Mobile Internet Equipment Spending Increases: Report

Apple's iPhone and other smartphones are driving growth in mobile Internet equipment spending, a Synergy report finds.

Synergy Research Group announces the launch of its quarterly Mobile Internet tracking service with the publication of its Q2 2010 Market Share report. The report highlights robust growth for IP Equipment sales that provide the infrastructure to enable mobile operators to manage the rapid rise in Internet traffic that is overloading their 2G/3G networks.

The Mobile Internet Equipment market totaled $1.6 billion in the first half of 2010, an increase of 101 percent over the same period last year. The report found up to this point, the market has been driven by the rapid rise of basic Internet applications such as texting and e-mail.

Synergy concluded that growing consumer demand for a variety of multimedia rich mobile applications would continue to overload mobile networks exponentially, forcing mobile operators to continue to aggressively invest in their Mobile IP networks. The company is forecasting the Mobile Internet market to grow in excess of $5 billion by 2011.

"The fast rise of the iPhone and other smartphones has created significant and costly disruption to the operation of traditional mobile networks," said Jeremy Duke, principal analyst and founder, Synergy Research Group. "We believe this will continue to be a growing opportunity for IP networking vendors, such as Cisco and Juniper, who are benefiting greatly from this new source of infrastructure spending. Further, we believe this spending will continue to rise as video downloads, and eventually video calling/conferencing, become popular mobile applications."

Cisco led the market for mobile Internet equipment sales, registering a 6.6 percent rise in market share, followed by Juniper with a 2.2 percent growth in market share. Alcatel-Lucent, Ericsson and Huawei rounded out the top five vendors. Synergy defines mobile Internet equipment as the hardware and software that facilitate the use and operation of Internet applications on mobile networks. This includes the combination of mobile packet edge, multimedia Ggteways, GGSN/SGSN, evolved packet core (EPC), IP-backhaul, and mobile IP backbone equipment.

According to the report, the fastest growing mobile Internet equipment segment is LTE multimedia gateways, also referred to as Evolved Packet Core (EPC). In 2009, this market only represented less than 1 percent of mobile Internet equipment spending. Already in the first half of 2010, this market has grown to represent close to 3 percent. The report said networking vendors have been quick to respond, as evidenced by Cisco's Starent acquisition as well as products coming from Juniper and Alcatel-Lucent.