LONDON --- Revenues from the sale of broadband modems and gateways fell by 11% in 2002, as a result of a collapse in prices, according to a report from market research company Strategy Analytics. And according to the company average selling price declines will more than counteract unit growth for each of the next five years, through to 2008.
Sales of broadband modem units in 2002 increased by 52% to 26.3 million units, but price erosion due to the competitive situation counteracted that. Strategy Analytics predicts that annual sales will reach 60 million units in 2008, representing an average annual growth 15%.
In spite of this, the report recommends that device manufacturers must continue to budget for revenues declining by 5% each year on average until 2008. The report adds that attempts to introduce higher value gateway devices with integrated wireless networking and other technologies will meet with only limited success.
"The pressure on operators to reduce costs will continue to outweigh the need for more advanced consumer devices," said Peter King, director of the Strategy Analytics broadband group in a statement. "Intense competition between manufacturers to win contracts will ensure that price erosion continues for the foreseeable future."
Strategy Analytics reports that DSL took an increased share of the market in 2002. Sixty-two percent of the broadband modems sold in 2002 were DSL, up from 57% in 2001. Thirty-three percent were cable, with fiber, fixed wireless and other technologies accounting for the remainder. DSL will continue to dominate the market over the next five years, although some growth in emerging platforms is expected, the company said.
