China Lte Summit Rob Van Den Dam Final May 5 2011

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3rd Annual China LTE Summit, May 5-6, Beijing

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China Lte Summit Rob Van Den Dam Final May 5 2011

  1. 1. IBV Institute for Business ValueTelco 2015What future in store forMobile Communications Rob van den Dam, Global Telecommunications Sector Leader IBV 3rd Annual China LTE Summit 4G Mobile Broadband: Getting There from Here May 5 - 6, 2011, Beijing, China © 2010 IBM Corporation
  2. 2. Content Telco 2015 2011 Consumer Survey Five telling years, four future scenarios 22 countries surveyed US Brazil Poland UAE Czech 3% 3% 11% 3% 3% Portugal 3% France S. Korea 8% 3% Belgium 3% Sweden UK 3% 7% Germany 3% Australia Spain 4% 7% Italy 4% China India 5% 5% Mexico Russia 5% Netherlands Greece Japan 5% 5% 5% 5% • Trends • Spending and Usage patterns for 2011- 2013 • Four contrasting future scenarios • Customer Advocacy • Revenue and profitability outlooks • Adjacent Market opportunities2 © 2010 IBM Corporation
  3. 3. The growing role of emerging markets: the mobile industry isincreasingly being driven by emerging countries Toward a new hierarchy Top 10 mobile markets worldwide France; 46 (M subs) UK; 68 1. Mobile Revenue YoY growth 3Q10 Italy; 71 China; 375 – Western Europe: - 1.0% 2005 India; 75 – Japan: - 0.4% Germany; 79 – North America: + 6.3% – Latin America: + 10.6% Brasil; 86 – Emerging Asia: + 11.3% Japan; 90 – China: + 12.1% USA; 208 Russia; 126 2. The emergence of new giants: Mexico; Nigeria; Italy; 90 88 84 Germany;107 2010 Etc….. Japan; 116 China; 833 Q3 And all know how to make profit with ARPU Brasil; 195 < US$ 5 Russia; 217 USA; 297 India; 688Source: Global Wireless Matrix Q310, Merrill Lynch, IBMInstitute for Business Value (IBV) © 2010 IBM Corporation
  4. 4. Consumer sentiment in emerging countries is much higher than in developed markets Compared to 2010 and previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years? electricity, water)Decrease Spending Increase Spending Utilities (gas, Electrical Appliances Going out (theatre) Food & Drinks Mobile Broadband Mobile Telecom Transport Vacation 50% 47% PayTV Subs Clothing 45% 42% 42% 38% 38% 39% 40% 33% Landline Sports 28% 24% 18% 10% 11% 11% 12% 6% 6% 7% 8% 4% 5% 5% 8% 8% 13% 11% 11% 14% 12% 14% 10% 15% 17% 15% 18% 18% Mobile Broadband 20% Landline 19% 19% 21% 20% Mobile Telecom 21% electricity, water) Utilities (gas, Food & Drinks Transport 27% PayTV Subs Vacation Clothing 31% Appliances Going out (theatre) Electrical 37% Sports 43% 4 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  5. 5. In Southeast Asian markets, more consumer than less expect to increase spending on Mobile Broadband usage India S. Korea China SPENDING ON MOBILE BROADBAND USAGE Q05 Compared to 2010 and previous years, areDecrease Spending Increase Spending you likely to spend less, the same or more on the following products / services in the next 2-3 Brazil years? 48% 45% Sweden Poland 42% Australia Netherlands 24% Spain Portugal US UK France 18% 18% Czech R. 12% 7% 8% 9% 4% 5% 5% 6% 8% 8% 15% 14% 13% 13% 14% 14% 13% 18% 16% 21% 21% 25% 5 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  6. 6. The Southeast Asian consumers surveyed lead in daily accessing the Internet via the mobile phone or Laptop/Netbook ChinaThrough laptop/Netbook Through mobile phone MOBILE BROADBAND ACCESS S. Korea India (daily access) Australia UK Sweden 51% Spain Brazil US Poland France Netherlands 39% 37% Portugal Czech R. 19% 19% 19% 20% 21% 21% 21% 23% 18% 9% 11% 8% 15% 14% 13% 15% 21% 20% 19% 24% 27% 27% 34% 43% 46% Q07 How often do you access the Mobile Internet via either the Phone or Laptop/Netbook? 6 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  7. 7. An increasing number of mobile consumers use over-the-top services like mobile email, instant messaging and social networks 97% 97% With 221 million bloggers as of the 100% 95% 87% June 2010 end of December 2009, China had 82% more than twice the number in the 77% 76% 80% U.S. 66% 60% 46% Chinese video-sharing website 40% such as YouKu and social Percent of Internet users networking site Qzone are “one 20% visiting Social Networks 100% replacements" for foreign sites such as YouTube and Facebook 0% Malaysia Vietnam South Korea India Japan Singapore Hongkong Philippines Indonesia Youku‟s video +56% Mobile Social software came Networking is pre-Installed on 50% of Dec „09 Dec „10 the fastest growing Mobile smart phones shipped in USA Content category 2010 in ChinaComscore Media Metrix, June 2010 and February 2011 7 © 2010 IBM Corporation
  8. 8. This communication is increasingly augmented with videos, photos &other multimedia content resulting in phenomenal growth of data traffic 2184 Smart phone Mobile Internet Mobile Internet /Data Traffic Petabytes/ month 89 615 Middle East & Africa Latin Amercia Central and Eastern Europe 1076 Western Europe 37 135% Asia Pacific CAGR 867 342 North America 483 15 406 The AppStore 158 207 85 182 397 65 34 80 201 41 91 6 17 2008 2009 2010 2011 2012 2013 SOUTHEAST • 2007: 75% of traffic was fixed/mobile voice ASIA • 2012: 90% of traffic is fixed/mobile data (2/3 of which is mobile data)Source: Cisco Visual Networking Index, June 2009, IDATE, IBM institute for Business Value (IBV) Analysis © 2010 IBM Corporation
  9. 9. Telecom revenues do not track the increases in network traffic anymore Traffic Traffic Volume / Voice Revenue Dominant Network Cost (existing technologies) Ecosystem Revenue Value Opportunity Telecom Revenue Network Cost (future technologies) Data Dominant Time © 2010 IBM CorporationSource: Nokia-Siemens; IBM Institute for Business Value (IBV) Analysis
  10. 10. After a decade of massive change what is the future of telecom?Likely but uncertain trends 1 Telecom industry revenue and with potentially high profitability outlook for each scenario by region and access impact and multiple (fixed/mobile) for 2015 outcomes Revenues 2 Determining Trends 5 3 Underlying trends in the evolution of the communications industry for which SCENARIO 2008 Survivor Consolidation Market Shakeout Clashof Giants Generative Bazaar there is very high degree of SYNOPSIS & certainty and consensus Free Cash Flow OUTCOME (EBITDA - Capex) Provide backdrop for the future of telecommunications in 2015 REALIZATION 2008 Survivor Consolidation Market Shakeout Clash of Giants Generatiev Bazaar PATHMajor economic, competitiveand technological events that 4 trigger each scenario © 2010 IBM Corporation
  11. 11. The interplay of addressable market growth and the competition/ integration structure produces 4 distinct future industry scenariosExpanding CLASH OF GIANTS GENERATIVE BAZAAR Spectrum Spectrum Passive Infrastructure Passive Infrastructure Enabling the two-sided business Active Active Device Aplication Media Telecom Electric Banking & SERVICE OTT/ Device Aplication Media Telecom Electric Health Care Banking & Network Network Manufacturers Developers Organizations Retail Utilities Health Care Finance Addressable Market Growth Manufacturers Developers Organizations Retail Utilities Finance PROVIDERS Support Support $ Telco Infrastructure Retail Infrastructure Retail OEM $ NET CO-OP OPEN ACCESS Channels Channels NET CO-OP Telco Devices Devices $ CONSUMERS CONSUMERS / BUSINESS Customer Customer SURVIVOR CONSOLIDATION MARKET SHAKEOUT Spectrum Passive Passive Active Infrastructure Spectrum Infrastructure Network ActiveDeclining/ Stagnant Few large Network Support Support Infrastructure Devices Retail Channels Infrastructure players Retail Channels dominate Devices Brand Brand Market Customer Customer Customer Many players - Fragmented Competition/Integration Structure Concentrated / Vertical Fragmented /Horizontal © 2010 IBM Corporation
  12. 12. Generative Bazaar represents the most optimistic outlook for telecoms, relative to the IMF’s global GDP forecast for 2011 – 2015 11% Global GDP vs.. Telecom Services Growth Scenarios 9% Developing Asia GDP 8,6% 7% Global Telecom 2010 – 2015 Telecom Growth ScenariosGrowth Generative Bazaar 5.3% 5% Global GDP 4.5% Clash of Giants 3.3% 3% Market Shakeout 1.8% 1% Survivor Consolidation 0.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -1%Source: International Monetary Fund (IMF), World Economic Outlook Database, October 2009; http://imf.org/external/pubs/ft/weo/2009/01/weodata/index.aspx, IBM Institute for Business Value (IBV) and IDATE Analysis, 2004 - 2009 growth forecasts are based on IDATE "World Telecom Service Market", 2008 Edition - January IBM Corporation © 2010 2009, revision in July 2009. 2010 -2015 are IBM Telecom 2015 scenario forecasts
  13. 13. Strong growth requires the industry to act collectively to create thenecessary conditions for the emergence of more profitable scenarios Industry Collaboration to compete against OTT Cost-effective Enhance Role in Ultra-Fast Vertical Broadband Leverage Markets Analytics for deployment Customer Insight Stimulate a range of new and exciting next gen Services by OPEN INNOVATION © 2010 IBM Corporation
  14. 14. The race for mobile broadband has been decided in favour of LTE Which of the following access technologies are going to be critically Ultra-fast Broadband important to the success of your business over the next 5 -10 years? Critical to Success Neither Not Critical to Success Major operators LTE deployment schedule FTTx 71% 27% 2% 4G/ LTE 67% 33% 3G 44% 48% 7% xDSL 43% 48% 9% Geographical mapping LTE developments CATV 27% 39% 34% 2G 20% 42% 38% WiMAX 8% 38% 54% 0% 20% 40% 60% 80% 100% “WiMAX only relevant if 3G/4G spectrum lacking” Head of Product-IT Development, European CSP2009 IBM Institute for Business Value Telecom Industry Survey N=61 © 2010 IBM Corporation
  15. 15. Some national governments fund open access network infrastructures to spur economic growth Innovation A nationwide ultra high speed fibre NBN as „game changer‟ for access infrastructure and a consumers and international complementary pervasive wireless competitiveness: network to support various - Fibre with speeds > 100 Mbps vertical sector economies - NGN Wireless with speeds > 1215 © 2010 IBM Corporation
  16. 16. Today’s consumers are getting smarter– Customer Advocacy is key to retain customers Customer Insight Advocates China has the: Apathetics • lowest proportion of advocates • highest proportion of Apathetics Antagonists 100% Advocates = customers who : 80% 1.Recommend their Provider to others 2.Increase purchases if their Provider 60% offered “other provider” products 40% 3.Stay with their Provider if another provider offered a better price and/or 20% higher quality service/product 0% Antagonists = customers who say „no‟ to China Australia Spain Sweden France all three statements US UK S. Korea16 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  17. 17. Consumers now have access to a huge amount ofinformation and are interconnected Customer Insight Q19 What are your preferred sources of information when you are looking for communications products and services? Recommendations / advice from friends, 66% familiy, peers 72% 56% Internet search on comparison sites 57% Social Media, blogs, discussion groups, 45% knowledge sharing web sites 59% 34% All ages Web sites of communication providers 24% < 25 year Emails from communication providers, 20% including promotional offers 15% Recommendations from 18% Traditional advertising 19% friends/ family/peers, Internet search on comparison sites, 8% and Social Media are the Shopping portals/auctions 10% preferred sources of Retail stores 8% information. 11% 0% 10% 20% 30% 40% 50% 60% 70% 80%17 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  18. 18. Consumers do not always let their provider know aboutproblems which is fundamental to their business Customer Insight Do you ever complain to your service provider when you are disconnected from the network during a conversation, a voice call or internet session? 100% 90% 25% 35% 31% No 80% 48% 47% 55% 54% 70% 63% 71% 67% 67% 60% 50% Yes 40% 75% 65% 69% 30% 52% 53% 45% 46% 20% 37% 29% 33% 33% 10% 0% China Australia Brazil Spain Sweden France Global UK USA India Korea18 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  19. 19. But they do tell their friends/family and that can be damaging What happens when you are disconnected from a mobile, landline Customer Insight or broadband during a voice call or when accessing the Internet? Attempt to re-dial/re- connect 34% 40% 20% 5% 95% Attempt Redial/ ReconnectTell friends/family about 14% 37% 43% 6% my poor experience Avoid providersfriends/family have poor experiences with 14% 35% 40% 10% 94% Tell friends/family Contact customer about their poor 8% 28% 50% 14% experience service Switch providers – e.g. 8% 24% 38% 30% use different SIM 89%My provider contacts me Avoid Providers with when I have a poor 9% 26% 31% 33% poor experience nework experience Always Most of the time Sometimes Never 19 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  20. 20. Apart from Banks/Government, CSPs are among the more trusted to manage identity and private/personal information CSPs using Vertical Markets personal data for Private data Banks 48% 45% 7% Customizing 15% 37% 47% Products Government 80% don‟t mind/care 33% 52% 15% Local autorities Online history CSPs 24% 63% 13% with consent 16% 38% 46% Healthcare 20% 65% 15% Payments on 17% organisations 35% 48% Internet/Mobile Retail stores 20% 67% 13% Online history Online stores 17% 67% 16% without consent 18% 38% 45% Insurance companies 15% 59% 26% Managing 19% 35% 46% identityISPs (Google, etc.) 15% 65% 20% Social Networks 11% 58% 30% Advertising 20% 38% 43% Most trusted Moderately Least Object Dont Mind Dont Care20 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  21. 21. Vertical Market opportunities ranked as number one by consumers surveyed in China Retail/Shopping Financial Services Healthcare Vertical Markets Nbr 1: Receive Mobile Nbr 1: Manage bank account Nbr 1: Reminders for coupons/Discounts (57%) though mobile (59%) medications/appointments (54%) Public Services Travel & Transport UtilitiesNbr 1: Authenicate for public/ Nbr 1: Pay for public Nbr 1: Alert when monthly usage local services (56%) transportation (60%) reach a pre-set threshold (61%)21 Source: 2011 IBM Global Telecom Consumer Survey, 22 countries, N = 11315 © 2010 IBM Corporation
  22. 22. Mobile network operators face new challenges as data becomes themajority of the content they deliver Our world is becoming INSTRUMENTED Our world is becoming INTERCONNECTED Virtually all things are becoming INTELLIGENT ... The world need smarter networks © 2010 IBM Corporation
  23. 23. www.ibm.com/iibvThank 謝謝you! Rob van den Dam Global Telecom Industry Lead, IBM Institute for Business Value rob_vandendam@nl.ibm.com © 2010 IBM Corporation

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