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Study On Evolution Of End Device Market V15
 

Study On Evolution Of End Device Market V15

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    Study On Evolution Of End Device Market V15 Study On Evolution Of End Device Market V15 Presentation Transcript

    • DiamondCluster Study The future of the fixed net end device market Survey results Munich, July 2006
    • Introduction Objectives of the DiamondCluster survey “The future of the fixed net end device market”
      • To summarize the results of DiamondCluster International’s (DCI) survey on “Evolution of fixed net end device market” in Europe, Middle East & North America with focus on
        • Technological evolution of access and in-house technologies
        • Convergence trends in the telecommunications market
        • Device evolution with special regard to triple play services
        • Implications on the device portfolio of telecommunication providers and retailers
    • Introduction DiamondCluster invited numerous players from Europe, Middle East & North America to participate in the international survey in March and April 2006 Players invited Focus regions
    • Introduction 35 CXOs in EMEA and North America across the entire telecommunications industry participated in the study Europe 24 Middle East 4 Interview sample Chipset producers 4 Other 1) 9 Fixed Net operators 11 COO 8 CMO 12 1) Note: Executives for Strategy, Sales, Product Management. Source: DiamondCluster International. North America 7 ISPs 8 Vendors 7 Retailer 5 CTO 6 Key questions Convergence trends Technology trends Device trends Implications for device market
      • What is your view on current convergence trends in the telecommunication industry?
      • How fast will these trends reach mass market status?
      • Which technology will set the standard for broadband access?
      • Which technology is likely to be used for in-house communication in the future?
      • How will convergence trends effect the end-device market?
      • Which device is likely to become the central control device for triple play services?
      • What trends will impact the end device portfolio of operators and retailers?
      • Will operators and retailers change their hardware purchasing behavior?
      • Which criteria will be of importance when selecting a vendor?
      35 35 35
    • Introduction Executive Summary
      • Broadband bandwidth is the driving factor for triple play services
      • WLAN will remain as the dominant in-house communication technology
      • Fixed networks will evolve from access pipes to intelligent networks
      • Operators, ISPs, and vendors tend to see a larger short term impact of convergence trends as compared to retailers
      • Device portfolio focus of operators and retailers will shift from simple phone & broadband devices towards more sophisticated gateway solutions and set top boxes
      • Device compatibility, reliability and quality will become key criteria when selecting a vendor
      • Operators will source devices from a small number of selected “best-of-breed” vendors to
        • Offer the best solution / portfolio
        • Avoid becoming dependent on a small number of vendors
      Technology Implications on device market Convergence Devices
      • Set-top boxes will become the key device for triple play services (e.g. IPTV) in the home environment
      • Large base of installed "single-purpose" devices will limit uptake of convergent devices
      Key findings
    • Agenda Introduction Key developments in the telecommunications market Implications for the device market DiamondCluster Credentials
    • Key developments in the telecommunications market In the short term VoIP and triple play developments will have the strong impact on the telecommunications market
      • VoIP and triple play will be the most relevant trends in the short term
      • When estimating the time frame for different trends, operators and vendors have a more optimistic view than retailers
      • Even though technology is ready, retailers claim that actual consumer interest in new services might be limited due to
            • Increase of cost
            • Lack of direct benefits
            • Slow changing user behavior
      • Fully networked home is expected to remain a long term vision due to long replacement cycle of home appliances
      Findings Evaluation of convergence trends Fixed Net/ISP/Vendor/Chipset manufacturers Retailers 2006 2012 2020 Time frame Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. VoIP (Dual Play) Triple Play Quadruple Play In-home convergence Fully networked home
    • Key developments in the telecommunications market Majority of respondents agree that intelligence will reside in network and not in end device – placing operators in a key position Where will intelligence be located?
      • Telecommunication networks will evolve from pure access pipes to intelligent content delivery networks
      • Operators increasingly take influence on devices sold through subsidy payments
      • Impacted by intelligent networks, mainly low end devices are pushed into the market by operators
      • Devices on customer premises expected to remain simple to
          • Keep prices attractive to drive penetration
          • Increase usability for less sophisticated users
      Findings Selected quotes Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. “ By shifting intelligence from the device to the network, prices of triple play end devices can significantly be reduced“ - Vendor, Europe “ The device at the customer premises will synchronize with the information provided by network“ - Operator, Europe “ By offering triple play services to our customers we can escape from the pipeline role that we were shifting into“ - Operator, Europe
    • Key developments in the telecommunications market WLAN is expected to become the dominant standard technology for inhouse communication
      • Coexistence of a multitude of technologies likely
      • WLAN is a global standard with broad device base installed
      • DECT is a high quality technology for short range voice communication, but not suitable for in-house networks
      • Wireless USB and Ultra Wide Band are still in a very early phase, but likely to gain importance
      • Bluetooth will remain an important technology, but only for specific applications (e.g. mobile headsets)
      • Ethernet and Coax Cable will vanish slowly in home environment
      Findings Evaluation of in-house technologies - + + WLAN Ultra Wide Band Wireless USB DECT Bluetooth Coax Cable Ethernet Current importance Future prospects Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Powerline
    • Key developments in the telecommunications market Mainly due to installed base, convergence of network termination, router and triple play device is seen as unlikely in short term
      • The convergence of access modem, router, and triple play device is technologically feasible…
      • … but a broad installed base of singular devices leads to the need for add-on functionality rather than converged device solutions
      • When subsidizing new devices, operators prefer low-cost, entry models
      • More sophisticated customers will eventually buy converged devices through retailers
      Findings Selected quotes Source: DiamondCluster International. “ Network access and triple play device should be separate devices in order to be able to upgrade existing customers without replacing existing infrastructure” Cable Operator, Europe “ Due to the number of competing standards for access and in-house communication, network termination and triple play devices should stay separate to allow customers a maximum of flexibility” Operator, Europe “ Operators, representing our most important customers, prefer to have modem and triple play device separate, mainly to remain flexible in selection of vendors” Vendor, North America
    • Key developments in the telecommunications market Mainly due to installed base, convergence of network termination, router and triple play device is seen as unlikely in short term Findings Evolution to device convergence Source: DiamondCluster International. 2005…. ... 2011 VoIP Telephony Connection to telecommunication network Gateway (Modem / Wlan router) Set Top box IPTV Services VoIP Tele- phony Connection to telecommunication network Set Top Box (incl. gateway) IPTV Services PC Internet Access Home Audio System PC Internet Access alternative slide
      • The convergence of access modem, router, and triple play device is technologically feasible…
      • … but a broad installed base of singular devices leads to the need for add-on functionality rather than converged device solutions
      • When subsidizing new devices, operators prefer low-cost, entry models
      • More sophisticated customers will eventually buy converged devices through retailers
    • Key developments in the telecommunications market Offering the highest flexibility and requiring only little technological affinity, set-top boxes are likely to become the central device Devices likely to serve as central controller
      • A set-top box offers a number of advantages that make it the ideal central control device
          • Easy to setup & use
          • Compatible to existing home entertainment devices
          • Inexpensive compared to media centre PCs or game consoles
      • Early adopters with high technological affinity will prefer Media centre PCs
      • Triple play functionalities will increasingly be integrated in TV sets as standard feature
      • Game consoles might be an alternative to set-top boxes, especially for young segments
      Findings Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Selected quotes Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. “ In the future, end users don‘t want to configure the end device – plug & play and good usability is key“ Operator, Europe “ Market is turning to lifestyle products. Especially big consumer electronic brands are set to dominate the market with their devices" Retailer , USA
    • Agenda Introduction Key developments in the telecommunications market Implications for the device market DiamondCluster Credentials
    • Implications for device market Today, broadband modems and gateways are the most important devices for operators - while retailers focus on DECT phones and broadband gateways Importance of devices
      • DECT and ISDN phones are still important devices in the portfolio of retailers and operators
      • The market for broadband modems is almost entirely served by operators - therefore of almost no importance to retailers
      • Retailers focus on more sophisticated devices, such as gateways with integrated modems
      • Due to early stage of market, IPTV set-top boxes do not play an important role for retailers yet, but an increasing one for operators
      • VoIP devices are slowly picking up in residential market
      Findings not important important 1 5 Cordless DECT phone ISDN phones VoIP phones Broadband modems Broadband gateways IPTV set-top boxes Home entertain- ment devices 2 3 4 Fixed Net Operators/ ISPs Retailers Note: n=24, multiple answers possible. Source: DiamondCluster International survey, 2006.
    • Implications for device market Variety of devices and network infrastructure let compatibility emerge as most important criteria when choosing a vendor Ranking of decision criteria for selecting a vendor
      • All survey participants agree that compatibility of vendors’ devices to network is very important
      • Reliability, quality, and after sales service are key when selecting a device vendor
      • 88% of respondants ranked price as an important decision criteria
      • Global footprint, portfolio width and vendor brand rank as relatively unimportant factors in decision process
      • To leverage own brand and services, operators increasingly focus on vendors’ ability to customize
      Findings - + Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Importance
    • Implications for device market Richness of portfolio is not expected to become a major decision criteria, nevertheless premium will be paid if single vendor is best of all classes Findings Selected quotes Source: DiamondCluster International.
      • Overall, operators prefer to procure from different sources in order to
          • Decrease dependency on specific vendors
          • Build on individual capabilities of vendors
      • Vendors not capable of offering the full range of products should iron out weaknesses through strong partners
      • operators are willing to pay a price premium for a vendor capable of delivering an end-to-end solution
      “ For vendors „umbrella management“ will be key for success in device market, rather than covering all products by themselves they should partner with different specialists and ensure compatibility“ Operator, Europe “ It will take quite some time until standardization will take place in triple play market, today operators are willing to pay for solutions delivered by single source“, Operator, USA “ Vendors don’t need to offer all devices out of one hand. What is more important to me is device compatibility to the network and other devices as well as the reliability of the vendor” Operator, Europe
    • Implications for device market Consequently two different concepts compete in the end device market Convergence player
      • Offering customers end to end solutions from network infrastructure to end device
      • Wide variety of devices and technologies
      • Generally slightly more expensive, mainly due to extensive R&D efforts
      • Often, already well known brands in telecommunication market
      • Specialized only on limited number of device types and technologies e.g.:
          • V-tech: Cordless phones
          • SMC: Broadband devices
      • High flexibility in production, often good capabilities in customization
      • Often cheaper than full range vendors due to more focused approach
      Pure Player Player Ascalade Panasonic SunCorp Uniden D-Link AVM Westell Netgear Zyxel Linksys Scientific Atlanta Humax Thomson Siemens HNW Cisco Convergence player Pure player Home Media Broadband Voice
    • Implications for device market Key learnings from different players in end device market Retailers
      • For device retailers trends will play an important role at much later point in time while…
      • … convergence trends will impact operators & vendors as technology enablers first
      • Devices sold through retailers will be more sophisticated thus combining different technologies and functionalities
      Operators
      • Triple play services might take longer to be established in market due to slow consumer acceptance
      • Operators should focus on set-top boxes, they are compatible to wide range of existing devices & affordable
      • Operators will focus on sourcing rather from specialists than convergence players due to
        • More attractive pricing
        • Avoidance of dependencies from small number of vendors
      Vendors
      • Vendors will focus on ensuring compatibility and quality to be an attractive partner for operators
      • For operator clients, vendors will increasingly need to be capable of delivering rather simple but customized devices
      • Convergence players that are able to achieve best in class positioning in all device groups, might achieve higher prices
      • Converged devices, combining access, router, and set-top box will only be of importance to retailers in the long run
      • Consumer electronics players are likely to dominate the home device market
    • Agenda Introduction Key developments in the telecommunications market Implications for the device market DiamondCluster Credentials
    • DiamondCluster International is a premier top-management consulting firm with a strong focus on Telecommunication & Technology
      • Premier business strategy and technology consulting firm serving the “Global 2000” companies
      • Firm focuses on Telco & Tech and Financial Services
      • Our European practice generates 80% of its revenues in Telco & Tech, serving operators and vendors
      • ~200 clients in over 35 countries supported by ~550 professionals from more than 45 different nationalities
      • Among top 5 strategy and management consulting firms in Telco worldwide (1)
      Premier international management consulting firm… … with a strong global presence (1) Global Market Analysis – Telecom Consulting, Hot Telecom/Total Telecom, 2004. LONDON PARIS MUNICH SÃO PAULO MADRID CHICAGO Clients served DiamondCluster offices BARCELONA DUBAI MUMBAI WASHINGTON D.C.
    • We serve the leading IT, CE & Telco vendors, operators, and media firms IT/CE Vendors Media Mobile Devices Mobile Networks Mobile Carriers Fixed Networks Fixed Carriers Fixed Devices Not exhaustive
    • Our expertise comprises strategy, technology and execution – a clear differentiator for the way we add value to our clients Definition of a technology vision that is aligned with business goals and development of an actionable plan Conceptualization and design of technology platforms Identification and build-up of core business capabilities required to launch or run a business Accomplishment of projects to operationally improve the customer and business value Temporary allocation of executive positions on CXO level to excellent managers Technology architecture design Interim manage- ment Business start-ups/ operations Value manage- ment Innovation based strategies Successful implementation with targeted actions STRATEGY EXECUTION Technology as a means to generate value TECHNOLOGY Development of growth strategies to capitalize on technology related acquisitions and post merger integrations M&A advisory Differentiator Technology strategy Designing strategies that work and help our clients materialize the benefits Strategy & execution Help CEOs master and capitalize on technology Strategy & technology Rigorous analysis and creative strategies about mobile landscape shifts, new competitors, unique market opportunities & emerging technologies Definition of sustainable sales and marketing strategies integrating channels, products, pricing and GTM in a unique market value proposition Sales & Marketing Strategy Strategy
    • Based on our comprehensive team experience, we provide support for the leading IT HW, SW and Service vendors Client examples Project description
      • Growth strategy: Development of a growth strategy for HP’s consumer business in Europe incl. growth initiatives for the 5 major countries
      • Go-to-market-strategy: Evaluation of the market potential for Microsoft Office solutions by industry to prioritize the go-to-market
      • Sales Push: Set-up of war rooms for Siemens Business Services to identify big outsourcing deal opportunities as well as management of the dedicated team
      • Outsourcing negotiation: Development of a risk-pricing methodology and negotiation framework for IBM´s telecommunication unit for IT infrastructure build/outsource deals
      • Growth strategy: Development of a growth strategy for the SME business of T-Systems incl. business plan, customer segmentation, partnership concept and sales force reorganization
      • Sales strategy: Development and execution of a sales push for Fujitsu Siemens Computers to improve its performance in the business notebook market in Spain
      • Controlling system: Implementation of an activity based controlling system for EMTEC incl. definition of improvement initiatives and implementation in SAP
      • Account Development: Preparation of an account development strategy for IBM to support their growth into the Nordic Region
      • Outsourcing: Preparation of outsourcing of WestLB’s data center operations, networks and desktop infrastructure
      • Application Development: Identification, design and planning of mobile data applications to complement Ericsson`s 3G network equipment and terminals in Germany
      • IT Strategy: Development of a global IT strategy for DaimlerChrysler Financial Services that is aligned to the business strategy
      • Merger strategy : Strategic evaluation of a global IT merger to understand potential implications for the enterprise business of HP in Western Europe
      Not exhaustive Strategy Exe- cution Tech- nology Strategy Tech- nology Exe- cution Exe- cution Tech- nology Strategy
    • Your contact at DiamondCluster Peter Wimmer Partner Telecommunication Tel: +49 89 24242 122 Fax: +49 89 24242 105 Mobile: +49 175 29050 22 [email_address] Leomax, Rosental 3-4 D-80331 München Germany