• by Mark Walsh  @markfwal, November 7, 2010

The U.S. wireless data market is on track to surpass $54 billion in 2010, with third-quarter data revenue up 25% from a year ago and 7% from the prior quarter, according to a new report from mobile research and consulting firm Chetan Sharma.

The study highlighted the rapidly growing connected device category, including tablets, e-readers, GPS gadgets and the like, as a driving force for mobile data during the quarter. "While the traditional net-adds have been slowing, the 'connected device' segment is picking up so much that AT&T, T-Mobile, and Sprint added more connected devices than postpaid subs in Q3 2010," noted Chetan Sharma.

The connected device category overall was up 42% from a year ago, and 12% from the second quarter, and the firm predicts that within five years it will generate more revenue for U.S. operators than the entire prepaid segment. "While today, connected devices represent only 3% of the quarterly data revenues, this segment didn't really exist a few months ago, and will keep on gaining strength every year for the foreseeable future," stated the report.

Chetan Sharma describes the iPad as a new category in itself, forcing competitors to respond by rushing to release to their own tablets. One alternate approach by Apple's rivals is introducing devices with smaller screens than the iPad, such as the 7-inch Galaxy Tab from Samsung and forthcoming Playbook from Research in Motion. Whatever tablet variations emerge, the research firm insists the category is here to stay, with demand for netbooks fading over time as a result.

For carriers, Sprint's third-quarter results showed it's not always a zero-sum game among connected devices. Sprint CEO Dan Hesse recently pointed out that strong iPad sales had helped lift sales of its Overdrive wireless-hotspot device, which customers use to hook up their iPads to the Internet while out and about.

While Verizon and AT&T continue to dominate the mobile data business -- accounting for 85% of revenue between them -- the report found T-Mobile USA's expansion of 3G service is starting to pay off. The smallest of the four major U.S. wireless operators, which added subscribers in the third quarter after two quarters of losses, is starting to match its larger competitors in mobile data growth. Verizon, AT&T and Sprint now all derive 30% of wireless revenues from mobile data, while T-Mobile gets 27% from the segment.

Looking ahead, Chetan Sharma is bullish on the outlook for the rollout of Windows Phone 7 devices, which debut Nov. 8 in the U.S. "Microsoft launched its much anticipated Windows Phone 7 in a bid to recapture the mind- and unit-share. By taking a different UI (user interface) route, it actually has a shot to be a viable third option to iPhone and Android and pushing RIM from the top 3," according to the study.

For the three months ending in September, Windows Mobile was fourth among smartphone platforms in the U.S., with a 10% share. RIM had 37.3%, Apple's iOS, 24.3%, and Android, 21.4%. Growing uptake of high-end devices by Americans is creating opportunity for all smartphone OS and device makers. Nearly half (47%) of devices sold in the U.S. in the third quarter were smartphones, compared to 24% globally.

"The fast pace of device introduction has catapulted the agile players like Samsung and HTC to the forefront while others like LG and Sony Ericsson have lost ground. By focusing singularly on Android and by broadening the device portfolio, Motorola has written a great comeback script," noted Chetan.