Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011)
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Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011)

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  • Most of Ovum ’s research assumes a 5-year planning horizon All our forecasts also use a 5-year time horizon This tends to fit with our clients ’ needs and practices It tends to be a period we can be reasonably confident about However, many of the shifts that occur in the industry take considerably longer There is therefore a need periodically to look further out and see what changes might occur 6-10 years from now The Telecoms 2020 report series does just this – for all of Ovum ’s telecoms research practices
  • Enron filed for bankruptcy Eric Schmidt was appointed first Chairman and then CEO of Google AOL and Time Warner completed their merger 9/11 Mac OS X was released Wikipedia was launched
  • A BlackBerry was a fruit Mark Zuckerberg was in high school Tweeting was something birds did App was only used to refer to Appalachian State University A Droid was R2-D2 “ Angry Birds” conjured up images of Tippi Hedren rather than green pigs If you’d heard about a show called Keeping Up With the Kardashians you’d have assumed it was yet another Star Trek spinoff
  • When I say “device” you probably think “smartphone” and when I say “platform” you probably think “smartphone OS” – but it’s much more comprehensive than that.
  • iCloud just extends all this to the online domain in a way it hasn’t been before – front end remains to be seen.
  • Could do the same for Amazon Video, incorporating Prime subscriptions, available on PCs, Macs, Roku etc.
  • A very different picture from mature markets – a much higher percentage of digital metics – who are excluded from the wired society and live as second-class citizens in the digital world. The proportion of digital adventurers is also higher, reflecting the lower disposable income and therefore smaller propensity to pay for all-in bundled services. Lastly, the digital citizen category is here a minority rather than the majority, mostly limited to wealthier customers.
  • This table reflects a couple of things: The first column is a generic revenue mix for a typical telco today – obviously there ’s a big range in reality, but many of the leading incumbent telcos in the world have a revenue mix that looks a lot like this, so it’s representative if not completely accurate for all operators. LEAN operators will have much less of a direct relationship with consumers, and a much bigger portion of their business, and the associated revenues, will be wholesale, since they will be primary suppliers to SMART operators. Business doesn ’t necessarily grow, except as a proportion of the total, since – as the bottom row shows – their total revenues will only be about 60% of what they are now. SMART operators will be even more consumer-centric than telcos are today, and will dervice a majority of their revenues from that source. However, the balance of revenues within consumer will have shifted dramatically away from voice and towards broadband and content (although in practice most SMARTs will probably bundle those two in a way that ’s not necessarily transparent to customers). And their total revenues will be 20% higher than telcos today, since they will incorporate significant content, device management and other revenues telcos don’t have today, which will more than offset the decline in voice.
  • This table reflects a couple of things: The first column is a generic revenue mix for a typical telco today – obviously there ’s a big range in reality, but many of the leading incumbent telcos in the world have a revenue mix that looks a lot like this, so it’s representative if not completely accurate for all operators. LEAN operators will have much less of a direct relationship with consumers, and a much bigger portion of their business, and the associated revenues, will be wholesale, since they will be primary suppliers to SMART operators. Business doesn ’t necessarily grow, except as a proportion of the total, since – as the bottom row shows – their total revenues will only be about 60% of what they are now. SMART operators will be even more consumer-centric than telcos are today, and will dervice a majority of their revenues from that source. However, the balance of revenues within consumer will have shifted dramatically away from voice and towards broadband and content (although in practice most SMARTs will probably bundle those two in a way that ’s not necessarily transparent to customers). And their total revenues will be 20% higher than telcos today, since they will incorporate significant content, device management and other revenues telcos don’t have today, which will more than offset the decline in voice.
  • The Smart Enabler role here refers to the early stages of the platform approach outlined on previous slides. This slide illustrates the fact that these investments are a good idea regardless of which of the two end games an operator is pursuing – SMART or LEAN.

Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011) Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011) Presentation Transcript

  •  
  • Telecoms in 2020: a vision of the future Jan Dawson Chief Telecoms Analyst @janovum 27 June 2011
  • Agenda
    • Looking over the horizon
    • The trends that will shape the next ten years
    • Two sets of players: SMART and LEAN
    • Operator strategies
    • Conclusions / Q&A
  • Ovum ’ s Telecoms 2020 research series 1. LOOKING OVER THE HORIZON
  • In 2001…
  • In 2001…
  • Major trends in the next ten years 2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • Managed device platforms as a major force
    • The last several years have seen the rise of device platforms – notably from Apple, RIM, Palm, Microsoft and Google – which go considerably further than the traditional model
    • Under this model, the platform vendor (not the mobile operator) controls and supplies:
      • the operating system
      • some or all of the pre-installed applications
      • a developer platform for creating applications to run on the device
      • a mechanism for procuring those applications (an ‘app store’)
    • Roles traditionally held by the operator are being usurped by these platform vendors, which we refer to as managed device platforms
    2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • MDPs in the wireline market
    • The same trend is emerging in the wireline market
    • A range of players, including some of the same as in the mobile arena – are developing platform plays for the home device market
      • Notable examples are Google and Apple, with their respective TV offerings
      • Interestingly, these are tied into mobile platforms – Android and iOS as operating systems for STBs
      • Amazon ’s Kindle strategy is another interesting example
    • This means what we ’re really looking at over time is the emergence of integrated MDP players combining fixed and mobile platforms
    2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • Apple as a platform provider 2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • Google as a platform provider 2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • Amazon as a platform provider 2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS
  • Consumer – SMART players versus LEAN operators
    • In 2020, there will be two main player types in the broader market of which telecoms will be part:
      • LEAN operators – focused on infrastructure ownership and wholesaling services to other operators who serve retail customers (possibly including their own retail arms)
      • SMART players – operators and other players (primarily CE vendors) who offer a managed broadband experience including device management, technical support, backup/security/storage etc., for the whole home – these grow out of today ’s managed device platforms
      • Some operators may combine 1 and 2 through netcos / servicecos
    • Many operators will instinctively flock towards 2, but there will be limited room in all categories leading to more consolidation
    3. TWO SETS OF PLAYERS: SMART AND LEAN
  • Consumers in 2020 – mature markets Digital citizens – by far the largest group (perhaps around 60%) - seek safety, ease of use, and predictable spend commitment through a relationship with a SMART vendor, which provides a bundle including devices, configuration and ongoing management, applications, content and connectivity – for a fixed one-off fee or a leasing arrangement. Digital adventurers – A small minority – perhaps 5-10% of users – continue to value fully open platforms, self-configuration and management, and unmediated access to free content on the web, via P2P and rogue servers Digital ‘metics’ – A larger group (perhaps 25-30% of users) are resigned to limited low-cost devices, direct contracts for connectivity, and simplified access to minimal transaction-oriented content and applications (ticketing, banking, etc)‏ 3. TWO SETS OF PLAYERS: SMART AND LEAN
  • Consumers in 2020 – emerging markets Digital citizens – The ‘digital citizen’ type of consumer will account for only around 30% of the users in the emerging markets in 2020. These will be in the upper tiers of the customer pyramid, and like their mature market counterparts, will seek the safety, ease of use and predictable spend commitment of a relationship with a SMART provider, which will provide them with a bundle including device, management / configuration, applications, content and connectivity. High speed, high capacity broadband will be at the centre of the service bundle for these consumers. Digital adventurers – Most of the youthful segments will be digital adventurers (30% of the total) which will continue with the practice of self- configuration and management, as well as unmediated access to content on the web Digital ‘metics’ – The largest group (40%) will be digital metics who will remain limited to low cost devices and simplified access to basic content and applications (e.g. mobile money, health, education, commerce). 3. TWO SETS OF PLAYERS: SMART AND LEAN
  • SMART players 3. TWO SETS OF PLAYERS: SMART AND LEAN
    • Likely heritage
    • Consumer electronics vendors
    • Software vendors and online service providers
    • Operators
    • Services provided
    • Connectivity
    • Content, applications, services
    • Management, care, sales & billing
    • All of the above bundled
    • Assets and skills required
    • Branding, marketing, charging
    • Service provision, management, care
    • Content creation and/or aggregation, devices, and platforms
    • Customers
    • Mainstream end user consumers ( “digital citizens”)
  • LEAN operators 3. TWO SETS OF PLAYERS: SMART AND LEAN
    • Likely heritage
    • Operators
    • Equipment vendors
    • Services provided
    • Low-cost, interconnected bandwidth
    • Network management
    • Application performance management
    • Assets and skills required
    • Efficient network management
    • Application performance management
    • Interoperability with other systems
    • Customers
    • SMART players
    • Some consumers (a portion of “digital adventurers”, “digital metics”
  • Telcos need to be very clear about which strategy they want to pursue
    • There are dramatic differences between the SMART and LEAN models, in terms of:
      • the skillset required
      • the revenue mix (see next slide)
      • the investments that need to be made
      • the relationships with platform vendors, device vendors, content providers
    • Decisions need to be made now in order to start down one of these two paths, including investment, acquisition, partnering decisions
    • Interestingly, elements of LEANness and SMARTness are useful steps on both paths
    4. OPERATOR STRATEGIES
  • Future revenue mix for fixed telcos 4. OPERATOR STRATEGIES 2010 LEAN – 2020 SMART – 2020 Consumer, of which: 50% 20% 60% - Voice 33% 5% 10% - Broadband 16% 15% 25% - Content 1% 0% 25% Business 30% 30% 25% Wholesale 20% 50% 15% Relative size of total revenue 100 60 120
  • Future revenue mix for mobile operators 4. OPERATOR STRATEGIES 2010 LEAN – 2020 SMART – 2020 Consumer, of which: 60% 20% 70% - Voice 40% 5% 15% - Broadband 15% 15% 30% - Content 5% 0% 25% Business 20% 20% 20% Wholesale 20% 50% 10% Relative size of total revenue 100 60 120
  • Advice for operators
    • Two initiatives are key for both paths:
      • Maximizing efficiency
      • Enabling third party value creation
    • Beyond that:
      • SMART players will need deep content, device, service management, service creation strengths
      • LEAN operators will need application performance management, high-quality interconnection, QoS / CoS capability
    • These efforts need to start now even if the 2020 vision takes a number of years to develop in its entirety
    4. OPERATOR STRATEGIES
  • Orange vision for multi-screen content 4. OPERATOR STRATEGIES
  • Verizon as a platform provider 4. OPERATOR STRATEGIES
  • 4. OPERATOR STRATEGIES
  • Verizon provides several useful lessons
    • Using the home TV service as a gateway to owning TV/video on the mobile, or vice versa
    • Opening the TV platform to third party innovation is much easier than the telco platform
    • A platform doesn ’t have to be an OS, and in fact in many cases won’t be – rather, a set of apps on various operating system
    • Porting to other platforms provides a beachhead there too, and creates stickiness – much more compelling than mere bundling
    • If operators don ’t do this, others will – need to take the first steps now
    4. OPERATOR STRATEGIES
  • But platforms are broader than just devices
    • Building an operator platform means exposing the core operator asset – the network – to third parties
    • This is done through carefully controlled, secured and monetised APIs and other interfaces
    • It has two major benefits:
      • Outsources a measure of innovation along with the risk
      • Enables a much better experience for consumers and content partners when using “over the top” content
    • Overall, it turns the network into an asset multiple parties can innovate on, not just the operator
    4. OPERATOR STRATEGIES
  • Building a platform useful for both paths 4. OPERATOR STRATEGIES Telcos LEAN Operator SMART player Smart Enabler 2015 Position in value chain 2010 2020 End states for telcos
  • Conclusions
    • “ Telecoms ” as a discrete market will be hard to identify in 2020
      • It will have become part of a larger, content-centric ecosystem
    • There will be two major roles for operators to fill – SMART players, and LEAN operators
    • There will be plenty of competition for both roles, with operators only one of the groups pursuing them
    • Maximizing efficiency and enabling third party value creation are key to both paths
    • Beyond that, they require different skillsets, which operators have to start building now
    5. CONCLUSIONS / Q&A
  •