Novatel’s (s nvtl) second quarter results Thursday included a 50 percent rise in year-over-year revenue and showed off the tight relationship between better mobile broadband, Wi-Fi and consumers toting multiple broadband-enabled devices. The company, which makes the MiFi mobile routers that use a cell signal and convert it to Wi-Fi, said in its earnings release that LTE was a strong contributor to sales of the hot spots. From the Novatel release:
Our LTE MiFi hotspot has quickly become the category leader. Our LTE Expedite embedded modules have achieved a number of tier-one OEM design wins for future product launches in the U.S. and around the world.
The company also anticipated sales of $105 million to $120 million for the coming quarter, which could help Novatel swing to profitability. This is far better than the lackluster earnings and worries Novatel was facing 18 months ago when it bet its success on hot spots. It also may be a sign that 4G broadband speeds are the key to mobile hot spot success. Last year, an analyst report from Infonetics offered the surprising conclusion that sales of personal hotspots had fallen in 2009, when only 3G versions of the credit-card sized devices were available.
So I’m willing to bet Novatel’s success is a combination of faster LTE speeds that rival old-school wireline connections at 5 Mbps to 12 Mbps down, and more Wi-Fi enabled devices that benefit from a broadband connection such as tablets. Throw in a lack of compelling multiple-device plans from carriers and more familiarity with the product, and LTE hot spots are a likely winner; a premise we concluded in our review of the MiFi 4510L.
Of course, for customers taking advantage of the devices, especially with multiple devices, they may experience some serious sticker shock if they go over their data plans. On the flip side, carriers may not be pleased by a preponderance of mobile hot spots, not only because they can take away revenue from folks buying additional plans, but also because Cisco (s csco) estimates many of the devices that connect via a MiFi device consume much more data than smartphones. And we already know how carriers are viewing smartphone data consumption.