Device, software suppliers set to benefit from network upgrades

The increasing emphasis being placed on next-generation networks by mobile operators is good news for device makers, according to a new report from Canaccord Genuity.
The financial research firm noted that a number of companies that produce wireless modem products designed to work with next-generation networks (WiMAX, LTE, HSPA+) are beginning to see increased traction at retail outlets as customers appear to be future-proofing themselves in preparation for higher-speed wireless networks.
Canaccord Genuity singled out hardware makers Sierra Wireless Inc. (SWIR) and Novatel Wireless Inc. (NVTL) as well as software provider Smith Micro Software Inc. (SMSI) as companies that are beginning to see increased attention at retailers due to advanced network rollouts.
The firm noted that a recent channel check at Sprint Nextel Corp. locations found “solid sell-through trends” as consumers “overwhelmingly chose WiMAX-enabled hotspots such as the Sierra Wireless Overdrive mobile hotspot versus USB data dongles.”
Canaccord Genuity added that Sierra Wireless was also benefiting from its recently launched Shockwave HSPA+ modem at AT&T Mobility and “believe AT&T is increasingly promoting its HSPA+ network and recently launched Sierra Wireless’ USB product (Shockwave), which is free with a two-year contract.”
For Novatel, Canaccord Genuity said it expects Verizon Wireless’ impending launch of LTE services in 38 markets before the end of the year should see the launch of a Novatel-supplied LTE mobile hot spot device and strong initial sales of LTE-based devices. However, in the long term, the firm said increased production of LTE-enabled devices could hurt Novatel’s share of the market.
“Novatel Wireless has had very high market share at Verizon, and we believe Novatel is well positioned through its relationship with Qualcomm (Inc.) and Verizon to capture meaningful share of the potentially large LTE product cycle at Verizon over the next several quarters,” Canaccord Genuity said in its report.
Smith Micro, which has a broad base of connectivity and security software solutions, is expected to benefit from these sales as well as consumers begin upgrading from 3G mobile broadband solutions to next-generation offerings.
“Overall, we believe most major wireless carriers in North America are increasingly promoting new network technologies and faster throughput speeds, and we believe these trends bode well for data connectivity vendors such as Sierra Wireless, Smith Micro, and Novatel Wireless,” Canaccord Genuity noted.