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  • 1. Asian 3G Overview+ Business Development 101 Greg Tarr CrossPacific Capital/Kodiak Networks gtarr@kodiaknetworks.com

2. Outline Asian 3G Overview Asian Business Development/Strategy Model Asian Channel Issues Asian Markets and Customer Access Asia: Global Center of Technology Production St Paul Ventures/Proquent Systems Asian Case Study Ascend Communications Asian Case Study Key Relationships What Action Do I take Now in Asia/Japan? About Greg TarrGreg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 3. NTT Docomo, SK Telecom, China Mobile Data% ARPU Data % Developing according to Handsets available and Customer spending power(Source:Goldman Sachs 2002) 35% 30%30%25%20% 20% 17% 15% 11% 10% 9%5% 4%0% 20022005 NTT Docomo SK Telecom China Mobile Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 4. Mobile Data Network Evolution Plancdma2000 cdma2000Standard IS-95AIS-95B W-CDMA 1x-RTT1x-EV-DODeploymentIn ServiceIn ServiceIn Service 20022003 Schedule D14.4 kbps 57.6 kbps 144 kbps~ 2.4 Mbps ~ 2 MbpsL Data RateU14.4 kbps 14.4 kbps64 kbps 153 kbps384 kbpsL Low rateMedium rateHigh rate InternetInternetVODaccessaccessMultimediaAODMultimedia/ApplicationSMS Location/Different Moving Data only VoiceStill image Freq. Band image VISS MovingMobile IP VMSimage Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 5. Backward Compatibility 2G/3G Voice/Data Roaming On top of nationwide back-bone network for voice (IS-95A/B network), On top of nationwide back-bone network for voice (IS-95A/B network), KTF will deploy cdma2000 1x/EV-DO & W-CDMA KTF will deploy cdma2000 1x/EV-DO & W-CDMA Coverage plan of each network generation- Voice service : Nation-wide coverage (2G/3G roaming service)- Data service : Provide access to different network with different speed according to market needs 2G data(64k~144kbps) : Nation-wide coverage 3G middle data rate(144k-300kbps) : Major cities (including metropolitan area) 3G high data rate(300k ~ 2Mbps) : Major citiesW-CDMA dual mode handset 1x 1x EV-DO handset/1x EV-DO/W-CDMAvoice roaming1x data roamingcdma2000 1xW-CDMA dualmode handset 2G 1x handset/IS-95 A/B , 1x voice roaming 2G datavoichigh speed dataroaming 1x handset 2G voice2G/3voice,3G middle speed dataroaming2G/3G voice, 2G low speed dataGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 6. Asia leading the World in WLAN Access SEOUL TOKYO KOREA CHINA15,000 Hot spots YE 350 Hot spots 90 Hot spots Airport, Ritz-CarltonAirport, Okura, Hilton Beijing, Shanghai Subway, Post OfficeMini-Stop Convenience Guangzhou,ShenzhenKT, HanaroNTT Communication Leading the world in Guangdong Telecom WLAN DEPLOYMENT China Netcom W/ 15,000 Access Points TAIPEI 9 Hot spots Airport, Convention NEW DEVICES HONG KONGWTC, Au Bon Cafe Expect Seamless Roam200 Hot spotsChungwha Telecom Service, Networks, BillingAirport, Pacific Coffee CDMA, W-CDMA, WLANStarbucks, Pac Place PCCWSK TELECOM & KT KUALA LUMPUR 25 Hot spotsMANILA Global Leadership RoleAirport, Convention15 Hot spots Marriott, Chase Coffee Airport, Seattle Coffee VIOLET VENTURES Airzed NetworkCalifornia Pizza KitchenSINGAPOREPLDT, Airborne Access Leadership Validating208 Hot spots U.S. VCs Portfolio& Airport, ConventionShangri-La, Starbucks Korean Portfolio> ChinaSingtel, BluengineGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 7. What Do Customers Demand from 3G Services?High Volume Content for a Low Price, Reducing Price/Bit is Critical High Volume Content for a Low Price, Reducing Price/Bit is Critical by discount packet Power of Expression/ package tariff for Price per Transactionheavy usersVideo/Movie orA Single Title of Music (5MB/965JYEN)Video Clip (100KB/15sec/80JYEN) An obstacle of advancedMusic Clipapplications/rich contents is(85KB/5sec/68JYEN)the charge per bit. Karaoke (30KB/60JYEN) by discount packet Ringing Melody -package tariff4 Chords (4KB/8JYEN) 16 Chords (10KB/20JYEN)by basic EZweb tariffAmount of Dataper TransactionGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 8. Mobile MultiMedia Services Movie-mail15 sec max recording 96x80 dpfSmooth movie at 7.5fps max Capable of dubbing Capable of text superpositionCapable of location advice indicated on a map using GPS Capable of movie exchange with PCsGreg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 9. Top 5 Mobile MultiMedia Services 1st 2nd 3rd 4th 5th Top 5 Contentsfor 2GRing-tone Character MSNEmoticon PictureDownloading Downloading(Portal&Mail) (SMS) DownloadingTop 5 Applicationsfor 1x Multipack VOD Player Theme ParkGo StopCartoon ShopKaraoke Source : KTF statistics (Jan, 2003) (Ringtone(Network Game)&Character Downloading)Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 10. New Potential Growth Areas Mobile MultiMedia Mobile Multimedia Services with 3G phones VOD Video on Demand Case Study: Music Videos MMS MultimediaMessaging Korean Pop Group-Noel Exclusive Release on SKT 11/02=40,000 Users @US$9 Song Ringtone=1,100 Won Video Screensaver=1,200W CD Song=3,500 Won Full Music Video=10,900W Mobile Movies2min=5,500WDownload & Streaming VODPhone Web PhoneShort & long video clip Long Text + Image, MIDI, Video clipContent : Education, Music video, News, Handset with built-in cameraMovie preview,Email to Phone (Data Push)SKT Plans TV Phone broadcasting has spent Content : News, Education, MP3,US$22m R&D (US$13Month=15channels)video clip, etc Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 11. Conclusion: Key Korea/Japan Success Drivers/Factors Value to Customers !!! Fast, Easy, Fun & Useful !!! Marketing Drivers Technology Drivers Services on the front line of advertisements Handset Functions Standardized by Less technology platform Focus i.e. (3G) Carrier,not Manufacturer Rapid roll-out: Monthly news of coverage Handset with Color LCD, MIDI and Marketing & Promotions / Customer Training Multimedia Platform for Mobile Internet Many Hi Speed Network Options Services/Products Drivers WLAN, 1X-RTT, 1X-EVD0, W-CDMA Early Adopter: launched data services 1998 Inherent backward compatibility to Large number- Content/Service ProvidersIS-95, leading to: Continuous service availability within 2G cdmaOne coverage Killer applications, Win-Win Business Model Uncompromised QoS and service portfolioTech maturity inherited from IS-95 compared with those of 2G cdmaOne operational records, leading to: No increase in handset Size No degradation in specs at minimal priceNo degradation in handset battery life increase compared with 2G cdmaOne phonesKorea/Japan expertise in 2G cdmaOne network operations contributing to the Movie-mail (movie recorder-enabled) stable services offering - CDMA2000 1x phones followed Photo Mail quickly Photo-mail (camera-equipped) phone released on Day One of 1X-RTT in Japan Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 12. Asian Strategy+BD+Customer Roadshow=Sales Executed by BD Advisor w/China,Japan,Korea Customer CTOs Asia/Japan Business Development Model For PortfolioStep 1 Step 2 Step 3Step 4 Research, Broaden Recruit Architect Asian Leverage Advisor Regional/LocalManagementStrategy withfor Asian roadshow SI/Channel Candidates w/ VC, CEO, BD &w/Customer CTO Localize Product ChinaJapanKorea Advisor OEM+Channel Trials Track record Asia is usually priority #3 after U.S./Europe sales, this is faulty strategy as Asian mobile markets are more advanced and have higher Capex growth than U.S./Europe Working in Japan for 1-2 years does not qualify someone as the Asian expert. Asia covers a larger global area with more diverse language, culture and GDP compared to Europe/U.S. Find rare Regional Experts who know China, Japan, Korea, not the guys flying in for 1day a month from Hong Kong/Singapore/U.S. lacking customer CTO friends. VCs should phase out U.S. Centric views of the world by recruiting Partners/Principals who can reduce risk & enhance portfolio firms network/traction with Asian customers.Startups hiring an expat to head the region is ok to start but the sooner you can replace them and locate Western Educated locals, the sooner you start scaling revenues.Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 13. Top Tier Asian Channel Can Boost Revenues80% of Asian Capex comes from Japan, China, KoreaBuilding Asian Channels is complex compared to U.S./Europe.Most U.S. VCs/portfolio lack local knowledge/Relationships to plan/execute strategy Channel Issues: Selecting/Closing Top Tier Partners Channel Conflict Managing Multiple SI Product Functions Solid Customer Trial Top Launch Customer Service/Training/Price Fragmented regionally Ethics Risk/Low Sales Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 14. Asia=Advanced Mobile/Broadband markets & HighCAPEX but COO/CTO customer Access is tough2004 Global Mobile Internet Users% As U.S./Euro Carriers slash spending, Asia is a larger piece of CAPEX pie to target. Asia 49% Carriers in Asia are very loyal to local products/SIs due to relationships which USoutweigh product performance.29% Europe i.e. Accenture, Cap Gemini do not have the 22% relationships/skillsets/creditability in China,Source: IDC Japan, Korea to initiate and drive channel revenue for early stage portfolio firms.2001-2005 Global Telecom Capex Top Tier Advisors can introduce Portfolio CEOs to customer COO/CTOs whichAsia40%speed up trials and the Sales cycle. Most early stage firms never get access to customer COO/CTOs and wasteRest ofWorldtime/money/cycles on customer middle 60% management.Source: Yankee Group Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 15. Asia leads in Semis, Mobile, Broadband &TFTAdvisors have to assist in leveraging Asian customers/partners U.S. firms need Asia Sales+OE