Ericsson (ERIC) Predicts Rapid Wireless Data Growth

Jeff Kagan |

Ericsson (ERIC) says we should expect rapid changes in wireless, and that smartphone subscriptions will reach 5.6 billion by 2019. Today we are at 1.9 billion. That will mean different handsets and new areas of growth. So what will the wireless world look like tomorrow? You may be surprised.

First of all it’s important to recognize that Ericsson is in the business. So when they issue a report that traffic will grow tenfold by the year 2019, and the device market will explode with growth, we must take that with a grain of salt.

On the other hand, I must agree with Ericsson on their prediction. However I would go further. The future is not just about smartphones. It’s also about transforming the entire business community to use wireless data to compete in new ways.

So wireless growth will look very different by 2019. We can expect a vibrant marketplace, with incredible growth, but things will look very different. Then again, it has also changed dramatically over the last five years as well.

Many of the companies that lead the wireless space today won’t in 2019. Many new companies and technologies that will lead may not even exist yet.

Just look at the last five years as an example. The Apple (AAPL) iPhone and Google (GOOG) Android started just six years ago and changed the entire smartphone segment. Before that Blackberry (BBRY) and Nokia (NOK) led.

What that says is it can be impossible to predict what the marketplace will look like five or ten years out. During the last five years we have seen the entire wireless space transform both technologies and companies.

So what will the industry look like in another five years? We can make predictions, but we must also be aware that surprises happen all the time. I never assume anyone knows what the marketplace will look like more than a few years out. That’s the nature of wireless innovation.

Wireless is one of the fastest growing segments in business today. In fact it is also one of the most often and fastest changing industries we have ever seen, both here in the US and worldwide.

In many areas of the world, the costs and limits of a wired world mean the wireless network is the only way to communicate. In fact the same may be true right here in the United States. Just look at how Verizon (VZ) is not rebuilding in many areas after last year’s Hurricane Sandy.

It’s pretty safe to say some of the wireless carriers will likely continue to be winners. Look at AT&T Mobility (T) and Verizon Wireless as an example. Today they account for roughly 70 percent of the marketplace.

Will they continue this lead? Impossible to say today, but they are both ahead of the curve so I expect they will at this point.

Sprint (S) and T-Mobile (TMUS) are number three and four. One year ago they were both failing, but things change. Today they are trying to reinvent themselves.

Sprint was acquired by Softbank and is building a very fast wireless Internet. T-Mobile’s new CEO seems to be breathing new life into their lungs. So over the next year or two these companies may start to win an increasing amount of business.

We know how the smartphone world and network speeds are rapidly growing. That won’t stop. But where else will wireless growth come from?

Growth will come from unexpected places. Consider how the wireless industry is helping industry after industry move forward.

Look at the automotive industry. It is rapidly moving forward, and it’s not just Tesla, Lexus, Mercedes and Cadillac. It’s also Ford, Chevy, Toyota and Honda. Actually, one by one all the carmakers are jumping into this wireless data space. This competitive threat in automotive, is also an enormous opportunity for the wireless industry going forward.

Look at healthcare. Wireless data is changing that space as well, both for doctors and for patients. New devices are transforming the entire space. Not only do doctors and hospitals use it, but increasingly patients are as well. Smartphone apps that are real healthcare tools used to link patients to doctors for better care.

Look at retail. Walk into a store and you get a welcome text message. It also knows you, what you purchased before, asks what you are looking for today, and not only directs you to the place in the store you are looking for, but also sends you a personalized coupon.

In area after area, and industry after industry, this is going to be one of the big growth areas in wireless in coming years. And we are really just in the very early days of this new revolution.

So what else will we be talking about in coming years as the wireless industry continues to grow and change everything?

Ericsson seems to think there is plenty of opportunity going forward. They see lower priced smartphones enticing new waves of customers, in country after country.

They expect mobile subscribers to reach 9.3 billion by 2019. They expect to see the number of mobile broadband subscribers grow to four times the size of today’s market, growing to 8 billion, from 2 billion today. They see smartphone subscribers growing to 5.6 billion, from 1.9 billion today.

Ericsson also expects the amount of data used by each smartphone to grow to four times today’s market. Ericsson also expects 90 percent of the world’s population to be using WSDMA/HSPA technology, and 65 percent to be covered by LTE or Long Term Evolution by 2019.

So we have quite a long way to go to reach those numbers, but growth in wireless continues. Now that growth with expensive gear is slowing, the less expensive handsets are starting to sell. This welcomes in new waves of users, worldwide and they all get hooked on wireless data.

In this changing marketplace, it’s important to recognize that some companies and ideas will succeed, while others will not. Some of today’s leaders will give way to tomorrow’s leaders. Choosing the right companies and technologies to invest in is always the challenge.

With that said, while this Ericsson study is very interesting and sounds exciting, take it with a grain of salt. They could be right. Then again, the industry could go down an entirely different path that we are not even aware of today. Remember Apple and Google? It happens all the time.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 112.12 1.09 0.98 27,070,277
TMUS T-Mobile US Inc. 58.55 0.16 0.27 4,156,062
ERIC Ericsson 5.46 -0.09 -1.62 4,246,894
NOK Nokia Corporation Sponsored American Depositary Sh 4.58 -0.12 -2.55 22,302,308
GOOG Alphabet Inc. 776.42 5.23 0.68 1,488,110
T AT&T Inc. 40.41 -0.04 -0.10 21,999,139
BBRY BlackBerry Limited 7.83 0.20 2.62 5,326,169
JPCMZ Jpm Chase Bk Tata Pwr n/a n/a n/a 0

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