Change is inevitable and growth is intentional

Kevin C Tofel wrote an interesting article in Gigaom about the killer combination in Netflix and apple’s new device iPad. Bollywood in India is massively popular and you will find traditional movie stores every corner in Mumbai. These traditional movie rental stores normally have collection of Indian movie titles and some popular Hollywood titles which can be rented at monthly fees of less than US$ 8. I talked to one of the local stores in my neighborhood to get an idea about the number of titles they have in their stores. The percentage was even less than two digits as compared to the number of online titles Netflix (12,000) has for streaming. A US$ 8.99 for unlimited access to enormous collection of titles is a convincing deal. I was apprehensive about my neighbored book and movie stores who nave not realized that “change is inevitable and growth is intentional”.

We Love it or hate it; it’s hard not to be astonished by the Hollywood blockbuster-style opening day enjoyed by the iPad. Apple just announced that it sold 300,000 of the devices. At a base price of $499 (for the 16 GB model), that translates into some $150 million on day one. Add to the fact that Apple says nearly a million apps and 250,000 e-books were downloaded.

Estimated sales of iPad is supposed to reach 7.1 million units worldwide in 2010, according to research firm iSuppli, whereas our GigaOM Pro analysts estimate that the conservative sales of the device will be around 6.1 million.

Two aspects which I am curios to analyze is the effect of IPAD on carrier’s wireless data network and changes in traditional business models. The current data consumption of Notebook and other internet centric devices is 4 to 6 GB/Mo as reported by some of the HSPA operators. WiMAX operators, Yota and Clearwire reported 10 and 7 GB/Month of average data traffic in their new 4G networks. A typical Iphone user in US consumes .4 to .8 GB/Month in their 3G enabled iphones. It is generally expected by industry analysts that the consumption of average monthly data in iPad’s would lay in between iphone and notebook consumption.

Independent wireless industry analyst Chetan Sharma estimates that a 3G-enabled iPad will consume about two-thirds as much network capacity as a 3G iPhone. If Apple sells 2.7 million 3G iPads this year, as Piper Jaffray & Co. (PJC) analyst Chris Larsen forecasts, that could be the equivalent of 1.7 million iPhones hitting AT&T’s network.

Startlingly, my own estimates advocate that the consumption of data from iPad’s would be around 4-6 times higher than current iphone consumption. The biggest driving factor is streaming video (Youtube , Netflix etc.) and Social media. To watch one DVD quality streaming video consumer will require anywhere around 1-2 Gigabytes of data.

Expected average data consumption for iPad user will stay around 3.1 GB/Month as per my estimates. iPad consumers could give wireless operators a headache in coming time. We already hear about 3G cellular networks being swamped with growing data traffic from millions of Apple iPhones. Although carriers are optimistic of offloading a large amount of iPad traffic to Wi-Fi access points when using services indoors, which might not as rosy at it, looks.

Change is something which is inevitable and it would be interesting to watch to impact of iPad in operators wireless data networks and my corner book and movie stores.