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Nov. 12, 2009

Today, ABI Research has reduced its previous estimates on femtocell shipments after sales came in a lot lower than previously expected.

A femtocell (originally known as an Access Point Base Station) is a small cellular base station, typically designed for use in a home or small business. It connects to the service provider’s network via broadband such as DSL or cable.

Current designs typically support 2 to 4 active mobile phones in a residential setting. A femtocell allows service providers to extend service coverage indoors, especially where access would otherwise be limited or unavailable.

The overall number of shipments forecast in April for 2009 has been cut by about 55 percent to just 355,000 expected for 2010.

Furthermore, ABI Research now says that only about 340,000 femtocells will have shipped by the end of 2009, about 25 percent lower than predicted in November 2008.

"Femtocell vendors are now surprised that wireless operators haven't pushed them as much or as soon as expected," said ABI Practice Director Aditya Kaul in a report.

"We expect that deployments next year will increase but will be a lot slower than previously expected. Our data suggests about a 40 percent reduction on previous estimates," said Kaul.

While Kaul said he still believed in femtocells' market potential he added that 2010 will be a critical year for some companies who manufacture the devices. "If conditions don't improve by the end of next year, some smaller vendors may find themselves in trouble," he said.

All the large wireless operators in the U.S. have femtocell offerings including AT&T, Verizon and Sprint.

But their marketing efforts around the devices have been weak and the price of an unsubsidized femtocell seems to deter potential buyers.

Overall, femtocells have also struggled to find a compelling utilization justification with many consumers, even in the business community.

It will be interesting to see if 2010 will be what ABI is predicting. Some wireless industry observers seem to think that ABI's findings are a bit bearish and that the femtocell market next year should be a bit better than 2009.

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Source: TNC.