I’m Still Relevant: Why the USB Modem Still Has a Place in the Market

Back to Blog  •  Posted on December 22, 2014 by admin


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A few years ago, the advent of the embedded module hit the tablet and M2M market with a full head of steam. Market analysts predicted that embedded module sales would soon out-pace the USB Modem.* However, when embedded module sales closed in on the USB Modem, their growth slowed to a crawl. It seems that the market has room for two “highlanders,” but why?

Clearly, the embedded module is a boon for tier-one carriers (Verizon, T-Mobile, Sprint, AT&T). Essentially, an embedded module locks in a customer to a carrier contract for the length of the host-device’s life cycle. For the same reason, though, this has stagnated the embedded module’s market ceiling. Simply, the average retail customer does not want to be locked into a single carrier for the entire life of their tablet, laptop, or connected device. But this is not the whole story.

What really has been driving the embedded device market has been the M2M (Machine to Machine) space. The stability and reliability of an embedded module was seen to be far superior to the USB Modem. This led carriers to push for modules in all of their emerging M2M solutions. Unfortunately for Verizon, AT&T, T-Mobile, et al., developers found such solutions burdensome. It locked solutions creators into a process of developing a device around its connective ability, rather than creating a device, and then finding the connectivity solution towards the end of development.

USB Modems, on the other hand, are more affordable, more easily customizable, and in some respect, disposable.

In the new “Internet of Things” era, the production cycle of a M2M solution can often be a long one, as developers constantly tweak and improve their device. As a result, when the final iteration of the device is ready for full scale production, it is often the case that network technology has advanced more rapidly than expected when development began. In turn, a device can be rendered obsolete, as, for example, 3G becomes more affordable, and 2G virtually unusable. The USB modem addresses these issues in a pretty straightforward fashion: throw out the old, and buy new (or used). The affordability of the USB modem is really its greatest asset.

Sure, the USB is not a sleek fitting, micro thin solution that really provides designers to implement a “wow” factor. But it is constantly upgradable. With many of the M2M solutions now geared towards B2B sales, substance always trumps style. More to the point, who cares how sleek your M2M device is, when it is being put inside and air conditioner, under a truck, or on an oil pipeline?

In the end, manufacturers have a marked interest in maintaining the USB modem. They have a shorter life than the Embedded module, which, in turn, leads to more sales. More than that, though, it is much easier to diversify a USB modem’s applicability within different markets. Huawei’s product catalogue serves to illustrate this point thoroughly. The largest mobile manufacturer in China has yet to produce a full scale embedded module for any market. Meanwhile, they crank out a new USB modem every 6 months, and each of those USB modems has multiple sub-models, with country specific frequencies.

Eventually, embedded modules will completely supplant the USB modem, but not in the near future. Pricing of modules on the secondary market is still high, and their supposed benefits do not justify the price at which they are sold. When M2M developers are constantly looking to limit overhead, while mitigating tech development risk, the USB modem remains king. Coupled with an increasing prepaid market, and consumers dissatisfied with long-term carrier contracts, the embedded module wont be able to fully capitalize on its potential, until top-tier carriers offer more attractive plan pricing.