Modem prices will continue to slowly fall as broadband internet approaches saturation.
Los Angeles, CA (PRWEB) August 21, 2014
The modem market exhibits a buyer power score of 4.2 out of 5, representing a high level of buyer power. According to IBISWorld procurement analyst Dale Schmidt, “the buyer's high power comes mainly from the high competition that arises from the low level of product specialization.” All new modems are manufactured according to the latest prevailing standard, causing modems to be functionally similar across brands. As a result, buyers can easily compare modems and choose the cheaper option. This fact forces suppliers to undercut one another on price to remain competitive, resulting in a steady decline in the price of modems, also a benefit to buyers.
Several factors limit buyer power, however. The current level of price competition cannot last forever. Input costs for modems are steadily rising, placing pressure on supplier profit margins. “To survive, suppliers are consolidating, as evidenced by Arris acquiring Motorola's relevant division in 2013,” says Schmidt. The reduction of available suppliers has a negative effect on buyer power, because buyers are ultimately left with fewer options. Currently, though, buyers still have enough options available to keep prices low.
The market for industrial modems exhibits a lower level of buyer power due to the increased level of specialization available. In addition to upload and download speeds, industrial modems compete on their ability to function through adverse environmental conditions. However, buyers in this market do benefit from the increased fragmentation of suppliers. No industrial suppliers enjoy the dominant market share that Arris and Cisco do in the commercial market. On the other hand, the reduced ability to directly compare industrial modems, due to the higher level of specialization, allows suppliers to compete less directly on price, ultimately leading to higher prices. The modems market is dominated by two vendors: Arris and Cisco.
For more information, visit IBISWorld’s Modems procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of modems. Short for modulator-demodulator, a modem is a device that converts data between analog and digital forms, allowing computers to transmit data, such as over a telephone line. This report includes phone modems, DSL modems, cable modems, modem cards and modem software.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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