Embedded laptops: the hidden cost

I'm currently working on a report on mobile broadband devices which should be out in time for Mobile World Congress. As part of that process my thoughts naturally turned to how quickly embedded laptops will take off. There seems to be an emerging assumption that embedded will come to dominate the market. It's superficially more user-friendly and manufacture and distribution costs would be lower.

However, the most obvious drawback for the end user is that it will be expensive to upgrade. Currently we're seeing very fast technology evolution, from HSDPA to HSUPA to HSPA+ to LTE. Much faster than the laptop replacement cycle. So if anyone wants to keep up with technology evolution they'll need to replace their laptop every 1-2 years, which is unlikely. But, that presupposes that people are bothered about keeping up, which is probably a rash assumption. Experience with mobile broadband is so variable that few subscribers will make their decision based on what the nominal speed is. According to a recent Ofcom report the average fixed broadband users only gets 49% of their headline rate, but they don't seem to care, with 93% satisfied with the experience they receive. As long as the service does what users want it to do, they won't care about the headline rate. In the mobile world the link between headline and actual rates will be even more tenuous.

What really should be worrying MNOs is that a greater demand for embedded laptops will result in higher churn. The impetus to replace a laptop will be far greater than to replace a USB modem and with far greater cost to the MNO. With higher churn MNOs will be compelled to start subsidising devices in an attempt to acquire and retain this high churn segment, with potentially disastrous consequences for their bottom line.

More on this as the report progresses.