telecom market outlook
TRANSCRIPT
Telecom Market Outlook
Jayesh Easwaramony
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Jayesh Easwaramony
Vice President ICT Practice
February 2011
Developed by
ICT Research Team
Frost & Sullivan Asia Pacific
Market Outlook - Consumer centric 1
Market Outlook – enterprise centric 2
2
Key opportunities and imperatives 3
Key trends
Emerging Market Growth Story is coming to an end in wireless
Collision phase in Mobile Computing/Internet ecosystem
Smart TV will be 50% of most markets by 2015
Touch will be the default input
3
Computing/Internet ecosystem to lead to emergence of 2-3
dominant platforms
Network in the Cloud will redefine Mobility
Touch will be the default input mechanism
Experience platforms will define success
Very few APAC markets still have room for significant 2G growth
120%
140%160%
180%200%
2010 Wireless Market Revenue Growth Rates:
22% 7.3% 12.1% 3.6% 40.6% 2.3% 6.0% -0.5% 6.5% 1.3% 2.1% 0.7% 5.3% 3.6%
Emerging Market growth story coming to an end
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0%20%
40%60%
80%100%120%
India
Indonesia
China
Philip
pines
Vietnam
Thailand
Malaysia
Japan
Singapore
Hong
Kong
New
Zealand
Taiwan
Austra
lia
South
Korea
Mobile SIM Penetration Rate (%) Mobile User Penetration (%)
Emerging Market growth story coming to an end
2008 = 29
Africa, 10, 35%
Asia, 9, 31%
Americas, 5, 17%
South Pacific, 5, 17%
2009 = 21
Africa, 10, 47%
Asia, 5, 24%
Americas, 4, 19%
South Pacific, 2,
10%
2010 = 18
Africa, 9, 49%
Asia, 5, 28%
Americas, 3, 17%
South Pacific, 1,
6%
Acquisition strategy driven to more extreme markets
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Asia, 5, 24%
• 50-50 split between new
acquisitions and licenses
• Key markets
• Bharti was the most aggressive –
acquisition of Zain
• Key transactions – Rwanda,
Niger, Mali, Morocco, Uganda,
Ghana , North Korea , Honduras
Aggressive phase of Mobilization to continue
Initial seeding to monetize 3G
networks
Flat rate as a demand
simulation mechanism
Market Seeding Phase Pre2008
Data Deluge phase2008-10
2015
Packet data exceeded voice
data on mobile networks in
2010
Growth driven by large screen
– PC centric and early rise of
smartphones
Multi-device world –
Smartphone is mass market –Smartphones to be
60% of mobile sub base in APAC
80% of base will have today’s smartphone
equivalent
Value of Mobility will Exceed the Value of incremental bandwidth at home
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simulation mechanism smartphones
More mobile BB devices than
fixed BB devices
3G penetration at 52%
80% of internet users to have mobile internet
Tablets will bridge the digital divide
HP DreamScreen, straddles the boundary between television and computer with an
easy to use touchscreen interface,
For Rs 20,000.- bottom up innovation
works in both Hindi and English, and uses a selection of preloaded apps, enabling
it to be used in a variety of ways.
The device can also play back DVDs and VCDs, and along with the browser also
Tablets after 2012 will be the first PC for many rural households helping bridge the
digital divide
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The device can also play back DVDs and VCDs, and along with the browser also
has dedicated apps to book rail and air tickets.
HP has collaborated with different partners, including Airtel and Tata Teleservices,
who provide the Internet connectivity, Bill Desk for online bill payments, Erudite for
the educational content, Hungama for music and movies, along with Indiagames,
India Today, Music Today, NDTV and Yatra, all of whom have built specialised apps
just for this platform.
How the ecosystem is evolving – collision of 3 cycles
3 ecosystems are converging in the mobile computing ecosystem with diverse
approaches
1990s
Client-Server Computing
2000s 2010s 2020s
Cloud Computing
Web OS
PC as entertainment/Personalized
PC as workhorse
Laptops/Netbooks
Tablets
2015
Computing Cycle
Collision phase Convergence phase
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Mobile Cycle Mobile internet
Email/ Web Web 2.0
2G based comm
Fixed BB growth
Customized Tablets/phones
Apps
Tablets
Smartphones
Digitization – Digital content overtook analog content
Web 3.0 + Aug Reality
Video overtook static pages
Internet Cycle
Mobile Cloud
Graph not to scale
Soft SIMs
Mobile devices sold> Fixed devices
How the ecosystem could change – Platforms to emerge
By 2015 there will 1-2 platform choices for each need and 2overall integrated platforms. If
Microsoft acquires Facebook then that will be the 3rd platform
Communication Platforms
Entertainment Platforms
Facebook Inhouse?
Apple’s platform Google platform
?? Skype
(Acquired)
Itunes /app
store Youtube Xbox/PS3
Hulu ?
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Information Platforms ( monetized by ads)
Commerce Platforms
Participation/SNS Platforms
Experience Platforms –OS + Web
Akamai
PayPalVisa
MS-Nokia? RIM (Acquired)
Operator alliance
Twitter ?
Microsoft?
Android
NFC
enablement
NFC
enablement
• End to end experience providers controi 60% of the profits
• 4 kinds of players to remain- Market Creator/Innovator, Fast Follower/Market Leader , Optimizer and Niche – Nokia failed on all 4 ☺
• Assemblers of phones and devices will provide me-too devices (25% of market)
• Assemblers will provide ‘ make your own device’ service by early 2012
Platform play – some critical observations
Devices
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Platforms
• Players without software DNA will perish ( Qualcomm BREW)
• Speed on innovation is driven by internet companies – not hardware or software
• Hardware can be commodity in most cases unless integrated with experience platform
• Software can be used as means of other monetization e.g ad selling
• Infrastructure plays like Amazon are interesting categories still showing power in retail distribution
New age networks will be very different
Mi-fi devices at the consumer end
• MiFi devices can make any
device network-agnostic allowing
GSM, CDMA and WiMAX carriers
to offer any Wi-Fi enabled device.
• Offloading data traffic will ease
strain on existing 3G networks.
Network in the cloud
The new wireless network
• Except for the access network, a
mobile operator network is no
different from a fixed operators
network in cities
• 1 BTS today costs same as 3
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The new cloud type BTS
• Light Radio pioneered by ALU, HP and Freescale shows
how SDR, VLSI and smart power management will
change the scale and scope of BTS
• Antenna collapsed into the cell – the cube can be as
small as 10 cms
Fiber close to the BTS
• Greater fiberization of the access
nodes
laptops
• Tomorrow the equivalent of 3
laptops is a network node
creating a vastly different
network
• Mobile network meets the cloud
network leading to unimaginable
possibilities
Carriers and vendors will bring services such as remote wipe, remote storage and virus
protection to smart devices to the consumer space.
Key points
• Viruses have already emerged for Android,
iOS and via SMS.
• Malware for tablet PCs is expected in 2011.
• Many vendors are already offering remote
smartphone services, largely to enterprises.
• Carriers have been slow to enter this market.
Mobile revolution will create allied opportunities for services
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• Carriers have been slow to enter this market.
• Mobile cloud services will eventually help
overcome smartphone challenges such as
memory space, battery power and
processing speed.
• Government broadband
initiatives: Already underway in
Singapore, Hong Kong and
Australia. Initiatives are
expected in New Zealand, China,
and Taiwan this year.
DriversService Provider Initiatives
Consumer ServiceTrend
• Providers will continue to roll out
and accelerate FTTx service
• Providers will push their
subscribers to take-up higher
throughput plans (50Mbps to
100Mbps)
• Adaptation of triple play services
(HDTV, VOIP, Broadband)
• Initial launch and take-up of video
conferencing service in some
developed markets
• Increased usage of connected
Ultra high speed broadband will become predominant in developed markets
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• Service providers are pushed to
offer high speed broadband
service to find additional
revenues sources and to combat
mobile broadband
• Some providers will also start to
offer premium plans with
enhanced QOS
• Increased usage of connected
devices
Smart TV
Smart TVs will account for 50% of the developed market TVs by 2013
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Swapping of content from Mobile to
TV
TV Manufacturer Portals OTT Set Top Box based
• Vanilla bundling: Providers offering multiple services with only additional discounts
• Many Providers even have multiple bills for the bundled services
Old Trend
2011
“True Bundling” will be mainstream by 2012
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• Providers will start to offer true blended services with NG BSS & OSS capabilities
- 1 Bill for all services
• Watch content on TV, internet or mobile with one pay TV subscription
• Surf broadband through fixed connection or mobile with one subscription
• Voice calls for mobile or fixed line with one subscription
• Device bundling: although it can negatively affect profitability, providers in the
region will be forced to offer it due to competition
Old story: Cannibalization of international fixed traffic by
internet based VOIP services
Mobile substitution – Some subscribers disconnecting their fixed line
and using mobile phones only
Many Fixed SPs will start shifting focus from PSTN phones to IP Phones by 2013
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2011: Plunge in PSTN traffic and subscriber attrition will force many providers
to push IP phones over PSTN phone. In future Fixed service providers will
become broadband only service providers
2010: Rise of skype and skype like applications on smart phones
Push FactorsPush Factors Service Provider StrategyService Provider Strategy
• Broadband ARPUs continue to decline
• Revenue has even eroded for some
providers
• The data traffic is surging but network
monetization is a challenge
• Broadband ARPUs continue to decline
• Revenue has even eroded for some
providers
• The data traffic is surging but network
monetization is a challenge
• After launching CDN services in Europe
and North America, global service
providers will launch CDN service in
APAC (AT&T, France Telecom, BT, DT
etc)
• Local incumbents in many markets are
also expected to launch CDN services
• After launching CDN services in Europe
and North America, global service
providers will launch CDN service in
APAC (AT&T, France Telecom, BT, DT
etc)
• Local incumbents in many markets are
also expected to launch CDN services
Telco providers will venture into CDN
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• Internet providers and content owners
are reaping the rewards of telco’s
investments.
• Video is the fastest growng segment of
the internet traffic
• Internet providers and content owners
are reaping the rewards of telco’s
investments.
• Video is the fastest growng segment of
the internet traffic
also expected to launch CDN services
• Operators will also partner with content
owners to offer diffrentiated QOS for
different content / services
also expected to launch CDN services
• Operators will also partner with content
owners to offer diffrentiated QOS for
different content / services
Market Outlook - Consumer centric 1
Market Outlook – enterprise centric 2
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Key opportunities and imperatives 3
Mobility, cloud and new phase of smart infrastructure will redefine enterprises
Top 3 trends in enterprises
Blurring of boundaries between consumer and enterprise
• Enterprise infrastructure lags web 2.0 ( Skype as a communication
platform)
• Mobility based devices like tablets/ geo tagging
• Over 80 bn connected devices by 2020
Cloud adoption will be mainstream in next three years
• 83 % of APAC enterprises view cloud computing as relevant to their
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• 83 % of APAC enterprises view cloud computing as relevant to their
businesses *
• Top drivers: scalability-on-demand , reduced hardware
infrastructure costs and simplified resource/server provisioning.
Smart infrastructure creation
• Smart cities to be fulcrum of urbanization ( e.g. Guangzhou,
Mumbai –Delhi corridor)
• Will form testbed for cross-industry solutions
• Telecom as an enabler for new industry business models
Source: VMWare , Frost and Sullivan
Tablets in the enterprise
• Portable Electronic Health • Automated meter reading systems
Healthcare Power and Energy Healthcare
Tablets can improve the price/performance frontier for many industry applications
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Record (HER)
• Automation of forms, processes
and workflows, i.e. completing
electronic forms or
• “Writing” prescriptions, e-
Insurance Claims and
Reimbursements dealings
• Wireless interaction among staff
and physicians
• Improved collection and
integration of data, with single
integrated data capture device
• Automated meter reading systems
and network monitoring, Trouble-
Outage or emergency
management and response,
computer aided dispatch, e-
mileage/data logs
• On the spot service upgrades,
work order management
• Advanced applications: Predictive
analysis, simulations, contingency
analysis, energy and inventory
management (checking remaining
oil in container at eod), Automated
Mapping/Facilities Management
• Self service applications
for Airlines, restaurants,
banking,
• Line busting application in
retail stores, entertainment
and sports venues, theme
parks, and museums,
increase throughput with
tablet PCs during peak
traffic periods, general
Customer Service/ CRM
• E-forms and order taking,
automated inventory
/warehouse
synchronization
The 2nd Industrial Revolution
Internet
of
things
A new wave of infrastructure creation will be enabled
The Home Network Mobility on steroids Internet of things
‘S’ City Planning
‘S’ Business‘S’ Citizen
‘S’ Buildings
21P4E6-60
Source: Frost & Sullivan
M2M
things
Smart
Infrastr
ucture
• 8-10 Devices per home
• Universal Remote
6 bn
• 5-6 Devices per individual
• Touch as the default input mechanism
20 bn
• 500 per sq km
• Smart cities
24 bn
‘S’ Energy
‘S’ Mobility
M2M – Future
APAC M2M Revenue Forecasts
250
300
350
400
Revenue ($Million)
Others
POS/Payment
Security
APAC M2M Market Outlook: Revenue Forecasts
In 2015, the M2M revenue is expected to reach $319.1 million. Smart grid will remain the biggest revenue contributor, accounting for 37.7% of the total revenue We forecast consumer sector will generate 14% of the total revenue, increased from the 5.5% level in 2010.
22P4E6-60
Source: Frost & Sullivan
0
50
100
150
200
250
2008 2009 2010 2011 2012 2013 2014 2015
Year
Revenue ($Million)
Security
Remote Sensor/ Monitoring
Trace and Track
Connectivity(Consumer)
Vehicle Telematics
Smart Grid
Future of the cloud
SaaS
Current Thinking Future thinking
Think more like the OSI layer
SaaS to be complemented with other
services
23P4E6-60
PaaS
IaaS
Cloud brokers + Real time federators
Connectivity Managers for virtualized
clients
Application Managers
Smart data centers + cloud for internal
operations
Market Outlook - Consumer centric 1
Market Outlook – enterprise centric 2
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Key opportunities and imperatives 3
The key imperatives for operators include the following
Maximize the Revenue Opportunity Minimize the costs to serve Improve customer
experience
Key imperatives for ecosystem dominance
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Increase bundling to reduce churn Explore new revenue streams
Scaling without increase in costs
Innovative pricing models
Demand shaping/yield management Common IP core and backhaul
Real-time offer management
Integrated view
Segmented offerings
Speed up time to market
Ability to differentiate
Operators will increasingly get segmented or choose different business models
Key imperatives for operators
Lean/ Effective Rapid Enabler Experience Provider
Operator Type
Predominant Strategy
Infrastructure oriented
Aggregation oriented
Relationship oriented
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Business Mix
Key considerations
Infrastructure
Aggregation
Relationship
Infra
AggrInfra
Capital Efficiency
Market Cap/Sales EV/sub
Scale Scope or Speed Scale and Scope
Platform thinking will need capture of key capabilities
Platform possibilities exist – Mobile + cloud example
Device Management Information Management Cloud management App Management
Third party API mgmt
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Software Manager
Front end Manager
Session Manager
Request brokers
Data retrieval
Interfaces with other
File synchronization
Configuration management
Security
Third party API mgmt
OTA management
Provide ability to work
with wide variety of
devices
Leverage apps provided
by third parties and
other providers
Provide opportunity for
SMEs to have simple
ERP type software
Hosted environment
Global Growth Consulting Company
Gamsa Hamnida
28
Global Growth Consulting Company
The 2nd Industrial Revolution
Hardware
(incl Module)
• High cost
• Power consumption issues
• 50% reduction in costs ( volume game)
• Plug and play
Standardizat
ion
• Operators certification
• Lack of standardization
• Standardization - Web OS
• More devices
2011 2015
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Network • 60% M2M service are based on GSM/CDMA
network, 40% on 3G/WiMAX.
• 70% M2M service are running on 3G/WiMAX, 20% on
4G ( LTE). The rest 10% on WiMAX/CDMA, GSM.
• Lower network cost
Platform • Less than 10% M2M applications were
developed by platform.
• 70% of the M2M services come from developers that
developed their services on the M2M platform.
• Convergence of M2M platform and cloud computing
Application •55% revenue comes from smart grid and
vehicle telematics. Highly concentrated in
utility and vehicle markets.
• More than 60% revenue comes from asset and people
tracking, logistic management/healthcare diagnostics/
consumer touch security applications.
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For Additional Information
Donna Jeremiah
Corporate Communications
Asia Pacific
+603 6204 5832
Mi Ok Lee
Corporate Communications
Asia Pacific - Korea
+82 2 6710 2033
31
Jayesh Easwaramony
Vice President
Asia Pacific
ICT
+65 6890 0999