Since the end of 2006, several modem vendors have launched or announced development of USB cellular modems.

A new study from ABI Research reveals a growing and increasingly competitive market and forecasts shipments of these modems in excess of 22 million by 2012.

According to principal analyst Dan Shey, “Proliferation of 3G networks is the primary driver of growth in cellular modems, regardless of form factor. However, new companies are jumping into the USB modem market because the installed base of devices for USB modems includes not only laptops but also desktops.

Desktop PCs are ubiquitous around the world and will continue shipping in large volumes, exceeding 140 million units per year through 2011.” In a market characterized by increasing competition, cellular modem shipments, including PC cards and Express Cards USB modems, internal modems and 3G/WiFi routers, will grow to over 68 million units by 2012, representing a compound annual growth rate of 53 percent.

The market dynamics affecting USB modem growth will be very different from those that affect the other modem form factors. This will create opportunities and challenges for all value chain players. Says Shey, “There are two factors to watch which will affect the USB modem market. First, the newer companies entering this market are in the Asia-Pacific region, a territory with notoriously price-competitive companies. Second, since the USB modem attaches externally to the computer, the device has no space or shape limitations.

This fact allow modem vendors to differentiate their products by on body design and functional features, providing for interesting marketing opportunities.” ABI Research’s study, “Expanding Cellular Broadband Connectivity to the Laptop,” provides a comprehensive overview of the market for cellular modems.

The report analyses the factor both driving and inhibiting growth and illustrates how changes in the market are creating both opportunity and complexity for the value chain participants, including chipset manufacturers and wireless operators, as well as producers of modems, laptops and connection client software.

In depth analysis is also applied to the value-creating role of the connection client and its impact on the value chain participants. Finally, this report provides comprehensive market share and forecast information. Forecasts are provided for each of five different form factors by worldwide region, technology standard and air interface and average selling price.