making the right connections in the new mobile world technology, tablets and tariffs
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Shaun Collins
shaun.collins@ccsinsight.com
Twitter: @shauncollins
Making the Right Connections in the New Mobile World
Technology, Tablets and Tariffs
2© CCS Insight
• Introduction• Market disruptions are immense and unpredictable• New behaviour, new devices, new entrants• Personal and professional cloud • Technology, Tariffs and Tablets• Q & A
This is not the world we planned for
3© CCS Insight
Massive Disruptions in an Unpredictable Market
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Operators are managing change in a tough trading environment
Note: data refers to share of total for four main operators.
Note: data refers to share of total for four main operators.
Data26.8%
Data33.7%
Data29.8%
Data9.8%
Vodafone27.8%
Everything Everywhere
33.6%
O228.3%
310.3%
Revenue Split, 1Q12
Post-paid26.4%
Post-paid33.2%
Post-paid28.6%
Post-paid11.8%
Vodafone25.2%
Everything Everywhere
34.8%
O229.3%
310.8%
Subscriber Split, 1Q12
38%
40%
42%
44%
46%
48%
50%
4,000
2,000
2,000
4,000
1Q11 2Q11 3Q11 4Q11 1Q12
Revenue (£M)
Data Voice % Data
20%
25%
30%
35%
40%
45%
50%
1Q11 2Q11 3Q11 4Q11 1Q12
Non-Voice Services as % of Total Revenue
Vodafone Everything Everywhere O2 3
6© CCS Insight
SOURCE: CCS Insight
Post-Pay Jungle - June 2012 - UK
Nokia C6
iPhone 4
RIM 9800
RIM 9300Curve
Samsung Omnia 7
HTC Trophy
LG Optimus 7
Samsung Galaxy 551
HTC Wildfire S
HTC Desire S
Samsung Galaxy S II
RIM 9900
Alcatel OT-990
HTC Titan
HTC Radar
HTCSensation XL
Samsung Galaxy Note
Motorola RAZR
Nokia Lumia 800
Nokia N9
HuaweiBlaze
RIM 9380 Curve
Nokia Lumia 710
Sony Xperia S
Alcatel OT-995
MotorolaDefy Plus
HTC One X
HTC One V
Nokia 302 Asha
Samsung Galaxy S Advance
ZTE Tania
Nokia Lumia 900
HTC One S
Sony Xperia U
Sony Xperia P
LGL3
LGL7
LGL5
Samsung Galaxy W RIM
9360Curve
Samsung Galaxy S3
Motorola RAZRMAXX
Nokia Lumia 610
Nokia 808 PureView
Samsung Galaxy Mini 2
HuaweiAscend G300
RIM 9320Curve
Samsung GalaxyAce 2
HuaweiAscendP1
7© CCS Insight
Blurring Hardware Categories
8CCS Insight presentation to KPN March 29th 2012
How are users thinking about their mobile/tablet usage?
9© CCS Insight
Two Megatrends – Smartphones and Tablets
Tablets
Worldwide tablet shipments in 2011 - 65m
Worldwide PC shipments in 2011 - 414m
Our main scenario - tablets take us into a “Post-PC” era
– Long term annual sales potential - 700-800m / year
Source: CCS Insight, various, Apr 2012
10© CCS Insight
Two Megatrends – Smartphones and Tablets
There is still work to do to realise the full value of smartphone growth
– Smartphones are available at <€100
– The next wave depends on affordability of pre-pay data tariffs
Parallel story with tablets and multi-device tariffs
Source: CCS Insight, various, Apr 2012
11© CCS Insight
Who’s Buying Tablets?
65:35 male to female
Tablet ownership is concentrated in older age groups
Maps broadly onto wealth distribution in Europe
Demographics are likely to broaden as lower priced devices become available
– E.g. Amazon Kindle Fire
CCS Insight Tablet User Survey: October 2011, EU5
13-17 18-24 25-34 35-44 45-54 Over 55
0%
5%
10%
15%
20%
25%
30%
35%
Tablet Ownership by Age Group - Europe
Apple iPadOther
4500Sample
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Nearly half think of tablets as a genuine new category
One third think of them in computing terms in Europe
– 40-50% in Asia,
Comparisons with mobile phones have much lower weight
– 85% of users do not think of tablets as a “mobile” devices
– This has big implications
But the mobile market complicates the purchase with the 3G option
CCS Insight Tablet User Survey – Oct 2011, EU5
Portable TV with a smaller screen
A mobile phone but with a bigger screen
Other
Super duper smartphone
A laptop but with a smaller screen
Simple easy to use computer
Exactly what it is, a tablet
0% 10% 20% 30% 40% 50%
What Would You Say A Tablet Is?
Other
Apple iPad
4500Sample
What Is A Tablet?
13© CCS Insight
New Categories Emerge
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Video is a “wrecking ball”for networks
And it’s everywhere
– Social use
– Work use
Data consumption by users on mobile
Source: FT, 4th May 2012
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Data traffic shows astonishing growth
18% sequential growth of total in 3Q11
60% y-o-y growth of mobile data users
300% smartphone traffic growth 2011
Total traffic doubled every 4-5 quarters through 2010 / 2011
We have not reached the half-way point with smartphones yet
~1bn mobile broadband SIMs so far
Data consumption by users on mobile is growing faster than supply
Worldwide mobile data traffic vs. voice
Source: Ericsson Traffic and Market Data Report, November 2011
Data
Voice
16© CCS Insight
Tariffs are beginning to recognise this new behaviour
Long signalled but significant restructuring of tariffs in USA
– Apply up to 10 devices onto a tariff (at various costs)
– Then add limits of data – all with unlimited voice and text (wi-fi not included)
Long term caps off the voice and text data streams and seeks to capitalise on data Unlimited tariffs will gradually disappear Some anomalies here (Tablets $10/ Netbooks $20) On average this is seen as ARPU accretive for Verizon
17© CCS Insight
Verizon’s Initial LTE Services Messaging Was Unremarkable
Verizon’s initial marketing of 4G LTE services offered nothing that was not available on 3G
Other than a vague promise of better speed – “become a high octane version of you”
This has now evolved, but only slightly
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Network coverage and capacity – 4G
The need for 4G
3G coverage is hampered by high frequency spectrum bands
– However, operators deserve some criticism here
In some urban areas 3G networks are suffering congestion
The benefit of 4G will depend on the frequency band
– Higher frequencies – urban coverage and capacity
– Lower frequencies – mainly coverage
The result of 4G
The mobile industry does not fully appreciate how good 4G is
An “Experience Good”
– The result is that people will use more data
Operators try to use 4G as a way of raising prices?
4G coverage will take years to build
19© CCS Insight
So What?
• Massive, unpredictable changes in mobile right now– Fragmentation and complexity is now the standard– Data moves to the centre of the decision making process– More to come – technology and applications
• Cloud computing is capturing the imagination of the user– iCloud and Facebook are creating an expectation around use cases– Desire for connectivity will increase exponentially
• 4G will be crucial to the multiplier– Applications decisions are made on mobile first then desktop– Device decisions and technology play a large role
• Tablets and smartphones replace desktops and laptops– Cloud and applications will drive an improved experience– Access and response times will improve dramatically
20© CCS Insight
Q & A
@shauncollins
@ccsinsight
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