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Summary:

Mobile penetration in the U.S. is nearing 100 percent, leading some to wonder whether we’re near a saturation point. But as connectivity expands to a wide range of devices that aren’t phones, “handset penetration” won’t really matter anyway.

With the mobile penetration rate in the U.S. nearing 100 percent, we’re seeing plenty of stories about how we’re approaching (or already at) at the saturation point. But as I note in my weekly column over at GigaOM Pro, I’m beginning to wonder exactly where that saturation point is — and how much longer “handset penetration” will really matter.

For as we’ve seen in a host of other markets, 100 percent penetration is no ceiling. Analyst Tomi Ahonen pointed out a few weeks ago that the U.S. penetration rate for the full year of 2008 (the latest World Bank statistics) was 89 percent — 84th among all countries. Some emerging markets even ranked ahead of the U.S., including Thailand and Algeria.

The impetus for such high rates can vary wildly from region to region, so there are reasons to think that the U.S. may have a lower ceiling than other markets when it comes to mobile usage. But there’s also a new class of connected devices that’s just beginning to come to market.

The success of the iPad 3G underscores the untapped market for a device that’s neither laptop nor phone but leverages a constant connection to a cellular network — and it’s just the beginning. The notion of handset penetration rates, then, will become obsolete as the mobile industry expands to a wide variety of gadgets that aren’t phones. Like ARPU — which is still a key metric in the industry — it will provide just a glimpse of the market rather than a broad view. So instead of arguing about what kind of handset penetration rates we should expect to see in the U.S., we should be talking about the penetration rate of connected devices — and how much higher that will be than mere phone usage. Read the full post here.

Imaage courtesy Flickr user The Intrepid Traveler.

  1. Most of these connected devices will use Android as it is truly a mass OS- manufacturers need no permission to implement in automobiles, tablets, phones, etc.

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  2. Sorry, I’m not able to comment on the expanded article as I am not a premium member. But I will comment on what you’ve talked about so far in this post.

    If you’re a follower of Tomi Ahonen you’d have read many times that 100% penetration rate is not the end. The belief over the years was that 100% was the end-all but time has proven that to be generally untrue (maybe even universally untrue). Countries that have hit 100% penetration have also surpassed that rate with some countried already at 120% penetration rates (and climbing) and some higher.

    Handsets generally refer to mobile(cell) phones. I have no doubt that this number will surpass 100% in the near future. I see absolutely no reason why the USA would be different from the rest of the world in this regard. The other “connected” devices are separate and shouldn’t be lumped together with mobile phones/handsets. It would just convolute the data and discussions with similar but unrelated categories/classes of devices.

    Devices like the iPad are tablets (slates) and no matter how simplified their OS (relative to their desktop counterpart) or how similar it is to their mobile phone OS, they are full computing devices that fall under similar categories as netbooks/smartbooks.

    Also, I think it’s a bit premature to state exactly how successful a device the iPad is. Will a few million iPad devices in the public constitute general populace adoption or are these to be the toys of early adopters, fans and gadget geeks? The consencus is not yet out and I would caution against making a call at so early a stage of its life cycle.

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