2011 will be a transition year for the cellular broadband 3G modem market, as embedded modems surpass external modems in market share for the first time, reports In-Stat. Although external 3G modem sales will hold up well for a few more years, 2010 will be the peak year for revenues, due to declining Average Selling Prices (ASPs).

The ASP of external or USB modems dropped markedly from $84.14 per unit in 2008 to $62.87 per unit in 2009. This type of price drop is less likely in the future because modem products are taking on more functionality such as HSPA with 3G fallback or hotspot functionality.

Recent research by In-Stat found the following:

In 2010, 75.4 million 3G cellular modems (excluding mobile handset modems) will be sold.
More than half of all mobile PCs will have an embedded 3G cellular modem by 2014.
In 2014, 203.3 million cellular modems (external and embedded) will be sold, representing $6.6 billion in global revenue.

Mobile operators will subsidize the cost of netbooks and notebooks to incentivize customers to sign up for a subscription data service, as AT&T’s is doing with the iPad and HP Mini 110.
The research, “The Cellular Broadband 3G Modem Market: Multi-Mode and Hot Spots Add Spice to Life” (#IN1004602SI), covers the worldwide market for cellular broadband 3G modems (excluding mobile handsets). It includes:

Examination of the cellular broadband modem market including drivers and barriers.
Results from a consumer survey on broadband modem usage including who uses cellular modems, how they use them, and attitudes toward the service.
Forecast for both external and embedded modems, including shipments, ASPs, and revenues.

Profiles of leading external and embedded cellular modem vendors including C-motech, Huawei, Novatel Wireless, Option Wireless Technology, Sierra Wireless, Ericsson, Icera, Qualcomm, and ST-Ericsson