Best Buy, OEMs Offering More Mobile Services, Says Report

The number of mobile devices requiring cellular connectivity support is increasing, and as a result, the OEMs and large retailers, such as Best Buy, that are selling the devices are expected to begin acting as the connectivity providers for their products, according to a Dec. 1 report from ABI Research.
While mobile carriers have gone from supporting and subsidizing smartphones to also netbooks and notebooks, a still-increasing number of devices, such as e-readers, mobile navigation units, gaming devices, mobile media players and digital cameras, now also require cellular connectivity services.
ABI forecasts that by 2014, 2.5 billion connected data-centric devices will be in use worldwide, and of those, almost 1.5 billion will not be mobile phones.
“Carriers tell us they view the wireless connectivity business model for these emerging devices as murky,” Mark Beccue, an ABI senior analyst, wrote in the report. “They are quite prepared to sell connectivity wholesale, allowing retailers and OEMs to assume the role of primary service provider to their customers.”
Beccue says the trend has already begun, noting that AT&T agreed to allow TomTom and Garmin to sell the connectivity services to their navigation devices, and that in Japan, Hewlett-Packard acts as the wireless service provider for one of its netbooks.
While ABI expects the trend to extend to all “developed consumer societies,” it’s expected to be especially strong in North America, where retailers are large, the integrated device market is significant and consumers tend to own multiple devices.
“These new service providers won’t dominate the market, but in North America in 2014 will provide as much as one-third of the 595 million expected mobile data connections,” Beccue wrote.
“Data plans offered by retailers and OEMs will focus on pay-as-you-go services,” Beccue added, “or on models like that of Amazon’s Kindle, where the connectivity cost is built into the price of the content.”
(Amazon’s Kindle offers cellular connectivity through the Sprint Nextel network, though payment is built into the initial cost of the e-reader – handled between Amazon and Sprint – and customers don’t receive a monthly bill. In October, Amazon announced an international version, for data-connectivity support worldwide, that relies on the AT&T network. )
ABI reports that big-box retailer Best Buy, which it writes has an “annual turnover of $40 billion and a growing mobile business,” is in a strong position to become a wireless data connectivity mobile virtual network operator – or MVNO.
The one-third of the market that ABI anticipates being covered by these untraditional providers, by 2014, are an equal-parts combination of retail and OEM MVNOs.