The Connected Home and Online Commerce

The Connected Home and On-Line Commerce: Gold Mine or Bust for Operators? Mike Jude, Ph.D., Program Manager Connected Home April 27, 2011

Today’s Presenter Mike Jude, Ph.D., Program Manager Stratecast, a division of Frost & SullivanFunctional Expertise:30 years of experience in telecommunications and IT which includes technology application, market research,consulting, and operations management. Particular expertise in: Decision Analytics Market and Business Analysis Developing Innovation and Encouraging CreativityIndustry Expertise:Experience base covering broad range of sectors, leveraging long-standing working relationships with leadingindustry participants’ Senior Executives in:•Local Exchange Telephone Service Providers•Broadband and Wireless Telecommunications Providers•Network Automation Technology•Service Automation 2

Focus Points• Connected Home and On-Line Shopping• The Connected Home Survey• The Dynamics of Home On-Line Shopping• Profiting from the On-Line Home Shopping Wave• Recommendations 3

Poll QuestionHome often do you shop on-line? • More than once a week • Less than once a week, but more than twice a month • Less than once a month but more than six times a year • Never 4

Connected Home Networks Communication Services Connected Home Telemetry Home Entertainment 5

eCommerce is a Significant Service at the ConnectedHome Interface• On-Line Shopping: • Melds content with communication services • Is a primary determinant of perceived value • Is increasing in importance to the economy generally (Cyber Monday after Thanksgiving, etc.) • Offers an opportunity for non traditional supply chains and middle men 6

How Big is eCommerce? U.S. Consumer eCommerce $350,000 $300,000 Revenue in Millions $250,000 $200,000 Total U.S. Min Total U.S. Nom $150,000 Total U.S. Max $100,000 $50,000 $0 2009 2010 2011 2012 2013 2014 2015 Year 7

Questions• How important is on-line shopping for consumers?• Who uses on-line shopping services?• How often do consumers use on-line shopping services?• How risky is on-line shopping perceived to be?• What do consumers buy? 8

Connected Home Survey• Conducted in January and February 2011• Involved a sample of 1003 residential consumers across the U.S.• Income level constrained to two times minimum wage and above• Evenly split between male and female• Focus on exploring connected home dynamics and preferences• Data returned March 2011• Forthcoming report on the results 9

Home Common is On-Line Shopping E-mail Shopping (other than auctions) News (text or video) Navigation/Maps/Directions Social Networking Auctions (Ebay, Craigs List, etc.) Online Games Videos/Movies Instant Messaging Classified Advertising/Directory Assistance Applications (personal productivity, etc.) None Other Survey sites Investing / Banking 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of Sub Population 10

How Often do Consumers Shop On-line? Less than once a week Once a week Up to three times a week Up to ten times a week More than ten times a week 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% % of Sub Population 11

Wage Demographics of On-Line Shopping 50% 45% 40% $30,001 to % of Sub Population $50,000 35% $50,001 to 30% $70,000 25% $70,001 to 20% $100,000 15% >$100,000 10% 5% 0% Less Once a Up to Up to More than week three ten than ten once a times a times a times a week week week week Frequency of On-Line Shopping 12

Age Demographics of On-Line Shopping 50% 45% 40% % of Sub Population 35% 30% 18 to 35 36 to 45 25% 46 to 55 20% >55 15% 10% 5% 0% More than Up to ten Up to Once a Less than ten times times a three week once a a week week times a week week Frequency of On-line Shopping 13

How Risky do Consumers Think On-Line Shopping is? 30% 25% Less than once a week % of Sub Population 20% Once a week Up to three times a 15% week Up to ten times a week 10% More than ten times a week 5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% % of Sub Population 0% Not at all Moderately Somewhat Neutral Somewhat Moderately Highly Risky Un-Risky Un-Risky Risky Risky Risky 14

% of Sub Population Pe 0% 10% 20% 30% 40% 50% ts 60% Co upp mp lies ute r-re Sp late o rt ing d goo ds Gif Ho Ele ts bb ctr on y/ ics Co Ho llec use tibl ho es He To ld i alth ys tem an an dg s db am What do Consumers Buy? ea es uty sup plie s Ca rs Oth Fo er od item Inv est s Du me rab nt le g s oo ds Vid eo s Tra Mu vel sic ser vic es Bo ok s Clo thin g15

Home Shopping Distribution Channel• The network is the store • Takes the place of the retail center • Provides the real estate for product display• Integrated services can mimic the in-store shopping experience • Voice, video and data services can connect shoppers with real sales associates • Combination of integrated directory can facilitate comparison shopping • Data applications and realistic avatars can mimic the “trying on” experience for clothing• Network operators can be “network mall” owners and operators 16

Conclusion/Key Take-Aways• eCommerce is an expanding market which resonates with a majority of Internet savvy consumers• It is likely to become a primary means of consumer shopping over time• Operators who are developing connected home offerings have the opportunity to define a new shopping experience and benefit from the commercial transactions that occur on their networks• The time is now to begin developing these new “network malls” 17

Next Steps Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth (www.gil-global.com) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 18

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For Additional Information Craig Hays Mike Jude, Ph.D. Sales Manager Program Manager: Consumer Information & Communication Communications Services Technologies Stratecast | Frost & Sullivan (210) 247-2460 (303) 466-2377 chays@frost.com mjude@stratecast.com Mireya Espinoza Global Director, Corporate Communications (210) 247-3870 Mireya.espinoza@frost.com 21

The Connected Home and Online Commerce

by Frost & Sullivan on Apr 28, 2011

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The Connected Home and Online Commerce — Presentation Transcript