Thoughts from VON - dualmode devices

I've been at VON in San Jose this week. This morning I moderated a panel session on dualmode WiFi/cellular handsets, and putting together the intro slides made me crystallise my thoughts on them a bit more clearly, as I seem to have contradictory optimistic/pessimistic thoughts about them.

In a nutshell, dualmode phones are:

a) Qualitatively more important than many people think
b) Quantitatively less important than many people think

Point (a) refers to the catalytic nature of WiFi-capable phones - stimulating new business models & service providers in the mobile space, teaching end-users about using phones to connect to non-service applications and devices (PBXs, PCs etc), driving diversity & maturity into the non-carrier channel for phones, and so forth. The inclusion of WiFi also points out the absurdity of paying a premium for "mobility" when you're not actually moving about.

One of the panellists this morning said that the average number of cell base stations used in the course of a call is just 1.06. In other words, less than 6% of calls make use of the hugely complex & expensive cell-to-cell handoff capability in the network; the remainder is in a single cell, and often in range of a single WiFi AP.

Point (b) is the counter to this. I keep seeing forecasts from my analyst peers about hundreds of millions of dualmode phones shipping in the near future. I think this is wrong - I honestly can't see the "attach rate" of WiFi going beyond 10%, maybe 15%, of phones. It's so much more than just adding a $5 chip - it's the software, the integration, the application & UI optimisation work.

And when you think in a bit more detail about the handset market, the addressable segment of phones for which WiFI makes sense is actually quite small. So, for example, about 60-70% of phones worldwide are sold to prepay customers, often sold independently of any service provider customisation. In my view, I see almost no justification of including WiFi in these devices - certainly, I'd bet almost no dualmode devices have shipped into the prepay market to date.

Then there's CDMA - about 20%-ish of handset shipments. There has been much less interest in CDMA/WiFi dualmode to date - no equivalent of UMA, and not much interest in VCC or proprietary SIP-based dualmode. Sure, this might change, but not immediately.

Then there's the simple issue that outside N America, Europe & a couple of Asian countries, there's simply not that much residential broadband, let alone WiFi-enabled APs or gateways.

And, lastly, there's so much other cool stuff you could put in phones - GPS, VGA screens, TV, motion sensors - that WiFi is competing against lots of other hardware & software for space on handset designers' priority lists.