Service provider transformation
Christopher S. Dean
Chief Strategy Officer
September 23, 2009
1

Trends changing the service
provider landscape
2

Macro Trends
Wireless Wireline Emerging Applications
& Service Models
Regulatory
Economy
Environment
3

Wireless: Growth of Smartphones
4

Global mobile subscribers in 2013
5 Wireless

in 2013
of the mobile phones sold
worldwide in 2008 were
smartphones
Source: Informa Telecoms & Media, 2009
6 Wireless

“There will be more smartphone launches in the next
couple of months than we’ve ever seen before.”
– Ken Dulaney, Gartner analyst
7 Wireless

BlackBerry quarterly sales have
tripled from $1.1 billion to $3.4
billion since the iPhone was
introduced in June 2007
Source: Fortune, “Blackberry vs. iPhone: Whose side are you on / How Blackberry does it,” August 31, 2009
8 Wireless

of the top-selling mobile phones
in the U.S. are now BlackBerry
smartphones
Source: Fortune, “Blackberry vs. iPhone: Whose side are you on / How Blackberry does it,” August 31, 2009
9 Wireless

iPhone market share in
the business market
a year ago
Source: ChangeWave Research, May 2009
10 Wireless

Wireless: 4G
11

4G is defined as:
“the 4th generation of cellular wireless,
which includes LTE and WiMAX 802.16m
and embodies the design goals of the IP
Multimedia Subsystem (IMS), integrating all
types of communications based on IP
(voice, video, e-mail, Web, messaging, etc.).”
12 Wireless

WiMAX networks
(fixed, portable, and mobile)
deployed to date in 135 countries
Source: WiMAX Forum
13 Wireless

are expected by 2010
people currently have access
to next-gen WiMAX networks
Source: WiMAX Forum
14 Wireless

network operators worldwide
have already committed to LTE
Source: Juniper Research
15 Wireless

LTE subscribers by 2014
Source: Juniper Research
16 Wireless

how much wireless operators will
spend on radio access network (RAN)
infrastructure worldwide in 2009
17
Source: ABI Research Wireless

Wireless: Mobile VoIP
18

Ways to carry mobile VoIP traffic
1. Circuit-switched voice channel
2. WiFi (through wireless access points)
3. 3G (over carriers’ data networks)
19 Wireless

of mobile voice traffic will be
end-to-end VoIP by 2019
Source: Gartner, Emerging Technology Analysis: Mobile VoIP, Global Consumer Communications Services, May 2009
20 Wireless

annual revenue generated by
mobile VoIP applications in 2013,
driven by over 278 million
registered users worldwide
21
Source: In-Stat

Tested VoIP services on its LTE
network in Boston in mid-August
22 Wireless

VoIP applications can now be
carried on its 3G wireless
network in Germany
23 Wireless

Wireless Trends Summary
1. Smartphones are growing
2. 4G is going to deliver the network needed for richer
forms of communications
3. Mobile VoIP is going to carry voice traffic over
these data networks
24

Wireline: Broadband
25

increase in broadband adoption
in the U.S. from 2001 to 2008
Source: Internet Innovation Alliance, The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, July 2009
26 Wireline

In 2008
U.S. households
with broadband
access in 2001
Source: Internet Innovation Alliance, The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, July 2009
27 Wireline

U.S. households with
dial-up connections
in 2001
in 2008
Source: Internet Innovation Alliance, The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, July 2009
28 Wireline

Of U.S. households
without Internet
access in 2001
in 2008
Source: Internet Innovation Alliance, The Substantial Consumer Benefits of Broadband Connectivity for U.S. Households, July 2009
29 Wireline

Average Download Speed
5.1 Mbps 80.8 Mbps 92.8 Mbps
Source: SpeedMatters, A Report on Internet Speeds in All 50 States, August 2009
30 Wireline

U.S. rank in percentage
of population subscribing
to broadband
Source: Organisation for Economic Cooperation and Development (OECD), OECD Broadband Statistics, Table 5a
31 Wireline

U.S. homes will add network
connectivity in the next five
years, driven by increasing
reliance on the Internet for
entertainment, business
and social interaction
Source: Forrester Research, The State Of Consumers And Technology: Benchmark 2009, US, September 2009
32 Wireline

Wireline: VoIP
33

U.S. CIOs who still plan
to invest in IT initiatives
over the next year
Source: Robert Half Technology survey of 1,400 CIOs in the U.S.
34 Wireline

VoIP’s position on the list of IT
priorities for U.S. CIOs to invest
in over the next 12 months
Source: Robert Half Technology survey of 1,400 CIOs in the U.S.
35 Wireline

of those CIOs plan to invest in VoIP
to save on monthly phone bills and
get on the unified messaging
bandwagon
Source: Robert Half Technology survey of 1,400 CIOs in the U.S.
36 Wireline

Wireline Trends Summary
1. Broadband growth remains high in both developed
and emerging markets
2. VoIP is in high demand by end-users, especially
businesses, who are looking to add functionality
and save money
37

Emerging Apps: Fixed-Mobile
Convergence (FMC)
38

FMC is defined as:
“seamless connectivity between fixed and wireless
telecommunications networks, with the goal of
optimizing transmission of data, voice and video
communications to and among end users, no
matter what their locations or devices. FMC means
that a single device can connect through and be
switched between wired and wireless networks.”
39 Emerging Apps

by 2014
FMC handset voice
connections for enterprise
customers this year
Source: ABI Research
40 Emerging Apps

in 2014
WiFi attach rate in
smartphones in 2009
Source: ABI Research
41 Emerging Apps

Emerging Apps:
Unified Communications (UC)
42

Unified Communications
is defined as:
“a complete communications solution that
includes some combination of voice and
telephony, conferencing, messaging, presence
and IM, clients and communications appliances.”
43 Emerging Apps

Size of the UC market by the end of
2009, even amid economic uncertainty
Source: Forrester Research
44 Emerging Apps

Worldwide UC product
revenues by 2012
Source: In-Stat, Unified Communications: A Clash of Titans, September 2008
45 Emerging Apps

UC, which is one of the top three "recession-proof"
technologies in Nemertes' 2009 benchmark,
provides firms with specific value, particularly
in a tight economic environment
46 Emerging Apps

in 2012
Estimated size of unattended
audio conferencing market
in 2007
Source: Wainhouse Research, Rich Media Conferencing, 2008
47 Emerging Apps

in 2012
Estimated size of Web
conferencing market
in 2007
Source: Wainhouse Research, Rich Media Conferencing, 2008
48 Emerging Apps

Emerging Apps: Cloud Computing
(aka “Software as a Service”)
49

Gartner defines cloud computing as:
“a style of computing where massively scalable IT-related
capabilities are provided 'as a service' using Internet
technologies to multiple external customers”
50 Emerging Apps

Most Important Factors Driving
Cloud Computing Adoption
1. Lower Costs
2. Better performance
3. Increased Agility
Source: IDC
51 Emerging Apps

spending on IT cloud services
by 2012, with more enterprises
considering and adopting cloud
offerings due to current U.S.
economic woes
Source: IDC
52 Emerging Apps

58% say cloud computing
will cause a radical shift in IT
47% are already using it
or actively researching it
Just 18% call cloud
computing a "passing fad"
Source: CIO Magazine, Cloud Computing Survey: IT Leaders See Big Promise,
53
Have Big Security Questions, October 21, 2008 Emerging Apps

Planned Usage of Cloud Offerings
Collaboration tools – 67%
App platforms & dev software – 61%
Enterprise application software – 54%
Utilities/management software – 54%
Personal productivity software – 45%
Source: CIO Magazine, Cloud Computing Survey: IT Leaders See Big Promise,
54
Have Big Security Questions, October 21, 2008 Emerging Apps

Emerging Applications & Service
Models Trends Summary
1. FMC will converge your landline and mobile calling
into a single device, reducing complexity, while
increasing mobility and convenience
2. UC delivers the added communications functionality
that businesses want, in a single package
3. Cloud Computing enables emerging apps to be
delivered at a lower cost
55

Economy: IT Spending
56

decline in global purchases of IT
goods and services by businesses
and governments in 2009
Source: Forrester Research, US And Global IT Market Outlook: Q2 2009, June 2009
57 Economy

decline in spending in the U.S.
annual IT market in 2009
Source: Forrester Research, US And Global IT Market Outlook: Q2 2009, June 2009
58 Economy

drop in communications
equipment buying
Source: Forrester Research, US And Global IT Market Outlook: Q2 2009, June 2009
59 Economy

organizations whose direct IT
budgets will either be a bit or much
lower in 2009 compared to 2008
Source: Osterman Research, The Impact of the Economy on 2009 Spending Plans, January 2009
60 Economy

Number of organizations that will
either definitely or probably reduce
budget for travel during 2009
compared to 2008
Source: Osterman Research, The Impact of the Economy on 2009 Spending Plans, January 2009
61 Economy

Economic Trends Summary
1. The economy is forcing companies to do a whole
lot more with less
62

Net Neutrality
& Wireless Openness
63 Regulatory

Net Neutrality Rules
1. Consumers are entitled to access whatever lawful internet
content they want.
2. Consumers are entitled to run whatever applications and
services they want, subject to the needs of law enforcement.
3. Consumers can connect to networks whatever legal devices
they want, so long as they do not harm them.
4. Consumers are entitled to competition between networks,
applications, services and content providers.
64 Regulatory

Net Neutrality Rules
5. Non-Discrimination: Service providers are not allowed to
discriminate between applications, services and content
outside of “reasonable” network management.
6. Transparency: Service providers must be transparent about
the network management practices they use.
65 Regulatory

Regulatory Trends Summary
1. Net Neutrality / Wireless Openness rules will
create an environment which is good for end-users
66

Impacting the future of business
communications…
…and our opportunity!
67

Skype started out
as a consumer product...
...but increasingly,
businesses are using Skype
68

use Skype for business purposes
Source: Skype user segmentation survey of 4,000 users (UK, US and China), March 2008
69

Why the interest in Skype?
Saving money Saving time Staying ahead
70

The proof:
say they are saving money
Source: Skype user segmentation survey of 4,000 users (UK, US and China), March 2008
71

The proof:
say they communicate better
with customers using Skype
Source: Skype user segmentation survey of 4,000 users (UK, US and China), March 2008
72

The proof:
say they are using it while
traveling on business
Source: Skype user segmentation survey of 4,000 users (UK, US and China), March 2008
73

The proof:
say they are seeing the
increase in productivity
Source: Skype user segmentation survey of 4,000 users (UK, US and China), March 2008
74

Saving money is just the start
Free Skype-to-Skype calls
Really low-cost calls to landlines & mobiles
75

Interoperability
Unified Communications 500
Series for Small Businesses
76

Richer conversations,
collaboration & efficiency
Video calling Screen sharing
Instant messaging Subscriptions
Conference calling Online numbers
Sending files Voicemail
Presence SMS
77

placeholder graphic
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use video for
business purposes
Source: Results from a December 2008 online survey of 2452 active Skype users in the US and UK
78

What about mobile?
79

of smartphones will soon have
Skype available for download
80
Source: Gartner, “Market Share: Smartphones, Worldwide, 4Q08 and 2008,” March 2009

What’s the channel opportunity?
81

How Business Customers buy technology?
Vendor
Distribution
“Trusted
Advisor”
Consultants
Products
Telco
SMB
E-tailers Resellers
Customer
Advice Services
System Support VARs
Integrator
Service
Partner
Distribution
Vendor
82

Why do we care about Channel Partners?
Technology / IT market
Sold through indirect channels - 66%
83
Source: Gartner

Why do we care about Channel Partners?
Telecommunications market
Sold through indirect channels - 80%
84
Source: Gartner

of VARs and integrators named
VoIP the technology that will
generate the fastest-growing
sales for them in 2009
Source: ChannelWeb, Inside The 2009 Networking Landscape, June 23, 2009
85

of VARs and integrators said VoIP
and UC technology will
see the most innovation and
creativity over the next 12-18
months as vendors bring new
collaboration solutions to market
Source: ChannelWeb, Inside The 2009 Networking Landscape, June 23, 2009
86

Why do we care about Channel Partners?
1. Expands coverage
2. Reduces selling costs
3. Provides access to industry expertise
87

What do Channel Partners expect?
Core Elements Incentives
Advancement Rewards
Tier 1, 2, 3
Promotional Support
Sales & Tech Training
Support
CRM Tools
Brand Recognition /
MDF Reputation
Leads
Quality / Innovative Product
Competitive Product /
Pricing
Enhance Revenue - GPM
Tech Support Easy to sell / Easy to Policies
Commission / Tools Support
Deal
Rebates Low cost of entry Registration
Availability
Marketing Tools Reporting
Partner Portal
Partner Performance
Rating
Capability Building Elements
88

Skype Service Partner Program
Educate service partners through online Incentives / Training / Support
Skype Academy
Give service partners marketing and support tools
Give service partners leads and drive a continuous creation of end-
user (business) demand
Provide support tools needed to manage client accounts and deliver
any necessary technical support
89

Sign up to learn more about the
Skype Service Partner Program at:
www.skype.com/go/servicepartnerprogram
90

Emerging Skype ecosystem
91

Skype wants to partner with:
1. Wireline Carriers
2. Wireless Carriers
3. MSOs
4. OEMs and their VARs
5. Application Developers / ISVs
92

Skype partnership with Hutchison 3
3 Skypephone
• 500K units sold, one of the most popular pre-pay
handsets for 3
• 20% higher margin than average PAYG user on 3
• 79% of customers are new to 3
• 500M+ free Skype-to-Skype minutes on the
3 UK network since November 2006
• 1.7M free Skype-to-Skype minutes carried
over 3 UK's network each day in August 2009
• 150M+ free Skype conversations on the
3 UK network since November 2006
Source: 3 UK / Skype
93

Learn more at www.skype.com/business
or visit us in Room B118
94