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© Copyright 2012, All Rights Reserved. Copying w/o permission is prohibited. http://www.chetansharma.com 1
State of the Global Mobile Industry Annual Assessment - 2012
Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits.
© Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited. http://www.chetansharma.com 2
Table of Contents
• Global Mobile State of the Union - 2012 • Mobile Impacts Everything • Mobile Subscriber and Revenue Growth • Global Markets – Data Growth • Devices – Changing Landscape • Mobile VAS and OTT • Mobile Data Traffic Growth and Solutions • Intellectual Property • Global Markets – Competitive Dynamics • 2012 Expectations
© Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited. http://www.chetansharma.com 3
Global Mobile State of the Union 2012
1. Total Global Mobile Revenues to hit $1.5 Trillion in 2012, over 2% of Global GDP – Top 10 operators control 42% of the global data mobile revenues
2. Mobile Services Revenue exceeded $1 Trillion for the first time in 2011 – The number of mobile operators with > $1 Billion in yearly data revenues will touch 50 in 2012
3. Total Global Mobile Data Revenues went past $300 Billion in 2011 – Non-messaging data now owns 53% of the global mobile data revenues
4. Mobile Operator Profits have more than doubled over the last 10 years – However, the wealth is not divided evenly. Asia’s share has tripled at the expense of Europe whose profit share has declined by 50%.
5. Total Global Subscriptions to exceed 7 Billion in early 2013 – China exceeds 1 Billion, India 950 Million. Subscriber growth is in Asia, Revenue growth is in Asia+North America
6. China and India represent 27% of subscriptions but only 12% of the global service revenues – US represents only 6% of the subscriptions but 21% of the global service revenues, 26% of the data revenues, and 27% of the global
CAPEX
7. Mobile Devices are now exceeding traditional computers in unit sales + revenue – 70% of the device sales in the US are now smartphones. Device Replacement cycle is shrinking
8. Samsung and Apple now account for 50% of the smartphone unit share and 90% of the profit share – Difficult environment for other OEMs esp. when ZTE and Huawei are coming strong from the bottom. It will be difficult for pure play
device OEMs to survive long-term
9. Tablets (iPads) has created a new computing paradigm that is having a significant impact on commerce, content consumption, and developer investments – Apple will continue to dominate the segment and iOS will be the leading OS for the segment. Amazon, ZTE, Huawei, to chip away at
the sub-$200 tier
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Global Mobile State of the Union 2012 cont’d
10. Mobile Broadband (4G) is being deployed at a faster rate than previous generations, first time data is leading the charge – Over 1.5 Billion broadband connections by 2012
11. Global Mobile Apps revenue has completely (and irreversibly) tilted to off-deck – The decline is directly proportional to the increase in smartphone penetration by region
12. All major markets are consolidating with the top 3 players at 85% of the market – Regulators will have to be more prudent and proactive about managing competitiveness and growth
13. Mobile data traffic 2x YOY in most markets. Mobile Data will be 95% of the global mobile traffic by 2015 – Many countries are facing spectrum exhaust in the next 2-3 years (in certain markets)
14. Mobile Signaling takes up 2x the resources as Mobile Data Traffic – Signaling traffic is growing faster than the data traffic on broadband networks
15. Connected device segment is growing at the fastest pace in the western markets – Operators will have to quickly adapt their strategies to stay relevant in this segment
16. Several multi-billion dollar opportunity segments are emerging – Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few
17. Mobile Ecosystem has become very dynamic and unpredictable – The 5 Platform Amigos – Apple, Google, Amazon, Microsoft, and Facebook dominate though the first two have the real power
18. Mobile Operator Revenue is under pressure from OTT Players – OTT Share of the Global Mobile Revenues increased to 4%
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Global Mobile State of the Union 2012 cont’d
19. OTT players forcing operators to up their game – Operators are partnering, launching their own OTT apps, increasing tariffs to manage the margins
20. Intellectual Property has become a key component of long-term product strategy – 21% of all patents granted in US are mobile related. Top 20 control 1/3rd of the overall mobile patent pool
21. Mobile Patent Rankings: US – IBM, Microsoft, Nokia. Europe – Alcatel-Lucent, Nokia, Samsung. Overall – Nokia, Samsung, Alcatel-Lucent – OEMs – Nokia, Samsung, Sony. Service Providers – AT&T, NTT DoCoMo, Sprint
22. In 3-5 years, with few exceptions, if a company is not doing majority of its digital business on mobile, it is going to be irrelevant – Majority (by a good margin) of the consumer interactions with brands will be on mobile
23. Mobile has become the single most important digital channel for engaging consumers and it shows – In the US, mobile revenues were > all Ecommerce And > Music, ISP, Hollywood, and Cable revenues combined
24. We have entered the mobile 3.0 era where “data” is all that matters and it disrupts the value chains – Data will drive majority of the network growth, Contextual data will drive majority of the VAS growth
25. There will be more changes in the next 10 years than in the previous 100 – The value chains will keep disrupting every 12-18 months by the new players and business models. Several verticals are
already getting redefined e.g. retail, health, education, etc.
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Key Industry Micro-Milestones
• Apple captures 70% of mobile device profits – defies gravity, obliterates competition
• Apple mobile appstore downloads exceed 25 Billion, 100 Million on Mac – redefines distribution/ecosystem
• Samsung ends Nokia’s 14 year reign as the device king – brutal execution
• Android 300M activations – Juggernaut
• Paypal does $7B in mobile transaction volume
• Square does $5B in commerce transaction volume
• Google > $5B in mobile revenues
• Microsoft revenues from Android > Windows Mobile
• Pandora’s 70% usage is on mobile, Twitter’s 60% of the usage is on mobile – heading towards a mobile-dominant world
• Facebook Instagram Acquisition $1B – Mobile only acquisition to beef up mobile strategy
• Angry Birds approaches a billion downloads
• ESPN does 3.1 billion minutes on mobile in 3/12 – Mobile is where the action is
• Skype traffic over 150 billion minutes – OTT pressure
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Key Industry Micro-Milestones cont’d
• KPN messaging volumes decline 15% YOY – OTT pressure
• Mobile Security threats grow 7x in last two years, Android threats up 3000% – Mobile IS IT
• Cisco BYOD ratio – 70% (up 52% in 2011) - BYOD is creating new opportunities for vendors
• US data traffic over 130 quadrillion bytes/month in 2011 – Data traffic 2X YOY, welcome to the yottabyte era
• Fandango sells quarter of its ticket on mobile – commerce is happening
• Expedia does > $1B in mobile commerce – see above
• Microsoft Nokia Multi-Billion partnership – It takes two to tango
• Lightsquared fails – Keep your friends close, enemies closer
• Google Motorola $12.5B – IP becomes key to strategy
• Nortel Patent acquisition $4.5B – IP becomes key to strategy
• AT&T/T-Mobile Failure – DOJ/FCC put down the gavel
• 40% of Kenya’s GDP comes from mobile money – impact of mobile is pervasive
• Millennial Media IPO at $2B – first public market validation of the mobile advertising space
• HP gives up on Palm – Competition forces Corporate Schizophrenia
MOBILE IMPACTS EVERYTHING
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Mobile Apps and Services
Mobile is fundamentally reshaping how we as consumers spend from housing and healthcare to entertainment and travel, from food and drinks to communication and transportation. Mobile not only influences purchase behavior but also post purchase opinions. When the share button is literally a second away, consumers are willingly sharing more information than ever before. Mobile is thus helping close the nirvana gap for brands and advertisers who seek to connect advertising to actual transactions. The long-term battle is however for owning the context of the users. Having the best knowledge about the user to help drive the transaction is the simply the most valuable currency of commerce. The day is not far when mobile commerce will dominate all digital commerce.
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Mobile is the single most pervasive technology ever invented
Mobile impacts all Maslow levels
Source: US Department of Commerce
Self
Safety
Physiological
15%
35%
50%
% of Average Spend
Mobile is now 50% of the household IT budget
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Context – the most valuable currency in mobile
Knowledge
(about User)
Transactions
(from User)
Demographics/Explicit
Profile
Interests/Implicit Profile
Sensor data
User Intent
Location
Presence
Physiological
parameters
Calendar
Address Book
Social Community
Intellectual Community
M2M
Preferences
Devices in the vicinity
3rd
Party Sources
Browsing, Watching,
Previewing, Flipping
Purchasing, Payments
Communications
Search (Local, Online,
Media)
User Experience
Gifting
Advertising
Pricing
Security/Authorization
DRIVES
Trusted Concierge
Trusted Advisor
Big Opportunities in becoming the trusted Concierge/Advisor to the individual user
MOBILE SUBSCRIBER AND REVENUE GROWTH
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The Big Picture
• The global mobile industry is the most vibrant and fastest growing industry. We expect the total revenue in the industry to touch approximately $1.5 Trillion in 2012 with mobile data representing 28% of the mix. Mobile data services revenue stood at 33%. Global Mobile Data revenues eclipsed $300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues will make up the majority of the overall global data revenues at 53%.
• By the end of 2011, the global subscriptions exceeded 6 Billion. The first 1 billion took over 20 years and this last one took only 15 months. The primary growth drivers are India and China which are cumulatively adding 75M new subs every quarter. China became the first country to eclipse the 1 billion mark in March 2012. India is likely to arrive at the milestone by early 2013.
• Smartphones are driving tremendous growth around the globe. Amongst the major markets, US leads with 69% sales. The global figure stands at approximately 32%. Some operators expect 90-95% of their device sales to be smartphones in 2012. In terms of the actual smartphone penetration, we expect the US market to eclipse the 50% mark in 2012.
• China leads in the number of subs but US dominates in both total and data revenue. A number of emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings.
• The number of mobile operators with more than $1B in data revenues will increase to 50 in 2012. This number was only at 13 in 2005.
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Global Mobile Market Snapshot 2011
Each dude represents approximately 113 million humans on planet Earth
Global Subscriptions
Global Smartphone
Users
Global Data Users
Global SMS Users
© C
he
tan
Sh
arm
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su
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2
Global Mobile Market Snapshot 2012
Global Mobile Broadband
Users
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Global Mobile Technology Evolution
First time, data is leading the charge
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Global Mobile Industry continues to grow at a healthy pace
• Non Operator OTT Revenues at 4% • Voice will fall below 50% in 2012 • Messaging revenues still growing but flattening growth • Access revenues are growing quicker than any other operator segment
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Mobile is over 2% of Global GDP
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Operators around the world are benefiting from mobile data
50 operators with > $1B in data revs
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Global Mobile Industry Growth
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Top 10 global mobile data operators – US, Japan, China Dominate
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Global Mobile Leaders - 2012
Rank By Subs By Total Revenue By Data Revenue
1 China US US
2 India China Japan
3 US Japan China
4 Russia Brazil France
5 Brazil France UK
6 Indonesia Russia Korea
7 Japan UK Italy
8 Pakistan Germany Germany
9 Germany Italy Australia
10 Mexico India Brazil
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Global Mobile Leaders - 2012
Rank By Sub Penetration By ARPU By Data Usage
1 Hong Kong Japan Sweden
2 Finland Canada Finland
3 Portugal Switzerland Hong Kong
4 Austria US US
5 Singapore Norway Denmark
6 Sweden Australia Canada
7 Denmark France Australia
8 Greece Netherlands New Zealand
9 Germany Singapore Austria
10 Switzerland Israel Belgium
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Biggest Telecom Groups
Rank By Subs By Data Revenue By NM Data Revenue
1 China Mobile Verizon Wireless AT&T Mobility
2 Vodafone NTT DoCoMo NTT DoCoMo
3 Telefonica AT&T Mobility Verizon Wireless
4 Bharti Airtel China Mobile China Mobile
5 America Movil Vodafone Vodafone
6 Orange Sprint Nextel Sprint Nextel
7 China Unicom KDDI KDDI
8 Vimplecom Telefonica Telefonica
9 TeliaSonera Softbank T-Mobile
10 Reliance T-Mobile Softbank
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US at the epicenter of mobile growth
• 2% net-adds, 6% total subs but 21% of service revenues, 26% of data revenues, and 27% of global CAPEX
• Networks: LTE/HSPA+ - Most broadband customers
• Smartphones: Over 70% of the devices sold (more than twice the global average)
• Applications: Billions of downloads (#1) • Pricing: Per Bit, Per Minute, Per Message lowest
in developed world
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US – Mobile is the most dominant digital channel
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Race to a Billion – China won
Corruption drags down growth
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China+India in Mobile
China+India account for 37% of the global population
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China regains momentum & the lead
GLOBAL MARKETS: DATA GROWTH
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US, Japan lead in revenues; China, India in subscriptions
• Japan continues to be the leader in mobile data with NTT DoCoMo, KDDI, and Softbank Japan ahead of the pack in terms of mobile data revenue and data as a % of total ARPU. Country average is now at 60%.
• Next, Australia and the US have made good inroads in the last two years. In fact, if we look at the overall data revenue, US is much further ahead than any other nation due to the size of the market.
• While India has the highest subscriber growth rate in the world right now, the revenue generating opportunity remain down right anemic compared to other major markets with average dropping down to $2.50 in overall ARPU. Even with significant subscriber base, there is going to be a general lack of opportunity in the market for the next couple of years relative to other markets.
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Mobile Internet 3.0 – Data as growth engine
1.0
2.0
3.0
KDDI
NTT DoCoMo
3 UK
Softbank Japan
3 Australia
3 Italy
SK Telecom
Vodafone UK
O2 UK
Singtel
KT
Vodafone Spain
Sprint
Vodafone Italy
Vodafone Germany
Verizon
AT&TO2 Germany
T-Mobile US
Rogers
China Mobile
China UnicomVodafone India
Bharti Reliance
T-Mobile UKT-Mobile Germany
T-Mobile Austria
T-Mobile Netherlands
SMART
3 Sweden
Telefonica
Orange France
Orange UK
Bouygues
SFR
Telstra
TurkcellAIS
TIM
$-
$10
$20
$30
$40
0% 15% 30% 45% 60%
Mo
bile
Dat
a A
RP
U (
USD
)
Mobile Data as % of Total ARPU
Mobile Internet - Leading Global Operators (2011)
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Source: http://chetansharma.com/Mobile_Internet_3.htm
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All major markets experiencing data growth – Japan, Australia, US leading
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Operators seek new sources of revenue
Vo
ice
Ac
ce
ss
Me
ssa
gin
g
Clo
ud
- E
nte
rprise
Clo
ud
- C
on
sum
er
Mo
bile
Ad
ve
rtis
ing
Tra
nsp
ort
atio
n
Ho
spita
lity
We
llne
ss
He
alth
Pa
ym
en
ts
Ind
ust
ria
l
En
erg
y &
Sm
art
Grid
Messaging
Access
Voice
New Service RevenueAR
PU
Today Tomorrow
Re
ve
nu
e in
Bill
ion
s
Service and Application Areas
Direction of Revenue Growth
© C
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Source: http://chetansharma.com/Mobile_Internet_3.htm
Operators can generate new revenue streams by focusing on the long-tail of VAS Verticals
DEVICES: CHANGING LANDSCAPE
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Devices – Apple, Android Dominate
• Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to catch-up on the features but can’t do on the margins. OEMs can grow the pie by bringing products at a better price points that helps attract different demographics to the mix. Microsoft can make good inroads into the space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue.
• Apple and Samsung are strong on the top. Huawei and ZTE are coming up strong from the bottom. The middle tier players will have a tough time going forward.
• It will be difficult for pureplay device OEMs to survive long-term.
• Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product planning and execution has left their market share in disarray. Nokia’s valuation has been cut into half. Nokia’s release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of Nokia Windows Phones (Lumia). While the market hasn’t shown much appetite for Windows phone thus far, a good family of devices might be able to slow the loss trajectory and position the combined team for the up-for-grabs 3rd spot in the ecosystem. Given that the computing is shifting to mobile devices, we can expect some of the weaker desktop/laptop players will exit the industry.
• Majority of the tablet use is in the WiFi mode because the primary use case is indoors and WiFi gives a better (and cheaper) user experience. However, of the users who use cellular, the churn is low. Once operators start to roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher (e.g. Rogers, Vodafone Spain) but will still be dominated by WiFi overall.
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Mobile Devices are dominating the Computing Ecosystem
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US leading in smartphone sales
US accounts for roughly 40% of the smartphone sales worldwide
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Smartphones driving data growth
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Samsung reaches the top of the hill in market share, Nokia struggling
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Apple and Samsung control 50% of the unit smartphone sales. Nokia’s share decimated.
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Connected devices come in all shapes and sizes
Dat
a Co
nsu
mp
tio
n
High
Low
Low High
Smartphones
SuperphonesTablets
Data Cards/Embedded
Automotive
Picture Frames
Health Monitors
Home Sensors
Energy Meters
Grid Sensors
Number of Units in Market
Feature Phones
eReaders
Cameras
Video Cameras
Security Sensors
Wellness Devices
Copiers, Scanners, Printers
Asset Tracking
Digital Signage/Kiosks
Vending
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AT&T – Connected Devices Growth
Postpaid growth is slowing down in western markets, Connected device segment growing fastest
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US Tablet Launches in 2011
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US Tablet Market
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Competing with iPad
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Platform players – 5 Amigos of mobile
Strengths Weaknesses
Apple Step ahead of the competition. Vertical Integration, Brand loyalty, Dev revenues, Commerce, Distribution
Pressure on the operator margins
Google Broad adoption. Broad Support. Open dev platform. Ambitious
Fragmentation. Dev revenues. Lack of clear device strategy. Regulatory microscope
Amazon Deep understanding of the user, Content, Commerce, Distribution, Margin master
New to the device arms race, Lack of OS
Microsoft Bank balance, Operators want a 3rd ecosystem
Late to mobile party, Lack of mobile execution
Facebook ~ 1 B users, 500 M mobile Lack of coherent mobile strategy, Lack of OS
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Apple dominates the platform ecosystem
Users
Ma
rk
etc
ap
Apple
Microsoft
FacebookAmazon
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The overall market is basically iOS and Android. Apple marketcap > Microsoft + Google + Facebook or Amazon
VAS AND OTT
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The Big Picture
• The traditional operator revenue streams of – Voice – declining and under threat from VoIP
– Messaging – flattening/declining and under threat from IP messaging
– Access – rising but margins are shrinking fast
– VAS – declining in proportion to the growth of smartphones
• Operators are fighting back with – Voice – launching their own VoIP apps e.g. Bobsled from T-Mobile,
partnering with VoIP players e.g. Skype integration, charging for VoIP apps e.g. TeliaSonera €6/month
– Messaging – launching their own IP messaging apps e.g. Huddle from AT&T, partnering with IP messaging players e.g. Whatsapp partnership
– Access – Tiering
– VAS – launch their own VAS apps and industry vertical apps and services
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Smartphones are enabling Offdeck to dominate app revenue
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Some operators are starting to see the decline in messaging revenues
Some operators in Europe are also seeing declines in messaging revenue
Total SMS Volumes still increasing but revenue in decline
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SMS Growth – US takes over Philippines
Philippines SMS volumes/sub declining precipitously due to the rise in IP messaging
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Mobile Advertising: All verticals participating
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Promising Segments. Leading Companies
• Advertising – Google, Millennial Media
• Payments/Commerce – Paypal, Square, Google, Amazon
• Gaming – Microsoft, Rovio
• Enterprise – AT&T, Salesforce
• M2M – Vodafone, AT&T, Ericsson
• Identity – Facebook, Google, Twitter
• Cloud – Amazon, Microsoft, Google, Salesforce
• Wellness/Health – Qualcomm, Fitbit, Mobisante
Sampling Only
MOBILE DATA TRAFFIC GROWTH
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Mobile Data Traffic Growth
• In most western markets, data traffic is doubling YOY
• Sweden, Finland, Hong Kong, and US make the top 4 in terms of MB consumed per capita
• A Multi-pronged approach is needed to have a sustainable strategy long term
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Only a holistic strategy to deal with data tsunami can help the operators long-term
• As a result of the data tsunami, there are two types of opportunities that are being created, one that take advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially.
• To be able to stay ahead of the demand, significant planning needs to go in to deal with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won’t be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach and thus bringing the hockey stick curves of data cost more in line with the revenues and thus preserving the margins.
• The decision making process within the operator organizations will need to be streamlined as well. Operators should also consider creating a senior post which focuses on both the cost side and the solution side so they can devise and institute a sustainable long-term policy and keep the margins healthy.
Wireless seeing unprecedented growth (US)
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US Mobile Data Traffic is doubling every year
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Margin preservation key to all operator strategies
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Managing data margins will be top priority for all operators
20% 40% 60% 80% 100%
10%
20%
30%
40%
50%
Japan
Sweden
New Zealand
Philippines
Hong Kong
Australia
Germany
Switzerland
Netherlands
DenmarkPortugal
Finland
Italy
Spain
UK
Singapore
Korea
France
Russia
Canada
USIndonesia
Brazil
ArgentinaIndia
China
Mexico Malaysia
South Africa
Data as % of Overall Network Traffic
Dat
a as
% o
f Se
rvic
es
Re
ven
ue
s
Revenue-T
raffi
c Equili
brium
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Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition http://chetansharma.com/yottabyteera2.htm
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Management of Data Requires Multiple Strategies
2G
4G
3G
Core Network
Radio Access Network Core Network
Mobile Backhaul
Fiber
Microwave
Copper
LightNetworks
GGSNRNC SGSN
Offloading Traffic
WiFi/FemtoCell
Offloading Traffic
Inte
rnet
Ser
vice
s
Compression/Optimization of Data Traffic
Policy Management
Compression/Optimization
Optimization
Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition http://chetansharma.com/yottabyteera2.htm
INTELLECTUAL PROPERTY WILL REMAIN KEY TO LONG-TERM PRODUCT AND COMPETITIVE STRATEGY SUCCESS
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IP is critical to long-term product strategy
• The IP tussles are playing out as expected
• Players with strong IP portfolios will be able to command better negotiating positions, new revenue streams, competitive positioning over the long-term
• On average mobile companies file patents 1.7 times more in the US vs. Europe
• Mobile Patent Leaders in US: IBM, Microsoft, Nokia
• Mobile Patent Leaders in Europe: Alcatel-Lucent, Nokia, Samsung
• Mobile Patent Leaders in Infrastructure: Samsung, Alcatel-Lucent, Ericsson
• Mobile Patent Leaders in Devices: Nokia, Samsung, Sony
• Mobile Patent Leaders in Service Providers: AT&T, NTT DoCoMo, Sprint
• Top 20 control 1/3rd of the total mobile communications patent pool
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Patent Power Rankings – Mobile Communications Related Issued Patents 1995-2012
Rank US Europe US+Europe
1 IBM Alcatel-Lucent Nokia
2 Microsoft Nokia Samsung
3 Nokia Samsung Alcatel-Lucent
4 Samsung Sony Ericsson
5 Ericsson Ericsson Microsoft
6 Sony RIM IBM
7 Motorola NEC Sony
8 Intel NTT DoCoMo NEC
9 Alcatel-Lucent Siemens Motorola
10 Qualcomm Qualcomm Qualcomm
Based on an estimation of Mobile Communications Related Patents that have been granted by The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents
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Patent Power Rankings – Mobile Communications Related Issued Patents 1995-2012
Rank OEM/Software Infrastructure Service Provider
1 Nokia Samsung AT&T
2 Samsung Alcatel-Lucent NTT DoCoMo
3 Sony Ericsson Sprint
4 NEC NEC British Telecom
5 Motorola Motorola Verizon
6 RIM Qualcomm T-Mobile
7 Siemens Siemens Swisscom
8 LG LG Telecom Italia
9 Fujitsu Fujitsu SK Telecom
10 Hitachi HP TeliaSonera
Based on an estimation of Mobile Communications Related Patents that have been granted by The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents
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US outpaces Europe in mobile patents
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Nokia, Samsung, and ALU – The big 3
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Mobile Patent Portfolio of leading mobile players
Nokia
Samsung
Alcatel-Lucent
Ericsson
Microsoft
IBMSony
NEC
Motorola
Qualcomm
RIM
Intel
Siemens
LG
Fujitsu
HP
AT&T
NTT DoCoMo
Hitachi
CiscoBroadcom
Philips
Panasonic
Oracle
Huawei
Interdigital
Ricoh
Sprint
AppleSAP
Kyocera
British Telecom
Verizon
GoogleHTC
T-Mobile
ZTEJuniper
Dell
EMC
Swisscom
Amazon
Adobe
Telecom Italia
Openwave
SK Telecom
Lenovo
TeliaSonera
Asustek
Orange
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 2000 4000 6000 8000 10000 12000
% o
f P
aten
ts I
ssu
ed 2
00
7-1
2
Number of Patents Issued 1995-2012
Mobile Patent Portfolio of Leading Players
© Chetan Sharma Consulting, 2012
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IBM, MS lead in US. Nokia, Samsung in Europe
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Integration of IP with product strategy is essential for competitiveness in mobile
Market
RequirementsProduct
Requirements
Design and
Development
IP competitive and
risk assessmentIP Protection Process
Public Disclosure
IP Management
Ideation
IP Analysis
IP driven Product Development Cycle
R&D, Other
Sources
Licensing
© C
het
an S
har
ma
Co
nsu
ltin
g, 2
01
1
NUMERIC
ANALYSIS
SUBJECTIVE
ANALYSIS
PATENT
PROGRAM
ANALYSIS
f(Σ) Patent Portfolio Quotient™
(PPQ)
Source: What is your Patent Portfolio Quotient? http://chetansharma.com/patentportfolioquotient.htm
Improve your PPQ by tight integration with product strategy
GLOBAL MARKETS – COMPETITIVE DYNAMICS
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Changing Ecosystem Dynamics
It is very clear that the ecosystem dynamics can change very quickly, one just can’t take the competitive and friendly forces for granted. In the past, the silos and segments were clearly defined with little overlap. However, over the course of last couple of years, players have been migrating and surfing in segments across the board - from Apple to Visa, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer’s pocketbook. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft’s enterprise business, so on and so forth. One product launch, one acquisition, can change the game in an instant. And this is only the beginning.
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Competitive Dynamics
• The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average, the top 3 control 93% of the market in an given nation. It doesn’t matter if the market is defined by “controlled regulation” like in China, Korea, and Japan or if it is “open market” driven in markets such as the US, UK, and India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the mobile market.
• Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is settling into a “top 3” operator market. India’s brutal price wars are going to trigger the consolidation in the next 12-24 months and will eventually settle into a structure similar to other markets.
• The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are 46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some semblance of equilibrium in the market the top operator shouldn’t have more than 50% of the market share and the number three player shouldn’t have less than 20%. This helps create enough balance in the market to derive maximum value for the consumer.
• Mobile operators will face some hard choices in developing and protecting the role they want to play in a given region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA margins, investment required over the long-haul, how investors view them, and on the competitive landscape of the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this decade that further define “communications” and “computing” as we know it.
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Competitive Landscape in Major Markets
Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm
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Global Mobile Competitive Index
Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm
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Eventually all markets consolidate to top 3
Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm
WHAT TO EXPECT IN 2H 2012
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What to expect in 2H 2012
• More Tiering, faster pace of change of plans. More options, family data plans
• Cost reduction is as important as revenue generation. More players will align their value-chains and cost structures
• Facebook IPO is probably going to be the single biggest event in the technology industry in the next few months.
• Radios will start connecting the digital world with the physical world with significant disruption opportunity
• Mobile Payment Networks will remain intact for the near future as the ecosystem largely focuses on building value on top of the existing exchange platforms
• The intersection of Social, Location, Identity, and Gaming is creating new opportunities
• With connectivity becoming pervasive, mobile will fundamentally start to alter the legacy infrastructure – retail, health, education, energy, computing, travel, entertainment
• Significant tablet adoption in the enterprise directly impacting the traditional computer manufacturers
• Both HTML5 and Apps will continue to grow, the relevancy to any given application will depend on the reach and economics requirements. HTML5 is not going to replace Apps.
• Mobile data growth will double again in 2012. Significant opportunities in managing and understanding of mobile data growth
• Regulators will need to evolve to keep up with the trend to keep their nation globally competitive
• More IP scuffles before licensing settlements
• Consolidation of weaker players, more global M&A
• Significant progress in emerging areas like mHealth, mPayments will come from the developing world while the western countries get mired in regulatory and legacy mess
• Several players face challenging times ahead and 2012 will be critical in their turn around sojourn.
MOBILE FUTURE FORWARD MOBILE’S THOUGHT-LEADERSHIP SUMMIT 09.10.12 SEATTLE WWW.MOBILEFUTUREFORWARD.COM
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Discussions to inform your strategy
• Is 4G a Game Changer?
• Innovation at the Edges
• Mobile Payments and Commerce
• Disruption is in the air
• Mobile Data Services from the Prism of the CIOs
• Solving the 50 year Spectrum Crunch
• Managing the Network Growth
• Opportunities in the Emerging Markets
• The Universe of Connected Devices
• Analytics - How to Collect, Manage, and Use Data?
• Multi-modal Interactions - How Consumers Adapt?
• At the Intersection of Social, Mobile, Commerce, Content
• Battle for the Home – playing in the n-screen world
• What do Developers Want?
• A Smarter Planet - The Role of Mobile in Enhancing Lifestyles and in Making Everyday Decisions
• Drivers for New Sources of Revenue
• Role of Regulations - Spectrum, Privacy, Net-Neutrality
• Mobile Cloud Computing
• Monetizing the network
• From 3 Screens to Multi-screens
• Mobile Universe in 2020
Mobile Executive Summit
Sept 10th, 2012 Seattle
Ever wondered what the future of mobile looks like?
Join us for an extraordinary day of executive mobile brainstorming
Contact [email protected] for
sponsorship and speaking opportunities www.mobilefutureforward.com
Mobile Breakfast Series
Excellent Speakers. Invaluable Insights. Peerless Networking.
Contact [email protected] for
sponsorship and speaking opportunities
www.mobilebreakfastseries.com
June 7th – Seattle – Mobile Operators and OTT Panel Discussion with AT&T June 22nd – Atlanta – Connected Devices Fireside Chat with David Christopher, CMO, AT&T Mobility Panel Discussion with CNN and Synchronoss June 29th – London – Mobile Operators and OTT Panel Discussion with Telefonica, Orange, Rebtel, Horizons Venture
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We look forward to hearing from you
Chetan Sharma
TW: @chetansharma
http://www.chetansharma.com
Mobile Future Forward
TW: @mfutureforward
http://www.mobilefutureforward.com
Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits.