Telecom Market Outlook


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Frost & Sullivan analysis of Telecom Market Outlook in Asia Pacific

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Telecom Market Outlook

  1. 1. Telecom Market Outlook Jayesh EaswaramonyVice President ICT Practice February 2011 Developed by ICT Research Team Frost & Sullivan Asia Pacific 1
  2. 2. 1 Market Outlook - Consumer centric2 Market Outlook – enterprise centric3 Key opportunities and imperatives 2
  3. 3. Key trends Emerging Market Growth Story Smart TV will be 50% of most is coming to an end in wireless markets by 2015 Collision phase in Mobile Computing/Internet ecosystem Touch will be the default input to lead to emergence of 2-3 mechanism dominant platforms Network in the Cloud will Experience platforms will define redefine Mobility success 3
  4. 4. Emerging Market growth story coming to an endVery few APAC markets still have room for significant 2G growth 2010 Wireless Market Revenue Growth Rates: 22% 7.3% 12.1% 3.6% 40.6% 2.3% 6.0% -0.5% 6.5% 1.3% 2.1% 0.7% 5.3% 3.6% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% India Indonesia China Philippines Vietnam Thailand Malaysia Japan Singapore Kong Hong Zealand Taiwan Australia Korea South New Mobile SIM Penetration Rate (%) Mobile User Penetration (%) 4
  5. 5. Emerging Market growth story coming to an endAcquisition strategy driven to more extreme markets 2009 = 21 2008 = 29 2010 = 18 South Pacific, 5, 17% South Pacific, 2, South Pacific, 1, 10% Africa, 10, 35% 6% Americas, 4, 19% Americas, 3, 17% Americas, 5, 17% Africa, 10, 47% Africa, 9, 49% Asia, 9, 31% Asia, 5, 24% Asia, 5, 28% • 50-50 split between new acquisitions and licenses • Key markets • Bharti was the most aggressive – acquisition of Zain • Key transactions – Rwanda, Niger, Mali, Morocco, Uganda, Ghana , North Korea , Honduras 5
  6. 6. Aggressive phase of Mobilization to continueValue of Mobility will Exceed the Value of incremental bandwidth at home Market Seeding Phase Data Deluge phase 2015 Pre2008 2008-10 Multi-device world – Packet data exceeded voice data on mobile networks in Smartphone is mass market –Smartphones to be 2010 60% of mobile sub base in APAC Initial seeding to monetize 3G networks Growth driven by large screen 80% of base will have today’s smartphone – PC centric and early rise of equivalent Flat rate as a demand simulation mechanism smartphones 3G penetration at 52% More mobile BB devices than fixed BB devices 80% of internet users to have mobile internet 6
  7. 7. Tablets will bridge the digital divideTablets after 2012 will be the first PC for many rural households helping bridge thedigital divide HP DreamScreen, straddles the boundary between television and computer with an easy to use touchscreen interface, For Rs 20,000.- bottom up innovation works in both Hindi and English, and uses a selection of preloaded apps, enabling it to be used in a variety of ways. The device can also play back DVDs and VCDs, and along with the browser also has dedicated apps to book rail and air tickets. HP has collaborated with different partners, including Airtel and Tata Teleservices, who provide the Internet connectivity, Bill Desk for online bill payments, Erudite for the educational content, Hungama for music and movies, along with Indiagames, India Today, Music Today, NDTV and Yatra, all of whom have built specialised apps just for this platform. 7
  8. 8. How the ecosystem is evolving – collision of 3 cycles 3 ecosystems are converging in the mobile computing ecosystem with diverseapproaches 1990s 2000s 2010s 2015 2020s Collision phase Convergence phase Computi Client-Server PC as PC as Cloud ng Cycle Computing workhorse entertainment/ Computing Personalized Web OS Laptops/Netbooks Tablets Mobile Mobile Cycle 2G based Fixed BB Smartph Mobile Cloud Customized comm growth ones internet Tablets/phones Apps Soft SIMs Internet Cycle Email/ Web Web 2.0 Web 3.0 + Aug Reality Digitization – Digital content Video overtook Mobile devices Graph not to scale overtook analog content static pages sold> Fixed devices 8
  9. 9. How the ecosystem could change – Platforms to emergeBy 2015 there will 1-2 platform choices for each need and 2overall integrated platforms. If Microsoft acquires Facebook then that will be the 3rd platform Apple’s platform Google platform Communication Inhouse? ?? Skype Facebook Platforms (Acquired) Entertainment Itunes /app Youtube Xbox/PS3 Platforms store Hulu ? Information Platforms ( Microsoft? Google Akamai monetized by ads) NFC NFC PayPal Visa Commerce Platforms enablement enablement Operator alliance Participation/SNS Facebook Twitter ? Platforms Experience Platforms – MS-Nokia? Android RIM (Acquired) OS + Web 9
  10. 10. Platform play – some critical observations • End to end experience providers controi 60% of the profits • 4 kinds of players to remain- Market Creator/Innovator, Fast Follower/Market Leader , Optimizer and Niche – Nokia failed on all 4 ☺ Devices • Assemblers of phones and devices will provide me-too devices (25% of market) • Assemblers will provide ‘ make your own device’ service by early 2012 • Players without software DNA will perish ( Qualcomm BREW) • Speed on innovation is driven by internet companies – not hardware or software Platforms • Hardware can be commodity in most cases unless integrated with experience platform • Software can be used as means of other monetization e.g ad selling • Infrastructure plays like Amazon are interesting categories still showing power in retail distribution 10
  11. 11. Network in the cloudNew age networks will be very different Mi-fi devices at the consumer end The new wireless network • MiFi devices can make any device network-agnostic allowing GSM, CDMA and WiMAX carriers to offer any Wi-Fi enabled device. • Except for the access network, a mobile operator network is no • Offloading data traffic will ease different from a fixed operators strain on existing 3G networks. network in cities • 1 BTS today costs same as 3 laptops • Tomorrow the equivalent of 3 The new cloud type BTS laptops is a network node creating a vastly different • Light Radio pioneered by ALU, HP and Freescale shows network how SDR, VLSI and smart power management will change the scale and scope of BTS • Mobile network meets the cloud network leading to unimaginable • Antenna collapsed into the cell – the cube can be as possibilities small as 10 cms Fiber close to the BTS • Greater fiberization of the access nodes 11
  12. 12. Mobile revolution will create allied opportunities for servicesCarriers and vendors will bring services such as remote wipe, remote storage and virusprotection to smart devices to the consumer space. Key points • Viruses have already emerged for Android, iOS and via SMS. • Malware for tablet PCs is expected in 2011. • Many vendors are already offering remote smartphone services, largely to enterprises. • Carriers have been slow to enter this market. • Mobile cloud services will eventually help overcome smartphone challenges such as memory space, battery power and processing speed. 12
  13. 13. Ultra high speed broadband will become predominant in developedmarkets Service Provider Consumer Service Drivers Initiatives Trend • Government broadband • Providers will continue to roll out • Adaptation of triple play services initiatives: Already underway in and accelerate FTTx service (HDTV, VOIP, Broadband) Singapore, Hong Kong and Australia. Initiatives are • Providers will push their • Initial launch and take-up of video subscribers to take-up higher conferencing service in some expected in New Zealand, China, and Taiwan this year. throughput plans (50Mbps to developed markets 100Mbps) • Increased usage of connected • Some providers will also start to devices • Service providers are pushed to offer premium plans with offer high speed broadband service to find additional enhanced QOS revenues sources and to combat mobile broadband 13
  14. 14. Smart TVSmart TVs will account for 50% of the developed market TVs by 2013 Swapping of content from Mobile to TV Manufacturer Portals OTT Set Top Box based TV 14
  15. 15. “True Bundling” will be mainstream by 2012 Old Trend • Vanilla bundling: Providers offering multiple services with only additional discounts • Many Providers even have multiple bills for the bundled services 2011 • Providers will start to offer true blended services with NG BSS & OSS capabilities - 1 Bill for all services • Watch content on TV, internet or mobile with one pay TV subscription • Surf broadband through fixed connection or mobile with one subscription • Voice calls for mobile or fixed line with one subscription • Device bundling: although it can negatively affect profitability, providers in the region will be forced to offer it due to competition 15
  16. 16. Many Fixed SPs will start shifting focus from PSTN phones to IPPhones by 2013 Old story: Cannibalization of international fixed traffic by internet based VOIP services Mobile substitution – Some subscribers disconnecting their fixed line and using mobile phones only 2010: Rise of skype and skype like applications on smart phones 2011: Plunge in PSTN traffic and subscriber attrition will force many providers to push IP phones over PSTN phone. In future Fixed service providers will become broadband only service providers 16
  17. 17. Telco providers will venture into CDN Push Factors Service Provider Strategy • Broadband ARPUs continue to decline • After launching CDN services in Europe and North America, global service • Revenue has even eroded for some providers will launch CDN service in providers APAC (AT&T, France Telecom, BT, DT etc) • The data traffic is surging but network monetization is a challenge • Local incumbents in many markets are also expected to launch CDN services • Internet providers and content owners • Operators will also partner with content are reaping the rewards of telco’s owners to offer diffrentiated QOS for investments. different content / services • Video is the fastest growng segment of the internet traffic 17
  18. 18. 1 Market Outlook - Consumer centric2 Market Outlook – enterprise centric3 Key opportunities and imperatives 18
  19. 19. Top 3 trends in enterprisesMobility, cloud and new phase of smart infrastructure will redefine enterprises Blurring of boundaries between consumer and enterprise • Enterprise infrastructure lags web 2.0 ( Skype as a communication platform) • Mobility based devices like tablets/ geo tagging • Over 80 bn connected devices by 2020 Cloud adoption will be mainstream in next three years • 83 % of APAC enterprises view cloud computing as relevant to their businesses * • Top drivers: scalability-on-demand , reduced hardware infrastructure costs and simplified resource/server provisioning. Smart infrastructure creation • Smart cities to be fulcrum of urbanization ( e.g. Guangzhou, Mumbai –Delhi corridor) • Will form testbed for cross-industry solutions • Telecom as an enabler for new industry business modelsSource: VMWare , Frost and Sullivan 19
  20. 20. Tablets in the enterpriseTablets can improve the price/performance frontier for many industry applications Healthcare Power and Energy Healthcare • Portable Electronic Health • Automated meter reading systems Record (HER) • Self service applications and network monitoring, Trouble- Outage or emergency for Airlines, restaurants, • Automation of forms, processes management and response, banking, and workflows, i.e. completing • Line busting application in computer aided dispatch, e- electronic forms or mileage/data logs retail stores, entertainment and sports venues, theme • “Writing” prescriptions, e- • On the spot service upgrades, parks, and museums, Insurance Claims and work order management increase throughput with Reimbursements dealings tablet PCs during peak • Advanced applications: Predictive traffic periods, general • Wireless interaction among staff Customer Service/ CRM analysis, simulations, contingency and physicians analysis, energy and inventory • E-forms and order taking, management (checking remaining automated inventory • Improved collection and /warehouse oil in container at eod), Automated integration of data, with single synchronization Mapping/Facilities Management integrated data capture device 20
  21. 21. The 2nd Industrial RevolutionA new wave of infrastructure creation will be enabled The Home Network Mobility on steroids Internet of things ‘S’ Citizen ‘S’ Business ‘S’ City ‘S’ Buildings Internet Planning of things ‘S’ Mobility ‘S’ Energy Smart M2M • 8-10 Devices per home • 5-6 Devices per individual • 500 per sq km Infrastr • Universal Remote • Touch as the default input mechanism • Smart cities ucture 6 bn 20 bn 24 bn Source: Frost & Sullivan P4E6-60 21
  22. 22. M2M – FutureIn 2015, the M2M revenue is expected to reach $319.1 million. Smart grid will remain the biggest revenue contributor,accounting for 37.7% of the total revenue We forecast consumer sector will generate 14% of the total revenue, increased fromthe 5.5% level in 2010.APAC M2M Market Outlook: Revenue Forecasts APAC M2M Revenue Forecasts 400 350 Others Revenue ($Million) POS/Payment 300 Security 250 Remote Sensor/ Monitoring 200 Trace and Track 150 Connectivity(Consumer) 100 Vehicle Telematics 50 Smart Grid 0 2008 2009 2010 2011 2012 2013 2014 2015 Year Source: Frost & Sullivan P4E6-60 22
  23. 23. Future of the cloud Current Thinking Future thinking Think more like the OSI layer SaaS SaaS to be complemented with other services Cloud brokers + Real time federators PaaS Connectivity Managers for virtualized clients Application Managers IaaS Smart data centers + cloud for internal operations P4E6-60 23
  24. 24. 1 Market Outlook - Consumer centric2 Market Outlook – enterprise centric3 Key opportunities and imperatives 24
  25. 25. Key imperatives for ecosystem dominanceThe key imperatives for operators include the following Improve customer Maximize the Revenue Opportunity Minimize the costs to serve experience Increase bundling to reduce Scaling without increase in costs Integrated view churn Explore new revenue streams Demand shaping/yield Segmented offerings management Innovative pricing models Common IP core and backhaul Speed up time to market Real-time offer management Ability to differentiate 25
  26. 26. Key imperatives for operatorsOperators will increasingly get segmented or choose different business models Operator Experience Type Lean/ Effective Rapid Enabler Provider Predominant Infrastructure Aggregation Relationship Strategy oriented oriented oriented Business Relationship Mix Infrastructure Infra Aggr Aggregation Infra Key consideratio Capital Market Cap/Sales EV/sub ns Efficiency Scale Scope or Speed Scale and Scope 26
  27. 27. Platform possibilities exist – Mobile + cloud examplePlatform thinking will need capture of key capabilities Device Management App Management Information Management Cloud management Software Manager Third party API mgmt Request brokers File synchronization Front end Manager OTA management Data retrieval Configuration management Session Manager Interfaces with other Security Provide ability to work Leverage apps provided Provide opportunity for Hosted environment with wide variety of by third parties and SMEs to have simple devices other providers ERP type software 27
  28. 28. Gamsa HamnidaGlobal Growth Consulting Company 28
  29. 29. The 2nd Industrial Revolution 2011 2015Hardware • High cost • 50% reduction in costs ( volume game)(incl Module) • Power consumption issues • Plug and playStandardizat • Operators certification • Standardization - Web OSion • Lack of standardization • More devicesNetwork •60% M2M service are based on GSM/CDMA •70% M2M service are running on 3G/WiMAX, 20% on network, 40% on 3G/WiMAX. 4G ( LTE). The rest 10% on WiMAX/CDMA, GSM. • Lower network costPlatform •Less than 10% M2M applications were •70% of the M2M services come from developers that developed by platform. developed their services on the M2M platform. • Convergence of M2M platform and cloud computingApplication •55% revenue comes from smart grid and • More than 60% revenue comes from asset and people vehicle telematics. Highly concentrated in tracking, logistic management/healthcare diagnostics/ utility and vehicle markets. consumer touch security applications. 29
  30. 30. Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare,and Twitter 30
  31. 31. For Additional Information Donna Jeremiah Mi Ok Lee Corporate Communications Corporate Communications Asia Pacific Asia Pacific - Korea +603 6204 5832 +82 2 6710 2033 Jayesh Easwaramony Vice President Asia Pacific ICT +65 6890 0999 31