Goldman bullish on tablets, wireless data growth

4G will lead to explosion of data consumption; iPads take Goldman by surprise

Goldman Sachs' investment research arm expects a coming boom in wireless data consumption fueled by 4G wireless services and the rise of mobile tablet computers.

Goldman projects that wireless data traffic will account for the majority of traffic sent over wireless networks as measured by minutes of use equivalents starting next year. From there, Goldman says wireless data usage will surge by more than six-fold by the year 2020 even as wireless voice usage will remain essentially the same. In terms of revenues, Goldman expects wireless data to generate nearly triple over the next two years, shooting up to $205 billion by the end of 2012.

Tablets still miss the mark for businesses

One of the big drivers for this growth in wireless data usage will be the rise of 4G wireless networks such as WiMAX and LTE.  Goldman estimates that 4G data cards currently consume around 7GB of data per month, compared to 1.85GB per month consumed by 3G data cards and 1GB per month consumed by Apple iPads.

Goldman also says that it expects both smartphones and tablets to cannibalize traditional cellular phones and laptops over the next few years. So while Goldman estimates that smartphones today account for just under 20% of all mobile phones, by the end of 2014 they will account for just under 45% of all mobile phones. Similarly, Goldman expects shipments of tablets such as the Apple iPad to more than double over the next year, going from 16 million in 2010 to 35 million in 2011. Goldman says that it has been taken by surprise by the success of the iPad and other tablets.

"While we had always expected tablets to affect netbook/notebook sales beginning in 2010, cannibalization is happening even faster than we originally expected," the firm writes. "We expect 40% of the 35 million tablet unit sales in 2011 to cannibalize PCs, with 20%... cannibalizing notebook sales and 80% cannibalizing netbooks."

Goldman also says that tablets are playing an increasing role in the enterprise setting. According to the firm's IT spending survey, 37% of enterprises currently support tablet computers, while another 19% expect to support tablets on their networks within the next two years. Only 33% of enterprises surveyed said they had no plans to support tablets at all in the future.

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