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The future of smartphones: exploding data demand

Canadian consumers’ current addiction to smartphones will only intensify over the next few years thanks to exploding growth in demand for – and use of – mobile data.

Research firm eMarketer released data in May confirming Canadian smartphone penetration had topped 50 per cent this year. While this lags U.S. penetration, which hit this threshold last year and now sits at 56.8 per cent, Canada remains ahead of the global mobile community where less than one in three consumers has upgraded to a smartphone.

In a reversal of trends that often see North American adoption trail other markets, we’re expected to be much more smartphone-savvy over the next few years compared to the rest of the world, with 80 per cent of North American consumers carrying one within four years. Global penetration will only hit 50 per cent in 2017.

Figures from comScore are even more optimistic, with Canadian smartphone penetration hitting 62 per cent by the end of 2012, up from 45 per cent the previous year. Total smartphone subscriptions grew by 17 per cent year-over-year, while the broader handheld market – which included feature phones – was up by only 10 per cent. Translation: expect feature phones to become even harder to find on Canadian store shelves as smartphones take over.

Impressive as the to-date numbers may seem, the fun is only just beginning. The overall smartphone market is set for massive growth, with Ericsson’s Mobility Report projecting a tripling in the number of global mobile subscriptions – from 1.9 billion at the end of 2013 to 5.6 billion – by 2017. Ericsson says only between 25 and 30 per cent of all phones currently in use worldwide are smartphones, but as the global market moves toward the smarthone-feature phone tipping point, demand for higher-capacity wireless networks will increase, with LTE increasingly supplanting 3G in North America and Europe, and emerging markets moving from older GSM and Edge networks to 3G and, to a lesser degree, LTE.

By 2019, two-thirds of all mobile devices will be using LTE. The next-generation LTE-Advanced, which supports even higher capacity through simultaneous use of different frequencies, will eventually help carriers deal with the exploding numbers of devices, and the growing sophistication in how they’re used.

It’s all about the data

Mobile data lies at the root of this growth, and Canadians’ increasingly voracious demand for it will only add fuel to the fire in the years to come. The Cisco Systems Visual Networking Index (VNI) Forecast estimates the average Canadian used 638 megabytes of mobile data per month in 2012, and this will grow to 5 gigabytes monthly by 2017.

Canadian businesses used 74 per cent more mobile data in 2012 than the previous year, and Cisco projects 55 per cent annual growth through 2017. This means average monthly average usage of 3,600 terabytes per month will increase nine-fold to 31,700 terabytes per month by 2017. Ericsson sees data traffic increasing by a compound annual rate of 45 per cent between 2013 and 2019 – for a ten-fold increase over the period – largely thanks to the rapid proliferation of data-hungry applications like video, collaboration and always-on location-based and so-called machine-to-machine or automated services.

These figures echo global mobile broadband growth that research firm A.T. Kearney says has grown seven-fold since 2008 – from 200 million mobile broadband connections to 1.6 billion now – and will increase by 26 per cent annually to 5 billion connections by 2017.

Whoever’s producing the data, the numbers paint a compelling picture of massive, consumer-driven growth in demand for ever more sophisticated mobile devices and services. Smartphones may have been consumers’ gateway into a mobile existence. But exploding demand for tablets, coupled with rising interest in wearable devices, means the fun is only just beginning.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca