Apple and the Scary Future of Mobile Data Traffic

AppleInsider ran a story yesterday about Apple (AAPL) iPhone data traffic share that should scare the living economics out of every mobile carrier in the world.

I could poke some holes in the data behind this as not being perfect -- it's all from AdMob -- but this is an imperfect world, and you sometimes you do a business analysis based on what you can get. And in this case, it's an eye-opener. The iPhone is currently responsible for half of all mobile data traffic.

Combine that with another piece of news from a Gartner report: Q3 smartphone unit sales hit 41 million out of total handset unit sales of 309 million. Apple's share? About 7 million units, or 17 percent of smartphone sales. Or 2.3 percent of all handset sales.

Yup, at this rate, under 3 percent of handset sales are becoming responsible for half of all data traffic. And that's a huge problem for capacity planning. All the other smartphone vendors are having to go in the same direction, pushing on downloading apps and media and driving the desire of people to do more with data when mobile.

Again, this is far from perfect data and the accuracy of the results are questionable. But this is an indicator of trends. Smartphone prices continue to drop, which is going to put them in the hands of more consumers. But a relatively tiny number is pushing the traffic boundaries and already mobile carriers are complaining about the implications. What's going to happen over the next few years? Want to see the results when every carrier becomes an AT&T with burdened networks? It's going to be a holy mess requiring massive investing in equipment, cell towers, and spectrum. Who's going to pay for that? Ultimately it has to be consumers, and that makes it likely that we'll see a natural balancing point, as data traffic plan costs start to rapidly rise to a point at which most people won't be willing to spend the money.

But many other parts of technology, including processor and display sales, have gotten a lift from smartphones. What happens to them? It seems likely that there is going to be a domino effect of contractions, driven by the very success of the products that have been one of the few bright spots in an industry bedraggled by the current economy. I'm not trying to be alarmist, and, again, the data is imperfect, but there does seem to be this trend of relatively few devices gorging on wireless bandwidth, and that will have logical consequences.

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