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06/19/2003

IDC Expects Wi-Fi Hype to be Tempered by Realities of Building a Sustainable Network Offering

FRAMINGHAM, MA -JUNE 19, 2003 – Despite the rapid growth in both the number of Wi-Fi locations and the number of users worldwide, the hotspot market is still in the very early stages of development. According to a new study from IDC, these early growth figures, achieved from a very low baseline, represent little more than the creation of a hotspot infrastructure. Building a functional network offering that attracts and retains subscribers over the long-term will prove to be far more difficult than today's Wi-Fi hype admits.


"In many respects, the hotspot market feels like another technology gold rush," said Keith Waryas, research manager for IDC's Wireless Business Network Services program. "What we're hearing right now are the promises of fame and fortune typical of an early deployment phase. It is imperative to remember that this market is still exceptionally young and rife with uncertainty. Most business models are not yet proven, or even solidified, and the competitive landscape is still very unclear. The hard work needed to achieve Wi-Fi's promise still lies ahead."

Over the next five years, IDC expects the hotspot market to evolve through two distinct phases – two years of massive network footprint expansion followed by three years of intense relationship building among carriers, network operators, and service providers. The first phase will be characterized by dramatic growth in both the number of hotspots and hotspot users. Over the next five years, IDC projects the worldwide number of available commercial hotspots will increase at a compound annual growth rate (CAGR) of nearly 57% while the number of worldwide hotspot users will approach 25 million.

One consequence of a rapid build-out is that many public access points will be underutilized because they weren't deployed in a thoughtful manner. This will be further complicated by the evolution of usage patterns, pricing tolerances, and service expectations among users. In the second phase, network roaming relationships and network partnerships will become an essential ingredient for long-term success as providers seek to fill holes in their footprints and expand network utilization. This phase will be increasingly influenced by the weight that wireline and wireless carriers bring to the market as they seek to offer Wi-Fi as a low-cost extension of their existing services.

The IDC study, Worldwide Hotspot Forecast, 2002-2007 (IDC #29555), analyzes the market for hotspots and services between 2002 and 2007 and includes forecasts of the total number of available sites, users, and service revenue by region. Additionally, this document examines how revenue streams and user growth, which are expected to demonstrate annual increases of 143% and 112% respectively, will define and impact opportunities for pure-play hotspot service providers, wireless and wireline carriers, and remote access service providers around the world.

For more information, please contact Keith Waryas at 508-988-6883or kwaryas@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research, and exposition company.

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