Small Cell Deployments: Poised for Rapid Growth


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Mindspeed and Radisys discuss the key trends in the small cell base station sector.

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Small Cell Deployments: Poised for Rapid Growth

  1. 1. Small Cell Deployments: Poised for Rapid Growth Market and Technology Analysis Hosted By: &NASDAQ: MSPD NASDAQ: RSYS June 29, 2012
  2. 2. Forward-Looking Statements This presentation contains forward-looking statements within the meaning of applicable federal securities laws. Such statements include statements regarding the Company’s expectations, goals or intentions, including but not limited to, statements regarding: product features and their benefits; the Company’s expectations and estimates for growth of the small cell market; anticipated small cell product deployments and the Company’s customer engagements; and the depth and breadth of the Company’s small cell product portfolio. Forward-looking statements are subject to substantial risks and uncertainties that could cause actual results and events to differ materially from those stated in the forward-looking statements. The Company’s existing business is subject to numerous risks and uncertainties, including fluctuations in its operating results and future operating losses; loss of or diminished demand from one or more key customers or distributors; the ability to successfully develop and introduce new products; pricing pressures; and the potential for intellectual property litigation. Additional risks and uncertainties that could cause the Company’s actual results to differ materially from those set forth in any forward-looking statements are discussed in more detail under the caption “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2012 and in the Company’s future filings with the SEC. All forward-looking statements are qualified in their entirety by this cautionary statement. The Company is providing this information as of the date of this presentation and does not undertake any obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or otherwise.2
  3. 3. Agenda  Small Cell Market Status  Why Carriers are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction Doug Pulley CTO Wireless  Radisys Introduction Mindspeed Technologies  Conclusion Rupert Baines VP, Marketing Strategy & MarCom Mindspeed Technologies Todd Mersch Director, Product Line Management Radisys Corporation3
  4. 4. Significant Momentum for LTE Small Cells AT&T “launches RFI for Small Cells” ...up to 100,000 units (Light Reading, June 21, 2012) “AT&T has been an advocate of small cells for several years, and we’ve spent a lot of time with our vendors working on a strategy for deployment” – Kristin Rinne, SVP, Architecture & Planning (speaking at CTIA Wireless trade show May 9, 2012) Planning on deploying small cells to enhance LTE capacity – Hans Leutenegger, VP of Network: South Region (speaking at CTIA Wireless trade show May 2012) “The end goal of our plans is a completely heterogeneous network. Small cells are a fundamental part of this.” over 600,000 residential femtocells today; moving to indoor small cells this year and outdoor small cells “to add much needed capacity” in 2013 – Iyad Tarazi, VP Network Engineering (May 2012) · Announced launch of small cells for residential & enterprise across Europe & Latin America · Now deploying multi-mode small cells for LTE FCC Opens up 100MHz for small cell LTE (3.5GHz – 3.6GHz)4
  5. 5. Small Cell SoC TAM to Reach $1 Billion in 2016  Market forecast to grow from <$100 million in 2012 to over $1 billion in 2016*  Informa predicts 91 million small cells deployed by 2016 – 4.6 million small cells currently deployed – By the end of 2012, there will be 6.4 million small cells outnumbering the forecast 6 million macrocells worldwide  Currently, 43 small cell commercial deployments in 23 countries 54 40 35 30 Public Access 25 Units 24 20 Enterprise 15 10 Consumer 5 0 2009 2010 2011 2012 2013 2014 2015 2016 Number of Operator Deployments $7.8B TAM, 92% CAGR -- ABI 4Q11 2Q12: Informa * SOURCE: Industry and Company Estimates5
  6. 6. Deployments Already Underway  LTE deployments beginning in 2012 with ramp in 2013-2014  Carriers deploying small cells now – 43 commercial launches – > 100 trials  Metrocell requires multimode (3G + 4G + WiFi)  9 out of the 10 largest operators now have small cell deployments6
  7. 7. Small Cell Forum Industry Players 76 vendors and 67 operators representing nearly 3 billion subscribers7
  8. 8. Agenda  Small Cell Market Status  Why Carriers Are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction  Radisys Introduction  Conclusion8
  9. 9. Motives for Small Cell Deployments Problem: Femtocells: Coverage - Basic RF coverage holes - Provide basic service coverage - Particularly affects affluent homes - Primarily residential - Some success stories (eg SPRINT, - Requires improved voice coverage SFR) and carrier support - Rural areas “Greater Femto” - Benefits: reduce churn, increase customer lifetime value Voice Data Problem: Small Cells: Capacity - Data loads exceeding capacity - Provide localized capacity - Limited macro expansion ability - Expand overall capacity/ARPU - Increase capacity economically - Clear acceptance and support from carriers by offloading to femtocells - Benefit: Increase capacity, increase customer satisfaction with lower CapEx, OpEx Future: Applications and New Services9
  10. 10. Data Demand Increasing Exponentially Revenue vs. Traffic Growth Traffic Revenues & Traffic Gap Widening Voice Era Revenues Data Era Source: Cisco VNI Source: Heavy Reading Traffic is more than doubling every year (Cisco MVNI 108% CAGR) ARPU flat: Carriers need to increase capacity and efficiency10
  11. 11. Capacity: Technology Reached Limits Increase performance Most gain from shrinking cells Small cell macro Shrink cell  Need more cells and tighter interference control  Cooper’s Law: increasing the (HetNet, SON) to increase capacity number of cells has always been the primary way to add capacity “Spectral efficiency can improve capacity by 1.5x. Spatial efficiency Increases capacity by 10x or more” - Alcatel-Lucent11
  12. 12. Small Cells and WiFi – Solving Problems Together  All operators now require WiFi with their pico / metro cells  WiFi alone is insufficient for carriers – Short range requires too many sites, not economic compared to WiFi + cellular small cell – Poor performance and customer experience concerns  Multi-mode dramatically improves economics – Increase usage, value – Minor impact on CapEx Best of Breed Outdoor Wi-Fi – TCO dominated by per site, power, backhaul LTE Small Cell12
  13. 13. Economic Drivers for Small Cell Deployments Hierarchical Cell Structure / Self-Organizing Network / HetNet Mobile Experts  Macrocell is 2.5x – 8 x more expensive than a small cell Signals Research (Carrier Data Costs)  Macro = $8/GB  Small cell = $5/GB  Femto cell = <$1/GB Small cells reduce mobile network operator CapEx, OpEx and TCO13
  14. 14. Telefonica: Small Cells Across Europe & LatAm Triple mode: 3G HSPA + WiFi + 4G LTE “Small cells are the only way for future capacity, even factoring in extra spectrum and LTE-A” -- Robert Joyce, Chief Radio Engineer14
  15. 15. Vodafone Committed to Small Cells • Small cells increase coverage and reduce churn • Core part of marketing strategy • Improved customer satisfaction: 96% “would recommend” • Small cells as dominant part of LTE deployment15
  16. 16. AT&T: Largest Deployments to Date  AT&T launched residential femto service in March 2010  Several hundred thousand deployed – Informa estimates 800,000  Emphasis on coverage and churn reduction  Light Reading reported RFI for 100,000 multi-mode small cells for 201316
  17. 17. Agenda  Small Cell Market Status  Why Carriers Are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction  Radisys Introduction  Conclusion17
  18. 18. Small Cell Product Categories Residential Enterprise Pico Micro Macro Femto Femto (indoor, outdoor) Business Metro 4-8 16-32 64-128 128-256 256+ users users users users users Number of Concurrent Users18
  19. 19. Small Cell Supply Chain Mobile Network Operator OEM QCOM CAVM System-on-Chip TXN FSL BRCM19
  20. 20. Product Development Strategies: A Changing Paradigm In-House Resell SW + SoC TTM X   Agility  X  Control  X  Shared Base X X  Differentiation  X  Margins  X  Software + SoC integration Balance between control, cost and TTM20
  21. 21. Agenda  Small Cell Market Status  Why Carriers Are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction  Radisys Introduction  Conclusion21
  22. 22. Mindspeed: Powering Next Generation Mobile Broadband Communications  Transcede®: First application-specific, Winner Winner Finalist single-chip SoC for LTE small cells  The only TD-SCDMA SoC on the market  First to market with 3G and 4G solutions; Winner Winner Finalist 2010 Supporting 25* customer engagements worldwide  Broadest portfolio of small cell SoC Finalist Winner Finalist 2011 solutions available today  T22xx and T33xx family addresses growing multi-mode 3G/4G residential, Finalist Winner Finalist enterprise and metro mobile infrastructure markets 2010 *as of March 31, 201222
  23. 23. Mindspeed’s Small Cell Portfolio Residential Enterprise Pico Micro Macro Femto Femto (indoor, outdoor) Business Metro 3G 3G + 4G Dual-mode23
  24. 24. Small Cell Adoption Already Underway 2015-16 2013-14 2012 2011 China 3G small cells United States UK deployed in over 23 countries South Korea Japan Europe India Mindspeed leading the wave of LTE small cell deployments24
  25. 25. Mindspeed Leading in Korea Mindspeed in designs in Korea for Transcede 4G/LTE SoCs  Supporting the world’s first LTE small cell commercial deployments  Mindspeed: 2012 Small Cell Industry Award Winner Commercial Deployment Award Jointly with Contela and SK Telecom Technology Enablement Award Radisys for KT – based on Transcede 2525
  26. 26. Agenda  Small Cell Market Status  Why Carriers Are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction  Radisys Introduction  Conclusion26
  27. 27. Radisys At a Glance Single Solutions Source Worldwide Customer Base Wireless Software Embedded COTS Platforms Wireless Media Server / MRF Infrastructure Solutions Professional Services Embedded Wireless Infrastructure Solutions27
  28. 28. Dual-mode Small Cell Software  3G Femtotality Our Focus: Small Cells  LTE TOTALeNodeB  Multi-mode ‒ 3G + LTE + Wi-Fi Femto  60+ LTE / 3G Small Capacity Cell Customers Metro Micro Pico Best Enabling Macro Technology: TOTALeNodeB Coverage28
  29. 29. Radisys Company Snapshot 2011 Revenue Employees Radisys Executive Leadership ~ $350M Mike Dagenais 950 in 12 locations Chief Executive Officer worldwide Long Life 500 Hardware & Software Engineers Brian Bronson Markets President and Chief Financial Officer 150 Professional  Telecom / Services Networking  Aerospace & Manish Singh 100 Operations Chief Technology Officer Defense  Public Safety  Medical29
  30. 30. Agenda  Small Cell Market Status  Why Carriers Are Deploying Small Cells  Small Cell Technology  Mindspeed Introduction  Radisys Introduction  Conclusion30
  31. 31. Small Cells Already Deploying Today and Ready to Explode  Carriers deploying small cells today – A strong ramp expected starting in late 2012 – Growing semiconductor TAM to roughly $1B by 2016  Solves key problems for carriers  Mindspeed and Radisys in core leadership positions31
  32. 32. Thank You Questions? Please contact us for additional information or to set up a briefing. Kevin Trosian Vice President Business Development and Investor Relations +1 949-579-3111 Lyn Pangares Radisys Corporation lyn.pangares@radisys.com32