Nemertes Impact Analysis:

Apple (NASDAQ:APPL) and Sprint's (NYSE:S) launches of iPhone 4 and EVO respectively reinforce limits on evolutionary new services by lack of access capacity at the edge, a trend Nemertes predicted in our 2008 study “Internet Interrupted: Why Architectural Limitations Will Fracture the ‘Net.”

iPhone 4 features a front-facing camera capable of supporting video chat, but only over WiFi networks, and only when those networks are uncongested as highlighted by Apple’s need to have audience members turn off their own WiFi devices to allow Steve Jobs’ demo to proceed. Sprint’s EVO uses Clearwire’s (NASDAQ:CLWR) 4G services, but 4G is not widely available and some tests have shown it to be slower than HSDPA offerings. Taken together these examples underscore our conclusion that innovation on the Internet will increasingly be stifled by the lack of access bandwidth capacity.

Impacts:

Enterprises: Bandwidth limitations will impact your ability to deliver innovative new services to customers and users. Thoroughly test applications under a variety of conditions.

Vendors: Gain competitive advantage by addressing access bandwidth limitations.

Investors: Increasing demand for high-speed wireless is good news for infrastructure providers such as Alcatel-Lucent (NYSE:ALU), Ericsson (NASDAQ:ERIC), and Qualcomm (NASDAQ:QCOM).

Irwin Lazar, Vice President, Communications and Collaboration Research

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