MID Market Will See Eightfold Increase Through 2012

Mar 12, 2009 2:38 PM, MD&D News Staff

The mobile Internet device (MID) market is still emerging, leading to a nebulous product definition that ranges from ultra-mobile PCs (UMPCs) to some portable media players (PMPs). Yet the opportunities for growth in this segment are clear, with global unit shipments expected to expand by nearly a factor of eight from 2007’s 53.8 million mark to 416 million in 2012, according to iSuppli Corp. That’s a compound annual growth rate (CAGR) of 50.6%.

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The market research company defines MIDs as devices that have integrated connectivity for wireless local-area networks (WLANs), wireless metropolitan-area networks (WMANs), or 3G or higher worldwide-area networks (WWANs). They also must offer a maximum-sized 8-in. diagonal display, an instant-on function, always-connectable capability, and a full day’s worth of battery life under typical usage scenarios. Because of this broad definition, many products now fit the MID category, with many more to debut in the next few years.

“The market for MIDs does not just reside in one big multipurpose platform, but instead encompasses segments of various product markets, including UMPCs, netbooks, smart phones, portable navigation devices, e-book readers, portable media/MP3 players, and handheld gaming devices,” observed Francis Sideco, senior analyst, wireless communications, for iSuppli. “Each MID device segment enjoys varying levels of penetration in the market, with smart phones leading the way, followed by e-book readers and, to a lesser extent, UMPCs and gaming devices.”

Smart phones are expected to dominate the MID segment from 2008 to 2012. About 60% of all smart phones now are considered MID-class devices, iSuppli estimates, but that figure will rise to cover 100% by 2012. A key gating factor is the inclusion of WLAN or 3G connectivity. Applications like video downloads, gaming, and full Internet browsing will proliferate when smart phones attain 3G-speed downlink and uplink capabilities.

Despite their relatively recent arrival, e-book readers already have achieved 35% MID penetration as of 2008, which will then rise to 76% by 2012. The high penetration primarily is driven by the success of Amazon’s Kindle, with 100% WWAN penetration, and of Sony’s counterpart, the Sony Reader, which has 25% WLAN penetration. The Kindle, for instance, integrates ubiquitous wireless connectivity within the e-book reader to deliver real-time news, on-the-go media purchasing, and even e-mail applications.

Only 2% of all UMPCs were considered to be MID-class in 2008, but the figure is expected to grow to 28% by 2012. Key factors increasing MID penetration in this area include continued improvements to instant-on capabilities and battery-life performance. Meanwhile, netbooks provide a low-cost alternative to UMPCs when they’re used as portable devices. Key factors excluding most netbooks from being considered as MIDs, though, include screen size, instant-on capabilities, and battery life. However, battery-life performance in some netbooks will reach MID performance levels by 2012.

Only 2.8% of gaming devices will be considered MID-class by 2011 if the full set of criteria is brought to bear, with the rate increasing markedly to 15.1% the year after. But if the requirement for ubiquitous coverage is relaxed to cover only WLAN, then the percentage of gaming devices that can be considered MID-class shoots up to 98.6% in 2008, with the figure rising to 100% by 2011.

No significant volume shipments of PMPs and MP3 players that fit the MID class occurred as of 2008. Also, only 3% of these devices will be MIDs by 2012. But if manufacturers increase the amount of WWAN support for the players, which can deliver rich multimedia content and experience, they may see a potential upside in the market.

Finally, only 0.22% of today’s PNDs are MID-capable, with the number growing to 10% by 2012. The rate of wireless connectivity, primarily through WWAN, will drive MID functionality in PNDs. Once enabled, PNDs allow the implementation of solutions such as real-time traffic, rerouting, remote map and database updates, location-aware advertising, and the purchasing of services such as fast food and gas. PNDs also are unique among MID devices since they can use the automobile as a power source and aren’t limited by battery-life constraints.

There will be some cannibalization of the PC and laptop markets as MIDs emerge. That cannibalization primarily will affect lower-tiered laptops and PCs, though, and that’s a relatively small segment of those markets. Also, even in five to 10 years, MID capabilities are going to be use-case specific, while laptops and PCs are general-purpose platforms. Only MIDs with broader functionality, like UMPCs and netbooks, will be encroaching on the laptop and desktop markets.

Furthermore, MIDs represent the midpoint between smart phones and laptops. So, both industries are jumping into the MID market. Companies like Dell and Nokia are developing devices. And in the supply chain, chip manufacturers like Intel and Qualcomm are developing products suited for the MID market too. According to Sideco, there’s a “tectonic shift” under way in the industry.

For more about MIDs, see Sideco’s new report, “Mobile Internet Devices—A Class All To Themselves.”