WhyDom

Femtocells are going to move fast in the coming 12 months.  Wireless carriers will push the residential gateway from zero units to millions.  On August 13, 2007, Xchange Magazine reported that In-Stat is projecting that by 2011 there will be 40 million femtocells in use and 101 million users of femtocells.   Femtocells are micro cell phone antenna receivers connected to a customer’s home Internet access.  The femtocell allows the cell phone customer to keep their current cell phone and obtain WiFI like speeds from 1Mbs to 3Mbs and more on their cell phone.  As noted in an earlier post, in July 2007, a month before the In-Stat release, ABI Research predicted that by 2012 there would be 70 million femtocells and 150 million users.  The projections of ABI Research and In-Stat are mere predictions/projections but are both in alignment.  

It was also reported by Xchange that Cisco’s John Sweeney, Director of Product Strategy and Management, IP Subscriber Networks, anticipates that femtocells would initially be sold for $200 per unit.  (Cisco has not announced a femtocell product although there was a rumor in Unstrung in January 2007 that the company was considering an investment in Ubiquisys. Google invested in Ubiquisys on July 20, 2007).  The femtocell price point will likely rapidly decrease from $200 in 2008 to $100 in $2011 – tracking the decreasing price of DSL Routers like Linksys and Netgear.  Using the sales predictions of ABI Research and In-Stat, the femtocell total device market is approximately $8 billion to $4 billion over four years, or $1 billion to $2 billion per year.  This is not an insignificant market.   GigaOm pointed out that cellco’s were all over the femtocell concept and were going to aggressively push femtocells as a way to counter the move to dual mode WiFI phones and WiFI VoIP phones: “Mobile carriers are obviously worried by the impact of WiFi and VoWiFi on their voice revenues.”

In addition, femtocells are being integrated by residential gateway providers like 2Wire, Netgear, or Thompson, into residential DSL routers or cable modems.   The value and stickiness of the femtocell device market will increase with integration into the residential gateway.  The integrated residential gateways will combine femtocell technology with storage for video or music.  The gateway will give customers the ability to play music or video stored on the gateway on any PC or device connected to the home network.  In addition, the gateways will be used by service providers to maintain and monitor home networks.