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Death to the Dongle: Phones are the New Hotspot!

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The number of consumers interested in a buying mobile broadband dongle or a computer with an integrated 3G or 4G radio is half of what it was last year, with just 7 percent planning to purchase one. The data comes from YouGov’s DongleTrack poll, which notes that in 2008, one of every five consumers intended to buy a data stick for their laptop or buy an integrated solution. So if people aren’t buying USB devices for their mobile web access on notebooks, netbooks and tablets, how are they getting online? Wi-Fi proliferation is one answer, as are MiFi devices, but there’s also a growing number of smartphones with mobile hotspot capabilities that people are turning to.

To be sure, the YouGov poll results I read via the MocoNews blog are specific to the United Kingdom, but they should act as a reasonable proxy for any region that has both a mature mobile broadband infrastructure and a growing number of smartphone users. So I suspect similar customer behaviors elsewhere in Europe and in the U.S., for example. And using a phone for a mobile broadband connection isn’t exactly new: back in 2006, my mobile setup used an inexpensive piece of software that turned my Windows Mobile phone into a 3G modem. But that solution required a USB cable and was only good for a single device connection. Fast forward five years, and now our phones are wireless hotspots for up to eight devices.

As consumers become both more tech-savvy and cost-conscious, a mobile broadband dongle makes less sense for most. Why? The data stick is just as limiting as my 2006 solution; it’s good for a single device only, which is the same problem found with an integrated solution on a notebook. Some may find software to share that single connection, but most won’t. And with a data dongle typically comes a lengthy commitment, at least here in the U.S., which means a completely separate data plan for up to two years. That’s not an appealing prospect as compared to adding the wireless hotspot feature to a handset, often for less money. There’s no commitment either; the phone-as-hotspot is much like the text messaging part of a plan. You can drop the functionality in a given billing cycle or add it again later.

Like so many technical solutions, however, there’s a downside to wirelessly sharing an Internet connection from a smartphone: battery life. A phone in wireless hotspot mode uses two radios at the same time: one for the cellular connection to the web and one to share that connection over Wi-Fi. So a typical phone in hotspot mode could run the battery dry in as little as four hours, leaving you with no web connection and, even worse, no phone. That gives hope to folks like Novatel Wireless (s nvtl) who make the standalone MiFi devices, but if smartphones can improve upon their battery life, the MiFi could go the way of the dongle: to the deadpool, replaced by the multi-purpose smartphone.

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11 Responses to “Death to the Dongle: Phones are the New Hotspot!”

  1. The problem with personal hotspots is that they create serious interference between each other and other wifi hotspots. In that sense, USB dongles are a better solution. Especially since many people are using them for one computer at a time. I have been to a few conferences where mifis and personal hotspots were banned because they interfered with the wifi access for the presenters…

    It would be cool if the carriers let you share a data account between dongles.

  2. If there is a play for in-home 4G to replace traditional DSL or cable broadband (given cell data plans become cost comparative and offer higher data caps) the MiFi could be the device. Just think of the competition for in-home broadband for 4G providers against today’s monopoly or duopoly broadband providers.

  3. I’ve been tethering for six years (since Shadowmite published the DUN hack for the Treo 650), but I don’t think mobile hotspot awareness is what’s driving disinterest in dongles. Wifi is ubiquitous enough for most people’s needs. Most people use their laptops and tablets at work, at home, or in their favorite cafe–i.e. a set number of places where wireless is already in place. Only road warriors need a more adaptable solution. The vast majority of the population can’t afford, or a least can’t justify, a second contract. Dongles and broadband-enabled laptops and tablets are luxury items.

    • No argument on the availability of Wi-Fi, Andre, but I think we’re seeing the beginning of a growing trend with phones as mobile hotspots. We’ll have to see how it plays out over time and I’d love to get carrier data on what percentage of smartphone customers are adding the hotspot feature to their phone plans. Doubt we’ll get that number, but if we could, I think it will be steadily rising.