Annual state of_global_mobile_industry_2012_chetan_sharma_consulting

State of the Global Mobile Industry
Annual Assessment - 2012

Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits.

http://www.chetansharma.com 1 © Copyright 2012, All Rights Reserved. Copying w/o permission is prohibited.

Table of Contents

• Global Mobile State of the Union - 2012
• Mobile Impacts Everything
• Mobile Subscriber and Revenue Growth
• Global Markets – Data Growth
• Devices – Changing Landscape
• Mobile VAS and OTT
• Mobile Data Traffic Growth and Solutions
• Intellectual Property
• Global Markets – Competitive Dynamics
• 2012 Expectations

http://www.chetansharma.com 2 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

Global Mobile State of the Union 2012
1. Total Global Mobile Revenues to hit $1.5 Trillion in 2012, over 2% of Global GDP
– Top 10 operators control 42% of the global data mobile revenues
2. Mobile Services Revenue exceeded $1 Trillion for the first time in 2011
– The number of mobile operators with > $1 Billion in yearly data revenues will touch 50 in 2012
3. Total Global Mobile Data Revenues went past $300 Billion in 2011
– Non-messaging data now owns 53% of the global mobile data revenues
4. Mobile Operator Profits have more than doubled over the last 10 years
– However, the wealth is not divided evenly. Asia’s share has tripled at the expense of Europe whose profit share has declined by 50%.
5. Total Global Subscriptions to exceed 7 Billion in early 2013
– China exceeds 1 Billion, India 950 Million. Subscriber growth is in Asia, Revenue growth is in Asia+North America
6. China and India represent 27% of subscriptions but only 12% of the global service revenues
– US represents only 6% of the subscriptions but 21% of the global service revenues, 26% of the data revenues, and 27% of the global
CAPEX
7. Mobile Devices are now exceeding traditional computers in unit sales + revenue
– 70% of the device sales in the US are now smartphones. Device Replacement cycle is shrinking
8. Samsung and Apple now account for 50% of the smartphone unit share and 90% of the profit share
– Difficult environment for other OEMs esp. when ZTE and Huawei are coming strong from the bottom. It will be difficult for pure play
device OEMs to survive long-term
9. Tablets (iPads) has created a new computing paradigm that is having a significant impact on commerce,
content consumption, and developer investments
– Apple will continue to dominate the segment and iOS will be the leading OS for the segment. Amazon, ZTE, Huawei, to chip away at
the sub-$200 tier


cont’d
10. Mobile Broadband (4G) is being deployed at a faster rate than previous generations, first time data is leading
the charge
– Over 1.5 Billion broadband connections by 2012
11. Global Mobile Apps revenue has completely (and irreversibly) tilted to off-deck
– The decline is directly proportional to the increase in smartphone penetration by region
12. All major markets are consolidating with the top 3 players at 85% of the market
– Regulators will have to be more prudent and proactive about managing competitiveness and growth
13. Mobile data traffic 2x YOY in most markets. Mobile Data will be 95% of the global mobile traffic by 2015
– Many countries are facing spectrum exhaust in the next 2-3 years (in certain markets)
14. Mobile Signaling takes up 2x the resources as Mobile Data Traffic
– Signaling traffic is growing faster than the data traffic on broadband networks
15. Connected device segment is growing at the fastest pace in the western markets
– Operators will have to quickly adapt their strategies to stay relevant in this segment
16. Several multi-billion dollar opportunity segments are emerging
– Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few
17. Mobile Ecosystem has become very dynamic and unpredictable
– The 5 Platform Amigos – Apple, Google, Amazon, Microsoft, and Facebook dominate though the first two have the real power
18. Mobile Operator Revenue is under pressure from OTT Players
– OTT Share of the Global Mobile Revenues increased to 4%


cont’d
19. OTT players forcing operators to up their game
– Operators are partnering, launching their own OTT apps, increasing tariffs to manage the margins
20. Intellectual Property has become a key component of long-term product strategy
– 21% of all patents granted in US are mobile related. Top 20 control 1/3rd of the overall mobile patent pool
21. Mobile Patent Rankings: US – IBM, Microsoft, Nokia. Europe – Alcatel-Lucent, Nokia, Samsung. Overall
– Nokia, Samsung, Alcatel-Lucent
– OEMs – Nokia, Samsung, Sony. Service Providers – AT&T, NTT DoCoMo, Sprint
22. In 3-5 years, with few exceptions, if a company is not doing majority of its digital business on mobile, it
is going to be irrelevant
– Majority (by a good margin) of the consumer interactions with brands will be on mobile
23. Mobile has become the single most important digital channel for engaging consumers and it shows
– In the US, mobile revenues were > all Ecommerce And > Music, ISP, Hollywood, and Cable revenues combined
24. We have entered the mobile 3.0 era where “data” is all that matters and it disrupts the value chains
– Data will drive majority of the network growth, Contextual data will drive majority of the VAS growth
25. There will be more changes in the next 10 years than in the previous 100
– The value chains will keep disrupting every 12-18 months by the new players and business models. Several verticals are
already getting redefined e.g. retail, health, education, etc.


Key Industry Micro-Milestones
• Apple captures 70% of mobile device profits – defies gravity, obliterates competition
• Apple mobile appstore downloads exceed 25 Billion, 100 Million on Mac – redefines
distribution/ecosystem
• Samsung ends Nokia’s 14 year reign as the device king – brutal execution
• Android 300M activations – Juggernaut
• Paypal does $7B in mobile transaction volume
• Square does $5B in commerce transaction volume
• Google > $5B in mobile revenues
• Microsoft revenues from Android > Windows Mobile
• Pandora’s 70% usage is on mobile, Twitter’s 60% of the usage is on mobile – heading
towards a mobile-dominant world
• Facebook Instagram Acquisition $1B – Mobile only acquisition to beef up mobile
strategy
• Angry Birds approaches a billion downloads
• ESPN does 3.1 billion minutes on mobile in 3/12 – Mobile is where the action is
• Skype traffic over 150 billion minutes – OTT pressure


Key Industry Micro-Milestones cont’d

• KPN messaging volumes decline 15% YOY – OTT pressure
• Mobile Security threats grow 7x in last two years, Android threats up 3000% – Mobile IS IT
• Cisco BYOD ratio – 70% (up 52% in 2011) - BYOD is creating new opportunities for vendors
• US data traffic over 130 quadrillion bytes/month in 2011 – Data traffic 2X YOY, welcome to
the yottabyte era
• Fandango sells quarter of its ticket on mobile – commerce is happening
• Expedia does > $1B in mobile commerce – see above
• Microsoft Nokia Multi-Billion partnership – It takes two to tango
• Lightsquared fails – Keep your friends close, enemies closer
• Google Motorola $12.5B – IP becomes key to strategy
• Nortel Patent acquisition $4.5B – IP becomes key to strategy
• AT&T/T-Mobile Failure – DOJ/FCC put down the gavel
• 40% of Kenya’s GDP comes from mobile money – impact of mobile is pervasive
• Millennial Media IPO at $2B – first public market validation of the mobile advertising space
• HP gives up on Palm – Competition forces Corporate Schizophrenia


Mobile Apps and Services

Mobile is fundamentally reshaping how we as consumers
spend from housing and healthcare to entertainment and
travel, from food and drinks to communication and
transportation. Mobile not only influences purchase behavior
but also post purchase opinions. When the share button is
literally a second away, consumers are willingly sharing more
information than ever before.
Mobile is thus helping close the nirvana gap for brands and
advertisers who seek to connect advertising to actual
transactions. The long-term battle is however for owning the
context of the users. Having the best knowledge about the
user to help drive the transaction is the simply the most
valuable currency of commerce. The day is not far when
mobile commerce will dominate all digital commerce.


Mobile is the single most pervasive
technology ever invented


Mobile impacts all Maslow levels

% of Average Spend

15%
Self

35%
Safety

50%

Physiological

Source: US Department of Commerce

Mobile is now 50% of the household IT
budget

Context – the most valuable currency
in mobile
Demographics/Explicit
Profile

Interests/Implicit Profile Browsing, Watching,
Previewing, Flipping

Sensor data
Purchasing, Payments

User Intent

Communications
Location
Trusted Concierge
Presence Search (Local, Online,
Media)

Physiological
parameters
Knowledge Transactions
DRIVES
(about User) (from User)
Calendar User Experience

Address Book
Gifting

Social Community

Trusted Advisor Advertising
Intellectual Community

M2M Pricing

Preferences
Security/Authorization

Devices in the vicinity

Big Opportunities in becoming the trusted
3 Party Sources
rd

Concierge/Advisor to the individual user

MOBILE SUBSCRIBER AND REVENUE
GROWTH

The Big Picture
• The global mobile industry is the most vibrant and fastest growing industry. We expect the total
revenue in the industry to touch approximately $1.5 Trillion in 2012 with mobile data representing
28% of the mix. Mobile data services revenue stood at 33%. Global Mobile Data revenues eclipsed
$300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues
will make up the majority of the overall global data revenues at 53%.
• By the end of 2011, the global subscriptions exceeded 6 Billion. The first 1 billion took over 20 years
and this last one took only 15 months. The primary growth drivers are India and China which are
cumulatively adding 75M new subs every quarter. China became the first country to eclipse the 1
billion mark in March 2012. India is likely to arrive at the milestone by early 2013.
• Smartphones are driving tremendous growth around the globe. Amongst the major markets, US
leads with 69% sales. The global figure stands at approximately 32%. Some operators expect 90-
95% of their device sales to be smartphones in 2012. In terms of the actual smartphone
penetration, we expect the US market to eclipse the 50% mark in 2012.
• China leads in the number of subs but US dominates in both total and data revenue. A number of
emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once
dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings.
• The number of mobile operators with more than $1B in data revenues will increase to 50 in 2012.
This number was only at 13 in 2005.


Global Mobile Market Snapshot 2011
Global Mobile Market Snapshot 2012

Global
Subscriptions

Global
Smartphone
Users

Global Data
Users

© Chetan Sharma Consulting, 2012
Global SMS
Users

Global Mobile
Broadband
Users

Each dude represents approximately 113 million humans on planet Earth

Global Mobile Technology Evolution

First time, data is leading the charge


Global Mobile Industry continues to
grow at a healthy pace

• Non Operator OTT Revenues at 4%
• Voice will fall below 50% in 2012
• Messaging revenues still growing
but flattening growth
• Access revenues are growing quicker
than any other operator segment


Mobile is over 2% of Global GDP


Operators around the world are
benefiting from mobile data

50 operators with > $1B in data revs


Global Mobile Industry Growth


Top 10 global mobile data operators –
US, Japan, China Dominate


Global Mobile Leaders - 2012

Rank By Subs By Total Revenue By Data Revenue
1 China US US
2 India China Japan
3 US Japan China
4 Russia Brazil France
5 Brazil France UK
6 Indonesia Russia Korea
7 Japan UK Italy
8 Pakistan Germany Germany
9 Germany Italy Australia
10 Mexico India Brazil


Global Mobile Leaders - 2012

Rank By Sub Penetration By ARPU By Data Usage
1 Hong Kong Japan Sweden
2 Finland Canada Finland
3 Portugal Switzerland Hong Kong
4 Austria US US
5 Singapore Norway Denmark
6 Sweden Australia Canada
7 Denmark France Australia
8 Greece Netherlands New Zealand
9 Germany Singapore Austria
10 Switzerland Israel Belgium


Biggest Telecom Groups

Rank By Subs By Data Revenue By NM Data Revenue
1 China Mobile Verizon Wireless AT&T Mobility
2 Vodafone NTT DoCoMo NTT DoCoMo
3 Telefonica AT&T Mobility Verizon Wireless
4 Bharti Airtel China Mobile China Mobile
5 America Movil Vodafone Vodafone
6 Orange Sprint Nextel Sprint Nextel
7 China Unicom KDDI KDDI
8 Vimplecom Telefonica Telefonica
9 TeliaSonera Softbank T-Mobile
10 Reliance T-Mobile Softbank


US at the epicenter of mobile growth

• 2% net-adds, 6% total subs but 21% of service
revenues, 26% of data revenues, and 27% of
global CAPEX
• Networks: LTE/HSPA+ - Most broadband
customers
• Smartphones: Over 70% of the devices sold
(more than twice the global average)
• Applications: Billions of downloads (#1)
• Pricing: Per Bit, Per Minute, Per Message lowest
in developed world


US – Mobile is the most dominant
digital channel


Race to a Billion – China won

Corruption drags down growth


China+India in Mobile

China+India account for 37% of the global population


China regains momentum & the lead


US, Japan lead in revenues;
China, India in subscriptions

• Japan continues to be the leader in mobile data with NTT DoCoMo,
KDDI, and Softbank Japan ahead of the pack in terms of mobile data
revenue and data as a % of total ARPU. Country average is now at
60%.
• Next, Australia and the US have made good inroads in the last two
years. In fact, if we look at the overall data revenue, US is much
further ahead than any other nation due to the size of the market.
• While India has the highest subscriber growth rate in the world
right now, the revenue generating opportunity remain down right
anemic compared to other major markets with average dropping
down to $2.50 in overall ARPU. Even with significant subscriber
base, there is going to be a general lack of opportunity in the
market for the next couple of years relative to other markets.


Mobile Internet 3.0 – Data as growth
engine
Mobile Internet - Leading Global Operators (2011)
$40

3.0
Softbank Japan
NTT DoCoMo
$30 KDDI
Mobile Data ARPU (USD)

2.0
Telstra
Vodafone Italy 3 Australia
$20 Rogers Verizon
Sprint 3 Sweden
AT&T
O2 Germany Singtel
1.0
Orange France

SFR T-Mobile US
T-Mobile Netherlands
Bouygues SK Telecom
$10 O2 UK
KT
T-Mobile Austria 3 UK Vodafone UK
Telefonica
Vodafone Spain TIM 3 Italy
Vodafone Germany T-Mobile UKT-Mobile Germany
Orange UK
China Mobile
Turkcell China Unicom
Vodafone India AIS SMART
Bharti Reliance
$-
0% 15% 30% 45% 60%
Mobile Data as % of Total ARPU
Source: http://chetansharma.com/Mobile_Internet_3.htm


All major markets experiencing data
growth – Japan, Australia, US leading


Operators seek new sources of revenue

ARPU
New Service Revenue
Operators can generate
Messaging new revenue streams by
focusing on the long-tail
Revenue in Billions

Access
Direction of Revenue Growth

of VAS Verticals
Voice
Cloud - Enterprise

Today Tomorrow

Cloud - Consumer

Mobile Advertising

Transportation

Energy & Smart Grid
Hospitality

Wellness

Payments
Messaging

Industrial
Health
Access
Voice

Service and Application Areas

Source: http://chetansharma.com/Mobile_Internet_3.htm


Devices – Apple, Android Dominate

• Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the
pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition
that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to
catch-up on the features but can’t do on the margins. OEMs can grow the pie by bringing products at a better
price points that helps attract different demographics to the mix. Microsoft can make good inroads into the
space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be
even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will
pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue.
• Apple and Samsung are strong on the top. Huawei and ZTE are coming up strong from the bottom. The middle
tier players will have a tough time going forward.
• It will be difficult for pureplay device OEMs to survive long-term.
• Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product
planning and execution has left their market share in disarray. Nokia’s valuation has been cut into half. Nokia’s
release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of
Nokia Windows Phones (Lumia). While the market hasn’t shown much appetite for Windows phone thus far, a
good family of devices might be able to slow the loss trajectory and position the combined team for the up-for-
grabs 3rd spot in the ecosystem. Given that the computing is shifting to mobile devices, we can expect some of
the weaker desktop/laptop players will exit the industry.
• Majority of the tablet use is in the WiFi mode because the primary use case is indoors and WiFi gives a better
(and cheaper) user experience. However, of the users who use cellular, the churn is low. Once operators start to
roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher
(e.g. Rogers, Vodafone Spain) but will still be dominated by WiFi overall.


Mobile Devices are dominating the
Computing Ecosystem


US leading in smartphone sales

US accounts for roughly 40% of the smartphone sales worldwide


Smartphones driving data growth


Samsung reaches the top of the hill
in market share, Nokia struggling


Apple and Samsung control 50% of the unit
smartphone sales. Nokia’s share decimated.


Connected devices come in all shapes
and sizes

High

Data Cards/Embedded
Superphones
Tablets
Video Cameras

Data Consumption
Automotive Smartphones
Cameras

eReaders

Picture Frames
Low High

Number of Units in Market
Feature Phones

Digital Signage/Kiosks
Security Sensors
Health Monitors
Copiers, Scanners, Printers
Wellness Devices
Home Sensors
Asset Tracking
Energy Meters
Vending
Grid Sensors
Low


AT&T – Connected Devices Growth

Postpaid growth is slowing down in western markets, Connected device segment growing fastest


US Tablet Launches in 2011


US Tablet Market


Competing with iPad


Platform players – 5 Amigos of mobile

Strengths Weaknesses
Apple Step ahead of the competition. Pressure on the operator margins
Vertical Integration, Brand loyalty, Dev
revenues, Commerce, Distribution
Google Broad adoption. Broad Support. Open Fragmentation. Dev revenues. Lack of
dev platform. Ambitious clear device strategy. Regulatory
microscope
Amazon Deep understanding of the user, New to the device arms race, Lack of
Content, Commerce, Distribution, OS
Margin master
Microsoft Bank balance, Operators want a 3rd Late to mobile party, Lack of mobile
ecosystem execution
Facebook ~ 1 B users, 500 M mobile Lack of coherent mobile strategy, Lack
of OS


Apple dominates the platform ecosystem

Apple The overall market is basically iOS
and Android.

Apple marketcap > Microsoft
+ Google + Facebook or Amazon
Marketcap

Microsoft

Google

Facebook
Amazon

Users


The Big Picture
• The traditional operator revenue streams of
– Voice – declining and under threat from VoIP
– Messaging – flattening/declining and under threat from IP messaging
– Access – rising but margins are shrinking fast
– VAS – declining in proportion to the growth of smartphones
• Operators are fighting back with
– Voice – launching their own VoIP apps e.g. Bobsled from T-Mobile,
partnering with VoIP players e.g. Skype integration, charging for VoIP
apps e.g. TeliaSonera €6/month
– Messaging – launching their own IP messaging apps e.g. Huddle from
AT&T, partnering with IP messaging players e.g. Whatsapp partnership
– Access – Tiering
– VAS – launch their own VAS apps and industry vertical apps and
services


Smartphones are enabling Offdeck to
dominate app revenue


Some operators are starting to see
the decline in messaging revenues
Some operators in Europe are also seeing declines in messaging revenue

Total SMS Volumes still increasing
but revenue in decline


SMS Growth – US takes over Philippines

Philippines SMS volumes/sub declining precipitously due to the rise in IP messaging


Mobile Advertising: All verticals
participating


Promising Segments. Leading Companies

• Advertising – Google, Millennial Media
• Payments/Commerce – Paypal, Square, Google,
Amazon
• Gaming – Microsoft, Rovio
• Enterprise – AT&T, Salesforce
• M2M – Vodafone, AT&T, Ericsson
• Identity – Facebook, Google, Twitter
• Cloud – Amazon, Microsoft, Google, Salesforce
• Wellness/Health – Qualcomm, Fitbit, Mobisante

Sampling Only

Mobile Data Traffic Growth

• In most western markets, data traffic is
doubling YOY
• Sweden, Finland, Hong Kong, and US make the
top 4 in terms of MB consumed per capita
• A Multi-pronged approach is needed to have a
sustainable strategy long term


Only a holistic strategy to deal with data
tsunami can help the operators long-term

• As a result of the data tsunami, there are two types of opportunities that are being
created, one that take advantage of the data being generated in a way that enhances
the user experience and provides value and the other in technologies that help manage
the traffic data that will continue to grow exponentially.
• To be able to stay ahead of the demand, significant planning needs to go in to deal with
the bits and bytes that are already exploding. New technical and business solutions will
be needed to manage the growth and profit from the services. Relying on only one
solution won’t be an effective strategy to manage rising data demand. A holistic
approach to managing data traffic is needed and our analysis shows that the cost
structure can be reduced by more than half if a suite of solutions are deployed vs. a
single dimensional approach and thus bringing the hockey stick curves of data cost
more in line with the revenues and thus preserving the margins.
• The decision making process within the operator organizations will need to be
streamlined as well. Operators should also consider creating a senior post which
focuses on both the cost side and the solution side so they can devise and institute a
sustainable long-term policy and keep the margins healthy.


Wireless seeing unprecedented growth (US)

US Mobile Data Traffic is doubling
every year


Margin preservation key to all
operator strategies


Managing data margins will be top
priority for all operators

50%

m
iu
Philippines

br
ili
Japan

qu
cE
ffi
ra
-T
40%

ue
en
Data as % of Services

v
Re
Australia
China
Revenues

Indonesia US UK
New Zealand
30% Singapore Hong Kong
Netherlands Germany

Italy Sweden
Switzerland
Mexico Malaysia France Portugal
20% Canada Denmark
Korea Finland
Russia Spain

Brazil South Africa
India
10% Argentina

20% 40% 60% 80% 100%
Data as % of Overall Network
Traffic
Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition
http://chetansharma.com/yottabyteera2.htm

Management of Data Requires
Multiple Strategies
Radio Access Network Core Network

Mobile Backhaul

Copper

2G
Core Network

Microwave
3G

Fiber RNC SGSN GGSN

4G

Light

Internet Services
Networks

Offloading Traffic
Optimization

Offloading Traffic

WiFi/FemtoCell Compression/Optimization

Compression/Optimization of Data Traffic

Policy Management

Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition
http://chetansharma.com/yottabyteera2.htm

INTELLECTUAL PROPERTY WILL REMAIN
KEY TO LONG-TERM PRODUCT AND
COMPETITIVE STRATEGY SUCCESS

IP is critical to long-term product strategy

• The IP tussles are playing out as expected
• Players with strong IP portfolios will be able to command better
negotiating positions, new revenue streams, competitive positioning
over the long-term
• On average mobile companies file patents 1.7 times more in the US vs.
Europe
• Mobile Patent Leaders in US: IBM, Microsoft, Nokia
• Mobile Patent Leaders in Europe: Alcatel-Lucent, Nokia, Samsung
• Mobile Patent Leaders in Infrastructure: Samsung, Alcatel-Lucent,
Ericsson
• Mobile Patent Leaders in Devices: Nokia, Samsung, Sony
• Mobile Patent Leaders in Service Providers: AT&T, NTT DoCoMo, Sprint
• Top 20 control 1/3rd of the total mobile communications patent pool


Patent Power Rankings – Mobile Communications
Related Issued Patents 1995-2012

Rank US Europe US+Europe
1 IBM Alcatel-Lucent Nokia
2 Microsoft Nokia Samsung
3 Nokia Samsung Alcatel-Lucent
4 Samsung Sony Ericsson
5 Ericsson Ericsson Microsoft
6 Sony RIM IBM
7 Motorola NEC Sony
8 Intel NTT DoCoMo NEC
9 Alcatel-Lucent Siemens Motorola
10 Qualcomm Qualcomm Qualcomm

Based on an estimation of Mobile Communications Related Patents that have been granted by
The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents


Patent Power Rankings – Mobile Communications
Related Issued Patents 1995-2012

Rank OEM/Software Infrastructure Service Provider
1 Nokia Samsung AT&T
2 Samsung Alcatel-Lucent NTT DoCoMo
3 Sony Ericsson Sprint
4 NEC NEC British Telecom
5 Motorola Motorola Verizon
6 RIM Qualcomm T-Mobile
7 Siemens Siemens Swisscom
8 LG LG Telecom Italia
9 Fujitsu Fujitsu SK Telecom
10 Hitachi HP TeliaSonera

Based on an estimation of Mobile Communications Related Patents that have been granted by
The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents


US outpaces Europe in mobile patents


Nokia, Samsung, and ALU – The big 3


Mobile Patent Portfolio of leading
mobile players
Mobile Patent Portfolio of Leading Players
100% Amazon
Google Panasonic
HTC ZTE
Juniper Huawei RIM
90% Lenovo Adobe Apple
EMC SAP
Telecom Italia
80% SK Telecom Samsung
Kyocera LG
Sprint Cisco
Verizon Broadcom
Ricoh Qualcomm Microsoft
% of Patents Issued 2007-12

70% Dell NTT DoCoMo Intel
T-Mobile AT&T
TeliaSonera Fujitsu Sony
60% Asustek IBM
Interdigital
Orange Siemens
50% Hitachi HP
British Telecom Ericsson Nokia
Philips
40% Swisscom
NEC Alcatel-Lucent
30% Motorola

20% Oracle
Openwave
10%
0%
0 2000 4000 6000 8000 10000 12000
Number of Patents Issued 1995-2012


IBM, MS lead in US. Nokia, Samsung in
Europe


Integration of IP with product strategy is
essential for competitiveness in mobile
NUMERIC
ANALYSIS

Improve your PPQ by
tight integration with product
SUBJECTIVE Patent Portfolio Quotient™
ANALYSIS f(Σ) (PPQ)
strategy

PATENT
PROGRAM
ANALYSIS

R&D, Other
Sources Ideation

Market Product Design and
Public Disclosure
Requirements Requirements Development

Licensing

IP competitive and
IP Analysis IP Protection Process IP Management
risk assessment

IP driven Product Development Cycle

Source: What is your Patent Portfolio Quotient?
http://chetansharma.com/patentportfolioquotient.htm

GLOBAL MARKETS – COMPETITIVE
DYNAMICS

Changing Ecosystem Dynamics

It is very clear that the ecosystem dynamics can change very quickly,
one just can’t take the competitive and friendly forces for granted. In
the past, the silos and segments were clearly defined with little
overlap. However, over the course of last couple of years, players have
been migrating and surfing in segments across the board - from Apple
to Visa, from P&G to AT&T, from Facebook to Time Warner, from
Google to Best Buy, every company wants to capture the mindshare
and piece of the consumer’s pocketbook.

The fine line between partners and competitors can get obliterated in
a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s
business, Visa and Verizon want to be the payment channel of choice,
Amazon is gunning for Microsoft’s enterprise business, so on and so
forth. One product launch, one acquisition, can change the game in an
instant. And this is only the beginning.


Competitive Dynamics

• The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average,
the top 3 control 93% of the market in an given nation. It doesn’t matter if the market is defined by “controlled
regulation” like in China, Korea, and Japan or if it is “open market” driven in markets such as the US, UK, and
India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy
but they are largely irrelevant to the overall structure and functioning of the mobile market.
• Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the
US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the
last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher
than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is
settling into a “top 3” operator market. India’s brutal price wars are going to trigger the consolidation in the next
12-24 months and will eventually settle into a structure similar to other markets.
• The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are
46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some
semblance of equilibrium in the market the top operator shouldn’t have more than 50% of the market share and
the number three player shouldn’t have less than 20%. This helps create enough balance in the market to derive
maximum value for the consumer.
• Mobile operators will face some hard choices in developing and protecting the role they want to play in a given
region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA
margins, investment required over the long-haul, how investors view them, and on the competitive landscape of
the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this
decade that further define “communications” and “computing” as we know it.


Competitive Landscape in Major Markets

Source: Competition and Evolution of Mobile Markets.
http://chetansharma.com/mobilecompetition.htm


Global Mobile Competitive Index


Eventually all markets consolidate to top 3



What to expect in 2H 2012
• More Tiering, faster pace of change of plans. More options, family data plans
• Cost reduction is as important as revenue generation. More players will align their value-chains and cost structures
• Facebook IPO is probably going to be the single biggest event in the technology industry in the next few months.
• Radios will start connecting the digital world with the physical world with significant disruption opportunity
• Mobile Payment Networks will remain intact for the near future as the ecosystem largely focuses on building value
on top of the existing exchange platforms
• The intersection of Social, Location, Identity, and Gaming is creating new opportunities
• With connectivity becoming pervasive, mobile will fundamentally start to alter the legacy infrastructure – retail,
health, education, energy, computing, travel, entertainment
• Significant tablet adoption in the enterprise directly impacting the traditional computer manufacturers
• Both HTML5 and Apps will continue to grow, the relevancy to any given application will depend on the reach and
economics requirements. HTML5 is not going to replace Apps.
• Mobile data growth will double again in 2012. Significant opportunities in managing and understanding of mobile
data growth
• Regulators will need to evolve to keep up with the trend to keep their nation globally competitive
• More IP scuffles before licensing settlements
• Consolidation of weaker players, more global M&A
• Significant progress in emerging areas like mHealth, mPayments will come from the developing world while the
western countries get mired in regulatory and legacy mess
• Several players face challenging times ahead and 2012 will be critical in their turn around sojourn.


MOBILE FUTURE FORWARD
MOBILE’S THOUGHT-LEADERSHIP SUMMIT
09.10.12
SEATTLE
WWW.MOBILEFUTUREFORWARD.COM

Discussions to inform your strategy
• Is 4G a Game Changer?
• Innovation at the Edges
• Mobile Payments and Commerce
• Disruption is in the air
• Mobile Data Services from the Prism of the CIOs
• Solving the 50 year Spectrum Crunch
• Managing the Network Growth
• Opportunities in the Emerging Markets
• The Universe of Connected Devices
• Analytics - How to Collect, Manage, and Use Data?
• Multi-modal Interactions - How Consumers Adapt?
• At the Intersection of Social, Mobile, Commerce, Content
• Battle for the Home – playing in the n-screen world
• What do Developers Want?
• A Smarter Planet - The Role of Mobile in Enhancing Lifestyles and in Making Everyday Decisions
• Drivers for New Sources of Revenue
• Role of Regulations - Spectrum, Privacy, Net-Neutrality
• Mobile Cloud Computing
• Monetizing the network
• From 3 Screens to Multi-screens
• Mobile Universe in 2020

Mobile Executive Summit

Sept 10th, 2012
Seattle

Ever wondered what the future of mobile looks like?
Join us for an extraordinary day of executive mobile brainstorming

Contact info@mobilefutureforward.com for
sponsorship and speaking opportunities
www.mobilefutureforward.com

Mobile Breakfast Series
June 7th – Seattle – Mobile Operators and OTT
Panel Discussion with AT&T
June 22nd – Atlanta – Connected Devices
Fireside Chat with David Christopher, CMO, AT&T Mobility
Panel Discussion with CNN and Synchronoss
June 29th – London – Mobile Operators and OTT
Panel Discussion with Telefonica, Orange, Rebtel, Horizons Venture

Excellent Speakers. Invaluable Insights. Peerless Networking.

Contact info@mobilebreakfastseries.com for
sponsorship and speaking opportunities

www.mobilebreakfastseries.com

We look forward to hearing from you

Chetan Sharma Mobile Future Forward
chetan@chetansharma.com info@mobilefutureforward.com
TW: @chetansharma TW: @mfutureforward
http://www.chetansharma.com http://www.mobilefutureforward.com

Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits.


Annual state of_global_mobile_industry_2012_chetan_sharma_consulting

Annual state of_global_mobile_industry_2012_chetan_sharma_consulting

Recommended

More Related Content

What's hot

What's hot(20)

Similar to Annual state of_global_mobile_industry_2012_chetan_sharma_consulting

Similar to Annual state of_global_mobile_industry_2012_chetan_sharma_consulting(20)

Recently uploaded

Recently uploaded(20)

Annual state of_global_mobile_industry_2012_chetan_sharma_consulting