25. Sylvain Lamblot | 2010-08-10 | Page 25
The rise of mobile OS fragmentation
http://www.visionmobile.com/blog/2010/11/infographic-the-mobile-developer-journey/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+Visionmobile+(VisionMobile+Forum)
27. Sylvain Lamblot | 2010-08-10 | Page 27
The rise of Brokering
Adress the Many to Many challenge
28. Sylvain Lamblot | 2010-08-10 | Page 28
The traffic avalanche
Source: Morgan Stanley, 2010
29. Sylvain Lamblot | 2010-08-10 | Page 29
The rise of mobile tiered plan
30. Sylvain Lamblot | 2010-08-10 | Page 30
The CONSOLIDATION
TOP 20 players coNtrol 2/3 of global revenues 2009E
5%
4%
4%
3%2%2%2%2%2%
2%
2%
2%
1%
1%
1% 4%
5%
7%
7%
8%
32%
AT&T
NTT
Verizon
DT
Telefonica
FT
Vodafone
China Mobile
NTT DoCoMoVivendiBT
Sprint
Nextel
China Telecom
Softbank
America Movil
Telstra
China Unicom
KPN
KDDITI
Others
Total revenues: 1616 BUSD
Top 20 players: 1095 (~68%)
1990 2010E
Consolidation
Mobile entry
Deregulation
2000
60%
Top 20 share of
telecom services
revenues
~75% ~70%
100%
Sources: Ericsson analysis, Reuters data (2010)
31. Sylvain Lamblot | 2010-08-10 | Page 31
A handful of players dominate the market
› Emerging markets giants increasingly present in top 20
› Continued consolidation defends market share and core business profitability
› Internet / device giants – comparably high performance and high future expectations
-4
0
4
8
12
16
20
24
28
20 40 60 80 100 120 140
Revenues 2009 (BUSD)
EBIT2009(BUSD)
AT&T
NTT
Verizon
DT
Telefonica
China Mobile
Vodafone
FT
NTT DoCoMo
Microsoft
Apple
Google
Sprint
Nextel
KDDI
Vivendi
TI
China
Telecom
America
Movil
Softbank
KPN
Telstra
China
Unico
m
BT
EBIT>17%
EBIT<17%
Top 20 operators
17% EBIT (weighted
average)
20 largest operators by revenue and EBIT (blue circles)
Market cap size
Sources: Ericsson analysis, Reuters data (2010)
32. Sylvain Lamblot | 2010-08-10 | Page 32
GROWTH PROFITABILITY
The operators Challenge: Find Profitable growth and
optimize investments
MATURING MARKETS WILL PRESSURE ALREADY LOW MARGINS
Sources: Merrill Lynch Global Wireless Matrix; Cowen & Co.; NCC; CIA World Factbook; Credo research and analysis
33. Sylvain Lamblot | 2010-08-10 | Page 33
The rise of CFO
Revenue
sharing
Central
procurement
SaaS model
37. Sylvain Lamblot | 2010-08-10 | Page 37
Acquisitions or not?
Sum of acquisitions from 2008-2009 YTD1
More than 70 multimedia related acquisitions 2008-2009
and >60 acquisitions in OSS/BSS market during 2007-20082
2
1
0
2
2
55
0
3
5
00
11
0
0
2
5
26
0
4
1
11
23
3
1
10
0
7
0
24
6
9
0
83
0
11
0
Qualcomm 72
20
Multimedia relatedOther acquisitionsMultimedia relatedOther acquisitions Total number of acquisitions
38. Sylvain Lamblot | 2010-08-10 | Page 38
11 factors
Impacting
Operators
11 factors
Open with
39. Sylvain Lamblot | 2010-08-10 | Page 39
Where are we?
http://
www.personalizemedia.com/media/socmedcounter.sw
40. Sylvain Lamblot | 2010-08-10 | Page 40
Did you like this presentation?
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Editor's Notes
Slide owners: Cecilia Borglund
Latest update: June 28, 2010
Best before date: June 30, 2011
Video is driving the rapid growth of the Mobile Internet traffic
Mobile Internet is predicted be bigger than Desktop Internet within 5 years. The cross over point is expected to be above 1600 million Internet users.
5 countries (China, the US, India, Russia and Brazil) account for 48% of the Internet users (at around 860 million today) and the usage growth remains robust
The Mobile ramping will be faster than Desktop was and it will also be bigger than most think
5 trends converging: 3G, social networking, video, VoIP and impressive mobile devices
Regarding pace of change, Morgan Stanley believe more users will likely connect to the Internet via mobile devices than desktop PC within 5 years
The Mobile data traffic is expected to rise 39x between 2009 to 2014 (108% CAGR) according to Morgan Stanley.
Comparing this with the Ericsson forecast we have similar estimates. According to Ericsson, mobile traffic (voice and data) is expected to increase almost 30 times by 2015, driven by video. Advanced Smartphone devices will grow 4 times to 2015 and the generated traffic will grow more than 30 times.
Video: Consumers want to find, select and watch video over wired and wireless Internet.
The Smartphone usage is about data, not voice
Massive data growth driving carrier/equipment transitions
Mobile phone usage is increasingly about data, not voice
Average US cell phone is 70% about voice, while an iPhone is only 40% about voice
Rapid ramp of mobile Internet usage will be a benefit for the consumers. Some companies will likely win big (potentially very big), while many will wonder what just happened.
Source: Morgan Stanley, Internet trends, April 12, 2010
Slide owners: Cecilia Borglund
Latest update: June 28, 2010
Best before date: June 30, 2011
Are we heading towards differentiated mass market pricing?
More and more operators are starting to work on new business models for data services, like the introduction of Tiered pricing in order to segment the market more efficiently. AT&T has gone from one single Data plan on Smartphones to having two, where the most important change is the introduction of a low price plan (1/2 the price of the previously available Unlimited plan). A similar move was made by UK operator O2 who introduced a number of bucket plans (with different price levels) where usage allowance ranges from 500 MB to 1 GB a month in conjunction with varying Voice Plans (also buckets). While some operators are moving away from having completely unlimited plans, others like Tele 2 and 3 in Sweden are reintroducing unlimited flat rates for their top Tier plans. Vodafone Spain also introduced complete Unlimited Flat Rate some time ago but is also using advanced management functionality (Traffic Handling Priority) to keep cost under control and provide Fair Access to Internet. Softbank recently announced the introduction of unlimited flat rate plans for roaming, which will be very much welcomed by frequent travelers and tourist alike. Comment: To efficiently expand its market, mobile operators are starting to segment the market in different ways using tiered pricing based on Speed or Volume or a combination of the two. The next step from operators would be to more efficiently use the available technology to manage users and traffic - keeping cost in control while even more efficiently being able to differentiate their offerings, like Vodafone Spain is doing.
So, examples are now starting to show that in more mature Mobile Broadband markets, operators like TeliaSonera in Sweden are starting to increase prices after reaching mass market (or at least come a long way towards mass market). Unlimited flat rates have been important to stimulate the uptake, but once reaching mass market, the differentiated pricing becomes an important next step. This view is also supported by analysts (e.g. Arthur D Little & Exane BNP Paribas):
In countries where Mobile Broadband is just starting in the mass market, such as Spain and Germany, most companies expect Mobile Broadband prices to decline and/or include higher traffic allowances for unchanged price points – including some companies which expect unlimited flat rates
In countries like Austria, the UK and even more so in Sweden, where ARPU is already low following very aggressive offerings 2008-2009, operators expect prices to stabilize or even increase – some of them even as soon as this year. They also expect a continued move towards tiered pricing (price difference on traffic allowance). Still both Tele2 and 3 in Sweden have introduced unlimited flat rate so there are no simple answers.
When Mobile Broadband is used as a substitution for fixed broadband, ARPU is expected to decline to correspond to (or be lower than) the fixed broadband ARPU. Using a weighted average of the European countries today gives a current ARPU of EUR 15-20 and with this prediction, the ARPU for 2015 is estimated at EUR12 per month. When Mobile Broadband is used as a complement for fixed broadband, an even lower ARPU is expected of EUR5.5 per month. This is either based on pre-paid Mobile Broadband (already a success in the UK and Austria), with low ARPU and/or Mobile Broadband as an add on to fixed broadband or triple play (as launched in e.g. Belgium or France), with low incremental ARPU. The mid- and long term Mobile Broadband ARPU vs penetration in the European countries suggests EUR 10 per month with 25% penetration. Source: Arthur D Little & Exane BNP Paribas – Mobile Internet: blessing or curse?
In an Ericsson Consumer Lab Mobile Broadband usage study from 2009-2010, we found that around 30% of the potential users are willing to pay up to 20€ per month and 65% are willing to pay up to10€.
Sources: Numerous sources, including: http://www.fiercewireless.com/europe/story/operators-dump-unlimited-data-offerings-file-sharing-blamed/2010-06-11?utm_medium=nl&utm_source=internal#ixzz0r1L3Q4bD, http://www.guardian.co.uk/technology/2010/jun/11/mobile-data-unlimited-end, http://www.macobserver.com/tmo/article/o2_announces_iphone_upgrade_plans_new_data_caps/, http://blog.connectedplanetonline.com/unfiltered/2010/06/10/dominoes-fall-u-k-s-o2-follows-att-iphone-data-caps/, http://www.electronista.com/articles/10/05/07/vodafone.uk.puts.soft.cap.on.phone.data.use/, http://blog.o2.co.uk/home/2010/06/offering-fair-and-transparent-access-to-mobile-data.html
Key message: As markets mature growth slows, and there is more competition, putting increasing pressure on margins.
The chart on the left shows that low penetration markets are growing at a greater rate than mature ones; this is pretty obvious. At the same time the profitability trend is demonstrated in the chart on the right; the markets where there is more competition, which tend to be the more mature markets, have lower margins.
The combination of these trends – slowing growth and smaller margins means that there is more and more pressure on operators to be efficient.
