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