Wednesday, March 21, 2012

Data Hungry iPads

Wireless providers around the world and especially in the US face a major issue with the massive data consumed by the new high resolution screen of the iPad3. According to the below Bloomberg video, users are blowing through data usage plans in only a couple of days. Wow!

The real key is whether AT&T (T) and Verizon (VZ) can charge more for higher usage. More spectrum and capital spending will be needed to keep up with exploding demand, but what the industry really needs is pricing that keeps up with technology. Either develop a way to exponentially expand capacity or charge more for high data usage to slow down demand on the network.

As mentioned by Derek Kerton, principal analyst at Kerton Group, users need to be pushed into using Wi-Fi when available such as at a coffee shop or even at home. At this point in the development of the industry, the goal can't really be to limit the wireless use of the iPad, but rather a wiser use of the available tools realizing that wireless capability of a LTE network has limits.

As with all Apple (AAPL) products, it still appears that the best way to invest in the concept is directly via Apple. Between the control of Apple and the limited group of wireless providers, equipment and network providers just don't appear to have the ability to charge premium prices or differentiate themselves. Some possible angles include Aruba Networks (ARUN), cloud software or data center providers. Either would benefit from continued increased demand for access to the internet outside of a PC.

Check out the clip below:





Disclosure: Long AAPL. Please review the disclaimer page for more details. 



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