Possibilities in the Future Telecom Market….                                  John W. Strand                              ...
Everybody is talking about innovation…. Consumer driven innovation, innovation as a  differentiator on technological innov...
10 taboos in the mobile industry that are hampering business and preventing a           dynamic development in a sector th...
Classic value chain – 5 main layers - 16 sub-layersStrand Consult
Operators OPEX & CAPEX va. Net Sales….Strand Consult
Ericssons Cash flow in 2007 - 188 Billion SEK…..                         Total salget voksede 4% totalt PS voksede 16%.......
What is their core business…Strand Consult
Case: Zyb…Strand Consult
The big boys are expanding…Facebook is becoming a dating sitePlaxo has been purchased by ComcastMicrosoft has MSNBC & trie...
The dream of creating a brand ….Strand Consult
Brand strategy for 2 - 2.5 - 2.8 - 3G…..       2G          2.5G      2.8G       3G Consumer        Consumer Consumer    Pr...
The five SP/BR/MVNO mobile phases        Copy                Discount                Consolidation            Segmentation...
Case: E-Plus – EBITDA vs. SAC….Strand Consult
Cost compared to ARPU per customer…                       Casts                         Procent of ARPU                 SA...
Overview of the five mobile broadband phases Phase I: Access for     Phase II: The             Phase III: PC’s are        ...
Mobile broadband – huge prices differences...                                           Mobile broadband                  ...
Case: SFR Quatroplay in france…50Mb to 250Mb, 10€ more pr. month.251Mb to 500Mb, 20€ more pr. month.501Mb to 1Gb, 30€ more...
Free IP TV is everywhere……Strand Consult
Free music and almost free TV…..Broadband subs:TeliaSonera       2,368kTelenor           1,574k                           ...
The reality…Current heroes/winners….     Yesterdays heroes/winners….Strand Consult
Case: Telenor – Good intentions, few services ….Strand Consult
Case: Skype few people, many services….Strand Consult
The big question– IP or not to IP….…                         What is the value of a network       IP Centric        What i...
Open vs. Walled garden..….       Vodafone Live   On the move..         SK-Korea                                          T...
”Open garden” value chain – Simultaneous parallel roads…                    With an ”open garden” value chain, consumers c...
What to invest in…..Walled                      OpenUnderstanding the market    Billing platformPlatforms                 ...
Open vs. Walled garden….Walled                    OpenHigh CAPEX                Low CAPEXLong production time      Fast pr...
An arms race for the chosen few….Strand Consult
Vertical vs. Horizontal media products…                 Old media                                         New media       ...
Revenues on Premium services 2006 (2005)       •Denmark: € 45 millions (36) – 8,33 € by inhabitant in 2006       •Sweden: ...
The importance of sales in the future telco market…          Services         POS          Coustomers                     ...
From high expences to... …  We believe that the succesfull telco’s of the    future will have few fixed expences and   uti...
Four main trends from an investor’s point of view…Innovation is moving from traditional companies to  smaller and more fle...
What are they purchasing…Players                     What are they seekingInfrastructure players      InnovationTechnology...
10 Digital winner tips….1. Mobile broadband – not via the mobile phone but via our PCs2. CPA broadband on mobile and ordin...
Main trends in relation to an exit strategy…Many companies quickly attain a positive cash flowMany smaller and medium exit...
It’s about 44 things....Business models Business models Business models Business modelsBusiness models Business models Bus...
For more information - Strandreports.comStrand Consult                             StrandReports.com
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1. John Strand Ft Oslo

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1. John Strand Ft Oslo

  1. 1. Possibilities in the Future Telecom Market…. John W. Strand www.strandreports.comStrand Consult
  2. 2. Everybody is talking about innovation…. Consumer driven innovation, innovation as a differentiator on technological innovation – the problem is what should we do with all this innovation and how will we finance it, if there are no business models that can transform new functionality and services into hard cash…Strand Consult
  3. 3. 10 taboos in the mobile industry that are hampering business and preventing a dynamic development in a sector that needs drive and innovation!1. Revenue sharing models for mobile services - we need to move forward from CPA / premium SMS2. Mobile services - how do we get consumers to change habits and purchase more advanced services?3. Distribution - how should distribution channels be rewarded in the future ?4. The mobile broadband - business models -Will mobile operators develop towards being mobile ISPs5. The MVNO market - is it small operators or segmented distribution channels?6. Outsourcing - what are the operators’ core competencies?7. Mobile payments - the future is simple, but many are trying to make it complicated.8. Mobile marketing - is the market that big and will it evolve as many optimists are predicting?9. Network technologies - we all know GSM and UMTS, but what about all the competing technologies?10. Mobile market regulation - the regulative authorities and politicians want to regulate the mobile market.Strand Consult
  4. 4. Classic value chain – 5 main layers - 16 sub-layersStrand Consult
  5. 5. Operators OPEX & CAPEX va. Net Sales….Strand Consult
  6. 6. Ericssons Cash flow in 2007 - 188 Billion SEK….. Total salget voksede 4% totalt PS voksede 16%....Strand Consult
  7. 7. What is their core business…Strand Consult
  8. 8. Case: Zyb…Strand Consult
  9. 9. The big boys are expanding…Facebook is becoming a dating sitePlaxo has been purchased by ComcastMicrosoft has MSNBC & tried to purchase YahooVodafone is purchasing Zyb.comGoogle is a content aggregatorNokia is offering free musicSkype – what are they and where are they heading?Youtube – is this a TV station?Strand Consult
  10. 10. The dream of creating a brand ….Strand Consult
  11. 11. Brand strategy for 2 - 2.5 - 2.8 - 3G….. 2G 2.5G 2.8G 3G Consumer Consumer Consumer Prime segment Business Business Business Volume segment MVNO MVNO MVNO Subbrands Subbrands CompetitorsStrand Consult
  12. 12. The five SP/BR/MVNO mobile phases Copy Discount Consolidation Segmentation Brand and Retail The mobile suppliers Discount mobile The Consolidisation Segmented mobile The brand phase is use same business suppliers means a phase is the suppliers are characterised by new model as MNO’s shift in paradigm culmination of the launched by MNO’s mobile suppliers that The mobile suppliers The market is very competition in the and SP’s not have a are often MVNO’s innovate because discount phase Focus is on lowering backgound in the The penetration is discount mobile The MNO’s are churn and increase telecommunications relatively low and suppliers are forced to lower the ARPU market mobile suppliers are launching new competition Increased number of Not least media mainly competing for products (internet as MNO’s buy up the independent companies, brand new mobile distribution, self most successfull segmented mobile owners and retailers customers with high service, new services mobile suppliers and suppliers Retailers are subsidies, rather etc.) are thereby getting MNO’s use SP’s and becomming important than existing mobile Many new mobile more control over the MVNO’s actively as customers for MNO’s users suppliers are stake market extra sales channels High degree of More mobile on low prices, and the The positive trends MNO’s launch own fragmentation/ suppliers means market experiences from the discount subbrands segmentation increasing churn stiff competition and phase continue – price pressure lower MoU High penetration Increasing number of No subsidisation of discount mobile costumers’ mobile suppliers are using terminals subsidisation to keep Increasing churn customers and as A Increasing MoU countermove to caused by the falling MNO’s subsidisation prices strategiesStrand Consult
  13. 13. Case: E-Plus – EBITDA vs. SAC….Strand Consult
  14. 14. Cost compared to ARPU per customer… Casts Procent of ARPU SAC 999,70 22 % Subsidies 901,10 20 % Commission 71,74 2% Marketing 26,90 1% Distribution 337,70 7% Network 509,10 11 % Interconnection 521,80 11 % Total cost 2368,40 51 % of ARPU* ARPU 4619,51Strand Consult *difference is consequence of VAS
  15. 15. Overview of the five mobile broadband phases Phase I: Access for Phase II: The Phase III: PC’s are Phase IV: Mass market Phase V: Change the mobile business young and the used for mobile – mobile broadband and fragmentation customer innovative on the communication and are getting a common of the market move machine to machine item communicationCompanies with Mobile internet access For all age groups, The market for mobile The same developmentemployees in the move are getting used by mobile broadband broadband connections as we have seen on theare requiting them that are on the access will be as will be saturated. The mobile market will weemployees with mobile move in the city and common in a wi-fi card mobile broadband see on the mobileinternet access who live out in café’s, market will look like broadband market at friends, at the Laptops will be sold the mobile market – allEmployees can then university with mobile internet people will have a There will emergecommunicate with the access mobile phone and a different terminalcompany, customers These young people mobile broadband types, ways to see theand partners will see it as a natural Machines will use the solution market, and it will be part of live and will internet through as defragmented as the perhaps not have a mobile internet The market will shift mobile market cable based internet solutions in stead of from being focused on access at home traditional broadband acquire new mobile solutions or as a internet customers to supplement preserve them they haveStrand Consult
  16. 16. Mobile broadband – huge prices differences... Mobile broadband Denmark Price (DKK) Usage• Sweden and Finland TDC na are price leaders Sonofon 499 1GB• Denmark to see price Telia 299 10GB 3 0,5 199 Unlimited erosion shortly as 3 1,5 299 Unlimited resellers enter the 3 3,0 499 Unlimited market Finland Price (EUR) Usage• Austria: EUR 7 (DKK Sonera 52 per) month Elisa 9,9 Unlimited• Sweden: 35% (and Norway Price (NOK) Usage increasing) of mobile Telenor n.a. broadband clients have Netcom 499 Unlimited no wireline connection Sweden Price (SEK) Usage (Tele2) Telia 199 Unlimited• In Finland, it is 20% Tele2 99 Unlimited Telenor 199 Unlimited 3 0,4 99 Unlimited 3 up to 7,2 199 Unlimited 16
  17. 17. Case: SFR Quatroplay in france…50Mb to 250Mb, 10€ more pr. month.251Mb to 500Mb, 20€ more pr. month.501Mb to 1Gb, 30€ more pr. month.Each extra 1 Gb costs 0.10 €These tariffs are offered for a 24 monthsubscription.It costs 5 Euro extra per month if thecustomer chooses a 12 monthsubscription. Strand Consult
  18. 18. Free IP TV is everywhere……Strand Consult
  19. 19. Free music and almost free TV…..Broadband subs:TeliaSonera 2,368kTelenor 1,574k Price in Denmark DKK 350 for TV and DKK 259 for InternetTDC 1,315kStrand Consult
  20. 20. The reality…Current heroes/winners…. Yesterdays heroes/winners….Strand Consult
  21. 21. Case: Telenor – Good intentions, few services ….Strand Consult
  22. 22. Case: Skype few people, many services….Strand Consult
  23. 23. The big question– IP or not to IP….… What is the value of a network IP Centric What is the value of infrastructure What is the value of a customer What is the value of traffic What is the value of a Telco brand Regional presence Network Centric Global presenceStrand Consult If the future services are IP based….
  24. 24. Open vs. Walled garden..…. Vodafone Live On the move.. SK-Korea Telenor 3-UK WALLED OPENStrand Consult
  25. 25. ”Open garden” value chain – Simultaneous parallel roads… With an ”open garden” value chain, consumers choose theStrand Consult providers of mobile services
  26. 26. What to invest in…..Walled OpenUnderstanding the market Billing platformPlatforms API solutionServices Legal aidMarketing Partner ProgrammesEmployees PartnersProduct development Market developmentStrand Consult
  27. 27. Open vs. Walled garden….Walled OpenHigh CAPEX Low CAPEXLong production time Fast production timeHigh customer knowledge High market knowledgeFocus on products Focus on the MarketFew services Many servicesLess dynamic Very dynamicStrand Consult
  28. 28. An arms race for the chosen few….Strand Consult
  29. 29. Vertical vs. Horizontal media products… Old media New media Newspapers Broadband Magazines Internet Radio TV Mobile Distribution Interaction and paymentStrand Consult
  30. 30. Revenues on Premium services 2006 (2005) •Denmark: € 45 millions (36) – 8,33 € by inhabitant in 2006 •Sweden: € 54 millions (44) – 6,06 € by inhabitant in 2006 •Finland: € 84 millions (70) – 16,47 € by inhabitant in 2006 •Norway: € 125 millions (100) – 27,77 € by inhabitant in 2006 •Baltic: € 31 millions (22) – 3,44 € by inhabitant in 2006Strand Consult
  31. 31. The importance of sales in the future telco market… Services POS Coustomers One stop shop ServiceStrand Consult Aggregation
  32. 32. From high expences to... … We believe that the succesfull telco’s of the future will have few fixed expences and utilize a combination of focusses strategy, partnerships, as well as diversified business models to create traffic in their networks and on their platforms. In the end it is all about who have most traffic in their billing system, not who sends out mosy Press Releases...Strand Consult
  33. 33. Four main trends from an investor’s point of view…Innovation is moving from traditional companies to smaller and more flexible playersA changed value chain opens a number of new business possibilitiesBusiness models based on revenue sharing make it easier to build a healthy businessConsolidation continues and continues and continuesStrand Consult
  34. 34. What are they purchasing…Players What are they seekingInfrastructure players InnovationTechnology providers Cross sellingNew players media/banks Market knowledgeOperators DistributionVenture players Consolidation Strand Consult
  35. 35. 10 Digital winner tips….1. Mobile broadband – not via the mobile phone but via our PCs2. CPA broadband on mobile and ordinary broadband3. Services that can take advantage of the operators billing systems, networks and service platforms4. Wide distribution, either via handsets or via existing media channels5. Those that can reduce the operators costs6. Those that realise that advertising can not finance much in the mobile world7. Those that can make everyday life easier for end users – mobility is one of many subjects in this category8. People that can think outside the box and that do not pay attention to technology providers talking about a bright future9. Those that do not try to create local copies of global concepts, but instead focus on creating unique companies10. Those that know the difference between innovation and evolutionStrand Consult
  36. 36. Main trends in relation to an exit strategy…Many companies quickly attain a positive cash flowMany smaller and medium exitsFew large exitsFew real fiascos if you avoid the ”dreamers”Innovation becomes valuableDistribution becomes valuableGlobalisation becomes valuableCash flow becomes valuableThe role as consolidator becomes valuableStrand Consult The classical virtues will win…
  37. 37. It’s about 44 things....Business models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business modelsBusiness models Business models Business models Business models….Strand Consult
  38. 38. For more information - Strandreports.comStrand Consult StrandReports.com

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