contents - pwc · the market for point-and-shoot digital cameras is likely to contract. in 2011,...

Contents

1. Image sensor: Steady growthfor new capabilities

2. Making sense of the rapidchange in mobile innovation(includes PwC's MobileTechnologies Index)

3. Device connectivity speed: Onehalf of an equation

4. Infrastructure speed: Watchcapital investment in 4G for thenext inflection

5. Application processors: Drivingthe next wave of innovation

6. Memory: The ever-predictableDRAM path

7. Storage: Quenching the thirst

for more

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Mobile Technologies Index Image sensor: Steady growth for new capabilities

Introduced in 2000, camera phones—combined with social media—continue to redefine what it means to communicate. The early camera phones produced low-quality images, but now, thanks to Moore’s Law, they are competing with point-and-shoot cameras and camcorders. How much more can camera phones do?

Quite a bit more, it turns out. The innovation curve will continue to produce camera phones that capture higher quality still images and videos with better sound. These improvements will result from image sensor improvements and increasingly from technology around the sensor, especially the use of microelectronic mechanical systems (MEMS), as discussed below.

Over the longer term, compelling new use cases that rely on tighter integration between the camera module and the operating system will lead to new capabilities more aptly classified as

machine vision. We introduce this topic below, but anticipate a deeper analysis in a future article. The main focus of this article is the image sensor, which is a component of the PwC Mobile Technology Index. The Index comprises seven technologies that enable mobile innovation.

PwC forecasts a compound annual growth rate (CAGR) of 20 percent for image sensors as measured in megapixels per dollar (MP/$) through 2015. [See Figure 1] Since 2007, image sensors have followed Moore’s Law, doubling megapixel density per dollar every two years for a CAGR of 37 percent. The MP/$ will continue to grow, but at a slower rate. [See Figure 2] This, however, will not reduce or depreciate the image sensor’s importance to mobile innovation. To understand the future of image capture, it is useful to review the evolution of imaging in smartphones.

Figure 1: Image sensor, compound annual growth rate (CAGR)

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Technology Institute

By Raman Chitkara, Global Technology Industry Leader

2 Mobile Technologies Index Image sensor: Steady growth for new capabilities

Figure 2: Price performance compared to Moore’s Law

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The image sensor is part of a camera module for the mobile device that also includes the lens and MEMS for various (and a growing number of) functions, plus interfaces to the application processor, memory and storage.

The first camera modules for cell phones used charge-coupled device (CCD) sensors. As recently as 2006, 4MP CCD-based modules cost US$22, which included US$8 for the image sensor. Camera module suppliers charged as much as US$15 more for ‘integration’ of this subsystem into the handset. Aside from being costly, the early camera modules came in only one size (large) and used significant amounts of power, consuming the battery faster.

The lower quality images from early camera phones were relegated to viewing on the phone screen because the resolution was not high enough for printing or displaying on a computer screen. As well, sharing photos on 2G/2.5G broadband cellular networks was much slower, and most camera phones didn’t yet support WiFi or Universal Serial Bus (USB) standards.

As a result, there were many hurdles to sharing, posting and permanently saving images. Despite these obstacles, camera

phones served a practical purpose and became a standard feature in 80 percent of all handsets manufactured—increasing to 90 percent within our forecast period.

CCD-based handsets have been slowly phasing out since the introduction of complementary metal-oxide semiconductor (CMOS) sensors in 2006. CMOS sensors consume less power than CCD sensors. They also enable lower cost, smaller form factors and much higher image quality.

Consumers now expect to capture higher-quality photos and to more easily share them in email, on social networks and as prints. They can look forward to the quality of images and video to continue to improve year after year. By 2015, high- end smartphones, which already have 8MP image sensors, will enter the 14MP to 20MP range.

Higher resolution image sensors equal to or approaching those of the point-and-shoot digital camera are only one part of the formula for image improvement. Through software manipulation and various MEMS devices, smartphones will continue to deliver improvements in image stabilisation; auto focus; zoom; light sensitivity; low-light performance; noise reduction; reduced power use;


integrated image processing hardware; sound recording for video and lens improvement. Software will also become a differentiator in image collection, compression, picture editing, video editing and searching.

MEMs are crucial. They are made with standard semiconductor manufacturing processes and benefit from the predictable price-performance curve of those processes.

Software and MEMs have already enabled new or improved functions in some smartphones: autofocus1 (MEMs), panoramas from multiple photos (software) and high-definition image capture (MEMs and software).

Improvements in image sensors, MEMS and software will enable future-generation camera phones to offer 3D imaging. 3D will not only provide a richer, more realistic photographic image, but the 3D depth map will be crucial to the sensing required for hands-free gesture control of the device and improved facial recognition.

1 http://www.doc.com/Actuator/Pages/Actuator.aspx

Due to these continuing improvements in mobile device imaging—still and video—the market for point-and-shoot digital cameras is likely to contract. In 2011, the average handset had 30 percent of the MP count of the average digital still camera. By 2015, handsets will have 60 percent of the MPs in digital still cameras on average, with some having more than 80 percent. [See Figure 3]

“In the near future, smartphones will have more than enough raw pixel resolution and capabilities to meet most users’ needs, and those users will become less willing to pay a premium for additional megapixels, unless new capabilities, like machine vision, are added,” says Robert A. Chinn, a principal in the Semiconductor Advisory Practice at PricewaterhouseCoopers LLP.

Figure 3: Megapixels in handsets vs. digital still cameras (DSC)

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Robert A. Chinn

Semiconductor Advisory Principal PricewaterhouseCoopers LLP


As noted earlier, improved image sensors and camera modules will factor into machine vision capabilities that are just now appearing on the horizon. Machine vision broadly comprises the translation of light (visible to the human eye or not) into digital information, and the analysis of that digital data for the purposes of identifying and extracting information about objects of interest. To date, machine vision has mainly been associated with manufacturing for quality control and other industrial uses. In smartphones, machine vision will involve the use of the image sensor to capture information that is analysed in the device or in the cloud (or both), and put to some personal purpose. For example, there already is a smartphone app that uses the image sensor to help it detect and measure gamma rays—radiation—in the immediate area.2

Machine vision capabilities in mobile devices will use the image sensor in different ways than photo capture does. Some machine vision applications will use less information than required for photos; for example, make determinations based on examining the contours of objects in an image but without needing a full color rendering of it.

Machine vision use cases supported by all the anticipated advances in image sensors, MEMs and software could include hands-free gesture control, facial

2 http://www.vision-systems.com/articles/2012/05/smartphones-measure-radioactivity.html

recognition and mobile industrial and medical applications. Another recently announced non-photo use of the image sensor is an infrared (IR) sensor that takes the body’s temperature. The IR sensor, which is a MEMs device, is designed to sit next to the image sensor in the smartphone and use its viewfinder to target the correct spot of the object or subject to take a temperature. We will explore machine vision use cases like this in depth in future articles.

Because the camera modules will move from commodity parts with limited functionality to multi-purpose modules capable of wide ranging uses, the modules will require deeper integration with the operating system. PwC anticipates consolidation in the vendor space within our forecast period as fewer suppliers will be likely to meet the higher threshold for functionality and OEMs will look to establish long-term relationships with individual suppliers. In 2012, the supply base included 40 image sensor suppliers and 40 camera module suppliers.

Whatever new use cases image sensors end up supporting, camera modules will clearly evolve within our forecast period to support everything needed for higher quality video and still photography, and use cases associated with recording scenes for later viewing or playback.

About PwC’s Technology Institute

The Technology Institute is PwC’s global research network that studies the business of technology and the technology of business with the purpose of creating thought leadership that offers both fact-based analysis and experience-based perspectives. Technology Institute insights and viewpoints originate from active collaboration between our professionals across the globe and their first-hand experiences working in and with the technology industry. For more information please contact Raman Chitkara, Global Technology Industry Leader.

About PwC

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at http://www.pwc.com/.

This content is for general information purposes only and should not be used as a substitute for consultation with professional advisors.

© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details. BS-13-0199

Raman Chitkara Global Technology Industry Leader PricewaterhouseCoopers LLP [email protected]

Robert A. Chinn Semiconductor Advisory Principal PricewaterhouseCoopers LLP [email protected]

Let’s talk

If you have any questions about the Mobile Innovations Forecast, or would like to discuss any of these topics further, please reach out to us.



The PwC Mobile Innovations Forecast Making sense of the rapid change in mobile innovation

With a quick boot, instant response to touch and speedy downloads from the cloud-based App Store, the application processor was one of the iPhone’s many competitive advantages when it debuted in 2007. One factor contributing to the powerful processing capability was Apple’s decision to use NAND flash memory instead of NOR. At the time Apple made that decision, NOR was the standard flash technology used in mobile phones and NAND was an emerging technology—faster and denser than NOR, but more expensive. For those performance reasons, Apple chose NAND, taking a calculated risk that the price-performance would improve, due in part to the demand that Apple itself would create with a successful launch of the iPhone.

Within two years, NAND became the standard, not only for system boot up but also for storage.

“Looking back, one overlooked but key enabling technology for the iPhone was moving from NOR flash to NAND flash,” says Steven Mather, Senior Principal Analyst at IHS, a global information and analytics provider. “You needed a powerful operating system and processor, but you couldn’t do that until you had the memory, and you couldn’t do the memory until you had the NAND flash. NOR wasn’t capable of supporting a higher level apps processor like the one in the iPhone.”

NAND was just one catalyst for the iPhone, which became one of the most successful high-tech product launches of all time.

“The team at Apple recognised changes in technology, usage and materials,” says Dan Hays, PwC US Wireless Advisory Leader. “Designing a phone that was that thin with that battery life wasn’t as much about beating the others to market. It was about recognising fundamental changes in materials, technology and things that you could do with industrial design and user interface.”

Dan Hays

PwC US Wireless Advisory Leader

The point is this: Apple’s decisions about NAND and other components illustrate how understanding the evolutionary curve of technological innovation, even of commodities like flash memory, can lead to a disruptive product that transforms an entire ecosystem. Where will the disruptions in mobile innovation arise over the next five years? How will they change consumer and employee behaviour? What business opportunities will result? What can companies do to take advantage of these disruptions? How do they fit into broader market trends now driving the technology sector?

http://www.pwc.com/technology

2 The PwC Mobile Innovations Forecast Making sense of the rapid change in mobile innovation

Introducing the PwC Mobile Innovations Forecast

Answering these kinds of questions requires not just a keen understanding of the evolutionary curve of the enabling technologies, but a broader framework for analysing mobile innovation quantitatively and qualitatively. So with the goal of providing business leaders early warnings about coming disruptions and actionable intelligence about new opportunities, PwC introduces its Mobile Innovations Forecast (MIF), a four-part framework for analysing and understanding mobile innovation. The four parts are:

• Enabling technologies;

• New technological capabilities;

• New use cases and

• New business models.

The four parts will be explored in periodic articles on this Web site in the months ahead. We expect that examining, analysing and forecasting mobile innovation along these lines will shed light on the interdependencies that are otherwise cloaked by the unorganised daily stream of innovation announcements from the mobile ecosystem.

The first category—enabling technologies—is the focus of PwC’s Mobile Technologies Index, a new quantitative method developed to analyse the rate of improvement in key technologies that are fundamental to mobile innovation, and to help forecast new use cases and business models. (see sidebar, “Creating the Mobile Technologies Index, page 8) These enabling technologies have led to the rapid improvement of mobile device capabilities, dramatically changing our personal and work lives, and the way several billion people interact with each other.

Over the next five years, the smartphone will continue to acquire capabilities that will make it more and more like a full-fledged personal computer, but in the same period mobile innovation will continue to extend beyond smartphones and tablets. Mobile innovation in health care, automotive, home entertainment, manufacturing and other diverse sectors is likely to be just as robust.

“We will track things like the number of technologies, how fast are they moving and how that enables innovations. If you get so much more processing speed and you get so many more features then it allows you to do something different,” says Rodger Howell, PwC Principal for Mobile Computing. “We will monitor progress along this vector, and we will also note when other vectors are showing up, new threads, new business models, new use cases—here’s a concept that somebody’s trying in a market not proven yet.”

Rodger Howell

PwC Principal for Mobile Computing

This article, the first of many, introduces the PwC Mobile Technologies Index; then explains where the Index fits in the four-part framework of the Mobile Innovations Forecast, and concludes with a look at how mobile computing contributes to the market and industry forces that are driving the broader technology sector. PwC identifies mobile computing as one of four market forces that are individually and collectively redefining customer demand, expectations and business opportunity. The others are cloud computing, social technology and the emergence of intelligent devices (the digitisation of inanimate objects). Together, these mega-trends are leading us toward an era of ubiquitous computing, which relies especially on wireless networks.

New capabilities

The Mobile Innovations Forecast includes technologies that are not currently significant enablers of innovation, but could become important within our five-year period. In our four-part framework we categorise these as new capabilities and they will be the focus of a future report. [See Coming soon at www.pwc.com/mobileinnovations]

“As important as the enabling technologies in our Index are, some of the more interesting use cases and disruptive mobile innovation are likely to be driven by the emerging technologies and new capabilities of existing technologies, which we include in this group,” says Daniel Eckert, a PwC Director for Mobile Computing.

Daniel Eckert

PwC Director for Mobile Computing

New capabilities include technologies that could change how users interact with the devices and how the devices interact with the environment. Based primarily on qualitative research to date, we can suggest several examples we might include: near-field communications (NFC), high-definition audio (HDA), 3D computing, future generations of voice recognition, artificial intelligence, advanced video compression, gesture sensing and olfactory sensing (artificial nose).

Based on our historical understanding of technology adoption, new capabilities for the purpose of our forecast framework are those that have not yet met the threshold of 20 percent penetration of mobile devices but are likely to do so within our five-year timeframe.

One such example is NFC, which allows for secure, simplified transactions, data exchange and wireless connections between two devices near each other—known as proximity detection. NFC’s

— Continued on next page

http://www.pwc.com/mobileinnovations



Figure 1: PwC Mobile Technologies Index

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The Index: 41% CAGR through 2015

Our examination of mobile innovation begins with the key enabling components, introduced here and then analysed in more depth, component by component, in separate articles in the weeks ahead. For this purpose, we have created the PwC Mobile Technologies Index, a broad composite of seven enabling components that underlie the power of the mobile device to sense, analyse, store and connect information. Since the first brick-like mobile phones began to appear in the chauffeured limousines of business executives and movie stars in the 1970s, disruptive breakthroughs in mobile have resulted due, in part, to the continuous progress of these components at predictable price points. Thus, our forecast begins with them.

In this first release of the Mobile Technologies Index, PwC forecasts a combined compound annual growth rate (CAGR) of the Index between 2011 and 2015 of 41 percent. [see Figure 1, “PwC Mobile Technologies Index”] As Figure 1 shows, this is less than the 55% CAGR of the Index between 2006 and 2011, but still represents large enough improvements in the underlying components to anticipate many new mobile value propositions.

Here is the forecast through 2015 for each of the seven enabling technologies in the Index:

• Infrastructurespeed: In average Megabits per second (Mbps), will improve 54 percent CAGR.

• Deviceconnectivityspeed: In Megabits per second per dollar (Mbps/$), will improve 37 percent CAGR.

• Processorspeed: In GigaHertz per dollar (GHz/$), will improve 53 percent CAGR.

• Memory: In Gigabits per dollar (Gb/$), will improve 48 percent CAGR.

• Storage: In GigaBytes per dollar (GB/$), will improve 35 percent CAGR.

• Imagesensor: In Megapixels per dollar (MP/$), will improve 20 percent CAGR.

• Display: In performance per dollar per square inch (P/$/in2), will improve 16 percent CAGR. (Performance is a weighted aggregation of resolu-tion, brightness, power efficiency and other factors.)

device penetration reached an estimated 7 percent by the end of 2011, but we expect it to hit the 20 percent threshold within a couple of years. NFC has the potential to drive use cases and business models around device-based electronic payment systems as an alternative to credit cards (already happening in parts of rural China), to being a proxy for tangible keys, money, tickets, travel cards and identity documents.

Based on our future research, there could be several micro-electro mechanical systems (MEMS) that we would include as new capabilities. At present, the most widely adopted MEMS device is the accelerometer, which rotates the smartphone screen from vertical to horizontal. Its device penetration rate increases from an estimated 45 percent by the end of 2011 to an estimated 69 percent by 2015. Compasses, gyroscopes and pressure sensors are three other MEMS devices we are tracking with data. Compasses reached an estimated 20 percent by the end of 2011, and will hit an estimated 44 percent in 2015, but the other two do not reach 20 percent by then.

New versions of Wi-Fi and Bluetooth currently under development could re-energise these technologies and make them “new capabilities” once again. A new version of Wi-Fi will offer ultra-high bandwidth for line-of-sight or in-room applications. A new version of Bluetooth is anticipated for ultra-low power applications. When these new versions appear, we would likely cover them as new capabilities.

We also include power and batteries under new capabilities. A smartphone that only needed recharging once a week would be a game changer. Batteries have improved only gradually for the past decade and are expected to continue their relatively slow advance. New capabilities that would accelerate improvements in mobile device batteries would create new opportunities, so our forecast will be sensitive to major disruptions emerging from innovation in power management and battery life.


You might notice that the Index does not include battery or power management. This is not an oversight, but an informed decision. Our research indicates that battery performance improvements have been limited in nature and are not currently forecasted to be anything close to what we have seen for the components we chose to include in the Index, such as processor speed or storage. We will keep a close watch on battery technology; if there is significant change in the offing we anticipate that it will be covered in future articles describing new technological capabilities. (see sidebar, “New capabilities”)

The Index from an historical perspective

The price-performance improvements of these enabling technologies are largely responsible for the current trend in which smartphones are gaining market share over feature phones. But all mobile devices become cheaper, faster, more

capable sooner, not later, and are able to deliver more, better and more diverse services and digital content of all kinds.

“The seven components together, on average, will improve 41 percent a year, each year, for the next few years. So the kind of dramatic change from phones we had in 2006 to the iPhone in 2007 is going to continue,” IHS’s Mather says.

By calibrating each component at 100, with 2006 as the base year, the spider diagram illustrates how the seven components are progressing relative to each other. [see Figure 2]

In the weeks ahead, we will examine these technologies in a series of articles, including one that looks at the operating system (OS), which is not included in the Index, but is a key enabler of mobile innovation. [See Coming soon at www.pwc.com/mobileinnovations] The first of these articles, looking at device connectivity speed, is available here.

Processor speed

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Figure 2: PwC Mobile Technologies Index—Relative progress of components

Note: Infrastructure speed, Device connectivity speed, Storage, Memory and Processor speed are core technologies.Each accounts for 16% of the Index. Imaging sensor and Display each account for 10% of the Index.See “Creating the Mobile Technologies Index” on page 8 for more information.

Source: IHS iSuppli Databases

New use cases

The technologies that comprise the Mobile Innovations Forecast and new capabilities are important, but some of the most interesting questions about mobile innovation centre on evolving use cases.

Tracking rates of change in various technologies will help us make modest predictions about use cases already under development. For example, within the five years of our forecast period we anticipate the smartphone will add new and improved features that will give it the power and capabilities of today’s desktop and laptop computers.

“I’m carrying in my pocket right now a smartphone that has, on the size of my fingernail, 32 GB of storage. My laptop probably has eight times that,” says Dan Hays, PwC US Wireless Advisory Leader. “But it’s not farfetched to ask why shouldn’t all that storage just be on the phone that I carry around with me all the time. It’s secured and why shouldn’t I just dock it into a bigger screen when I want a tablet or dock it into a shell when I want a laptop or dock it into my TV at home when I want to watch movies.”

The extent to which the smartphone actually disrupts personal computers remains to be seen. But consider this: the Apple App Store now offers more than 650,000 apps,1 and the number of Android apps has topped 450,000.2, 3 This continuing proliferation of apps suggests any number of future mobile use cases that will extend the power and scope of mobile devices.

1 http://www.bgr.com/2012/06/11/apple-kicks-off-wwdc-2012/

2 http://androidcommunity.com/android-growth-continues-450000-apps-850000-activations-daily-20120227/

3 http://www.engadget.com/2012/02/27/google-450-000-android-apps-now-available-to-300-million-device/




The four-part framework of the Mobile Innovations Forecast

As noted, the Mobile Technologies Index is just the starting point for our ongoing forecasting efforts in mobile innovation. Wireless devices and their supporting services will continue to run applications faster, store more data, create better pictures, and display information in brighter and more compelling images, driven by the seven components of the Mobile Technologies Index. “The seven components, individually or collectively, are not likely to cause the next great disruption in the next five years without some creative thinking about how to use them. Specifically, new capabilities, cre-ative use cases and imaginative business models—or some combination—are more likely to produce a game-changing mobile innovation,” says Kayvan Shahabi, PwC US Technology Advisory Leader. We will more closely examine these three areas in future reports on this Web site.

Kayvan Shahabi

PwC US Technology Advisory Leader

“People are focused on the things they know or are easy to understand, but those might be the wrong things,” PwC’s Hays cautions. “There are two pieces to this story. There’s how things are evolving and tactically moving up the curve and then there’s the big gotchas.”

To anticipate the gotchas and track their progress from idea to commercial reality, we constructed the broader framework of the Mobile Innovations Forecast. The Mobile Technologies Index tracks innova-tion that, in aggregate, is analogous to a rising tide that lifts heavier boats still resting on a muddy bottom. Predictably, future component performance levels at acceptable price points will support even “heavier” applications that are not fea-sible today. But other types of innovation are harder to predict and the consumer, and even some established vendors, can find it hard to anticipate them.

“There’s a segment of just new ideas that are going to come in. We don’t know what they are, but people are working on con-cepts that may or may not take off,” PwC’s Howell says.

A domain of technology with this amount of innovation poses a challenge for apply-ing a useful framework on its evolution: which attributes should be included? Add the complexities of personal, enterprise, national, service provider and global perspectives, and the problem becomes nearly unsolvable. The framework must be flexible enough to account for continu-ous introduction of the new. And it must separate innovations into meaningful cat-egories while retaining an explicit expec-tation of emergent interdependencies.

The historical context must also be considered. There was a time when most functions now standard in smartphones were too expensive or unusable due to the immaturity of the underlying technolo-gies. Such functions included integrated imaging, general purpose operating sys-tems, downloading applications, location awareness, motion sensing and others. How long after the technical capability existed did it take for these to become mainstream features, and what happened that allowed them and the use models they support to become standard?

From this perspective, more interest-ing questions about the future of mobile devices can be considered. What features and functions are coming, but are not commercially possible today due to cur-rent technology limitations, cost, wireless network speeds, business model imperfec-tions or other barriers? What constraints prevent their appearance? When will these constraints dissipate enough to allow the capability to flourish? Can we predict when mobile devices will incor-porate potentially disruptive capabilities they don’t have today, based on future engineering advances?

The smartphone is already causing disruption in several categories of electronics—alarm clocks, digital cameras, gaming devices, audio players and GPS devices, to name a few. Smartphone penetration in other use areas will also become predictable.

But if we only deal with obvious use cases entirely predictable from technology trends, then we will be limited to simply forecasting improvement in those uses over time. Our future research will lead us to discover and examine ideas still in the pure concept stage. Some of these seeds, planted over the next five years, are likely to come to fruition.

Such use cases will be found in numerous areas: health sensors and medical applications from on-person monitoring to alert systems; the electronic wallet; the automobile as an evolving mobile computing platform; wearable computing; highly evolved personal assistants. We can anticipate new classes of business use cases as well.

When we take a closer look at use cases in a future report, we will answer two key questions:

• Whatusecasesarestillontheshelfbecause of unsolved problems—technical or otherwise—and which of those problems have a chance of being solved in the next five years, thus unlocking the use case.

• Whatusecasesnotevenontheshelfyet could move quickly ahead if some technology or business model problem is solved.

The answers will come from the use cases we identify through our in-depth interviews and qualitative analysis.


In this ongoing series of articles, PwC will periodically offer answers to those types of questions through the frame-work of the four categories of the Mobile Innovations Forecast:

• The seven enabling technologies of the Mobile Technologies Index, plus the OS, as explained above, are the subject of this current report and a series of articles to appear in the coming weeks.

• The new capabilities of various emerg-ing and existing technologies. [see sidebar, “New capabilities,” and the subject of a series of articles scheduled for later this year]

• New use cases that arise from perfor-mance improvements or entirely new mobile technologies including the extension of the mobile ecosystem into the cloud. [see sidebar, “New use cases,” and the subject of future articles]

• New business models built on all of the above, and that might increasingly rely on industry dynamics outside of the mobile industry itself. [see sidebar, “New business models,” and also the subject of future articles]

We do not intend to develop an encyclo-pedic description of all existing or poten-tial capabilities, emerging technologies, use cases and business models. In many cases we expect there will be an explicit hierarchy in the new—a new capabil-ity, relying on further improvements in enabling components, creates the poten-tial for new use cases that, in turn, create new business models.

The broader business impact

As noted, this introductory article and the individual component articles in the weeks ahead are just the beginning of a much longer project to track mobile innovation across a broad front. One hope is that, over time, the community of read-ers will offer their own ideas and insights into this process, and begin to understand how mobile innovation itself is only one key element in a broader evolving technology ecosystem.

The Mobile Innovations Forecast exists within PwC’s framework for understand-ing various dynamics driving the broader technology sector today, a framework that suggests ways technology compa-nies might navigate disruptions that are rich in opportunity. In this context, there has been little research that parses the mobile ecosystem as we are parsing it, and then analyses the ecosystem parts to forecast innovations likely to reach commercial adoption.

It is a truism that technology innovation never stops, and technology companies can never rest on prior success. In this regard, the disruptive forces in mobile computing are familiar—as friend and foe. But there is something different this time. PwC sees major market and industry forces co-mingling in ways that paint a forward-looking picture that is starkly, even radically, unlike the past. Incremental change this is not.

As noted earlier, mobile innovation is one of four market forces that, individually and collectively, are redefining customer demand, expectations and business opportunity for technology companies; the others are cloud computing, social technology and the emergence of intelligent devices. Individually, each is turning the rules of the broader technology sector upside down. [see Figure 3] For examples, consider the following:

• Enterprise computing device strategies focused solely on desktop PCs and lap-tops ignore at their peril the 24x7 real-ity of fully engaged knowledge workers and customers on mobile devices.

• The lack of agility in typical legacy data centres destroys enterprise value rela-tive to cloud options.

• Email and Web portal strategies are siloed and tone-deaf if they aren’t embracing many-to-many social technologies.

• Networked, digital intelligence will be emanating from billions of smart, networked “things” operating without direct human oversight and offer-ing data for purposes limited only by the imagination.

New business models

When, where and how will the next disruptions to mobile business models happen? Perhaps a social networking site becomes a virtual network operator? Or a healthcare provider resells wireless devices and services as part of a chronic disease management solution. Maybe a carrier launches vertical service and application packages to industry segments. We’re already seeing announcements by carriers and credit card companies that portend major business model shifts.

How will the cloud figure in mobile business models? Does the newly emerging wholesale wide area network “pipe” business make sense? Will more electronics retailers offer branded devices and service? How far below the $100 price point might the full-featured smartphone drop?

These are among the topics we will examine when we do additional research into business models in future reports. We anticipate considerable innovation over the next five years.

“You could argue that today there’s very little differentiation in the mobile communications industry,” says Dan Hays, PwC US Wireless Advisory Leader. “The phones are all starting to look alike. The services are all becoming fairly ubiquitous. It all feels very similar. That’s when there’s the potential for business model disruption.”

Operators, OEMs, retailers, automobile companies, healthcare providers and insurers, web-based entrepreneurs, the entertainment industry and any number of segments we haven’t considered yet, will seek new ways to monetise mobile innovation. New business models have the potential to disrupt as much as technologies do.



“Mobile is one of several disruptive changes affecting technology, communi-cations and media industries. The others being cloud computing, social media and the network of intelligent devices through the Internet,” says Vicki Huff, Technology Industry Partner based in Silicon Valley. “The individual impact of each could threaten established vendors and create new customer value propositions—some-thing mobile is already demonstrating in spades. But their combined impact is likely to be greater as mobile devices engage with smart objects without user intervention, incorporate personal data stored in the cloud and socialise com-merce. We expect the same level of disruption we have seen in the mobile ecosystem to play out in all corners of the technology industry, in some cases bring-ing former competitors together and in others turning friends into rivals.”

PwC views these four trends as delivering on the long-time promise of ubiquitous computing, a phenomenon predicted two decades ago by Xerox PARC. Today, Wikipedia captures it well: “Ubiquitous computing (ubicomp) is a post-desktop model of human-computer interaction in which information processing has been thoroughly integrated into everyday objects and activities.” When our custom-ers and employees live and work in this ubiquity they have disruptive expecta-tions that their work lives will be as

“thoroughly integrated” as their private lives—hence the “consumerisation of IT” that every enterprise is grappling with today.

Vicki Huff

PwC Technology Industry Partner

As if these market forces weren’t enough, the tech industry itself is experiencing major internal disruptions: maturity and convergence, globalisation, patents as an arms race and digital transformation of business ecosystems. Market forces are driving some of these disruptive develop-ments. Cloud totally redefines compute infrastructure. Everyone is in everyone else’s markets—hardware companies go into retail and services, while retail-ers introduce their own hardware and software companies become retailers and hardware vendors. And mobile comput-ing is establishing heated competition for the future of the end-user devices, a battle that reverberates throughout the value chain, from chips to applications. Inevitably the migration of major powers towards overlapping customers is result-ing in IP battles, even as globalisation is bringing new players onto the land-scape—largely made possible by digitally transformed product development teams,

Figure 3: The interplay of market and industry forces and how they are driving technology companies to consider new business models and more agile operations

Source: PwC

IntelligentDevices

CloudComputing

Social Technologies

PatentWars

GlobalFocus

Maturation/Convergence

DigitalTransformation

Consumerisationof IT

Ubiquitouscomputing

Pressure to bemore agile

New businessmodels

MobileComputing

Industry ForcesMarket Forces

— Continued on page 9

For example, when Apple launched the iPhone in 2007 it injected a new dynamic to the OEM and wireless carrier relationship, changing the standard business model. For the first time a carrier allowed an OEM to dictate design and functionality of the handset because it believed the innovations would jumpstart the adoption of its 3G service.

Concerned about being disrupted by others, wireless operators in particular are looking to evolve business models. “The operators are wrestling with how they can add value to avoid becoming just a dumb pipe,” says Jagdish Rebello, Director of Consumer and Communications Research at IHS. “In this, operators are competing against other operators, but they are also competing with content providers, OEMs, app developers and other nodes.”

The technologies in the Mobile Technologies Index and in new capabilities will suggest new use cases, which in turn can inspire new business models. And the whole cycle is likely to turn around on itself when new business models create demand for or accelerate the development of new technologies.

Business models are not part of the Index, which is why our future analysis of them will rely on interviews with leading industry visionaries and other research to identify and analyse where new business models are possible, are being tried or thought about and where current business models are most likely to be disrupted.


Creating the Mobile Technologies Index

The Mobile Technologies Index is a method PwC developed to analyse the rate of improvement in key enabling technologies that are fundamental to mobile innovation, and to help forecast new use cases and business models.

In the spring of 2011, PwC began to research whether there was a way to forecast mobile capabilities. In addition to seeking credible data about the technological drivers of mobile capabilities, we sought a shared vision that mobile capabilities could be forecast. After an extensive review and discussion with various market research firms, PwC partnered with IHS.

IHS, an Englewood, Colorado-based global information and analytics provider, has a comprehensive database of each sector of the high technology industry value chain, from analogue and digital circuit designers through the chip foundries, as well as the original equipment manufacturers and the telecom network operators.

More than 130 subsectors of the high tech industry are included in its databases of prices, production capacities, capital spending, component features, average selling prices and numerous other metrics. More than 140 analysts have compiled these historical data points going back 10 years, and have prepared forecasts extending through 2015. The IHS iSuppli products and services include information from teardowns of various phones and tablets over the years, along with a continuing series of surveys, vendor roadmaps, market share analyses and other sources.

PwC mobile computing and high tech industry practice leaders and IHS analysts reviewed the databases and identified several metrics that drove mobile capabilities in the past, and would be expected to drive the devices and services in the future. We eventually chose seven components for the Mobile Technologies Index: device connectivity speed, infrastructure speed, processor speed, memory, storage, display and image sensor. [See story, “Making sense of the rapid change in mobile innovation”]

Through a series of back testing and other calculations, we determined that the relative performance of these Mobile Technologies Index components has consistently followed a pattern of at least 30 percent compounded annual growth. The components, and therefore the Index’s performance, appear likely to continue in the same upward path for the next five years.

In addition to the analysis of the data, PwC practice leaders interviewed leading mobile industry visionaries to review the data and provide their perspectives on the future capabilities of smartphones, tablets, wearable computers and other portable devices.

We concluded that five technologies will continue to serve as the basic building blocks of mobile innovation: device connectivity speed, infrastructure speed, processor speed, memory and storage. Over the five-year forecast period, each of the five will continue to progress along a Moore’s Law type price-performance curve, which makes them a natural starting point for a numerical and predictive index.

Based on our analysis, we added two other technologies to the Index: display and image sensor. Both are progressing along a Moore’s Law-style price-performance curve, which we expect will continue for the five-year forecast period. Currently both are nearly as important to mobile innovation as the five core technologies.

The display, with its multi-touch capability, has been one of the most disruptive qualities of smartphones. Over the next five years we anticipate that touch sensitivities will improve, and the physical display will become thinner, tougher and less expensive per square inch. Resolution and power efficiency are also expected to improve. As for the image sensor, not only will the smartphone continue to disrupt the digital camera market, this technology will be integral to next generation social networking, which is expected to consume video the way today’s social networking consumes still photos.

We decided to weight these two at less than the value of the five core technologies. Each core building block technology accounts for 16 percent of the Mobile Technologies Index, and image sensor and display account for 10 percent each.

We examined several other technologies, some with meaningful metrics and some without. Among the more important ones were Wi-Fi, Bluetooth and operating systems (OS).

Wi-Fi and Bluetooth have already achieved wide adoption. By the end of 2011, Bluetooth was found in an estimated 81 percent of handsets and its estimated CAGR is only 3 percent in Mbps/$ through 2015. Sixty percent of handsets will have Wi-Fi capability by 2015, including virtually 100 percent of smartphones. Its CAGR is 18 percent Mbps/$ through 2015. Given these factors, we decided to exclude them from the Index.

We would like to have included the OS in the Index, but we have observed that the OS does not trend along a predictable evolutionary curve similar to the other components. Rather, it tends to lurch forward in disruptive ways with qualitative enhancements to the user experience. User experience can be measured through usability testing, but such studies of mobile devices are not widely conducted and tend to test for basic functions, making them a bit simplistic. The OS can also be benchmarked for standard criteria, but we are unaware of anyone issuing benchmark or usability data covering the past five years or forecasting the next five years for mobile operating systems.

Despite these barriers to including an OS metric of some sort in the Index, the OS is central to innovation, and so we will include a qualitative analysis of it in this first series of reports, which are focused on the enabling technologies.

http://www.pwc.com/gx/en/technology/mobile-innovation/mobile-device-technology-components.jhtml


© 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details. BS-12-0541-A.0612.DvL

About PwC

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at http://www.pwc.com/.

Raman Chitkara Global Technology Industry Leader [email protected]

Tom Archer US Technology Industry Leader [email protected]

Vicki Huff Technology Industry Partner [email protected]

Kayvan Shahabi US Technology Advisory Leader [email protected]

Pierre-Alain Sur Global Communications Industry Leader [email protected]

Daniel Eckert Mobile Computing Director [email protected]

Dan Hays US Wireless Advisory Leader [email protected]

Rodger Howell Mobile Computing Principal [email protected]

Let’s talk

If you have any questions about the Mobile Innovations Forecast or would like to discuss any of these topics further, please reach out to us.

supply chains distribution channels and cus-tomer experience management.

Given this landscape, PwC’s Tom Archer, US Technology Industry Leader, says that all eyes should be on dynamic business model evolu-tion. “Vendors are looking at business models in a much more fluid way—across a spec-trum—anchored by products at one end and experiences at the other. Increasingly, vendors are positioning themselves somewhere in the middle: product with services; product with experience; services/experience with prod-uct; and service. This is easier said than done, of course, which means successful business model evolution requires a real investment in enterprise agility. Customers are already vot-ing with their dollars—with mobile computing leading the way.”

Tom Archer

US Technology Industry Leader

By examining mobile innovations in the framework outlined above, PwC hopes to cre-ate common understandings from which will emerge the launch points for disruptive innova-tions. In the weeks and months ahead, we will offer forecasts of the innovations positioned for near-term commercial success and around which others can build their own value proposi-tions. We have not reached the end of dramatic changes through mobile innovation. We are only at the beginning.

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1 Mobile Technologies Index Device Connectivity Speed: One half of an equation


Mobile Technologies Index Device connectivity speed: One half of an equation

From the user’s perspective, the mobile experience starts with the speed at which the device receives data and applications. That speed is, of course, the combined result of the speed capability of the modem technology inside the device, which is fixed, and the speed capability of the infrastructure, which can vary.

Thus, wireless speed is a complicated component to measure. So complicated, in fact, that we break it into two components, each with its own metric, in the PwC Mobile Technologies Index:

• Device connectivity speed in Megabits per second per dollar (Mbps/$)

• Infrastructure speed in average Megabits per second (Mbps)

In this article we offer our forecast for device connectivity speed, explain the metric and how we calculate it, and explore some implications for mobile innovation. In the next article we post [see, “Coming soon” at www.pwc.com/mobileinnovations], we will offer our forecast for infrastructure speed, and identify a pattern we see that involves both wireless speed components and that signals a future innovation inflection point.

PwC forecasts a compound annual growth rate (CAGR) of 37 percent for average aggregated device connectivity speed as measured in Mbps/$ through 2015. [see Figure 1] Put another way, average aggregated device connectivity speed will be four times greater in 2015 than in 2011.

Figure 1: Device speed capability CAGR, 2011–2015

0

.5

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’10 ’11 ’12 ’13 ’14 ’15’09’08’07

75% CAGR (2017–2011)Moving from 2G to 3G

37% CAGR (2011–2015)Moving from 3G to 4G


Mbps/$

By Pierre-Alain Sur, Global Communications Industry Leader




The device connectivity speed metric is actually an aggregation of metrics for all wireless generations in use, plus the improvements we anticipate for each generation during their period in use.

Device connectivity speed is defined as the theoretical maximum speed at which a mobile device can operate using a particular air interface technology, also known as a generation of radio transmission. The theoretical speed of each air interface is fixed, but the average speed realised within each generation of technology can improve through the optimisation of handsets, base stations and air interface protocols.

In addition to these variables, average aggregated speed in each generation will improve as OEMs shift production mix to faster protocols that exist within the generation. Shifts within generations will deliver the following improvements in Mbps/$ from 2011 to 2015:

• 2G speeds will improve at 3 percent CAGR as the mix moves from GSM to Edge.

• 3G speeds will improve at 6 percent CAGR as mix moves from EVDO and WCDMA to HSPA+.

• 4G speeds will improve at 8 percent CAGR as the mix moves from early WiMAX to mature LTE.

These incremental gains may appear to be modest, but there is another dynamic at work: the mobile device production mix shifts as the industry moves from 2G to 3G to 4G. So we take

the average speeds and weight them based on mobile handset production for each generation, and wind up with the Mbps/$ of “total devices produced” each year improving at a 55 percent CAGR, 2011 through 2015.

However, this 55 percent CAGR omits the cost of the main components in a handset that enable communication over the multiple air interfaces that end devices must support. After factoring in these costs, the actual Mbps/$ in the next four years will increase by 37 percent—which is the device connectivity speed CAGR we use in our Index.

This is just half the rate of improvement we saw in the period 2007-2011, when the CAGR was a staggering 75 percent. The slower increase in Mbps/$ is primarily due to the baseband chipset costs being significantly greater for the move from 3G to 4G than they were in earlier transitions.

Nonetheless, we anticipate that 37 percent CAGR is enough improvement to enable continuing mobile innovation at a rapid pace. A review of recent history explains why we are confident in saying this.

When the original 2G iPhone was launched in 2007, Apple proved that consumers would accept iTunes on handsets and the Apps Store concept. However, 2G connectivity was slow enough to risk failure for the original iPhone if the faster 3G version had not been launched one year later. By the time the 3G iPhone was introduced, the mobile handset supply chain was already producing more than 200 million 3G phones per year. Apple didn’t have to create the 3G technology, it just had to put it to use.

By the time Apple needed a faster connection to support its vision, the electronics industry was already devoting 20 percent of production to 3G handsets. Consumers were buying the faster handsets before many applications existed that needed the speed, and in many cases before infrastructure speed had fully transitioned. In contrast to classic “pent-up demand,” consumers were priming the pump for demand by pre-purchasing capabilities ahead of actual use cases, with the expectation that when 3G applications and 3G networks were available, their handsets were ready.

37%Annual increase in mobile device connectivity speed


We anticipate this trend will continue, and we use this as an example of the following rule of thumb for timing the launch of a disruptive mobile venture:

When new capabilities reach a penetration level of 20 percent, game-changing services can be launched, and market disruption can ensue. At the 20 percent level, the market has begun transitioning from a relatively few early adopters to a mass market, and the entire ecosystem, including new entrepreneurs, are developing and positioning for game-changing solutions.

In 2007 and 2008, 20 to 25 percent of device production was dedicated to 3G [see Figure 2]; this period coincided with the initial surge of 3G applications development. From the standpoint of infrastructure capital expenditure, 3G coverage had reached at least 53 percent of what carriers were spending on 2G during that time. (We will say more about this in the upcoming infrastructure article.)

All the 3G-related factors—device production, applications development and infrastructure investment—set the stage for the success of Apple’s iPhone, Google’s Android, apps stores and other key mobile device phenomena that have contributed to the mobile ecosystem as we know it in 2012. 4G will offer even faster speed and less latency, which makes the speed more useful.

Together, improved device connectivity speed and improved infrastructure speed will deliver another wave of innovation and disruption (to be further explored in the next article). The move from 3G to 4G will enable new business models for carriers, and new use models for the mobile device, including more and better streaming video, mobile video conferencing, voice-over-Internet services and other applications involving the movement of large amounts of information, including the growing mass of data collected by the mobile device itself and transferred wirelessly to the cloud for analysis, and back again for action by the user.

Figure 2: 4G poised to drive the industry in 2015

Device Production

2007 2008 2009 2010 2011 2012 2013 2014 2015CAGR

(2011–15)

2G 80% 75% 71% 66% 58% 51% 44% 37% 31% -14%

3G 20% 25% 29% 33% 41% 45% 47% 49% 45% 3%

4G 0% 0% 0% 0% 1% 4% 9% 14% 23% 121%



© 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details. BS-12-0541-B.0612.DvL

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1 Mobile Technologies Index Infrastructurespeed:Watchcapitalinvestmentin4Gforthenextinflection

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Mobile Technologies Index Infrastructure speed:Watch capital investment in 4G for the next inflection

PwC predicts that infrastructure speed will be the fastest improving component of the seven enabling technologies in the PwC Mobile Technology Index through 2015.

By 2015, we also expect three factors associated with the transition to 4G technology—share of infrastructure investment, share of devices and share of subscribers—to reach levels that could trigger a robust period of 4G innovation. We base this expectation on the pattern we saw in the same three factors in the 2G-to-3G transition. As this pattern repeats with 4G it creates the potential for a surge of 4G innovation starting no later than 2015 [see Figure 1]. We expect this 4G innovation to include new business models based on capacity improvements, and new use cases based on better video streaming and other technologies. We explore all this later in the article.

By Pierre-Alain Sur, Global Communications Industry Leader

2006 2007 2008

3G innovation surge

4G innovatio

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2013 2014 20152012

53%of 10%

of20%of

capital expenditures device penetration subscribers on 3G

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of23%of

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device penetration subscribers penetration

Figure 1: The shift from 3G to 4G will launch another innovation explosion

First, our forecast, and how we derived it.

The technology innovations that establish the speed at which data can travel to and from a mobile device happen in two places: the infrastructure speed capability outside the device, and the connectivity speed from the modem capability inside the device.[See Device connectivity article at www.pwc.com/mobileinnovations.] The Index includesbothfactorsasseparate,equally weighted components.

For myriad reasons, the actual speed for the user cannot be precisely predicted. At any point in time, the wireless infrastructure is a mix of technology generations. Carriers, for

http://www.pwc.com/gx/en/technology/mobile-innovation/wireless-device-speed-and-connectivity.jhtml


good business reasons, don’t normally make available to end users the maximum speed the underlying technology is capable of supporting. For the user, the mobile experience is only as fast as the slowest point on the network at that moment.

But it is not the purpose of the PwC Mobile Innovations Forecast, of which the Index is just one part, to predict with precision the real speed, or even the average, that a user might experience in the future. The purpose is to understand and forecast mobile innovation. That is, to use infrastructure speed as we calculate it and all the other metrics in the Index to suggest direction and magnitude, both individually and collectively, and, in turn, to use these as vectors to help us identify patternsthatsuggestnewinflectionpointsformobile innovation.

For infrastructure speed, PwC forecasts a global CAGR through 2015 of 54 percent [see Figure 2], as measured in average Megabits per second (Mbps). This makes it the fastest improving component, just ahead of processor speed—53 percent CAGR in GigaHertz per dollar.

The forecast CAGR for infrastructure speed is less than the rate of improvement from 2007 to 2011 when it was a staggering 77 percent. The CAGR is slowing down mainly because 2007 era

speeds started off so slow; speeds in 2011 and beyond are in a different part of the S curve.

Estimating improvements in average infrastructure speed over time is a complex formulation, involving several judgment calls. First, it is important to recognise that the metric we use is really a measure of infrastructure speed capability, meaning the maximum speed at which a single device could communicate with the wireless infrastructure under optimal conditions—a bit likeautomotivefuelefficiencyratings.

In practice, the speed at which bits are streamed to individual devices by wireless infrastructure is determined by several variables. Among these are the limits placed on the network by the operators themselves for technical, service quality or business reasons. Other variables include geography, the generation of technology used by the cell tower, the number of other devices sharing the total capacity of the tower, the type of data the devices are accessing (text or video, for example) and the signal’s generation, strength and exposure to interference.

The goal of tracking the relative changes in speed from one year to the next makes this task a bit easier, with the caveat that average infrastructure speed refers to speed where wireless services are offered to begin with.

Figure 2: Infrastructure speed, compound average growth rate (CAGR)

2011–2015 CAGR = 54%

2007–2011 CAGR = 77%

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With all of these factors in mind, we sought to create logic that resulted in an average network infrastructure speed capability across generations of technology and over time. Here is how we calculated the metric:

a) We sum the cumulative capital spend in any given year on each generation of wireless infrastructure [see Figure 3],

b) factor in “end of life” for infrastructure by discounting past investment by subtracting past years’ investments in 33 percent

increments beginning three years after their deployment,

c) and then create the weighted average network speed where the weights are the percentage of discounted, cumulative spend and the speeds are global industry values forspecifiedgenerations(3G,4G,etc.)[see Figure4].

To reiterate the earlier caveat, the speed data in Figure 4 are the anticipated optimal capabilities, not the actual speeds any user would experience.

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2004$33.8

2003$26.8

2002$27.5

Figure 3: Capex infrastructure market share chart

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Total carriers' annual spending (bn)

Figure 4: Infrastructure speed capability1 in megabits per second global average, 2006-2015


1. The maximum speed at which a single device could communicate with the wireless infrastructure assuming the service provider is not limiting these speeds for technical, service quality or business reasons.

Figure 4: Infrastructure speed capability in megabits per second global average, 2006-2015

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Figure 5: Subscriber market share

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1G


Total subscribers: (bn)

We now turn to a pattern that suggests the timing of a new market opportunity for mobile innovation. We considered both the infrastructure and the device. Understanding how these impacted 3G helped us to pinpoint a comparable 4G innovation opportunity.

In the device connectivity speed article we offered this rule of thumb for mobile innovation: when new capabilities reach a device penetration level of 20 percent, game-changing services can be launched and market disruption can ensue. The 3G modem technology reached device penetration of 20 percent in 2007 [see Figure 6].

That same year—2007—network operators’ investment in 3G infrastructure crossed the threshold of 50 percent of total capex (53 percent to be exact). Subscriber rates are a lagging indicator of innovation and not included in our Index, but in looking for patterns it is useful to note that 3G subscriptions reached 10 percent of the total in 2008 [see Figure 5].

Device penetration by 3G of 20 percent and the 50 percent threshold in 3G infrastructure capex spending, both reached in 2007, coincided with a surge in 3G application development in 2007 and 2008. Given this pattern, when might vendors expect a similar burst of 4G-based innovation comparable to the 3G surge? We expect it to start by 2015, if not sooner. Here is our reasoning.

Figure 6: Predicting the innovation surge

2006 2007 2008

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4G innovatio

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53%of 10%

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2G to 3G began when penetration reached:

3G to 4G begins when penetration reaches:

2007 2007 2008

2013 2015 2015


For 3G, capex spending hit 50 percent and device penetration hit 20 percent in the same year—2007. Our forecast predicts 4G capex spending reaches close to 50 percent in 2013 (49 percent to be exact), but 4G device penetration lags, not reaching 23 percent until 2015. The 4G subscription rate reaches 10 percent in 2015, comparable to 3G in 2008.

Based on the 3G pattern, we expect a surge of 4G-based innovation that would start no later than 2015. If infrastructure capex or device penetration were to accelerate faster than forecast, the 4G-based innovation surge could start as early as 2014.

Whether it starts in 2015 or 2014, this surge of 4G-based innovation could trigger another shift in the wireless value chain’s major players, although such a shift would depend on some vendors recognising the same potential tipping point that we see, and seizing the opportunity ahead of others by creating innovations that 4G networks bring to life.

What kind of innovation can we expect? We anticipate that 4G innovation could spawn new use cases, involving more and better streaming video, including more satisfactory viewingofcommercialfilmandTVcontentfrom the cloud and multiplayer mobile gaming with minimal latency. Other use cases are likely to come in mobile video conferencing and voice-over-Internet services that rival or exceed the quality of traditional wire-line offerings; new device form factors better attuned to augmented reality; and other applications involving the movement of large amounts of information.

We also expect new vertical industry use cases. For example, when paired with improved image sensing,innovativenewsensorsandartificialintelligence, 4G could support new use cases such as remote medical diagnosis and repair

effortsbyfieldservicerepresentativesandbringback house calls by the family physician—in virtual form.

Some of these applications and use cases are possible even with 3G technology, but 4G will certainly accelerate their adoption by making them more widely available and by improving the user experience through somewhat faster downloads and lower latency. But whatever the new use cases are, we also expect the period of 4G innovation beginning in 2015 to differ somewhat from the 3G transition.

“To some extent, 4G may not impact mobile innovation the way 3G did,” observes Dan Hays, PwC US Wireless Advisory Leader. “We may be more likely to see second order effects from 4G rather than new things enabled by the technology itself. The use case and application innovation we saw with 3G may be less likely to recur than is business model innovation. I believe 4G will enable operators to deliver a more consistent experience, more ubiquitously, at a lower cost and allow them to make money and stay in business.”

We expect operators to take advantage of 4G capacity and speed to achieve service level expectations but not necessarily go beyond them. The burst of 4G innovation will also offer operators the opportunity to reduce the costs of network operations through improvements in workforce productivity and other innovation.

It might be that the network operators and their businessmodelscouldbenefitmostdirectlyfromthe4Ginflectionpointweidentify.Andyet, there is also another way to think about the 4Gtransition,basedonwhathappenedwith 3G.

2006 2007 2008

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2005

2013 2014 20152012

53%of 10%

of20%of


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Figure 7: The 3G innovation zone occurred in 2007 and 2008

Dan Hays

US Wireless Advisory Leader

About PwC

PwCfirmshelporganisationsandindividualscreatethevaluethey’relookingfor.We’reanetworkoffirmsin158countrieswithclose to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to youandfindoutmorebyvisitingusathttp://www.pwc.com/.

The initial transition to 3G started several years before the highly disruptive introduction of devices such as the iPhone, Android phones and tablets that took advantage of the newer technology. There were early great expectations, of course—new 3G-only carriers started in various places in the world with little initial business success because the user experience was not that different from 2G. This was before devices had the component power of a true mobile computer (the very components we track in the Index), and before the existence of application ecosystems that offeredcompellingnewuse cases.

Instead, the early 3G value proposition mostly appeared to be lower operating costs for carriers rather than disruptive new capabilities for users. The predictions today that 4G will once again reduce operating costs for carriers has good reasoning behind it, especially because the software in 4G infrastructure is automating more and more management functions.

But predicting that 4G will mainly reduce carrier operating costs would appear to deny the kind of impact from 4G that 3G eventually had in creating the setting for highly disruptive innovations. Our future research on 4G will explore this matter in greater detail.


© 2012 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details. BS-12-0541-C.0712.DvL

Pierre-Alain Sur Global Communications Industry leader [email protected]

Dan Hays US Wireless Advisory Leader [email protected]

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Mobile Technologies Index Application processors: Driving the next wave of innovation

Application processor speed is improving so fast that by the time you finish reading this article, it is likely to have made another leap forward and triggered a new wave of mobile innovation.

While that’s an exaggeration, it is not an exaggeration to expect application processors’ clock speeds to increase from 1Gigahertz (GHz) to 1.5GHz and beyond in 2012. This is important because a jump of this magnitude has historically marked the beginning of the next cycle of processor-driven innovation for mobile devices, as explored later in this article and illustrated in Figure 2.

PwC forecasts a compound annual growth rate (CAGR) of 53 percent for application processor speed, as measured by Gigahertz per core per dollar (GHz/Core/$), through 2015 [see Figure 1], a faster growth rate than the 43 percent CAGR for 2007-2011. Stated another way, by the end of our forecast period, application processor speed will have increased five times from what it was in 2011, our baseline year. The CAGR for application processors will grow faster than the CAGR for any other device component of the Mobile Technologies Index, and second only to the infrastructure speed component (54 percent CAGR).

This essentially means that the application processor, which is equivalent to a personal computer’s central processing unit (CPU) and is also known as the mobile processor, will enable various mobile device use cases,

likely to include more powerful multitasking operating systems, more immersive and natural user interfaces and more powerful graphics, including 3D. Many vendors are already designing and building these because they can be sure that the processor will be up to the tasks.

We define processing power as an amalgam of the maximum clock rate per core with which a mobile device can perform tasks and run applications. In smartphones and other mobile devices, application processors have evolved from single core 300-400MHz chips to dual core 1.2 to 1.5GHz chips and are on the road to quad core 1.5GHz and beyond. Several tablets already have 1.66GHz processors.

To understand the importance of the application processor to mobile innovation, consider the user interface. The original 2G iPhone, launched in 2007, was the first smart phone of its type to allow for a multi-touch user interface. And this was around the same time that the GHz/Core/$ metric allowed application processor chips to surpass the 500MHz threshold.

The earlier application processors used by smart phones were more commonly in the 200 MHz to 400MHz range and limited operating systems to point and click interfaces using trackballs, wheels or styli as well as single-touch capability.



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2 Mobile Technologies Index Application processors: Driving the next wave of innovation

The advent of multi-touch spawned a wave of innovation aimed at more natural user behaviour when flipping and viewing pictures and pages or for other tasks. The user interface of a smart phone is now more similar to the hand gesture user behaviour for the same tasks in the physical world—with all the “intuitiveness” that implies—and a big driver of the mass adoption of these devices.

Another example later in the smart phone evolution is that of multi-tasking operating systems. As the smart phone evolved from a personal information device into a full-fledged mobile computing platform, consumers expected to be able to work on and share data between multiple applications concurrently as they do on a PC, pulling operating system requirements in that direction.

However, it wasn’t until 2009-2010 when the GHz/Core/$ metric enabled mobile devices to reach the 1GHz threshold that this type of operating system became viable and able to be fielded in such a way that did not bog down the device to the point of rendering it unusable.

Limitations to overcomeAlthough mobile processing power has begun to approach personal computer processing power, smart phones and tablets have constraints that suggest full equivalence with the PC may be well beyond our forecast period. As gigahertz increase in the smart phone, two problems arise: power limitations and overheating.

Since we only expect incremental improvements in battery life and power management during our forecast period, something will need to be done to allow multi-core processors to operate without quickly draining the battery. And given the tiny footprint of the processor in handheld devices, plus the lack of a fan, the heat dissipation problem could become acute. A user won’t get much use from all the cores if the device itself is too hot to hold.

The industry move to the 28 nanometer silicon process node in chip manufacturing could help, but chipmakers are also working on other solutions. In standard multicore architectures as seen on desktop computers, the processing for any job is typically spread among undifferentiated cores, which heats up everything and is not always the most efficient use of power.

In mobile, one approach could be “smart multicore,” in which individual cores are specialised for a particular processing requirement—say video—thereby reducing power drain and heat generation. In other words, cores could be power-optimised for the specific job. A variation on this is a separate adjunct chip for a specific computing task. In other words, in the context of future mobile devices all gigahertz may not be created equal. We will track this evolution, and depending how it goes, we might need to rethink the composition of the application processor metric in the Mobile Technology Index.

Figure 1: Applications processor, compound annual growth rate (CAGR)

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53% CAGR (2011–2015)

43% CAGR (2007–2011)

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3 Mobile Technologies Index Application processors: Driving the next wave of innovation

Figure 2: Cycles of processor-driven innovation

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The industry will continue to push beyond the 1.66GHz threshold in application processors in 2013. But how far beyond depends on factors not currently predictable. The possibility of 3GHz exists—PC processors have gone there. But power and heat problems for mobile devices at that clock speed are creating huge challenges for chip designers. Moore’s Law is silent on these issues.

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Whatever the ultimate architecture of future application processors, they will become more powerful and this will allow OEMs to create devices with new capabilities, or entirely new devices or platforms, which in turn are critical to triggering the next big success.

Immersive interfacesEnabling more immersive and natural user interfaces and experiences is one of the opportunities for creating an environment in which the next explosion can occur. Features such as 3D, gesture control and devices that process and act upon real world stimuli will be among the next evolutionary steps on this path, and will demand faster processors.

A new use case just beginning to take advantage of greater processor power is the ability to stream content wirelessly from a smartphone or tablet to a TV set or computer screen. Apple has launched AirPlay technology for content streaming among its products but not outside its ecosystem. For everyone else, OEMs are beginning to certify products on the Miracast standard, with some expected in stores for the holiday season. AirPlay and Miracast are based on newer versions of Wi-Fi (to be explored in a future article). In this content streaming use case, the application processor in the handheld is the pump that pushes the bits to the TV screen.

As this content model advances, more powerful processors will play another crucial role. Most of us quickly learn to operate our TV remote controls based on

the tactile feeling of the buttons while our eyes continue to watch the screen. As a remote control, the smartphone has virtual buttons, which users have to look at. Within our five-year forecast period, we expect a solution: new technology (to be explored in a future article) that senses where your fingers are hovering over the screen and projects an icon on the TV screen for the button you are above—channel changer or volume control, for instance. The sensing technology and software that will make this possible will require the level of processing power we are forecasting in future processors.

We anticipate the 1.66GHz threshold, which application processors will soon reach in large numbers, to be the launching point for the next cycle of innovation. [See Figure 2] It is important to keep in mind that not all of the next evolutionary steps will occur at the same time, but that this processor threshold is the starting point for some of these to begin to become viable in technology and cost.

In our forecast, the GHz/Core/$ metric enables devices to exceed this 1.66GHz threshold in large numbers in 2013-2014, and to approach the 3GHz threshold in 2015-2016. There is already at least one 2GHz smartphone that will be sold in markets outside North America before the end of 2012. Higher performing application processors at ever-declining prices will drive higher levels of smart handheld device penetration compared to feature phones, producing a larger total market.


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Chris Richard PwC Management Consultant Lead, Semiconductor Practice [email protected]

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As noted above, gigahertz increases in the smart phone are challenged by power limitations and heat dissipation problems that must be solved. While a 3GHz mobile processor is possible (at least one prototype exists), how the industry will surmount these physical hurdles is not clear.

“Even desktop processors have gotten out of the gigahertz race to some degree, delivering more cores and relying on parallelism to crank out more power rather than ever-faster clock speeds,” says Chris Richard, PwC Management

Consultant Lead, Semiconductor Practice. “Consumers will use all the gigahertz vendors can throw at them, but beyond 2015 it remains to be seen what scientists and engineers will be available to deliver.”

Chris Richard

PwC Management Consultant Lead, Semiconductor Practice

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Mobile Technologies Index Memory: The ever-predictable DRAM path

In a world constantly unsettled by disruptive innovation, it is comforting to know there are a few things you can count on. The phenomenal price-performance curve for Dynamic Random Access Memory (DRAM) has been a predictable constant for more than 30 years. It is easy to take this for granted.

We believe the long-term trend will continue. We forecast a compound annual growth rate (CAGR) of 48 percent for DRAM as measured in Gigabits per dollar (Gb/$) through 2015 (see Figure 1), compared to a 49 percent CAGR in 2007-2011. This means the growth rate of improvement in memory will be second only to the expected gains in processor speed (53 percent CAGR in GigaHertz per dollar) among the seven components of the Mobile Technologies Index, which are our key indicators of mobile innovation trends.

“The continued dramatic increases in the amount of affordable memory will lead directly to growth in the capabilities and innova-tions of operating systems, applications and use cases that mobile devices will be able to handle during the five years of the PwC Mobile Innovations Forecast,” predicts Daniel Eckert, PwC Director for Mobile Computing.

While the CAGR as illustrated in Figure 1 con-tinues a decades long trend, what is changing is that we have now reached a critical level of performance at which mobile devices can meet and exceed (in combination with other capabili-ties) the wide range of uses previously seen only on laptops and desktop computers.

Our analysis of 30-plus years of data shows a 55 percent CAGR in Gb/$ since 1980, meaning our forecast is consistent with history. This does not mean that DRAM is immune to the semiconduc-tor industry’s boom and bust cycles, as the past decade illustrates.

First, consider that from 2004 through 2008, chip manufacturers achieved CAGR improve-ments of 70 percent per year. This was due to three factors:

• an increase in capital spending by chip mak-ers after the dot-com implosion and before the 2008 recession, especially 2003 to 2006;

• although the transition began earlier, 12-inch wafer capacity surpassed 8-inch capacity during 2004-2008, dramatically increasing the available volumes;

• consistent growth in demand, due to the surge in purchases of laptops, netbooks and other mobile devices.

Daniel Eckert

PwC Director for Mobile Computing




2 Mobile Technologies Index Memory: The ever-predictable DRAM path

Next, note that during the global reces-sion (2008-2010), the growth of DRAM in Gb/$ slowed to 20 percent per year. Overcapacity also resulted in price de-clines, leading some manufacturers to close some fabs. This has been factored into our forecast.

Looking ahead, we anticipate 48 percent CAGR in DRAM based on several factors: renewed capital expenditure that began in 2011; improving worldwide gross domestic product (GDP) relative to the recession and the rapid growth in markets for smartphones and tablets. Continued sales of PCs of all types will also contrib-ute to the continued price-performance improvements in DRAM.

Computing power, memory capacity and storage (the topic of our next article) all work together to create the user experi-ence. As the amounts of each increase in tablets and smartphones relative to tra-ditional PCs, mobile devices will become capable of performing functions and run-ning applications previously associated only with PCs.

By 2015 average smartphones will have 40 percent of the 4GB of DRAM that PCs on average have today. Likewise, by 2015 the top 10 percent of smartphones will have 65 percent of the DRAM that PCs have today, and will perform correspond-ingly. The trend for tablets is even more dramatic (see Figure 2). Figure 3 shows the actual amounts of DRAM in gigabytes, on average, over our forecast period.

Already on the market, the iPhone 5 and the Samsung Galaxy S III both have 1GB of DRAM. The iPad 3 also has 1GB of DRAM, while the Samsung Galaxy Note II, a hybrid smartphone-tablet, has 2 GB.

DRAM represents 5 percent to 15 percent of a smartphone’s bill of materials. That portion is likely to remain steady over the five-year forecast because OEMs will load more DRAM on their devices as the price–performance curve improves, and will offer more applications that need it.

Figure 2: Mobile device DRAM as percentage of today’s average PC DRAM

2010 2011 2012 2013 2014 2015

Smartphones 6.6% 10.5% 16.4% 23.8% 31.8% 41.3%

Top smartphones 10.1% 14.7% 21.3% 30.9% 44.8% 65.0%

Tablets 6.3% 15.6% 29.7% 43.5% 61.9% 85.3%

Source: IHS iSuppli Memory and Storage Service

Figure 1: DRAM, compound annual growth rate (CAGR)

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3 Mobile Technologies Index Memory: The ever-predictable DRAM path

Figure 3: Mobile device DRAM averages

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DRAM is a key enabler of mobile inno-vation. DRAM and the central process-ing unit are the heart and soul of any computing device. And today’s mobile devices are powerful computing machines because of the amount of DRAM and powerful processors. But simply scaling up DRAM on the motherboard doesn’t address the speed at which processors can consume data. Higher functionality often means placing more memory on the processor itself.

“Performance related to DRAM includes more than just increased density and total Gb/$. Chip and system designers continue to look for ways to get past the ‘memory wall’ caused by the latency and limited bandwidth of traditional off-processor memory,” says Robert A. Chinn, a Principal in PwC’s Semiconductor Advisory Practice. “Companies are explor-ing new technologies and both existing and new architectures to more tightly couple memory with CPUs/GPUs/APUs to improve overall performance.”

In later reports of the Mobile Innovations Forecast, we will examine future use cases in more detail, however, for purposes

of positioning DRAM in the Mobile Technologies Index, consider how DRAM has enabled today’s mobile capabilities.

Smartphones and tablets would not exist as we know them if DRAM price–perfor-mance improvement had not increased at such a dramatic rate. DRAM is the secret sauce behind many mobile capabilities that we take for granted today:

• Camera functionality from digital stills to HD video capture and processing;

• Enhanced displays from increasing screen size, to HD level resolution to emerging 3D capabilities and multi-touch support;

• Running multiple applications and being able to seamlessly switch between them.

Smartphone functions that are now standard, such as Bluetooth, Wi-Fi, GPS and motion sensing, would not have been possible without the availability of lower cost, denser DRAM. These functions are enabled largely by advances in smart-phone operating systems. And operating systems, such as iOS, Android, Blackberry OS, Windows Phone and others, need ever increasing amounts of DRAM to func-tion. Today’s operating systems were not feasible in a hand-held device even five years ago because the cost of providing the necessary DRAM would have pushed device price points beyond acceptable levels to consumers.

Robert A. Chinn

Principal in PwC’s Semiconductor Advisory Practice

About PwC





Daniel Eckert Mobile Computing Director PricewaterhouseCoopers LLP [email protected]


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During the five-year forecast period, continued improvement in its CAGR will allow greater amounts of DRAM on mobile devices to sup-port new use cases that involve more data, more computing power and more and different multi-processing.

The drivers of new use cases will tend to be processor speed, network speed, image process-ing and software, not DRAM. But by becoming more affordable, more DRAM on the device will not constrain these innovations, and will in fact support them when they become feasible. More affordable DRAM will support use cases like these:

• The bit rates from a new HD standard, called ultra-high definition television (UHDTV). There are two proposed digital formats: 4K UHDTV with 8.3 megapixel (MP) resolution and 8K UHDTV with 33.2 MP resolution (16 times the number of pixels in the current HDTV standard);

• Multiple HD video streams on a tablet for a telepresence group experience;

• Highly immersive 3D gaming experiences including precise gesture control of game mechanics and

• Simultaneous application processing with high DRAM requirements.

The latter use case anticipates an evolution from today’s multi-processing scenarios, which position one application as dominant and background applications waiting to be switched into the foreground for user interaction. New use cases will emerge in which background applications are actively processing environ-mental inputs without direct user interaction, even as a foreground application maintains user attention.

Consider the following future scenario: You are at a business conference running an app that captures the voice of the speaker, converts the speech to text and automatically summarises the content. Now you need to respond to a com-plicated incoming email from your office. The device continues to run the content capture and summarisation app even as you are answering your email. While all this was going on, your device also scans the room for colleagues enter-ing the auditorium, and lets them know you are here, too, via a text message.

This kind of scenario, with multiple applica-tions simultaneously processing large amounts of information, will drive the specification for more DRAM in future mobile devices.

In summary, more affordable DRAM will continue to be a major supporter of mobile innovation.

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Mobile Technologies Index Storage: Quenching the thirst for more

As smartphones and tablets take on more of the computing chores that laptop and desktop com-puters used to handle, one might wonder if stor-age capacities will keep pace with the growth in digital content captured, shared and stored on these devices. Users won’t be disappointed.

Given the continuing improvement of the price-performance curve for solid-state flash memory, we predict robust growth in the amount of storage in mobile devices. For reasons we will explain, this is so even as cloud-based storage grows.

Specifically, PwC forecasts a compound annual growth rate (CAGR) of 35 percent for NAND flash memory, as measured in Megabytes per dollar (Mb/$), through 2015. [Figure 1] The CAGR for flash memory is fourth amongst the six enabling technologies of the PwC Mobile Technologies Index, our key indicators of mobile innovation trends.

NAND is the storage component in our Index because it is used in solid-state drives (SSD). Mobile devices created an early market for SSDs, replacing larger mechanical hard drives. Now, mobile innovation is benefiting from the growing demand for solid state in all other computing devices, and the volume-driven, price-performance improvements the broader demand sustains.

“Solid state is now front and centre for the entire computing industry,” says Robert A. Chinn, a principal in PwC’s Semiconductor Advisory Practice. “Solid-state drives are replacing the spinning hard disk drives on PCs, and pushing down their cost, which will then indirectly reduce costs for mobile devices.”

Robert A. Chinn

Semiconductor Advisory Principal

Figure 1: NAND flash memory, compound annual growth rate (CAGR)

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Technology Institute



2 Mobile Technologies Index Storage: Quenching the thirst for more

Our 35 percent CAGR forecast means that OEMs in 2015 will be able to install more than three times as much (3.3x) NAND for the same price as they do today. Average flash capacity in high-end handsets is already 22GB, and will grow to 50GB by 2015. [Figure 2] These numbers are averages—some smartphones and tablets already offer 64GB. We expect to see some 128GB tablets soon and some 256GB tablets are likely next year.

We use NAND flash, not NOR. They both have the main defining characteristic of flash memory—they are non-volatile. But NAND supports much higher capacities, and is used to store music, video, photos, contacts, emails and other data in SSDs, USB drives and memory cards. If a mobile device contains NOR flash, it is typically used for operating system purposes.

As noted, SSDs were first used in mobile devices. Specifically, Apple replaced the mini-disk drive with an SSD in the iPod as a proving ground for what it would do with the first iPhone. The new, thinner form factor of the SSD has meant that solid state has become the standard for smartphones and tablets. As the price curve dropped, OEMs also began to use solid state in laptops, desktops and serv-ers. SSDs are the fastest growing segment of storage drives [Figure 3], but are not likely to overtake HDDs any time soon. [Figure 4] Mobile HDDs will also continue to be used in some notebooks, laptops, game boxes and other devices.

Figure 2: Average storage in devices in GB

2008 2009 2010 2011 2012 2013 2014 2015

Handsets 1 2 3 4 6 8 10 12

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What will users do with three-times the storage they have now? Much of it will be used to store more HD video and photos at higher levels of resolution. A 128GB drive could store HD versions of the last four or five Oscar-winning films on your tablet. [Figure 5]

Image and video capture capabilities are improving (examined in a future article), their resolutions (megapixels) are increasing and the ability and desire of users to share them on social networks

is accelerating. By 2015, social network-ing will involve context awareness and the discovery of information, services, activi-ties and entertainment in social forums. Shared content among personal networks will consume more storage. Television ads are already touting the ability to swap music playlists and personal videos between two smartphones by simply placing them next to each other. We will explore these use cases in future articles.

Figure 4: Total storage drive capacity to be producedHard drive and solid-state drive total capacity

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Cloud-based applications and storage ser-vices, such as those from Amazon, Apple, Google and others, will also factor into mobile use cases and business models. Our analysis of the cloud’s impact on flash memory might seem counterintuitive: we anticipate that cloud-based storage ser-vices will actually increase the demand for on-device storage. We expect the two to grow together over the five-year forecast period, although we do not track cloud storage in our Index.

The weakness in the argument that most content will be stored in the cloud is that it assumes sending data back and forth to the cloud will be fast and affordable. As the thirst for more data over broadband grows, it will risk clogging the network and/or driving up personal usage bills. Connecting every time, any time, in real time to the cloud over cellular networks to upload gigabytes of HD video or stream HD movies will simply not be feasible because broadband connectivity will con-tinue to vary widely in cost, speed, latency and ubiquity.

Users already determine which content is best suited to the cloud and which is best suited to the device. They understand the cost of moving very large quantities of content back and forth over cellular broadband, and make use of Wi-Fi net-works to download or update content on devices. They will continue to consume a lot of content from local storage on the device without interruption and without incurring connectivity costs.

In the processor article, we noted a new use case that requires more processor power: the ability to stream content wirelessly from a smartphone or tablet directly to a TV set or computer screen. The content could stream from the native storage on the device or from the cloud through the device. We expect many users will download content to the device and use it from there.

Then too, there are new standards on the horizon for ultra-high definition television (UHDTV). Either one of the proposed digital formats, 4K and 8K, would challenge storage and cellular broadband capacities as we now know them. The compression standards are still developing, but we anticipate storage requirements for 4K and 8K video will be more than four and eight times, respectively, greater than today’s HD movies, based on pixel resolution alone. Other traits, such as higher color density and frame rate options as high as 120 frames per second, mean the storage requirements could be much larger.

With enough embedded storage—some-day beyond our forecast period a tera-byte is not inconceivable—a user could store a standard HD version of every John Wayne movie or the entirety of “The Sopranos” TV series, but if there is adequate public WiFi access at a reason-able price, a mobile user might choose to access the same content on a streaming basis from Amazon or Netflix.

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If you have any questions about the Mobile Innovations Forecast, or would like to discuss any of these topics further, please reach out to us.

At this stage, there are more questions than answers about the relative use of on-board stor-age versus cloud storage. We will explore these issues in detail when we examine use cases and business models.

One thing is clear right now. Friends like to share photos and videos with friends. There are already options that allow sharing amongst friends automatically through synchronisa-tion services. An individual shoots a video with his smartphone and friends automati-cally see it filed in their local storage on their mobile devices.

Thus, local storage in the form of NAND flash memory will be a key enabler of what we expect will be a series of new behaviours from a different kind of accelerated sharing on tomorrow’s social networks to the ability to consume all manner of content on the mobile device, whether it is connected or not.

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