TEMPE, Ariz.-Rapidly growing Wi-Fi hot spots will likely prove profitable only in some venues, according to a new report from Forward Concepts that assesses the profit potential of various hot spot venues.
“In most cases where repurposed technology has succeeded in a big way, such as the Internet, it has exhibited a strong grass roots component in terms of the user base. In hot spots to date, the grass roots aspect of the phenomenon resides in the service providers themselves,” explained Daniel Sweeney, author of the report. “Unless hot spots inspire a similar degree of enthusiasm among subscribers, the same fate could befall the hot-spot industry as befell e-commerce at the turn of the millennium, where similar vendor enthusiasm far outstripped market acceptance.”
According to Forward Concepts, 46,000 new hot-spot locations will be installed in the United States this year, followed by a “dramatic slowdown” in 2004 as industry focuses on applications, content and terminal designs. The report predicts growth will return in 2005, and by 2007 there will be 530,000 hot spots in the United States. Europe, in comparison, will host 800,000 hot spots by 2007 and Asia will have more than 1 million.
By 2007, analysts expect 4 billion sessions per year in the United States with most taking place in business hotels and major airports. Revenue in 2007 is projected to be $8 billion or about $15,000 per hot spot. Forward Concepts further predicts profitability will be dependent on low infrastructure costs.
