Shipment data for the cellular modems used to connect laptops and netbooks to the Internet indicate that more than 35 million of the devices hit the market in 2008.

“After years of slow growth, the embedded cellular modem market is starting to show signs of life, increasing volumes and exceeding expectations. ABI Research expects that, building on a good showing of 3.5 million units in 2008, shipments of embedded modems will more than double in 2009,” said ABI Research principal analyst Philip Solis.

Of 35 million, the majority were the external USB modems that mobile operators have been pushing for some time. Continued growth has been bolstered as mobile operators have bundled USB modems with netbooks in attractively subsidized price plans. A further 3.5 million were embedded modems, built into the computers.  

Qualcomm and Ericsson have been targeting the embedded modem market directly, positioning their products very competitively against each other. Operators, especially in Western Europe, are subsidizing USB modems and offering premium data plans that include “free” netbooks or laptops equipped with embedded modems.

The analyst warns that despite the positive picture for embedded modems, the global recession will inevitably have an impact on the market.

“In light of the prevailing economic conditions and the resulting slowdown in laptop shipments, ABI Research has lowered its overall forecasts for the cellular modem market for 2009. However, shipment rates will continue to grow, albeit at a slower place, because this is an under-penetrated market and because of subsidies and other incentives offered by mobile operators,” said Mr. Solis.