Online news hits a new high-water mark in popularity For many home broadband users, online news is a primary news source

Pew: By the end of 2005, 50 million Americans got news online on a typical day, a sizable increase since 2002. Much of that growth has been fueled by the rise in home broadband connections over the last four years. For a group of high-powered online users – early adopters of home broadband who are the heaviest internet users – the internet is their primary news source on the average day. Within this group – which makes up 40% of home high-speed internet users in the United States – 71% go online for news on the average day, while 59% get news from local TV. Just over half get news from national TV and radio on the typical day and about 40% turn to local papers. The broadband difference is now permeating the news environment. High-powered internet users are heavily into other media sources as well, but the preeminent place of online news suggests that it shapes their offline information choices in an important way. Across age groups, the impact of online news is greatest for American adults under the age of 36 with a high-speed internet connection at home. For this age group, the internet is now on par with local TV as a daily source for news, and surpasses national TV, radio, and local papers as a news source. Fully 46% of this group gets news online on the typical day, compared with 51% who turn to local TV, 41% who turn to radio, and 40% to national TV news. Broadband users in this age group are more likely to seek out a wider range of news sources on a typical day than their dial-up counterparts, with much of that addition coming from online news. For the under 36 age group generally, the local paper, local TV, and national TV newscasts play lesser roles in their newsgathering habits than for older Americans. Historically, Americans under the age of 36 are generally less likely to follow current events than older Americans, but the presence of an ‘always on’ broadband connection pulls some of them to the news. For many of these young broadband users, the internet is their ‘main course’ for news and they don’t always eat their vegetables or order dessert in the form of using other media. For older broadband users, online news fills in ‘news gaps’ among already established news consumption habits, although these broadband users show a modest tendency to watch less local TV news than dial-up users. Otherwise, broadband and dial-up users over the age of 35 show small differences in daily news consumption habits. Pew: Online news

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73% of Americans go online

Pew: Pew Internet & American Life Project shows that 73% of American adults (age 18+) go online to use the internet or email.

Three-quarters of white adults (74%) go online, compared to 61% of African American adults. Fully 80% of English-speaking Hispanics go online.

Age continues to be a strong predictor for internet use: 89% of 18-29 year-olds go online, compared to 82% of 30-49 year-olds, 71% of 50-64 year-olds, and 34% of those age 65 and older. Pew: online to use the internet or email

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Legal Music Downloads In Europe Will Hit Nearly €4 Billion In 2011

Forrester: Legal Music Downloads To PCs And Mobile Phones Will Make Up 36% Of The Total European Music Market, Supporting An Overall Market Recovery. While global physical music sales in Europe will decline by nearly 30 percent in value between 2005 and 2011, music downloads will grow exponentially to help fill the gap,. The European physical music market is forecast to decline from €9.1 billion in 2006 to €7 billion in 2011, but music downloads to PCs and mobile phones will help the overall music market actually increase to nearly €11 billion. Much of this will be straight substitution, particularly among young consumers, and will change the way they consume music — resulting in a shift of focus from albums to singles.

At present, legal downloads to PCs and mobile phones account for less than 2 percent of the value of the European music market. However, the market is set to expand rapidly, growing to 36 percent of all music sales by 2011, as long as suppliers are prepared to meet consumer demands for flexible, easy-to-use services with competitive pricing models. Over the past year, the market has seen significant trends, including an explosion in both the value and volume of legal downloads; downloads to mobile phones becoming increasingly prevalent in Europe and Asia; and the UK, France, and Germany dominating the European music download scene. These three markets alone account for 80 percent of legal music downloads to PCs in Europe. Consumer adoption of both portable music players and Internet-capable mobile phones is accelerating, and consumer interest in downloading and legal sites is also increasing.

However, the industry still has several hurdles to overcome if it is to take music downloads mainstream. The lack of standardization around formats and devices frustrates many users; the portability and flexibility of downloaded tracks remains vital, with consumers likely to turn away from services that limit track usage with overzealous digital protection. However, there are signs that this is changing, with the current moves in France to force companies to make downloads available for all devices. Finally, inconsistent pricing — both between services, for similar tracks from the same service, and between countries — is another challenge for consumers.

To understand how these positive and negative forces will ultimately affect the industry, Forrester used data from the IFPI, the BPI, and its own Consumer Technographics® data to forecast legal music downloads to PCs and mobile phones in Europe for the next five years. We forecast that this European market will reach just €279 million in 2006, or 3 percent of the total music market; by 2011, this will have grown to €3.9 billion, or 36 percent of the market.

Music downloads will grow an average of 74 percent per year, and downloads to PCs will dwarf downloads to mobile phones. While the overall music download market will be worth €3.9 billion in 2011, just €700 million will come from mobile phones. Problems like poor usability, uncompetitive prices, a lack of flexibility, and limited consumer usage of their phones' Internet capabilities will constrain the download of full music tracks by mobile phones for years to come.

The UK, France, and Germany currently account for four-fifths of the value of European legal music downloads to PCs, and they will continue to make up half of this market through 2011. In 2005, the UK legal PC music download market was worth €52 million, compared with Germany's €42 million and France's €20 million. This will have changed by 2011, when the German market will take €672 million, versus €514 million in the UK and €472 million in France. Thirteen other European countries will see major growth in music downloads to PCs — from €27 million in 2005 to €1.6 billion in 2011, collectively.

To take advantage of this growth, music services need to take recognize the social computing phenomenon, encouraging users to forward clips to friends and create online buzz around new singles. They will also need to help potential downloaders concerned about illegal files corrupting their computers by providing online support and emphasizing the legality and quality of their services. In addition, mobile services must make it easier and cheaper for consumers to download music via their mobile phones — and face the fact that investment in mobile download services won't generate significant returns from the start. Legal Music Downloads To PCs And Mobile Phones

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Asian Fiber-to-the-Home in Hyper Growth, But Opportunities Vary Dramatically Between Regions

The Diffusion: Asian FTTH will Grow Almost 10 Fold by 2010. The number of fiber-to-the-home (FTTH) subscribers in Asia will grow from 4.6 million in 2005 to more than 40 million by 2010 - then accounting for as much as 25% of all Asian broadband subscribers in 2010. However, analysts caution that the business case for FTTH deployments will be primarily urban and will vary dramatically in emerging markets. TDG's latest topic paper, The Market for FTTH in Asia: Different Geographies, Varied Opportunities, is available for free download at www.thediffusiongroup.com.

Fiber-to-the-Home Subscribers in Asia - 2002 to 2005

The majority of FTTH deployments in Asia will be confined to areas where broadband penetration is mature, bandwidth-hungry users continue to want more speed and governments provide incentives. FTTH deployments will be primarily limited to urban areas where the most affluent, professional, and bandwidth-dependent consumers reside in apartments or other multi-dwelling units. In such environments, user density is very high - a factor that makes the FTTH business case much more attractive.

To help identify where and when these specific opportunities will emerge within Asia's developing and emerging markets, TDG evaluated various deployment scenarios across suburban, urban and rural market segments. As well, a variety of locale-specific factors such as labor rates and disposable income were added to the model - these variables play a significant role in cost sensitivity analysis and ultimately determine which Asian regions cross the FTTH/DSL tipping point at which time. TDG also analyzes the importance of regional incumbents, as they will be the an important factor in determining (1) when the tipping point is reached, and (2) when mass rollouts are thus deemed attractive. While high levels of user density is important, it is the new revenues and consequently consumer ability to pay that make the business proposition significantly more attractive to operators. This is the real tipping point for FTTH industry - identifying the point at which the economics of deploying FTTH become more compelling than the economics of deploying or upgrading DSL.

Fiber to the Home in Asia: Analysis & Forecasts,

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AVERAGE U.S. HOUSEHOLD NOW OWNS 26 CONSUMER ELECTRONICS PRODUCTS, FINDS CEA'S ANNUAL OWNERSHIP STUDY

Consumer electronics : With the average U.S. household owning 26 non-discrete CE products (up from 25 in 2005) and spending $1,200 on CE products in the past 12 months. CEA's annual also found that analog is giving way to digital technologies across the board, identifying the top five CE growth sectors as MP3 players, digital cameras, car video entertainment systems, in-dash CD players and notebook PCs.

America's love affair with consumer technology products continues. Consumers across the nation recognize that digital products enhance the way we all work, live and play. Digital products are cool and the CE industry remains hot.

With the overall CE industry expanding 11 percent on a revenue basis in 2005, it is understandable that the household penetration of a handful of categories responsible for driving this double-digit revenue growth have gained momentum over the past year. The MP3 player certainly tops the list with a 10 point gain in household penetration from 15 percent in January of 2005 to 25 percent in January of 2006. This is the only category to have tripled growth in a year. Eight million units shipped in 2004 and shipments surpassed 25 million in 2005. We anticipate an additional 30 million will ship this year, which puts MP3 right up there with televisions.

That other top growth categories included the digital camera - up eight household penetration points from 49 percent in 2004 to 57 percent in 2005; car video entertainment systems, up six points from nine to 15 percent; the in-dash CD player, up five points from 57 to 62 percent and notebook PCs, up four points from 30 to 34 percent.

In addition to calling out the top growth categories, the study revealed the five most owned products, led by televisions at 95 percent household penetration, followed by VCRs (87 percent), cordless phones (85 percent), DVD players (81 percent) and wireless phones (78 percent).

CEA estimates the current installed base of cell phones is nearly 182 million units with an average of more than two wireless handsets per owner household. Close behind the wireless phone is the PC; three in four households now own either a desktop or notebook PC. Portability is playing a larger role in computing as evidenced by the fact that notebook ownership improved four points to 35 percent of households.

The report includes favorable findings for satellite radio, as well. Satellite radio ownership reached 10 percent of households as aggregate Sirius and XM subscribers breached the 10 million mark. Ownership and Market Potential Study

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Value of Networked Consumer Electronics and Home Networking Hardware to Reach $85 Billion by 2011

ABI: Global. The market for home networking and connected entertainment devices will grow at an astonishing rate over the next few years, as the total value of home networking hardware, gateways, networked storage devices and networked entertainment devices rises from $14 billion in end-user revenue in 2005 to more than $85 billion by 2011. The major driver in overall revenue growth for this market is the transformation of most conventional consumer electronics devices such as game consoles, DVD players, TVs and portable media players from stand-alone devices to network-connected ones, using both wireless and wired IP communications technologies. This market has reached a major turning point. Home networking has moved beyond a basic broadband sharing model to one of networked entertainment and convergence across the PC, consumer electronics and communications devices. The emergence of enabling technologies such as 802.11n for wireless video distribution, HomePlug AV and MoCA as alternative multimedia network backbones, and DLNA media server and device interoperability software, are all solidifying the foundation for an explosion of new devices and applications based on a fully connected home. New digital media applications are creating end-user demand for connected entertainment and communications devices. The rise in popularity of multi-room PVR, place-shifting, and networked gaming are fast creating an increased need for a pervasive connectivity throughout the home, to the Internet and between different devices. Service providers are also a catalyst in this market, as IPTV providers such as Verizon, France Telecom, PCCW and AT&T utilize home network technologies for video distribution, while others look to home networking as a way to extend data services without having to rewire the home. Residential gateways and networked set top boxes are becoming standard requests as service providers look for new revenue streams based on IP and converged networked services. The total number of network connections shipped into the connected home will grow from 247 million in 2005 to over 861 million by 2011. Wi-Fi will become the most common of the connection technologies, as consumers look to connect home servers, gateways, networked consumer electronics and portable devices over the media network. , Home Networking and Connected Home Market Analysis

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Technology Online Ad Spend to Reach $2.8 Billion in 2007

eMarketer: US. Sees Some Resurgence In Online Marketing And Advertising By Computer Hardware and Software Companies

Computing products advertising, as a share of total online ad spending, dipped in recent years, from 20% of all online advertising in 2003 to only 15% in 2005. eMarketer projects that in 2006 it will again account for 15% of all online advertising, rising to 16% in 2007.

The technology industry is going through major changes in platforms and business models, while it competes with consumer electronics. We expect online ad spending to keep pace with overall online advertising growth, but not surpass it in the next few years.

As hardware and software companies partner with Internet publishers and content providers to enter new markets and reach consumers in new ways a new convergence of the two industries is being created.

For instance, software publishers are beginning to shift distribution and pricing in the consumer market. One-time sales or downloads of programs are giving way to software as a service, where a monthly or annual subscription fee guarantees constant upgrades and system maintenance from the publisher. Technology Marketing: Customer Driven Convergence

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Growth in End-user Sectors Boosts Demand in the European SMT Placement Equipment Market

Frost: The development 2009 of high-growth end-user industries is opening up lucrative opportunities in the European surface mount technology (SMT) placement equipment market. Industries such as telecommunications, automotive and medical electronics are developing at an accelerating rate, thereby hiking demand for SMT placement equipment.) European Surface Mount Technology (SMT) Placement Equipment Market, reveals that revenues in this industry totalled $368.5 million in 2005 and is estimated to reach $550.5 million in 2012.

Fast-moving commercial markets, which demand a succession of sophisticated high-technology products, are dominating the electronics manufacturing scene today, This trend is compelling manufacturers to keep pace with the continuous miniaturisation and convergence of different technologies by developing increasingly flexible, modular SMT placement equipment.

For instance, mobile phones, once considered a luxury, are now becoming a commodity and converging with consumer electronics devices. Mass production of these multi-function products requires highly sophisticated, flexible and high-speed manufacturing equipment. In addition, the use of wireless technology in medical devices is growing rapidly, resulting in heightened demand for specialised SMT placement equipment. Also, the increased complexity of printed circuit boards (PCB) due to the miniaturisation trend across multiple industries is further boosting demand levels.

With a large number of central and eastern European countries recently joining the European Union, the SMT placement equipment market is experiencing significant new growth opportunities. Countries such as Romania, Estonia, the Czech Republic and Hungary are emerging as attractive low-cost manufacturing locations for the top Global electronics manufacturing service (EMS) providers, all of whom have set up production facilities in the region. This trend is expanding the demand for new SMT production equipment.

Despite such promising prospects, the cyclical nature of SMT equipment sales as well as the high cost associated with operation and maintenance can inhibit new equipment purchases. Many SMT placement equipment manufacturers have experienced financial losses and inventory build-ups with their product ranges in the past, not only due to the economic downturn, but also due to changing market requirements and the high price of new equipment.

Since the economic downturn of 2001, price has become a major concern for original equipment manufacturers (OEMs) and EMS providers. As a result, alternative business strategies focused on maintaining position rather than on increasing market share are being developed by manufacturers.

European Surface Mount Technology (SMT) Placement Equipment Market

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Growth in End-user Sectors Boosts Demand in the European SMT Placement Equipment Market

Frost: The development 2009 of high-growth end-user industries is opening up lucrative opportunities in the European surface mount technology (SMT) placement equipment market. Industries such as telecommunications, automotive and medical electronics are developing at an accelerating rate, thereby hiking demand for SMT placement equipment.) European Surface Mount Technology (SMT) Placement Equipment Market, reveals that revenues in this industry totalled $368.5 million in 2005 and is estimated to reach $550.5 million in 2012.

Fast-moving commercial markets, which demand a succession of sophisticated high-technology products, are dominating the electronics manufacturing scene today, This trend is compelling manufacturers to keep pace with the continuous miniaturisation and convergence of different technologies by developing increasingly flexible, modular SMT placement equipment.

For instance, mobile phones, once considered a luxury, are now becoming a commodity and converging with consumer electronics devices. Mass production of these multi-function products requires highly sophisticated, flexible and high-speed manufacturing equipment. In addition, the use of wireless technology in medical devices is growing rapidly, resulting in heightened demand for specialised SMT placement equipment. Also, the increased complexity of printed circuit boards (PCB) due to the miniaturisation trend across multiple industries is further boosting demand levels.

With a large number of central and eastern European countries recently joining the European Union, the SMT placement equipment market is experiencing significant new growth opportunities. Countries such as Romania, Estonia, the Czech Republic and Hungary are emerging as attractive low-cost manufacturing locations for the top Global electronics manufacturing service (EMS) providers, all of whom have set up production facilities in the region. This trend is expanding the demand for new SMT production equipment.

Despite such promising prospects, the cyclical nature of SMT equipment sales as well as the high cost associated with operation and maintenance can inhibit new equipment purchases. Many SMT placement equipment manufacturers have experienced financial losses and inventory build-ups with their product ranges in the past, not only due to the economic downturn, but also due to changing market requirements and the high price of new equipment.

Since the economic downturn of 2001, price has become a major concern for original equipment manufacturers (OEMs) and EMS providers. As a result, alternative business strategies focused on maintaining position rather than on increasing market share are being developed by manufacturers.

European Surface Mount Technology (SMT) Placement Equipment Market

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Optoelectronics Sales Forecast to Surpass Discretes in 2006

IC Insights: Total revenues for optoelectronics, sensors/actuators, and discretes to outpace IC growth. In 2006, for the first time in history, the optoelectronics market is forecast to surpass the discrete semiconductor market and become the second largest market segment in the semiconductor industry behind integrated circuits. This study forecasts that sales of optoelectronics devices will increase 11% in 2006 to $16.5 billion, while discretes will grow just 2% to $15.6 billion this year after declining 3% in 2005 (Figure 1).

Figure 1

Strong demand for image sensors in digital cameras and cell phones, along with new solid-state lighting applications for white light-emitting diodes (LEDs), will push optoelectronics sales to $31.8 billion in 2010. Meanwhile, revenues for discrete semiconductors are expected to grow at a much slower annual rate to reach $19.6 billion in 2010.

Optoelectronics has regained momentum after serious setbacks in the 2001 semiconductor downturn and telecom recession. The optoelectronics segment includes CCD and CMOS image sensors, which are forecast to grow at a CAGR of 24% this decade in terms of sales and 37% in unit shipments! High-brightness white LEDs promise to give the optoelectronics segment another boost at the end of this decade, when solid-state lighting systems begin to replace conventional fluorescent tubes and incandescent light bulbs in offices and homes.

Combined, the O-S-D segments accounted for 15% of the world's $227.5 billion semiconductor sales in 2005. During this decade, the total dollar volumes of optoelectronics, sensor/actuator, and discrete products are forecast to slightly outpace IC industry growth. IC Insights forecasts a 13% cumulative average growth rate (CAGR) for combined O-S-D sales in the 2005-2010 period, while the much larger IC segment will increase at a CAGR of 11%. It is important to note that dozens of the world’s largest IC suppliers participate in at least one or more of the O-S-D segments, and many are banking on strong growth from these markets in the future.

2006 O-S-D Report

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Household Telecom Spending To Fall As Services Converge

The convergence of fixed line and mobile telecommunication services has this year begun in earnest with potentially severe repercussions for the European Telecom Services market

- further rate cuts on mobile services driven by the imminent arrival of mobile-WiFi hybrid offers and, ultimately, of future broadband mobile technologies - ongoing mobile traffic growth (fixed-mobile substitution) boosted by these rate cuts. Fixed line revenues – already falling- continue to do so, mobile revenues follow - accelerated development of mobile broadband sustaining growth in mobile market, but high level of market sharing with internet services and content providers.

The arrival of hybrid handsets connecting to fixed, mobile and WiFi is driving the blurring and ultimately complete disappearance of traditional borders between fixed and mobile networks. Longer term, new technologies such as F-OFDM and WiMax will compound this situation whilst expanding the market. Many fixed line operators will make the most of these opportunities to enter the mobile market, mainly via voice over IP, but the mobile operators will use 3G to extend their lead, not only on voice, but also on broadband data services. This augurs for a proliferation of offers and therefore stiffer competition in coming years.

In bottom line terms the report forecasts, during the 2005-2010 period, the average growth in European telecom services to fall 0.8% pa, of which +3.1% pa on mobile and –1.3 pa on fixed line. This corresponds to a significant slowdown in mobile growth that currently stands at +8% pa (2002-2005) and deterioration in fixed line revenues that have remained flat in the same period. Thus, the share of household spending on telecom services will shrink.

Tough times for operators

At the operator level this means much stiffer competition through market share fragmentation and a decline in revenues. The report forecasts sector Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) to fall 1% in 2005-2010, and sector Return On Capital Employed to decline to under 15% in 2010, vs over 20% currently in mobile and 15% in fixed.

The report also publishes an extreme scenario showing sector EBITDA 2005-2010 Compound Annual Growth Rate (CAGR) of between +1 and –4%.

Fixed-line operators have a strong negative exposure to fixed-mobile substitution, but have a real opportunity to develop in mobility. The best positioned are the small alternative operators positioned on broadband, which have little to lose on fixed voice and much to gain in investing in mobile. The Internet service specialists such as Yahoo! and Google are well placed to gain from convergence. They have no telecommunications services to protect, are network agnostic and therefore naturally convergent.

Agreements such as that recently announced by Vodafone with Microsoft and Google on mobile Internet services such as email and web search point to increased activity by Internet Service specialists with potentially less sharing of value for the operators. In this scenario companies such as Skype, Google Talk and Yahoo! Talk will take increasingly greater margins from data and voice resale.

Consumer wins

For the consumer, much of this is good news. As convergence intensifies competition it will prompt price cuts on fixed broadband, mobile broadband and/or mobile voice – depending on the country. Consequently the report forecasts a global market slowdown between 2005-2010.

WiFi paves the way for hybrid offers blending the benefits of a mobile offer (for voice) and of broadband wireline access (when the user is at home, the office or in a hotspot). This technology will provide broadband services that are more powerful and less expensive than 3G and should be a catalyst for mobile data. On voice, WiFi could accelerate the fall in mobile rates by as much as –15% in three years.

Fixed or mobile under pressure, according to the country

Convergence will not have the same impacts in each country. Countries where convergence will increase competition in mobiles include France, the UK and, to a lesser extent, Spain, the Netherlands and Belgium. On the other hand, in Germany fixed mobile substitution will accelerate. The pressure on fixed line operators is also likely to increase in Portugal, Austria and the UK; while in Italy and Switzerland convergence is likely to have a limited impact on competition.

Facing Off on Convergence Publ 20060329

The business market is poised to play an increasingly important role in the U.S. wireless industry as total subscriber growth slows.

IDc: US. . With the consumer wireless market approaching saturation, service providers will focus on the business market and its attractively high voice average revenue per user (ARPU) and still early-stage adoption of data as primary growth drivers. Business revenue is expected to grow from $29 billion in 2005 to $52 billion in 2010.

The wireless industry will be impacted by numerous trends, including slowing subscriber growth, increased competition from MVNOs in the consumer space, evolution to a retail market model, voice ARPU erosion in both the business and consumer markets, and data pricing declines offset by growing data usage, especially in the business market. Wireless services are ideally suited to the business environment. Growth will be higher for businesses than for the overall market due to stronger subscriber growth rates within this segment. However, revenue growth rates will slow from 19% in 2006 to 3% in 2010 as subscriber growth rates slow and pricing erosions impact ARPU and revenue growth. As all industries become increasingly competitive and as companies look to differentiate themselves, incorporating wireless services into their communications and connectivity strategies provides businesses with numerous benefits.

Continued business subscriber growth will come from three strong trends: businesses finding new ways to use wireless to meet their communications and connectivity needs; business usage policies, such as wireless devices on master corporate contracts, that better manage wireless costs and for which non-business usage is explicitly forbidden or implicitly discouraged (such as no free night and weekend calling); and the growth of data services, such as email and laptop AirCard subscriptions.

U.S. Wireless Providers to Focus On Business Subscribers

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Japan PC Shipments Totaled 14.61 Million Units in 2005, Increased by 9.1% Year on Year

IDC: The Japan PC market expanded in 2005 with shipments increasing by 9.1% year on year.

The demand for home PCs recovered in 2005, following the strong demand for consumer electronics caused by the Olympics in 2004. The home PC market had its first positive growth after four consecutive negative years with shipments of 5.6 million units, increasing by 13.6%. The growth in 2005 was also the result of increased shipments by major PC vendors, which started selling spring models in December instead of January. The business PC market declined from double-digit growth in two consecutive years to 6.3%. In the large companies, many PC replacements were completed in the first quarter of 2005, and the demand for PCs for securities under the Information Protection Law also slowed in the second half of 2005.

Although home PC demand was a driver in 2005, there is a gap between shrinking home PC and expanding business PC markets. Despite the declining growth, business PCs will remain strong with over 60% of Japan PC market.

Vendor Highlights

IBM, which was the fifth ranked vendor in 2004, fell from the Top 10 list due to the acquisition by Lenovo. HP, Sony and Hitachi were ranked from fifth to seventh respectively while Lenovo Japan, which launched in May 2005, was ranked 8th.

The top 5 vendors except for Fujitsu marked double-digit growth and increased shares in 2005. While the four vendors focused on market share, Fujitsu took revenue-oriented strategies, thus decreasing its share by 1.4 points. Vendors ranked under 6th except for Apple also had decreasing shares. Apple had the highest growth among Top 10 vendors with 24.7% year-on-year growth with strong sales, including Mac mini.

Vendors focused on the SMB market from the second half of 2005, causing severe competition. As the growth of business PC slows, the competition will be more accelerated in every segment, forcing vendors to be strong under price competition.

The Japan PC market is expected to grow 0.2% year on year and reach 14.64 million in 2006. IDC Japan forecasts the market size will be flat because of the slow demand before the launch of Windows Vista and declining growth of business PC. However, the demand will recover in 2007, .

Notes to Editor

The shipments of Lenovo Japan include IBM Japan PC Business's shipments from the second quarter of 2005.

Japan PC Shipments and Growth Rate, 2000-2005 Source: IDC, 2006

Top 10 Vendor Ranking, 2004-2005 Top 10 Vendors in 2005, Japan PC PC Shipments See: Japan PC market

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2006 Will Be a Watershed Year for the SMB Storage Market

IDC: Small and medium businesses (SMBs) show a growing interest for larger companies' storage solutions and the share of total storage technology spending represented by advanced approaches will be increasing in the next 12 months.

The stars are aligning to make 2006 the breakthrough year for SMBs stepping up to advanced storage solutions. The deployment of local area networks and broadband has helped drive storage needs to unprecedented levels, and a growing number of manufacturers have been crafting storage products and services to meet the often conflicting SMB needs of performance, ease of use, and affordability.

Medium-sized firms have the same requirements as larger firms for improved backup and recovery that disk-based data protection schemas can deliver and are perhaps more open to using exclusively disk in their protection processes,

• SMBs continue to rely on internal disks to meet their storage needs, however, medium-sized firms will increase their storage area network (SAN) capacity in the overall mix in the next 12 months.

• While the top small business storage priority for the next 12 months is to expand storage capacity, enhancing disaster recovery is the top priority of medium-sized businesses.

• Small businesses devote the largest share of disk storage to email and digital content. In contrast, medium-sized devote the largest share of their disk storage to backup and recovery, as well as data-intensive applications.

U.S. SMB Storage 2006: The Move to More Advanced Storage Features

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Decline In Total Voice Revenue in 2008-2009 for the U.S. Consumer Wireless Industry

IDC: Although the U.S. wireless service provider industry rocketed ahead in 2005, adding approximately 21.8 million new subscribers, IDC finds the U.S. consumer wireless industry rapidly approaching key turning points in 2006. With subscriber growth slowing and continued voice average revenue per user (ARPU) erosion factors, total voice revenue is expected to decline in the 2008-2009 timeframe.

The U.S. wireless service provider industry had another stellar year in 2005, crossing the 200 million subscriber and 70% market penetration thresholds, receiving positive market response to the first handset-based 3G applications, and with providers reporting they had crossed the 10% data ARPU level. Another key dynamic in 2005 was that mobile virtual network operators (MVNO) moved into the market entry phase; two key roles that MVNOs will play over the forecast period are to force the broader wireless service provider market to adopt a retail market model approach and to increase the overall level of service provider competition.

Total voice service revenue declines late in the forecast period will jolt an industry accustomed to 25 years of voice revenue growth and further emphasize the importance of data services to the future of the industry. With the wireless subscriber market approaching saturation, driving further adoption usage of data services will be critical to maintaining total ARPU and service growth in light of continuing voice ARPU erosion

The key market dynamics over the forecast period include: the slowing of total subscriber growth; increasing levels of competition from MVNOs, followed by further service provider consolidation; market model evolution among established national wireless service providers from a utilities-type market model to a retail market model; continued voice ARPU erosion; strong data revenue growth offsetting emerging data pricing erosion; the increasingly critical role of content and entertainment in driving data service revenue; strong business market growth; new and emerging user segments; new uses of wireless contributing to continued subscriber and total revenue growth over the forecast period; and total average ARPU remaining relatively stable across the forecast period.

U.S. Wireless Consumer 2006-2010 Forecast: Ways Around The Walls Ahead

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Ringing in the Changes: The Explosive Growth of Mobile Music Downloads

ABI: The market for full track music downloads to mobile devices was twenty times larger at the end of 2005 than it was twelve months earlier. Mobile Music Services surveyed world markets for downloads of full music tracks, ringtones and ringback tones. It found that global revenues from over-the-air (OTA) downloaded full track songs last year were $251 million, up from $12.4 million in 2004. ABI Research forecasts that by 2011 this figure will be $9.3 billion. What drives a successful music download service? There are five prerequisites:

• A 3G network capable of delivering the product;

• A distribution mechanism: effectively a mobile music store that can deliver the content to the customer, verify that the handset can accept the content, and ensure that users are paying for it;

• An agreement between an operator, one or more record labels, and possibly a content aggregator; (in North America, operators - there are currently only two in this field, Verizon and Sprint - tend to partner directly with record companies, while overseas, content aggregators are frequently included in the equation as middlemen);

• A robust DRM scheme that also allows users to move tracks easily between devices; and

• Handsets with sufficient memory and feature-sets to support music downloads and transfers. This demand pleases handset manufacturers, who are only too happy to build high-margin extras into their new products.

You also need people willing to buy OTA content. Over-the-air downloads will be relatively less successful in North America because of the high penetration of PCs. Overseas (particularly in Asia), PCs are less prevalent and the mobile phone is more so. There wasn't even a Japanese iTunes store until Q4 of 2005. That's part of the reason KDDI sold 30 million mobile tracks last year in Japan alone. Mobile Music Services Publ 20060329

Fleet Management Solution for 50% of New Heavy Trucks by 2009

RNCOS: n the European road transport industry, the soaring prices of oil create demand for fleet management solutions (FMS) A GPS enabled technology, FMS allows large operators of mobile assets to track and communicate with the entire fleet. While the technology is a widely used LBS (Location Based Services) application in developed nations, it is making its impact on developing countries too.

FMS is an advanced technology to track and monitor vehicles through remote sensing. It typically helps to reduce fuel consumption by 5-15%. In 2005 as fuel prices increased by 28% and while this rise is likely to continue in the future, transport companies are strongly stimulated to invest in the FMS technology to keep costs under control. It is predicted that half of the heavy trucks sold in 2009 will incorporate a fleet management solution.

In US currently, nearly 1.9 million GPS/ wireless devices are used to monitor fleet vehicles, trailers, construction equipment and mobile workers. This includes about 1.36 million US fleet vehicles designed with AVL systems.

GPS: Fleet Management Market (2006-2010) Publ 20060329

Wired Equivalent Privacy: Unsafe at any Key Length

RNCOS: The speed with which wireless LANs are being deployed reveals the inherent benefits of the technology. However, most wireless deployments suffer absence of security. Experts looking at the deficiencies of the technology believe that organizations should not deploy it as yet. This clearly shows that LAN deployment has not reached its potential.

In spite of its deficiencies wireless LAN are continuing to be installed by organizations, IT departments in large enterprises as well as individuals. A part of the responsibility of lack of secured LAN system lies with most organizations, which simply haven’t put enough effort into installing the required security to the wireless LANs. Organizations began to consider Internet security seriously only after there had been highly visible and financially eroding hacker attacks. In the same way when wireless disasters in LAN systems occur, will organizations think about change and take wireless security more seriously.

While it is true that a number of inherent security problems prevail with the wireless 802.11 technology but there still are many direct measures that can be adapted to lessen their severity. As with introduction of many new technologies the ideal way is to first identify and recognize the problems and then to entrust to the ones, which can be reasonably solved in the various environments.

The total revenue from wireless LAN security all over the World to be around $1.28 billion for Q1 in 2 006, which should reach $6.6 billion by 2008.

The North American region facing recent attacks on important business establishments has decided to deploy more secured wireless LAN at these establishments. Arguably that the region will continue to generate more markets through 2004 to 2008 with accounted revenue of 63% is predicted in the report. Wireless LAN Security – A Industry Outlook Publ 20060329

Multimedia, Data-Rich Mobile Phones Rapidly Taking Market Share in Asia

In-Stat: Cutting-edge mobile phones—phones integrated with various multimedia and rich-data functionalities—are rapidly increasing their share of phones shipped in the Asia Pacific market. For example, with 252.3 million mobile phones shipped in the region in 2005, 53.4% had camera functions, the high-tech market research firm says. The plunging price of such models in emerging markets has greatly promoted their adoption. Digital cameras, including both digital still camera and video camera, will remain the most popular function of cutting-edge phones. By 2009, 67% of mobiles sold in Asia Pacific will have camera functionality.

• Phones with music-playing capabilities accounted for 23% of phones sold; that figure is above the Global average of 13.6%.

• By 2009, the functionality and quality of music playing on mobile phones will be greatly enhanced, with music phones likely to be in direct competition with stand-alone music players.

• Mobile digital broadcasting TV phones, and cellular phones with alternative wireless broadband connectivity, were introduced to early adopters in South Korea and Japan in 2005.

Cutting Edge Mobile Handsets in Asia

Publ 20060329

Faster Wireless Data Speeds Grow the Laptop Modem Market

ABI: The spread of high speed mobile data services is driving the increasing adoption of wireless modems in laptop computers. In the early days of mobile computing, only the most hardcore road-warriors in niche markets equipped their laptops with wireless connections, because transmission speeds were so painfully slow using the cellular technologies of the time. As speeds increase with the rollout of 3G services and air-interfaces evolve from EV-DO and W-CDMA to EV-DO Rev A and HSDPA, wireless connectivity becomes progressively more useful to a growing pool of laptop users. The original wireless modems for laptops were add-ons in the shape of PC cards, and indeed, there are still several good years left in the PC card market. Now, progressively more wireless modems are being built right into the computer, and it is there that the real long-term opportunity lies. That will produce a change in the dynamics of the market. ABI Research estimates that shipments of embedded modems will equal those of PC cards by 2009. With PC cards mobile operators sell the cards and an associated mobile phone service. Changing service provider or upgrading to a better modem is a simple matter of purchasing a new and different card. Embedded modems, however, must be chosen at the time the laptop is purchased - before the service is activated. The consequence is that mobile operators incentivize laptop vendors with a bounty for every activation. Therefore modem manufacturers should take care to cultivate strong relationships with carriers and operators. Among the leading laptop modem vendors — Option NV, Novatel Wireless, Sierra Wireless and SonyEricsson — Option has been most proactive in pursuing such relationships, and it has produced results: we found Option to be the number one cellular modem vendor at the end of 2005. Mobile Broadband to the Laptop Publ 20060329

Rapid development of technology increases interest in managed services

Telia: The majority of companies in Sweden think it is difficult to follow today's rapid technological developments. Interest in leasing functions for telephony, data communications and PC workstations has increased as a consequence. Four out of ten companies believe that it will become more common to lease managed service functions during 2006.

Telia's survey, which polled more than 2,000 people at companies all over Sweden, indicates that there is a strong interest in purchasing functions. Many companies consider it an advantage to have a fixed cost that can be budgeted, instead of having to hunt around for the lowest price service. The results of the poll were confirmed by a recently conducted "IT-Barometer" survey on the outsourcing of services. In this survey, one out of four enterprise managers considered managed services as their primary option for improving their IT support function. During the past year, we have seen a strong increase in demand for purchasing functions instead of individual services and products. This marks a breakthrough in the outsourcing of managed services. Companies have realised that managed services function well in practice and they make it easier for them to focus on their core operations,. Companies in the survey that had purchased managed services have mainly been able to reap the benefits of reduced costs, efficiency gains and other major advantages by having access to external expertise. Another important reason for the breakthrough in managed services is that technology has developed rapidly and IT systems have become increasingly complex in nature. ISix out of ten companies stated that that it is difficult to keep up with today's rapid development of technology. Six out of ten also considered it an advantage if they did not have to maintain their own competence in IT and telephony in-house. A number of customers have testified to this,. We are seeing a change in behaviour in which customers are no longer considering IT and telecom as separate services and are instead having a common view of communications, which is enabled by IP-based services. At the same time, this also makes these issues more complex and increases the interest of companies in managed services to ensure the best communication solutions. According to data from IDC, sales in the Swedish managed services market totalled approximately SEK 17 billion in 2005. The market has steadily increased over the past few years and is expected to continue growing between 3 and 5 percent in the next few years. Telia Survey IT-Barometer Publ 20060329

Sees Rise in Electronic Supplier Enablement

Aberdeen: New Benchmark Survey Finds Companies Will Conduct More Business over the Web in Next 2 Years More companies are doing business with their suppliers through online electronic means and will do more of it over the next two years. The survey found that while phone, fax, and e-mail remain the dominant communications methods, enterprises around the globe are discovering the value of Web-based tools such as portals, catalog hubs, supplier networks and marketplaces.

Tt electronic supplier enablement was the chief factor limiting the growth of electronic procurement,. An acceleration of various Web-based methods of transacting business. Still, only 29% of suppliers are enabled to do business over the Web.

The top obstacle to enabling more suppliers appears to be the suppliers themselves. Nearly half of the companies surveyed said many suppliers lack the money, infrastructure, or resources to support and sustain electronic enablement initiatives. To remove the obstacles, enterprises are using both enticements and mandates to nudge their suppliers close to the Web. Among those enticements and mandates:

• Consolidating spending with electronically enabled suppliers;

• Mandating that suppliers adopt a customer’s chosen communications methods; and

• ffering technical assistance to suppliers who want to move more business to the Web.

The Supplier Enablement Benchmark Report, Publ 20060329

NAND Flash Suppliers Score Big Gains in 2005. Samsung, Toshiba, Hynix, ST display strongest growth

IC Insights: Driven by demand from consumer and communications applications, the flash memory market enjoyed another solid year of growth in 2005. Flash memory sales totaled $18.6 billion in 2005, a 19% increase from $15.6 billion in 2004. Within the flash market, however, the NOR and NAND segments headed in opposite directions. The NOR market declined 13% to $8.0 billion, while the NAND segment grew 64% to $10.6 billion! In 2005, unit shipments of NOR flash increased 9% to 4.1 billion, while shipments of NAND devices increased an impressive 88% to 1.2 billion!

IC Insights' final 2005 ranking of flash memory suppliers shows that most vendors who provided NAND flash memory benefited from strong product demand. Topping the list of flash memory suppliers for 2005 was Samsung, a position it has held for the past few years (Figure 1). Samsung's flash sales (including internal transfers) grew 47% to nearly $6.6 billion, representing 35% marketshare. An agreement with Apple to supply flash memory for the iPod nano accelerated Samsung's second half sales and unit output.

Figure 1

Toshiba, also a provider of NAND flash memory, retained the number two position with flash sales that increased 13% to $2.5 billion. Toshiba's flash marketshare was 13% in 2005, down one point from 2004.

Intel, AMD/Spansion, and STMicroelectronics ranked three, four, and five, respectively, in flash sales for 2005. All three suppliers are predominantly makers of NOR flash memory. However, both Intel (with Micron to form IM Flash Technology) and STMicroelectronics (with Hynix to form Hynix ST Semiconductors) took steps to become actively involved in the hot NAND flash segment in 2006 and beyond.

Hynix Semiconductor enjoyed one of the fastest flash sales growth rates in 2005. Its sales jumped to $1.26 billion, an increase of nearly six fold from $220 million in 2004. Its flash memory sales accounted for 40% of its total quarterly revenue in 4Q05. Although it still has quite a way to go before reaching the flash sales level achieved at rival Samsung, Hynix could very well pose a threat to Toshiba as the second-largest supplier of NAND flash memory in 2006.

IC Insights' March Update to The McClean Report

Publ 20060328

THE MOBILE VIDEO MARKET WILL GENERATE REVENUES OF OVER $500 MILLION BY 2010 AS A RESULT OF EXPANDED VIDEO OFFERINGS ON MOBILE PHONES

JupiterResearch: 41% of mobile phone users are interested in some form of video service on their mobile phone. The growing demand for video will generate $501 million in revenues by 2010, up from $62 million in 2005. JupiterResearch is a leading authority on the impact of the Internet and emerging consumer technologies on business.

Adoption of mobile video on phones has been somewhat low to date with only 2% of mobile phone users claiming a subscription. However, among mobile subscribers 17% were interested in watching live TV on their cell phones while 11% indicated interest in short video clips. This consumer interest bodes well for the mobile industry as vendors use different business models to try and tap into this consumer demand. The challenge is not interest but rather finding the correct mix of premium content and price points that is lacking in today's offerings.

Longer term adoption will depend more on business models and content offerings than on the technology or devices. Our research shows that there's strong consumer interest in consuming mobile video. Consumers are just not interested in paying large fees for mediocre content. U.S. Wireless Forecast, 2005 to 2010

Publ 20060328

PC Shipment Growth To Remain Above 10% Through 2008 with Limited Impact From A Delayed Vista Launch

IDC: Following another strong performance in the fourth quarter, growth in the PC market is expected to slow to just over 10% for the next several years Although this is still relatively strong and an improvement from the November 2005 forecast, it is also notably below the growth of more than 15% for the past 2 years and will bring growth in shipment value to below 5%.

The market will slow in most regions during 2006, most notably in Western Europe, Japan, and Rest of world, although total worldwide growth is expected to be at least 10.5% through 2008. This is slightly more optimistic than the November 2005 forecast, which called for growth to slip below 10% starting in 2007. The update reflects a shift of growth from 2006 to 2007 that combines the influence of stronger commercial spending in 2007 with a larger response to Microsoft's Vista release and related developments around digital integration. Short term expectations for the United States and Japan were lowered slightly while the outlook in Europe has improved to reflect continuing portable adoption and a more gradual decline in growth. Overall, worldwide shipments of PCs are projected to grow by 10.5% in 2006 and 10.7% in 2007, compared to November projections of 10.6% and 8.9%, respectively. Total shipment volume is expected to reach 254 million in 2007 with a value of US$232 billion.

The recent delay in the release schedule for Microsoft's Vista is expected to have a limited impact on overall PC shipment volumes. IDC already expected growth to slow notably in 2006 following a wave of replacement purchases and portable adoption, so the Installed Base is relatively fresh. Commercial users are expected to give the new OS a thorough review before beginning any migration, although the consumer market should see a more immediate impact.

Some consumers will certainly delay PC purchases until Vista is available, but we expect the delay to shift only moderate volume from the fourth quarter of 2006 into 2007 and will not cause a loss of sales. The timing of the release will have some impact on when consumers buy, but not so much on whether or not they buy. In addition, we expect Microsoft and PC manufacturers to adjust their marketing and upgrade options to appeal to consumers in the fourth quarter even though the new OS is won't be ready. Instead of a dramatic effect on PC shipment volumes, the delay will probably have a larger impact on PC vendor and Microsoft marketing efforts that will need to be adjusted to fit the release schedule, and that will add complexity and cost.

The prevailing wind driving U.S. PC market growth continues to be consumers and the passage of desktops to portables as their dominant computing platform,. Declining prices, improving performance and battery life, and widescreen displays in notebooks are luring new buyers and upgrades, while stunting desktop PC growth to a trickle. This surge is contributing to the pace of overall notebook adoption and will likely bring closer the day that notebooks out ship desktops in the U.S.

U.S. and worldwide PC Shipments and Growth, 2003-2007 (Shipments are in millions of units)

Region	2003	2004	2005	2006*	2007*
USA Units (M)
Consumer	20.0	21.8	23.6	26.0	29.0
Commercial	32.7	36.5	40.3	42.2	45.9
Total	52.7	58.3	63.9	68.2	75.0
worldwide Units (M)
Consumer	57.2	64.8	78.3	88.4	98.7
Commercial	98.4	114.3	129.3	141.0	155.3
Total	155.6	179.1	207.6	229.4	254.0

worldwide Quarterly PC Tracker Publ 20060327