility and for as silly as it sounds it for this simple reason I would never activate an embedded product on a contract of any kind even if it was given to me for free by the laptop manufacturer.

2. Mr. Ravelli sells "advertising" with his connection manager. Can you imagine the "pop ups" and advertising we will be subjected to by the laptop manufacturers and guys like Edsard who make their money on selling advertising or collecting data have their way?

We all know these modems are two way devices. Who wants pop ups, advertising, sand boxing and all of the other marketing tricks that we would be subjecting ourselves to if laptop companies begin forcing ads on us everytime we open our laptop.

Nicholas Geiger

Dean Bubley said...


Thanks for the comments.

I agree about sharing the dongles, which certainly makes sense for certain user groups. For certain others, I think it makes more sense to integrate the dongle with a home-broadband gateway like the Vodafone Station (from Huawei). Various other ASDL/cable gateway providers are also integrating USB dongles. This enables you to "take your broadband with you", which would appeal to those people whose *primary* broadband is fixed, but who will want occasional mobile use as well.

It'll come down to segmentation at the end of the day, with a vareity of different models.

The advertising concept is an interesting - and somewhat scary - proposition. Thanks for bringing it up. It will be particularly interesting/dangerous (delete according to your viewpoint) when more laptops or dongles integrate GPS or cell-ID location clients.

Edsard Ravelli said...

Hi Dean and all,

Let me start by saying, that, as you know, we often agree on an array of subjects. And believe it or not, I too am sceptical at times.

But, over the years I have learnt that not all good things become popular or mainstream and not all bad things go into the night quietly.

In short, I don't know whether our bright minds here (and rational) will always be right in the end.

A couple of statements (assumptions) have been made that I would like to respond to:

1. Who says that this $15 chip will always be attached to a subscription? In fact this ("always") assumption is deadwrong. Yes, of course, if it's up to the MNO's that would happen. But don't underestimate other interest of companies who are not MNO's. Hint: Why not a "pay as you go" model. No contract, No frills, etc...

Not much more I can say about this, at this time. Maybe in a few months. more to come.

2. Yes, margins om most notebooks are pretty thin. But when you say this you have to realize that in 2009, 139 Million notebooks will be sold. Do you think all these notebooks are cheap? No they are not, don't you agree. what do you pay for a Panasonic notebook? have a look.
Do you think they care about $15 USD extra if it means getting the deal from a Pharma, Law Enforcement or Utitilities company for 10.000 notebooks? it cost of doing business. At least, this is often the case.

Nicolas states that my price point are unrealistic. Fine, don't believe me. If it is so unrealistic, how come a certain Asian USB Dongle vendor just made a deal for $7X,-- a unit with an operator in Asia. And that is with the added margin if the USB vendor, based on a Qualcomm HSDPA chip.

3. You statement "laptop purchase subsidises the connectivity" is spot on! Without going into details, I can tell you that this is happening. It is not the only model, but certainly, with a few tweaks the model has big potential of being sucessful. But time will tell.

In fact, Why does a (pro)sumer choose a Dell over an HP?
I suspect, "Bang for buck" principle, right?. What if you could buy the same notebook but get 1 year of standard WWAN traffic included?

The trick is: "what does standard traffic mean?" I leave it up to the creative minds to think up the answer. Hint: some think, getting people to start is most important.

Similar to getting people to buy a Mobile Phone. I remember back in the late eighties, being called names by certain dutch people because I had the arrogance of having a mobile phone. "Why would anyone need a mobile phone?" I still remember my ex-mother in law saying...
I bumped into here the other day, blabbing on a mobile phone. hahahaha.

Who needs an embedded 3G notebook?
I hope I am right. time will tell.
back to subject ;-)

4. Dean, the activation has been in the low single digits since the beginning - you are right. But this has, in my opinion, many many reasons, not only price.

Now without wanting to start a good-old flame war, I do take issue with the characterization of Nicholas Geiger.

At no point in this discussion did I raise the advertising point.
Nor, do I sell advertising. any advertising. This is a simplistic soundbite, a populistic one-liner

I take offence with the impression that Nicholas has given of me, our software and the company I indeed run.

By that logic, Dell and Acer also sell advertising when you get Norton with your Dell. By that same definition all Shareware and Freeware are advertising. Common man! Its marketing.

We make our money by selling Connection Managers and Servers to Mobile Operators, OEM's and Enterprise. We charge a per unit royalty. That is how we make our money. And whatever we charge them, we saves them 3 fold in OPEX cost.

Do you think you are using a notebook today that does not collect data in some way? Do you think your data is not being tracked when you use a USB dongle?
Do you think Mobile Operators need a Connection Manager to track your data? Have you have heard of packet inspection. Do you think Google really publishes random ads? are you that ill-informed?
Download the O2, Vodafone, Telefonica and Orange Connection manager today and read the EULA.
You confuse the cost of a subscription (or lack thereof) with sum simplistic "we will make it back with advertising scheme".
The fact is that big companies have marketing and strategy departments that want that data regardless of what you pay for the subscription.

Yes, you are probaly the only guy in the world that thinks popups are enoying and you think that OEM's and companies like us, are that stupid that they need to resort to popups to make money.
Popups are old school, failure, but let's use that. We will annoy our customer base and make money that way. (sarcasm, sarcasm,sarcasm,)

Start thinking new economy, jeezz...

Have you ever considered that collecting data can be used for good and non-evil purposes? Do you know what the average cost of a call is to the Helpdesk? Can you imagine the user experience where you call the helpdesk and the guy on the phone can actually help you in half the time it normally took?
Can you imagine the savings? can you imagines where does savings go?
Are you starting to see the picture?

It's not all evil out there. I admit i sometimes need to remind myself of that. But don't ever put me in the same group of "spam, gator-ish, we collect and steal your data for bad Mhuaahaha".

I detest those people. Easy money.
if I wanted that, I would have stayed out of the Telecoms business alltogether. Maybe.

In fact I would have asked you, as you seem to know me, for your USB dongle. I would have put that USB dongle into a Linksys AP, gone into a hotel or airport lounge, used a phishing app, running on the Linksys, to parse the original landingpage and made a couple of 1000 a day, that way. And when the cops come, who do they charge?
The owner of the USB dongle. When you then cry to the police that Mr. Ravelli did it. I will deny it, as you obviously don't know you. I hope you trust your relatives and friends and I hope they don't do any kinky stuff, which you don't know about.
I would never give away my SIM!

As for your "plugging into a 3G router" Check your subscrition agreement. You will see that the fine print states that you may not use a router with certain descriptions. 3G Routers actually come with different APN's at a higher subscription price. at least many of them do and did.

"Qualcomm gives nothing away!"
Wow! Reaaallly? No way!

When a USB modem is sold today to: Let's just say Vodafone. And lets just say the manufacturer is Huawei. And let's just say, by some stroke of idiocy, the USB modem is given away for free to Vodafone, by Huawei. in return for managing Vodafone's 3G network.
How does Qualcomm get paid?
Just to make it fun; in that same bid for the USB modems, let's just say that Option offers a similar USB modem to Vodafone for 150 euro per unit. Does this mean that Huawei is subbing 150 per unit to make it back from Networks?

All this is speculation of course.
This is merely an example and not based on any fact. legal bla bla bla.

Anyway. From that 150 euro per unit. How much does qualcomm actually get. Closer to 150 or closer to 15?