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3. Today’s Speakers
Research Director, Digital Media
408 654 1707
Copyright © 2012 IHS Inc. All Rights Reserved. 3
4. From Subscriber to Silicon
Why End-to-End Technology Value Chain Insight
is Critical to Your Supply Chain Survival
Research Director, Digital Media
408 654 1707
6. Because…
Image Sensor
140%
Overall Semiconductor
112%
Copyright © 2012 IHS Inc. All Rights Reserved. 6
8. Meanwhile…
Contract
Manufacturers
Display Device
Providers Software
Independent Wireless
Design Houses Infrastructure
and Providers
IP Licensing
Wireless
Silicon Communications Device
Providers OEMs
Value Chain
~ $1 Trillion
Service
Consumers Providers
(Operators)
Network
Retailers Maintenance
and
Content
Software
Providers
Copyright © 2012 IHS Inc. All Rights Reserved. 8
9. Example…
Technology
• Raw Materials
• Semiconductors
• Memory
• Displays
• Manufacturing
• Channels
• Applications
• Gaming • Operators
• Video • Wireless
Media • Cinema • Wired Telecommunications
• TV • Infrastructure
• Advertising • Computing
• Broadband Media • Telematics
• Mobile Media • Consumer
Copyright © 2012 IHS Inc. All Rights Reserved. 9
10. From Subscriber to Silicon
Why End-to-End Technology Value Chain
Insight is Critical to Your Supply Chain Survival
Research Director, Digital Media
408 654 1707
11. The Consumer Electronics Value Chain is
Large and Complex
$280B
$50B Contract
Manufacturers
Display Device
Providers Software
Independent $360B
Design Houses Device
& IP Licensing OEMs
Consumer
$62B CE Semi Electronics $200B
Suppliers / Pay TV Service
Manufacturers Value Chain Providers
~ $1 Trillion
Service
Consumers Providers
(Operators)
Online TV,
Retailers Pay per view
Service
Content providers
Distributors $5B
Copyright © 2012 IHS Inc. All Rights Reserved. 11
12. The story of an interconnected supply chain
The capabilities of the components drive consumer demand
Components Vendor Retailer/operator Consumer/subscriber
Revenue flows all the way back from subscribers to silicon
Copyright © 2011 IHS Inc. All Rights Reserved.
13. As an example let’s look at what happens to
the TV sets market in Europe
European TV sales and installed base
70 700
60 600
Installed base (m)
50 500
40 400
30 300
20 200
10 100
0 0
TV sets sales TV sets installed base
Copyright © 2011 IHS Inc. All Rights Reserved. 13
14. European TV sets sales and installed base
are starting to flatten after years of growth
Inflection point
European TV sales and installed base
70 700
60 600
Installed base (m)
50 500
40 400
30 300
20 200
10 100
0 0
TV sets sales TV sets installed base
Copyright © 2011 IHS Inc. All Rights Reserved. 14
15. But what actually happened during this
period was an increase in sets installed
TV homes and TV sets across major countries and regions
600
500
Homes / installed base (m)
400
300
200
100
0
US Europe Western France Germany Italy Spain UK Eastern
Europe Europe
TV HHs TV sets
Copyright © 2011 IHS Inc. All Rights Reserved. 15
16. Where were these new sets being installed?
In new rooms, this is really driven by FPD
Shipments driving sets per home
60 3.0
50 2.5
Beginning of growth
Shipments (m)
40 2.0
30 1.5 CRT
FPD
20 1.0 Sets per home
10 0.5
0 0.0
Copyright © 2011 IHS Inc. All Rights Reserved. 16
17. This has increased the number of homes
with more than one TV set
Multi-set homes
100%
90%
80%
70%
60%
50% US
40% Europe
30% Western Europe
20%
10%
0%
Copyright © 2011 IHS Inc. All Rights Reserved. 17
18. Now we’re starting to reach a natural limit to
TV set growth: no more rooms for TVs
Multi-set TVs profiled into homes 2011
600 3.5
500 3.0
Installed base (m)
2.5
TVs per home
400
2.0
300
1.5
200
1.0
100 0.5
0 0.0
US Europe Western France Germany Italy Spain UK Eastern
Europe Europe
TVs in multi-set HHs TVs in single-set HHs TVs per multi-set HH
Copyright © 2011 IHS Inc. All Rights Reserved. 18
19. And this slowdown is happening globally,
but not uniformly across regions
TV set shipments by region
300
250
China
India
Shipments (m)
200
Russia
Brazil
150
Asia-Pacific
Latin America
100
North America
Middle-East & Africa
50
Eastern Europe
0 Western Europe
Copyright © 2011 IHS Inc. All Rights Reserved. 19
20. And there are some noticeable bubbles,
including 2005-2010 globally
5-year growth bubbles in TV set sales
140%
120%
100%
80%
60%
40%
20%
0%
-20%
-40%
2000-2005 2005-2010 2010-2015
Copyright © 2011 IHS Inc. All Rights Reserved. 20
21. So, our forecasts for TV set shipments take
into account all of these complex factors
TV sets shipments in Europe
80
70
60
Units (m)
50
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Copyright © 2011 IHS Inc. All Rights Reserved. 21
22. In fact, we can see the drivers of component
revenue in the TV set shipment volumes
TV shipments against key component revenue
25 300
Revenue ($bn)
250
Shipments (m)
20
200
15
150
10
100
5 50
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Memory MCU Display Driver Logic ASSP/SoC
Analog/Power LEDs Other TV set shipments
Copyright © 2011 IHS Inc. All Rights Reserved. 22
23. And more explicitly in the volumes of key
advanced technologies which have really
driven demand for advanced components
Advanced TV technologies against component revenue
25 300
Revenue ($bn)
250
Shipments (m)
20
200
15
150
10
100
5 50
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Key component revenues HD (incl. FHD) 3D Digital tuner Smart TV
Copyright © 2011 IHS Inc. All Rights Reserved. 23
24. TV sets are only one ecosystem, others,
such as set-top boxes also obey the same
rules back up the supply chain
North America, Europe 2011: TVs accessed by pay-TV
Total TV sets
(935m)
Pay-TV STBs
(323m)
High-end STBs
(149m)
Copyright © 2011 IHS Inc. All Rights Reserved. 24
25. So we might ask ourselves what is driving
the growth and flattening of the pay TV set-
top box market
Global digital pay TV set-top box market
180 14
160 12
140
Revenue ($bn)
Shipments (m)
10
120
100 8
80 6
60
4
40
20 2
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cable Satellite IPTV Revenue
Copyright © 2011 IHS Inc. All Rights Reserved. 25
26. There is a superficial correlation between
pay TV subscribers and set-top shipments
Global subscribers against set-top box shipments
700 160
600 140
Shipments (m)
120
500
Subscribers (m)
100
400
80
300
60
200
40
100 20
0 0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Digital pay TV subscriptions Digital pay TV set-top box shipments
Copyright © 2011 IHS Inc. All Rights Reserved. 26
27. However it is much more complex, driven by
installed base breakages, subscriber churn
and subscriber net additions
Set-top box drivers: US data (m)
250
200
150
100
50
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Set-top box shipments Set-top box installed base
Total pay TV subscribers Net subscriber additions
Copyright © 2011 IHS Inc. All Rights Reserved. 27
28. The growth opportunity for set-tops is partly
driven by the number of TVs not currently
with a set-top
North America, Europe: TVs accessed by pay-TV set-top
boxes
700 100%
90%
600
percent accessed (%)
Devices installed (m)
80%
500 70%
400 60%
50%
300 40%
200 30%
20%
100
10%
0 0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
TVs accessed by digital pay-TV STB TV sets installed Percent accessed
Copyright © 2011 IHS Inc. All Rights Reserved. 28
29. But there is also a big future driver from IP-
capable (hybrid) gateway and client boxes
Connectable pay TV STB shipments by STB type
80
70
60
50
40
30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
IPTV STB DTH Hybrid STB DTH STB-Gateway
DTH Thin Client Cable Hybrid STB Cable STB-Gateway
Copyright © 2011 IHS Inc. All Rights Reserved. 29
30. Which is driven by increased global
broadband penetration
Broadband penetration of households (%) South Korea
Hong Kong
100
UK
90 France
USA
80
Germany
70 Japan
Australia
60 Italy
50 Spain
Czech Republic
40 Argentina
30 Turkey
Russia
20 Poland
10 China
Brazil
0 South Africa
2000 2005 2010 2015
Copyright © 2011 IHS Inc. All Rights Reserved. 30
31. However, broadband connectivity has also
had a impact on consumer behaviour
Digital Video
closed network
Internet
Copyright © 2011 IHS Inc. All Rights Reserved. 31
32. The result is a fragmentation of devices in
consumers’ homes
North America, Western Europe: percentage of devices
installed
100%
Percentage of devices installed (%)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005 2010 2015
Tablets Connectable PMPs Connectable consoles Smartphone handsets
PCs Connectable TV sets Connectable BD
Copyright © 2011 IHS Inc. All Rights Reserved. 32
33. At a household level, TV sets are now
inundated with companion devices
North America vs. Western Europe: devices per TV household
10
9
8
Devices per TV HH
7
6
5
4
3
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
North America: TV sets per TV HH
Western Europe: TV sets per TV HH
North America: IP connectable handsets, tablets, PMPs, consoles, PCs, TV sets, and BD players per TV HH
Western Europe: IP connectable handsets, tablets, PMPs, consoles, PCs, TV sets, and BD players per TV HH
Copyright © 2011 IHS Inc. All Rights Reserved. 33
34. Pay-TV investment has fragmented away
from large volume relatively complex STBs
Simple set-tops Complex set-tops Multi-device
Requirement To access To affirm a control Reactive against
additional TV sets point in the home changing consumer
behaviour
Example DTA in the US Multimedia Home Applications on
Gateways PCs, phones &
tablets
34
Copyright © 2011 IHS Inc. All Rights Reserved. 34
35. Creating severe revenue pressures on
major set-top suppliers
Global STB revenue by vendor
12
Others
10
Cisco+SA
Revenue (€b)
8
6 Motorola
4 Pace+Philips
2 Technicolor+Hughes
0
STB revenues (€m) STB average selling price (€)
Vendor 2000 2010 CAGR Vendor 2000 2010 CAGR
Cisco + SA 1,139 1,158 0.2% Cisco + SA 327 103 -10.9%
Motorola 1,686 1,814 0.7% Motorola 281 95 -10.2%
Pace + Philips 1,339 1,365 0.2% Pace + Philips 275 66 -13.3%
Technicolor + 2,116 930 -7.9% Technicolor + 230 72 -11.0%
Hughes Hughes
Total Market 8,005 10,998 3.2% Total Market 264 76 -11.7%
Copyright © 2011 IHS Inc. All Rights Reserved. 35
36. And each device type is driven by the same
logic of revenue from consumer spending…
Western Europe 2011: consumer leisure spend
2%
Pay-TV VoD
12% Pay-TV subscriptions
Games
Mobile Games
10% Mobile Video
2% Mobile Music
2% On-line video
On-line music
6% 54%
Physical music
Physical rental
1%
10% BD disc rental
DVD retail
Cinema
Copyright © 2011 IHS Inc. All Rights Reserved. 36
37. …advertising revenue…
Western Europe 2011: advertising revenue
1% 1%
7%
Television
11% 29% Internet
Radio
Newspaper
Magazine
24% Out-of-home
Cinema
22% Mobile
5%
Copyright © 2011 IHS Inc. All Rights Reserved. 37
38. …and ultimately device purchases
Consumer electronics device purchases: 2011
13%
5%
3%
Blue ray players
Blue ray recorders
26%
Televisions
Game consoles
24% Set-top boxes
Media Tablets
Digital Media Adaptors
11%
18%
Copyright © 2011 IHS Inc. All Rights Reserved. 38
41. IHS Electronics & Media…
PARTS , PROCUREMENT, AND SUPPLY CHAIN RISK MANAGEMENT
VERTICAL RESEARCH PLATFORMS
Consumer Electronics, Media, Electronic and Industrial
and Telecommunications Technology
Display Materials and Systems
HORIZONTAL
RESEARCH
Teardown Analysis
PLATFORMS
Connectivity, Electronics Manufacturing, and Semiconductors
Copyright © 2012 IHS Inc. All Rights Reserved. 41
42. IHS Electronics & Media…
• Access to over 1,200 data transformation analysts and researchers, over
350 sector analysts and industry experts, and tens of millions of data
points
• Proprietary datasets, forecasts, perspectives, and market analysis
• Primary and secondary research methods
• Data modeling
• Regional and country-level granularity
• Pricing, cost modeling, and teardown analysis for thousands of devices
and products
• Automotive, consumer, industrial, and medical electronics as well
digital content creation / distribution market data and analysis
• Value chain assessments including: end-market reporting and
commentary; hardware, component, and services market share analysis;
supply & demand dynamics; spending; electronics design and
manufacturing; as well as production trends and capacities
Copyright © 2012 IHS Inc. All Rights Reserved. 42
43. Questions & Answers
Research Director, Digital Media
408 654 1707
Copyright © 2012 IHS Inc. All Rights Reserved. 43
44. For More Information
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