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Tuesday, October 26, 2010

A Brief History of USB modems

USB modems have been around for about five years. The first company that pioneered in this invention is a Chinese manufacturer named Huawei Technologies. At that time, this was a brilliant product adopted by several global operators including Vodafone, T-mobile and 3 Hutchison. Since then the size, shape, function and download/upload speed have improved over the years.

Another Chinese manufacturer named ZTE Corportation, a HK stock exchange listed company with Chinese government as its dominant share holder (note: Huawei is privately owned and not yet listed), soon went into the game to manufacture USB modems. Instead of improving on the design and development of USB modems technology, ZTE went into a price war with Huawei.
A USB modem designed by Huawei for Vodafone
Other telecommunications companies, including Nokia and Sierra Wireless, saw the opportunity and joined the game; as USB modems are rather easy to design and produce at a low cost. Huawei was only able to enjoy a 'premium' on producing USB modems at the initial period.

ZTE's sales tactics worked. They were able to steal Huawei's market share in USB modem and partnered with global operators such as Telstra and 3 Hutchison. Since ZTE has initiated the price war, Huawei was forced to reduce its price on USB modems. Perhaps this is one of the reasons why Huawei entered the Android smartphone market, a market that ZTE is also trying to put its foot into. 

The overall life cycle of USB modems is likely to be less than ten years. It is a computer accessory that will soon be replaced by Wi-Fi tethering in smartphones, Wi-Fi networks, laptops with SIM card slot and iPads. We will hopefully see further price drop in the device and data plans in the next couple of years.


(Read about other technologies that makes life simple under the Lifestyle tab.)