03:16 PM

Femtocells Struggle To Catch On

The economy and the lack of carrier marketing are sapping demand for femtocells, according to ABI Research.

The market for femtocells in 2009 is not as strong as expected, and ABI Research said Thursday it would be scaling down its estimates for the space by about 55%.

Femtocells are essentially miniature cell phone towers that tie the owner's wired Internet connection to a mobile operator's network, and can boost cellular and mobile data reception within a home or office. These devices are being advertised to consumers to help reception, as well as to enterprises as a plank in their fixed-mobile convergence strategies. AT&T, Sprint Nextel, and Verizon Wireless have all released commercial femtocells, or devices that offer femtocell-like abilities, but ABI estimates only about 350,000 femtocells will be shipped by the end of the year.

The global economic recession likely plays a role, ABI said, as many of these devices are not subsidized and can cost up to $250, and some also come with monthly service fees. ABI also said the carriers are still working on their pricing tiers, as well as taking time to ramp up distribution plans and marketing campaigns.

"Even femtocell vendors are a bit surprised that the operators haven't pushed femtocells as much or as soon as expected," said ABI practice director Aditya Kaul in a statement. "We expect that deployments in 2010 will pick up but will be slower than expected -- our data suggests about a 40% reduction on previous estimates."

The research firm expects the market to pick up some steam over the next five years or so, and its 2014 shipping estimates are only about 10% lower than previous forecasts. Next year will be critical though, as ABI said if conditions don't improve by the end of 2010, "some of the smaller vendors may find themselves in trouble."

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