tem ecosystem: situation and evolution of the portuguese telecommunications macro-sector 2014-2017...

TEM Ecosystem: Situation and evolution of the Portuguese

telecommunications macro-sector 2014-2017

Altran Portugal, SA - Av. Forças Armadas n.125, 3, 1600-079 Lisboa Portugal

Tel: +351 210 331 600 e-mail: [email protected]

altran.pt

© Altran Innovación S.L.

Photographs Fotolia: © vege, © Syda Productions, © Victoria, ©

frank peters, © Andrey Armyagov, © HaywireMedia.

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Content

1. Introduction........................................................

1.1. Survey’s aim ........................................................

1.2. Ecosystem description ............................................

1.3. Survey’s structure .................................................

2. Telecom macro-sector Analysis ...........................

2.1. Devices ............................................................

2.2. Network ............................................................

2.3. Services ............................................................

2.4. Applications .......................................................

2.5. Contents ...........................................................

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25

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Altran Portugal, SA - Av. Forças Armadas n.125, 3, 1600-079 Lisboa Portugal

Tel: +351 210 331 600 e-mail: [email protected]

Altran report of the Portuguese telecomunications macro-sector

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Foreword

It’s a great pleasure for me to present the first edition of the TEM (Telecom&Media)

Ecosystem Report, as it is an interesting reflection of the main players perspective

about the market trends and its evolution. Therefore, I would like to start by saying

“Thank you” to those who have accepted to contribute with their opinions and future

predictions.

The idea to build up a TEM Ecosystem Report focused on the Portuguese Market,

has started in June 2013 during a Steering Meeting of the Altran Telecom Industry,

in London city inspired by London Bridge view. Back to Portugal, and after some internal

discussions about how to do it, we said: “Yes definetly, we must do this!”

The main objective of this Report is to analyse the emerging trends in the TEM market in

Portugal. This report was also carried out to understand the future outlook in terms of New

Business Models, New Business Strategies and the key coming Investment areas for the TEM

market in Portugal. Another ambition of the study was to find out more about the market

players’ strategy: Operators, Equipment Manufacturers, Software Product Companies,

Content Producers and Distributors, and ICT Services Companies.

For a deeper analysis the Report was divided into 5 market segments: Devices, Network,

Services, Applications and Content. Each market segment has been analysed through 7

topics: Main Events, Offering, Players, Business Models, Business Strategies, Key Competitor

Factors and Key Investments areas.

According to the interviewees many challenges and opportunities have been raised for the

next four years. Synthetically, I would like to highlight some topics with significant impact

in our Industry till 2017:

• Most relevant business models for telecom operators will be based on flat rates of voice

and data, models based on service packages tailored upon market segment, and pricing

models based on service quality and speed.• Business models based on service subscription

(with embedded advertising) are those that will have the greatest impact on the pay TV and

video market in Portugal.

• The investment in media and entertainment companies to enhance telecom operator’s

connectivity services with value-added contents will be the most relevant investment.

• The strategy focus on customer experience will be the most valuable to compete in the

market of mobile applications.

• OTT TV communication (28% of weighted value) will be the most used communication

service. For network professionals, Fixed Ultra-fast Broadband will be the main communication

service, with a weighted value of 31%.


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• Google, followed by Netflix will be the leaders of digital entertainment in Portugal.

• Freemium Model and Service Subscription will be the 2 most relevant business models for APPs.

• The ability to adapt the content to different digital platforms and a strong brand positioning will

be the most critical Key Competitive Factors in the Portuguese content market.

• Offering IPTV with pay TV and video on multiple devices is the most valuable business strategy for

the market of pay TV and video.

• Professional video, such as cinema, series and TV programs, is leading the industrial transformation

as the main offer for the next for years in Portugal’s content segment.

• The content generated by users in Social Media will be within the top five most used contents in

Portugal.

• Business models based on “Pay per consumption” of digital content are those that will have the

greatest impact of the market of content aggregators in Portugal.

Looking for the items above, I may say that Portugal has today one of the most advanced

infrastructures in the world, fix and mobile, and what’s coming next is: Innovation, Customer

Experience, Convergence, New business models and New OTT players.

Altran as partner of APDC (Associação Portuguesa para o Desenvolvimento das Comunicações), will

distribute this Report in the 24th ADPC Congress. The main conclusions of this Report will be deeper

discussed during the event throughout two main sessions with key market players.

A final word for you, report reader: as I referred before, this Report started as a project in June

2013, meanwhile many things happened thanks to market dynamic where we are, new brands, new

offers, new partnerships, new regulation and also companies merged which was the case of ZON

and Optimus resulting in a new company called NOS. For a better data accuracy we have decided to

analyse ZON and Optimus as separate companies. We promise for the next edition of this Report to

have NOS as a single company.

I hope you enjoy the Report and make it useful in your jobs and companies.

See you soon,

Bruno Casadinho

ALTRAN PORTUGAL

Head of Telecom & Media


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Informe Altran sobre el ecosistema Telco 2014-2017

Introduction1.

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1. Introduction

ALTRAN shows its huge interest in knowing and generating knowledge about evolution, status and future direction of

the telecommunications macro-sector in Portugal with the development and launch of a general survey in order to better

understand the Portuguese ecosystem. Therefore, a team from Altran has worked for several months on this study of the

macro sector which has resulted in the “Situation and evolution of the Portuguese telecommunications macro-sector 2014-

2017” report.

For the report, Altran has based itself on the opinions gathered from interviews with senior managers belonging to companies

across the value chain macro-sector and the expertise of our company.

1.2. Ecosystem description

Altran sets the following telecommunications macro-sector’s ecosystem, where it has identified five major industrial areas

(devices, networks, services, applications and contents), each one with its sub-areas and components. Different actors, with

more or less involvement in this ecosystem are identified in one or few of the mentioned areas.

1.1. Survey’s aim

Macro-Industry Structure

TEM

Mac

rose

ctor

Ecsy

stem

Devices Networks Services Applicactions Content

Areas of the TEM Macrosector1 2 3 4 5

Fixed DevicesSTBsHome EntertainmentDevices PCsConnected TVFixed Phones

OS (Operating system)

Mobile Tech SuppliersCPERadio Access

Fixed Tech SuppliersCPE (Customer Premises equipment)Fix Access

Mobile / Fixed SuppliersAggregation networksTransportCore transmission (IP/SDH/ATM/DWDM)

Cross / Transversal

SuppliersSignaling and ControlSDP (Service Develop-ment Platforms)

Mobile CommunicationsMobile voiceInternet access: Mobilebroadband

Fixed CommunicationsFixed voiceInternet: Fixed broad-band

Mobile EntertainmentMobile Tv

Fixed EntertainmentCabel TVPay TV (+VoD)

Service PlatformsPayment, Billing & SM, Conditional Access & DRM, Video encoding & delivery, customer ma-nagement, BSS, content discovery, etc.Cloud: PaaS & IaaS

(Mobile) App StoresPay TVMobile TVCable TVInformation & utilitiesGamesIMSocial NetworksMusicOTT VideoIPTVVoIPNewsMobile marketingAdvertising

Professional Content AudioVideoAdvertisingPublishing (News & Books)GameseBooks

UGC MusicNewsSocial mediaVideo

Enterp. App MarketplacesCRM, ERP, E-mail, SecurityBusiness IntelligenceOffice Apps

CloudSupport technologySaaS

Billing & paymentseCommerce & transactionsAccess services

Mobile DevicesSmartphonesTabletsNano-tablesNetbooksMobile / Cell phonesLaptops

Key A

spect

s

Enablers: Industry associations Standard and Consultative Organization European Commission National Regulatory Authorities

New AgenciesTV OperatorsGame Aggr. & SuppliersBook PlatformsMultimedia ContainerProviderContent CreatorsGame DevelopersAudiovisual ContentGenerators/ Producers

Application SWDevelopers / IntegratorsSocial Network Providers & PlatformsTV OTT y VoIPecommerceCloud Hosting Enterprises

Full Telecom Syc ProvidersMobile Virtual Network Operators (OMVs)Cable OperatorsIT Equipment & Platform VendorsCloud Providers & Integrators

Network Equipment Vendors Network Service SuppliersNetwork Infrastructure Integrators

OEM (Original Equip-ment Manufacturer): Samsung, Nokia, SonyOS developers (Apple, Microsoft, Google,…)

Pla

yers

8

Macro-Industry Structure

Devices include all kinds of fixed and mobile equipment and terminals that enable users’ online experience. Included in this

group are the Operating Systems (OS) developed for each of these devices.

Networks section includes all those elements related to the supply of fixed and mobile connectivity that compose the

telecommunications networks (core transmission, accesses, CPEs, Service Development and Management Platforms, etc.),

which are the key infrastructure of the ecosystem.

As per Services Area, it comprises all the services related to fixed and mobile communications, including fixed and mobile

voice, fixed and mobile Internet, TV services and service platforms.

Included in the Applications Section are all those software and programs that enable users’ tasks, from mobile apps to

business applications and platforms. Moreover, this section also includes all the applications used for financial purposes,

such as eCommerce and electronic transactions.

Finally, Contents Area covers all the content value chain, from creation to distribution. In order to guarantee a better

understanding of this sector, this section is deeper divided into “Content generated by professionals” and “User-Generated



9

In the following points each of the seven traversal topics is enlisted and described:

1. Recent Events. facts, business achievements and milestones that have taken place in recent months and that may be

of relevance for the evolution of the macro sector

2. Offering. set of products, services and solutions with which the ecosystem’s players compete in the different markets.

3. Players. elevant actors (vendors, manufacturers, suppliers, integrators, developers, telecom operators, etc.) that ope-

rate in each industrial area.

4. Business Models. efinition and description of the key pillars through which the players build, distribute, and capture

value. Bearing in mind that business models are built from different components, this analysis will be mainly focused

on revenue stream models.

5. Business Strategies. competitive strategies defined and implemented by the different actors of the ecosystem to

effectively compete in the markets.

6. Key Competitive Factors Competencies and capabilities those are critical for a business organization to effectively

compete and succeed in the current context.

7. Investments Investment strategies likely to be implemented in each area, either by players currently operating in that

specific area, or by players that directly or indirectly participate in that given area or in other areas.

In some intersections of Areas and topics, the survey focuses on specific sub-areas (i.e. Telecom Services, Mobile Apps, TV/

Video Apps, etc.) with the only aim of highlighting specific issues that might require further and deeper analysis (i.e. business

models, business strategies).

Devices

(T)

Networks

(R)

Services

(S)

Applications

(A)

Contents

(C)

1. Events 1T 1R 1S 1A 1C

2. Ofering 2T 2R 2S 2A 2C

3. Players 3T 3R 3S 3A* 3C

4. Business Models 4T 4R 4S 4A* 4C

5. Strategies 5T 5R 5S 5A* 5C

6. Key Competitive Factors 6T 6R 6S 6A* 6C

7. Investments 7T 7R 7S 7A 7C

(*)Questions divided into App and TV

AreasTopics

1.3. Survey’s structure

To elaborate the “Survey for 2017 Ecosystem”, the five previously described areas have been intersected to the 7 traversal

topics considered key to analyze the macro-sector (Events, Offering, Players, Business Models, Business Strategies, Key

Competitive Factors and Investments).

This way, the survey is structured according to the following matrix:

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Informe Altran sobre el ecosistema Telco 2014-2017

2. Telecom macro-sectorAnalysis

12

2. Telecom macro-sectorAnalysis

Devices

Services

Applications

Contents

Network


13

2.1. Devices

2.1.1 Events (1T)

According to the opinion of the interviewees, news related to Microsoft acquisition of Nokia’s Mobile Business (September

2013) represent the most relevant event for the evolution of the Portuguese telecommunications, media, and technology

macro-industry in the next 4 years.

On the other hand, Nokia gives up its main division, focusing on telecommunications networks which will represent its main

business unit from now on.

Ranked in the second position, with 9% of weighted answers, the professionals of the industry place the development of a new

fingerprint scanner integrated in the new iPhones.

The next three positions have the same weighted value, gathering the launch of the new Samsung’s tablet with dual operating

system that combines Android and Windows, the decision of the European Union to take part in the dispute between Apple

and Samsung over patents infringements and the launch of Firefox OS Open for mobile by Mozilla.

Devices


14

Microsoft acquisition of Nokia´s Mobile Business is considered as the most relevant event related to the segment of Original Equipment Manufacturers (OEM) and with highest impact

on the future of the TEM macro industry, according to the opinion of the interviewees.

T1 Recent events with the highest impact on the future of the industry for the next four years. Weighted scores normalized on base 100. Sample size: 12 interviewees answered to this question.

Microsoft agrees a deal to buy Nokia’s Mobile Business for 5,4 billion Euros (3,8 billion Euros for the division plus 1,6 billion Euros for licen-

se patents) (September 2013)

Apple develops a new technology integrated into its new iPhone 5s: fingerprint scanner

called the Touch ID (September 2013)

Samsung introduces ATIV Q, a dual OS tablet that combines Android 4.2 and windows 8

(June 2013)

European Union takes part to the dispute between Apple and Samsung wover design and

technical patents infringements, threatening Samsung with billionaire potential fines (Sept-

ember 2013)

Mozilla launches Firefox OS Open for mobile, aiming at challenging Apple and Google with

the open Web (February 2013)

12

9

8

8

8

2.1.2. Offering (2T)

The devices industry is experiencing increased competitiveness: on one side, traditional smartphone and tablet manufacturers

have been extending their offering; on the other, new players are vertically integrating in this area of the value chain by

progressively shifting their business towards mobile devices.

Within this context, Smartphones and Tablets represent, according to the opinion of the interviewed professionals, the most

used devices for communication services and applications consumption in the next four years. These two segments accounts

for the 55% of the interviewed professionals.

The leaders of the industry place in third position of the ranking Phablets –touch screen devices with more than 12.5 inches - ,

with 14% of total weighted answers, followed by Connected and Smart TVs which reach 12% of weighted answers.

In the last positions of the weighted ranking the leaders of the industry place PCs, as relevant devices for communication

services and applications consumption in the near future.


Smartphones

Tablets

Phablets

Connected and SmartTV’s

PC’s

15

Cross-industry

Deepening the analysis into the different industrial segments, it has to be highlighted that the interviewees

generally showed homogeneous opinions on the topic, regardless of the segment or industrial sector they

belong to.

Nevertheless, it is worth considering the opinion of Network and Contents professionals, which slightly differs

from the rest of the interviewed sample, giving more importance to Connected and Smart TVs (second and first

place respectively).

Smartphones and Tablets represent, according to the opinion of the interviewed opinion leaders, the two most used devices in the next four years in the Portuguese market.

T2.1 Most used devices for communication services and applications consumption in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Smartphones

Tablets

Phablets

Connected and SmartTV’s

PC’s

33

22

14

12

6


16

Regarding the Operating Systems segment, the battle for market dominance continues to represent one of the main hot topics

of the industry. With this in mind, Android has been selected by the industry experts as the one likely to be the dominant

player, in terms of shares, of the Portuguese market in the next four years. Android will suffer tough competition from iOS, as

the interviewees placed it in second position of the ranking.

Other OS that will cover the role of relevant challengers in the future landscape of the Portuguese ecosystem are, in order,

Windows Phone and Chrome OS.

Android, iOS, and Windows Phone are considered the OS with the largest market shares in the next four year in the Portuguese landscape, followed by Blackberry 10 OS and Chrome OS,

according to the opinion of the opinion leaders that participated to the questionnaire.

T2.2 OS for smartphones and tablets with largest market share in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Android

iOS

Windows Phone 8

Blackberry 10 OS

Chrome OS

40

31

15

5

3


17

Cross-industry

Deepening the analysis into the different industrial segments, it has to be highlighted that the interviewees

generally showed homogeneous opinions on the topic, regardless of the segment or industrial sector they belong

to.

T2.2 OS for smartphones and tablets with largest market share in the next four years. Weighted scores normalized on base 100. Comparison among global and devices areas results.

Total Devices

5

15

31

40 5644

Android

iOS

Windows Phone 8

Blackberry 10 OS

Android

Windows Phone 8


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2.1.3. Players (3T)

According to the opinions gathered in the survey, the interviewed professionals consider Samsung as the OEM that will hold

the market leadership in the next four years in the Portuguese sector of devices, concretely smartphones and tablets, followed

by Apple in the second position. These two competitors account for 64% of total weighted scores.

After these two players, the leaders of the industry consider that LG, Huawei, and Sony will hold a position of relevant

challengers in the Portuguese marketplace, as they have been selected respectively in the third, fourth, and fifth position of

the top Portuguese ranking.

According to the opinion of the industry professionals, Samsung is the OEM that will hold the largest market share in the Portuguese market of devices in the next four years, followed by Apple.

T3.1 OEMs (smartphones and tablets) with largest market share in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Samsung

Apple

LG

Huawei

Sony

35

29

9

9

8


Apple

Samsung

Sony

Google

Microsoft (Nokia)

19

Apple will be, according to the opinion of the interviewed actors, the player with largest market share in the segment of digital entertainment devices and consoles in Portugal.

Shifting the analysis to the segment of digital entertainment devices and consoles, the last 12 months have been extremely

relevant, as the market rebounded after 4 years of decline, and officially entered in the Next Generation of Game Consoles era.

This turnaround has been mainly driven by the renewal of the product offerings of the majority of the players.

In this context, the results of the survey show that Apple is considered by the industrial leaders as the manufacturer that will

hold the largest market shares in the digital entertainment devices segment in the next four years.

Apple will suffer tough competition from Samsung, which has been selected as the second most relevant player in the future

Portuguese market segment of digital entertainment.

The interviewees place Sony in third position, while Google and Microsoft (Nokia) close the top 5 ranking of the devices and

consoles manufacturers with largest market shares in the Portuguese ecosystem in the forthcoming future.

Cross-industry

The benchmark of the results obtained from different industrial sub-sectors shows a certain degree of

homogeneity of opinions, regardless of the segment to which the actors belong. Nevertheless, it is worth

highlighting the following differences: professionals from the network sector place Samsung (with 30% of

weighted answers) as the main player in the next four years, they also consider Huawei (10% of weighted

network sector answers) in the top 5 of devices and consoles manufacturers.

T3.2 OEMs (digital entertainment devices and consoles) with largest market share in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Apple

Samsung

Sony

Google

Microsoft (Nokia)

25

24

19

10

9


20

The interviewees place in a second layer the integration between the device and the Operating System, and “Razon Blade”

models based on low prices in order to increase sales of a complementary and consumable product.

The ranking of top 5 selections is closed by revenue model based on advertising.

Integration between the device and the app store/platform, Multi-device Operating Systems, and the integration between the device and the operating system are likely to be the most relevant business models for OEMs in the next four years, according to the opinion of the interviewed professionals.

T4 Most relevant business models for smartphones and tablets OEMs in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Cross-industry

The benchmark of the results obtained from different industrial sub-sectors shows a certain degree of heterogeneity of

opinions. In the devices sector the revenue model based on advertising is placed in first position with 42% of respondents,

followed by multi-device operating systems and integration between the device and the Operating System (33% and 25%

respectively).

In the network sector, its professionals place revenue based on advertising, “Razor Blade” model and “Other” in the first

position, with 16% of total weighted responses each one. Integration between inter-compatible smart devices is chosen by

11% of professionals in the network sector. The top 5 is closed by Dual or multiple Operating System devices and Integration

between inter-compatible smart devices (9% each one).

Integration between the device and the app store/ platform

Multi-device Operating Systems

Integration between the device and the Operating System

“Razor Blade” model (low prices in order to increase sales of a comple-mentary and consumable product)

Revenue model based on advertising

16

16

12

12

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2.1.4. Business Models (4T)

The business model for actors operating in devices sector is essentially based on the device itself, being it fixed or mobile,

and its specific way to complement the offer: either by developing in-house a set of additional functionalities (Operating

System, Access to Apps and Digital Contents, etc.) or by establishing strategic alliances with other players along the value

chain, raising in this way the value of the terminal.

For all these reasons the main objective of the devices manufacturers as well as of the other players of the value chain is to

find the model that creates as much value as possible and maximizes value capture and retention, thus enhancing higher

revenues.

In this context, and looking at survey’s results, the leaders of the industry consider the integration between the device and

the app store/platform and Multi-device Operating Systems as the most relevant business models for devices (smartphones

and tablets) OEMs in the next four years.


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2.1.5. Business Strategies (5T)

Devices industry has been experiencing fast growth, representing an attractive business opportunity for different players.

Unlike in the past, when traditional manufacturers were the only ones to produce and sell terminals, the appearance in the

market of smartphones and tablets attracted other actors, whose core business was different. It is the case of the new global

entrants like Apple, Google, and Amazon; network and technology vendors like Ericsson, Huawei, and ZTE; and even business

applications providers like Microsoft.

According to the opinion of the industry experts, focusing on emerging technologies such as AMOLED, retina display, quad-

core CPUs, 64-bit software, flexible screens, fingerprints scanning, etc. is likely to be the most relevant business strategy for

OEM to successfully compete in the Portuguese marketplace in the following four years.

The second option selected by the interviewed actors is represented by offering a wide portfolio of OSs and applications,

followed in the third and fourth position by alliances with mobile operators to strengthen their presence and the creation of

extended value networks of device manufacturers, OSs providers, and mobile operators.

The top five is closed by alliances with content providers, which represents 8% of total weighted responses.

The industry experts outline focus on emerging technologies as the most relevant business strategy for OEMs in the next four years in the Portuguese Marketplace.

T5 Most valuable business strategies for smartphones and tablets OEMs in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Focus on emerging technologies (AMOLED, retina display, quad-core CPU’s, 64-bit software, flexible screens, fingerprint scanning, etc.)

Offer a wide portfolio of OSs and applications

Aliances with mobile operators to strengthen their presence

“Razor Blade” model (low prices in order to increase sales of a comple-mentary and consumable product)

Alliances with content providers

17

14

13

13

8

Cross-industry

Deepening the analysis into the different industrial segments, it has to be highlighted that the interviewees generally

showed homogeneous opinions on the topic, regardless of the segment or industrial sector to which they belong to.

Nevertheless, it is worth highlighting the introduction of focusing on high range devices (smartphones, tablets, “phablets”,

“wearables”) in the top 5 of the most valuable business strategies for smartphones and tablets OEMs in the next four years

for the professionals in the devices and network sector.


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2.1.6. Key Competitive Factors (6T)

According to the results of the survey, technological innovation is outlined by 21% of the interviewees as the most critical

Key Competitive Factor for devices (smartphone and tablets) manufacturers to compete in the Portuguese marketplace in the

next four years.

In second position the opinion leaders of the industry place, with 16% of total weighted answers, strong brand positioning

as critical KCF for Original Equipment Manufacturers, followed in the third position of the ranking by alliances with multiple

devices manufacturers to increase Operating System penetration.

The top 5 ranking is closed by operational excellence and alliances between OEM and mobile operators (13% of total weighted

responses each one), representing the last options within the most critical Key Competitive Factors to compete in the devices

Portuguese market segment.

Technological innovation is outlined by the actors of the industry as the most critical KCF for OEMs to successfully compete in the next four years in the Portuguese market segment of devices.

T6 Most critical Key Competitive Factors for OEMs in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Cross-industry

The benchmark of the results obtained from different industrial sub-sectors shows a certain degree of homogeneity

of opinions, regardless the segment to which the actors belong. Nevertheless, it is worth highlighting the introduction

of financial capacity in the top 5 of the most critical Key Competitive Factors for OEMs in the next four years for the

professionals in the devices and network sector. Moreover it is remarkable that professionals in the services sector consider

capabilities for the management of mergers and acquisitions as a top five KCF for OEMs, placing it in fourth position.

Technilogical innovation

Strong brand positioning

Aliances with multiple devices manufacturers to increase Operating System penetration

Aliances with mobile operators to strengthentheir presence

Operational excellence

21

16

14

13

13


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2.1.7. Investments (7T)

As mentioned before, the traditional device manufacturers are not the only players offering devices and Operating Systems

anymore: other players, whose core business was not directly related to the manufacturing of devices (i.e. Network and

Technology Vendors, Business Applications Providers, etc.), are integrating vertically into this attractive area. As a consequence,

internal competitiveness is rising, with players undertaking focused investments to develop and implement their strategies

and to position themselves in the devices marketplace.

In this context, the industry experts that participated to the survey consider that traditional devices manufacturers will

invest in order to integrate forward in the value chain and get positions in services, applications and content. With the

same weighted value (20% of total weighted responses) industry professionals believe that new global players will continue

investing heavily to offer terminals with the latest technologies and advanced OSs. These two trends are the most relevant

investments strategies likely to occur in the Portuguese devices sector in the next four years.

In third place, according to the opinion of 14% of the interviewees, OSs, services and applications providers will invest to

acquire devices manufacturers.

The option of players from other areas of the macro-sector acquiring small manufacturers occupies the fourth position, while

minor relevance has been given to Asian devices manufacturers investing in the development of their own OSs, which has

been placed in the last position of the top 5 ranking by the industry leaders that answered to this question.

The industry experts overall believe that traditional devices manufacturers will invest in order to integrate forward in the value chain and get positions in services, applications and content. With the

same weighted value (20% of total interviewees) industry professionals believe that new global players will continue investing heavily to offer terminals with the latest technologies and advanced OSs.

T7 Most relevant investment strategies for OEMs likely to occur in the next four years. Weighted scores normalized on base 100. Sample size: 14 interviewees answered to this question.

Traditional devices manufacturers will invest in order to integrate forward in the value chain and get positions in seervices,

applications and content

New global players will continue investing heavily to offer terminals with the latest technologies and advanced OSs

OSs, services and applications providers will invest to acquire devices manufacturers

Players from other areas of the macro-sector will acquire small manufacturers)

Asian devices manufacturers will invest in the development of their own OSs

20

20

14

9

7

Cross-industry

Deepening the analysis into the different industrial segments, it has to be highlighted that the interviewees generally showed

homogeneous opinions on the topic, regardless of the segment or industrial sector to which they belong to. Nevertheless, the

results obtained from devices sector differs from the rest of the industry, where 42% of the professionals who answered this

question consider the investment of application developers to develop in-house capabilities in order to offer their own devices

and OSs, as the main investment strategy in the Portuguese market in the next four years.


24

The interviewees generally showed homogeneous opinions on the topic, regardless of the segment or industrial sector they belong to.

T7 Most relevant investment strategies for OEMs likely to occur in the next four years. Weighted scores normalized on base 100. Comparison among global, network and services areas results.

The opinion of the professionals belonging to the devices sector differs from the rest of the industry: in fact, they believe that the main investment strategy for OEMs in the Portuguese market for the next four years is the investment of application developers

to develop in-house capabilities in order to offer their own devices and OSs.

T7 Most relevant investment strategies for OEMs likely to occur in the next four years. Weighted scores normalized on base 100. Devices sector results.

Applications developers, both of consumer and business segments, will invest to develop in-house capabilities to offer their own devices and OSs

Traditional devices manufacturers will invest in the development of their own OSs

Asian devices manufacturers will invest in the development of their own OSs

42

33

25

Total Network Services

Traditional devices manufacturers will invest in order to integrate forward in the value chain and get positions in services, apllications and content



Players from other areas of the macro-sector will acquire small manufacturers

Others





Others





Others

36

20

914

20

39

19

15

17

11

25

39

11

8

16


25

2.2. Network

2.2.1. Events (1R)

According to the professionals of the macro-industry that participated to the survey, the event with the highest impact on

the evolution of the Portuguese network sector is the one related to the sale of Nokia´s mobile business to Microsoft for 5.4

billion euros, following Ericsson in networks focus.

Other relevant event with high potential impact on the future of the industry, according to the opinion of the interviewees, is

the one related to Huawei´s plan to introduce fifth-generation mobile technology for commercial service by 2020, with speeds

100 times current 4G networks. With the same weighted value answers (12%), industry professionals identify the fact that 4G

mobile broadband already covers 80% of the Portuguese population in the top three events with highest impact on the future

of the industry for the next four years.

Interviewees also mention, as a recent event likely to have certain relevance on the evolution of the European ecosystem, the

investigation, carried out by the European Union, of Huawei and ZTE for violating anti-dumping and anti-subsidy guidelines,

claiming the telecom vendors are allowed to offer low prices unfairly subsidized by Chinese government.

The ranking is closed by the fact that Cisco Systems acquires cyber-security firm Sourcefire for 2.7 billion euros.

Network


26

The sale of Nokia´s mobile business to Microsoft and Huawei´s plan to introduce fifth-generation mobile technology for commercial service by 2020, have been outlined by the actors of the industry as the recent events likely to have the highest impact on the evolution of the European network sector.

R1 Recent events with the highest impact on the future of the industry for the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

Cross-industry

Grouping and analyzing the results by industrial area of belonging of the interviewed actors, no significant

discrepancies have been detected with respect to the global results, showing a certain degree of homogeneity

of the opinions. However, it should be noted that the services sector professionals identify the fact that Huawei

gives up US market, and announces that it will expand its services in Europe as an important event with high

impact on the future of the macro-sector.

Nokia sells its mobile business to Microsoft for 5,4 billion euros, following Ericsson in networks focus (September 2013)

Huawei says it plans to introduce fifth-generation mobile technology for commercial service by 2020, with speeds 100 times current 4G networks

(August 2013)e “Galaxy Gear” Septiembre de 2013)

4G mobile broadband already covers 80% of the Portuguese population (August 2013)

The European Union investigates Huawei and ZTE for violating anti-dum-ping and anti-subsidy guidelines, claim the telecom vendors are allowedto offer low prices unfairly subsized by Chinese government (May 2013

Cisco Systems acquires cyber-securiy firmSourcefire for 2,7 billion euros (July 2013)

16

12

12

11

10


27

2.2.2. Offering (2R)

The whole sample of interviewed professionals believes that the most used network in the Portuguese panorama in 2017 will

be FTTx broadband fixed network and 4G/LTE mobile network.

In third position, interviewees highlighted HFC/DOCSIS broadband fixed network, while they selected 3G/3.5G mobile network

as fourth option.

In the last position of the top 5 ranking the pool of professionals that participated to the survey placed xDSL access broadband

fixed network, reaching 6% of total weighted answers to these question.

Cross-industry


homogeneous opinions on the topic, regardless the segment or industrial sector to which they belong to.

FTTx broadband fixed network and 4G/LTE mobile network will be the most used networks in Portugal in the next four years, according to the opinion of the industry experts.

R.2 Most used network for communication in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.

FTTx broadband fixed network

4G/LTE (Long Term Evolution) mobile network

HFC/DOCSIS broadband fixed network

3G/3.5G mobile network

xDSL acess broadband fixed network

33

33

19

9

6


28

2.2.3. Players (3R)

One of the big concerns surrounding the networking sector currently is the macroeconomic environment in which the

customers, enterprises and service providers operate. Business organizations over the past year have become extremely

cautious with their network spending. This has impacted the top-line growth of the networking sector as a whole, so growth

has been slight for network equipment suppliers.

In this context, the actors that participated in the survey overall believe that the network equipment provider with the most

relevant role in the development and deployment of networks in the next four years is likely to be Huawei (28% weighted

responses).

In the second position of the ranking the interviewees place Ericsson, followed by Cisco. The top three players gather 75% of

total weighted answers to this topic. After these three leaders, the professionals of the industry mention Alcatel-Lucent as

relevant player in the future Portuguese network sector.

In the last position of the top 5 it can be found ZTE, which is considered to play a marginal role in the future Portuguese

ecosystem.

According to the opinion of the industry experts, Huawei is likely to be the network equipment provider with the most relevant role in the development and deployment

of networks in the next four years, followed by Ericsson and Cisco.

R3 Players with the most relevant role in the development and deployment of networks in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.

Huawei

Ericsson

Cisco

Alcatel-Lucent

ZTE

28

26

21

10

8


29

Cross-industry

The benchmark of the results obtained from different industrial sectors shows a certain degree of homogeneity of opinions,

regardless the segment to which the actors belong. Nevertheless, it is worth considering the opinion of network opinion

leaders, which slightly differs from the rest of the interviewed sample, giving more importance to Ericsson (placed in first

position in this industry) versus Huawei which is situated in second place.

Additionally, for professionals in this industry segment, ZTE acquires more relevance, being the third player with most

relevant role in the development and deployment of networks in the next four years.

The interviewees generally showed homogeneous opinions on the topic, regardless of the segment or industrial sector to which they belong to

R3 Players with the most relevant role in the development and deployment of networks in the next four years. Weighted scores normalized on base 100. Comparison among global and network areas results.

Huawei

Ericsson

Cisco

Alcatel-Lucen

ZTE

Others

Huawei

Ericsson

Cisco

Alcatel-Lucen

ZTE

Others

Total Network

28

2621

10

8

8

26

2914

6

18

7


30

2.2.4. Business Models (4R)

The business models for Networks Equipment Vendors are characterized by increased convergence of products and services

(mainly network equipment, network services and network infrastructure integration services). This way, those firms whose

traditional core business was the supply of network equipment, are inclined to either acquire or merge with companies that

provide network services, or develop and offer these services in-house.

Having said this, the interviewed professionals believe that the most relevant business model for network equipment suppliers

in the next four years will be a subscription-base model for the use of software in network management equipment (SDN).

In order of relevance, the following option selected by the leaders of the industry is the business model based on “Turn-key”

network solutions (equipment provider + primary focus on managed network services and consultancy).

In third position, industry experts highlighted participation at all stages (design, engineering, deployment and management)

for 4G/LTE under network sharing models (joint-venture with mobile operators) as relevant business model in the Portuguese

network industrial sector.

The top three business models are very closed each other since the first one has 25% of weighted answers, only 2 percentage

points over the third. It is remarkable that these models nearly double those placed in fourth and fifth position.

The top three business models outlined by opinion leaders as the most relevant business model for network equipment suppliers for the next four years in the Portuguese Marketplace are very closed each other.

Subscription-based model for the use of software in network management equipment

“Turn-key” network solutions provider (equipment provider + primary focus on managed network services and consultancy)

Participation at all stages (design, engineering, deployment and mana-gement) for 4G/LTE under network sharing models (joint-venture with

mobile operatores)

Model based on ensuring end to end QoS from virtualized data servers related to cloud services

Participation at all stages (design, engineering, deployment and management) for FTTX networks under public-private models

25

24

22

13

11

R4 Most relevant business models for network equipment suppliers in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.


31

Become equipment provider with a complete portfolio (by means of alliances, mergers and acquisitions)

Specialize in being the technological leader in a specific network segment

Focus on technology innovation

Focus on a differencial equipment offering based on the flexible network capacity and the necessary software licenses (SDN)

Focus on being cost leader ($Network costs per user) in network equipment

18

15

11

11

10

Cross-industry


homogeneous opinions on the topic, regardless of the segment or industrial sector they belong to.

It is interesting to notice how the group of network professionals place ensuring end to end QoS from virtualized data servers

related to cloud services in third position with a weighted value of 23%, setting participation at all stages for 4G/LTE under

network sharing models back to the sixth position and reducing its weighted answers to 13%.

Another remarkable difference is how services opinion leaders identify participation at all stages for 4G/LTE under network

sharing models as the most relevant business models for network equipment suppliers in the next four years with 33%

weighted responses.

2.2.5. Business Strategies (5R)

As a result of Global economic instability, intense competitive pressure, and decreased spending by communication services

providers, network equipment vendors have been driven to streamline and refocus their business strategies in order to

maintain profits.

The most valuable strategy for network equipment providers to compete in the Portuguese panorama in the next four years,

with 18% of weighted asnswers, is that one focus on becoming an equipment provider with a complete portfolio (by means of

alliances, mergers and acquisitions).

At a lower level, the specialization in a specific network segment is mentioned as the second most valuable strategy by the

interviewed sample.

Finally, the top 5 ranking of most valuable business strategies for network vendors is closed by those strategies focused on

technology innovation, differential equipment offering based on the flexible network capacity and the necessary software

licenses (SDN), and being a cost leader in network equipment.

Becoming an equipment provider with a complete portfolio is believed to be the most valuable business strategy for network equipment providers to compete in the Portuguese panorama

in the next four years, according to the opinion of the experts of the industry.

R5 Most valuable business strategies for network equipment suppliers in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.


32

Cross-industry

Deepening the analysis at sectorial level, it has to be noticed that the opinion of the respondents has been generally

homogeneous, regardless the industrial area to which the different actors belong. Nevertheless, it is worth mentioning some

discrepancies of opinions of the network and services sector, where strategies focus on technology innovation loose weighted

value, leaving the top five ranking.

For the professionals interviewed in the network sector, strategies focus on a differential equipment offering based on the

flexible network capacity and the necessary software licenses (SDN) are considered as the most valuable strategies. These

interviewees identify providing turn-key network solutions, maintenance, evolution, and managed network services to the

operators as the second main strategy. They also introduce two new strategies in the top five: provide enterprise applications

services and IT management, and provide funding to network operators.

Interviewees in the services group place the specialization in a specific network segment in first position, followed by the

specialization in proper management of networks and platforms, leveraging on the continuous convergence of networks and

services.

2.2.6. Key Competitive Factors (6R)

According to the results of the survey, the Key Competitive Factor considered by the pool of industrial leaders as the most

critical for network equipment vendors to successfully compete in the next four years in the Portuguese network sector is

technological innovation.

Right after, the interviewed actors mention the ability to provide a comprehensive and integrated solution of equipment +

network integration + network operation service, with a weighted value of 20%.

Financial capacity for investments and solid alliances with mobile operators have been also outlined as relevant KCF, as

they have been placed in third and fourth position respectively, while capabilities for the management of strategic alliances

obtained a marginal score ending in the last position of the top 5 ranking.

The most critical KCF for network equipment suppliers in the next four years will be, according to the interviewees, technological innovation and ability to provide a comprehensive and

integrated solution of equipment + network integration + network operation service.

Technological innovation

Ability to provide a comprehensive and integrated solution of equipment + network integration + network operation service

Financial capacity for investments

Solid alliances with mobile operatores

Capabilities for the management of strategic alliances

23

20

12

11

8

R6 Most critical Key Competitive Factors for network equipment suppliers in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.


33

Cross-industry

Looking at the results of the different industries, it is of interest to highlight the different opinion of services professionals

with respect to the whole consolidate scores. Specifically, these experts mentioned financial capacity for investment as the

most critical KCF for network providers (27% of weighted answers), and introduce the ability to offer low cost solutions in the

top five ranking of most critical KFC.

On the other side, network professionals consider the capabilities for mergers and acquisitions management as a top five KCF

for network equipment suppliers (fourth position, 13% of weighted responses).

Services professionals place financial capacity for investment as the most critical KCF for network providers, and introduce the ability to offer low cost solutions in the top five ranking.

R6 Players with the most relevant role in the development and deployment of networks in the next four years. Weighted scores normalized on base 100. Comparison among global, network and services areas results.



Ability to provide a comprehensive and integrated solution of equipment + network integration and operation service


Solid alliances with mobile operators


Others




Capabilities for mergers and acquisitions management


Others




Ability to offer low cost solutions


Others

2623

20

1211

8

18

14

13

13

11

32

15

21

27

15

12

9


34

2.2.7. Investments (7R)

Enterprises are expected to invest more heavily in their network infrastructure, as the macro concerns have had little impact

on data demand which has continued to remain strongly driven by big trends like mobile Internet and cloud computing.

Specifically, mobile data traffic has grown exponentially with the proliferation of mobile devices such as smartphones,

e-readers and tablets.

In this context, the majority of the interviewees consider the consolidation of western network suppliers to gain size and

synergies to cope with Asian competition as the most relevant investment strategies for network equipment vendors likely to

occur in the next four years.

Interviewees place the investment in R&D to offer the most advanced technologies and network accesses as the second most

relevant investment strategy for network equipment providers.

The investment of new global players, such as Google, Microsoft or Apple, in networks has been instead selected by the

industry leaders as the third investment strategy with highest probability to occur and highest impact on the evolution of the

Portuguese ecosystem.

The top 5 scoring is closed by the investment in bringing SDN and other cloud-centric networking solutions, and the acquisition

of companies to offer an integrated service, which respectively occupy the fourth and fifth position of the ranking.

Consolidation of Western network suppliers to gain size and synergies to cope with Asian competition is outlined by the pool of interviewees as the most relevant

investment strategy for network providers likely to occur in the next four years.

R7 Most relevant investment strategies for network equipment vendors likely to occur in the next four years. Weighted scores normalized on base 100. Sample size: 13 interviewees answered to this question.

Western network suppliers will consolidate to gain size and synergies to cope with Asia competition

Network providers will invest in R&D to offer the most advanced technologies and network accesses

New global players will invest in networks (i.e. Google, Microsoft or Apple)

Network providers will invest in bringing SDN and other clous-centric networking solutions

Network providers will acquire companies to offer an integrated service

22

20

18

12

9

Cross-industry

The benchmark of the results obtained from different industrial sub-sectors shows a certain degree of heterogeneity of

opinions.

It is worth highlighting the following differences: opinion leaders from the network sector place the investment in bringing

SDN and other cloud-centric networking solutions as the main strategy in the next four years. They also consider, as well as

professionals from services sector, the acquisition of Western competitors by Asian network providers in top 5 of the most

relevant investment strategies.

Taking into account interviewees from the services sector, they place in fourth position the investment in networks which will

be carried out by devices manufacturers and Operating Systems developers (i.e. Samsung).


35

2.3. Services

2.3.1. Events (1S)

Brussels’ top competition authority calls for 28 national telecoms regulators to be replaced by a single pan-European

watchdog in an attempt to bring down the national barriers to cross-border consolidation and the removal of different

regulators (August 2013). This fact has been outlined by the professionals who participated to the survey as the event in the

telecommunications services industry with the highest potential impact on the evolution of the Portuguese ecosystem.

In second position of the ranking, the opinion leaders of the industry place the reduction by the European Union of 36% of

roaming charges imposed on customers for checking e-mail and video viewing.

In fact, the European Parliament approved, last April 2014, the elimination of roaming charges in countries of the EU as of

December 15, 2015 in order to create a common telecommunication market. This approval also ensures an Internet open to

all, prohibiting the blocking of the network and the degradation of their content and coordinating licensing of spectrum for

wireless broadband services. It also provides customers with a higher level of transparency in their Internet and broadband

contracts, allowing them to switch providers more easily.

The fact that the KPN Foundation blocks América Móvil’s 7,2 billion Euros offer for the 70 % of the Dutch Cell phone operator

KPN undermining Carlos Slim’s ambition to expand his telecom empire to Europe (August 2013), has been also given quite

relevance for the future of the industry, ranking third within the top 5 events.

Based on total interviewees pool, third position is occupied by the fact that US operator AT&T seems to be interested in

expanding its business into European mobile telecommunications market (focused on 4G network deployment) throughout

inorganic growth. Its main targets are companies like Telefónica, EE, Vodafone and KPN (June 2013).

Finally, closing the top 5 ranking, industry experts remarks the merger agreement between Oi, Brazil’s biggest phone

company, with Portugal Telecom to create a trans-Atlantic carrier, to better compete against Telefónica Group and America

Móvil (October 2013).

Cross-industry

Looking deeper into the results of the survey from a sectorial perspective, opinions show a certain degree of homogeneity,

regardless the industrial area to which the different actors belong. Nevertheless, it is worth mentioning that professionals

from Portuguese services sector consider the approval by Portugal's competition authority of the merger between cable TV

operator Zon Multimedia and Sonaecom's mobile phone unit Optimus, which will create the country's second-largest telecoms

firm, as the third event with the highest impact on the future of the industry for the next four years.


Services

36

S1 Recent events with the highest impact on the future of the industry for the next four years. Weighted scores normalized on base 100. Sample size: 9 interviewees answered to this question.

Brussels’ top competition authority calls for 28 national telecoms regula-tors to be replaced by a single pan-European watchdog in an attempt to bring down the national barriers to cross-border consolidation and the

removal of different regulators (August)

The European Union will cut the roaming price mobile carriers can charge customers for checking e-mail and watching videos while traveling by

36%, in an attempt to make the market for European telecommunications companies more unified (June 2013)

The KPN Foundation blocks America Móvil’s 7,2 billion Euros offer for the 70% of the Dutch Cell phone operator KPN undermining Carlos Slim’s

ambition to expand his telecom empire to Europe (August 2013)

US operator AT&T seems to be interested in expanding its business into European mobile telecommunications market (with a focus on 4G net-

work deployment) through out inorganic growth; with the likely targets Telefónica, EE, Vodafone and KPN (June 2013)

Oi, Brail’s biggest phone company, agreed to merge with Portugal Telecom to create a trans-Atlantic carrier, to better compete against

Telefónica Group and America Movil (October 2013)

19

16

15

11

10

2.3.2. Offering (2S)

According to the opinion of the interviewed professionals and industry leaders, Mobile Ultra-fast Broadband will be the most

consumed communication service in Portugal in the next four years, followed by Fixed Ultra-fast Broadband.

Fixed Broadband and Mobile Broadband share the third position in the ranking with 14% of weighted answers, followed, in

fourth position, by other two communication services with 13% of weighted responses: IPTV Services (Telecom operators) and

OTT TV.

Finally, in the last positions the pool of industry experts that participated to the survey placed Cable TV (Analogic and / or

DTT) and Satellite TV as communication services with certain consumption in the future Portuguese ecosystem.

The fact that Brussels’ top competition authority calls for 28 national telecoms regulators to be replaced by a single pan-European watchdog has been considered by the pool of interviewees as the recent event related

to services sector likely to have the highest impact on the evolution of the Portuguese macro-industry.


Mobile Ultra-fast Broadband

Fixed Ultra-fast Broadband

Fixed Broadband

Mobile Broadband

IPTV Services (Telecom Operators)

37


Fixed Ultra-fast Broadband

Fixed Broadband

Mobile Broadband


21

19

14

14

3

3

13

13

The results of the survey reveal that Mobile Ultra-fast Broadband will be, according to the opinion of the industry experts, the most consumed communication service

in Portugal in the next four years, followed by Fixed Ultra-fast Broadband.

S2 Most used communication services in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

OTT TV

Cable TV (Analogic and / or DTT)

Satellite TV

Cross-industry

The benchmark of the results obtained from different industrial sub-sectors shows a certain degree of homogeneity of

opinions, regardless the segment to which the actors belong.

Nevertheless, it is worth highlighting that interviewees from services sector place OTT TV communication (28% of weighted

value) as the most used communication service in the next four years, moving Mobile Ultra-fast Broadband to the third place.

For network executives, Fixed Ultra-fast Broadband will be the most used communication service in Portugal in the next four

years, with 31% of weighted answers.


38

S2 Most used communication services in the next four years. Weighted scores normalized on base 100. Comparison among global, network and services areas results.

2.3.3. Players (3S)

The whole sample of the professionals interviewed believes that the player with highest growth in terms of market share in

the Portuguese mobile telephony segment in the next four years is MEO1.

In second position, interviewees highlighted Vodafone, followed by Grupo ZON2 and Optimus2, situated in third and fourth

position respectively.

1. Portugal Telecom, MEO and Grupo PT are currently operating under the same brand: MEO.2. Grupo ZON and Optimus have merged, creating a new company called NOS.

MEO

Vodafone

Grupo ZON

Optimus

Other


Fixed Ultra-fast Braodband

Fixed Broadband

Mobile Broadband


OTT TV

Others




Fixed Broadband

Mobile Broadband


OTT TV

Others



Fixed Broadband

Mobile Broadband


OTT TV

Others

170

22

118

14

28

14

8

9

26

3114

8

6

13

13

14

14

21

19


Interviewees from services sector place OTT TV communication (28% of weighted value) as the most used communication service in Portugal in the next four years. For network professionals, Fixed Ultra-fast Broadband will be the main communication service in the next four years, with a weighted value of 31%.

Interviewees believe that TMN1 (Telecomunicações Móveis Nacionais), Vodafone and Grupo ZON2 will be the players with highest growth of market shares in

the Portuguese segment of mobile telephony in the next four years.

MEO

Vodafone

Grupo ZON

Optimus

Other

32

25

19

18

4

S3.1 – Players with highest growth of market shares in the mobile telephony segment in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

39


Cross-industry


opinions, regardless the segment to which the actors belong.

Nevertheless, some differences can be found in the results from interviewees in the services sector who place Grupo ZON2,

with 30% of weighted responses, as the player with highest growth of market share in the Portuguese mobile telephony

segment in the next four years. MEO1 (28% weighted value) is placed second in the ranking, followed by Vodafone and

Optimus2, third and fourth respectively.


40

According to the interviewed leaders of the industry, Vodafone will experience the highest growth of market shares in the Portuguese segment of fixed Internet, followed by MEO1 and Grupo ZON2/TV Cabo 1.

Vodafone

PT Comunicações (Grupo PT)

Grupo ZON/TV Cabo 1

Optimus

Other

35

32

23

4

3

S3.2 Players with highest growth of market shares in the fixed Internet segment in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.



Vodafone

MEO

Grupo ZON

Optimus

Other

Industry experts in the services sector place Grupo ZON2 as the player with highest growth of market shares in the Portuguese segment of mobile telephony in the next four years.

S3.1 – Players with highest growth of market shares in the mobile telephony segment in the next four years. Weighted scores normalized on base 100. Comparison among global and services areas results.

Regarding the Portuguese segment of fixed Internet, the interviewed leaders of the industry identify Vodafone as the player

which will experience the highest growth of market shares in the next four years, followed by MEO1 and Grupo ZON2/TV Cabo

1, second and third position respectively.

MEO

Vodafone

Grupo ZON

Optimus

Others

MEO

Vodafone

Grupo ZON

Optimus

Others

Total Services

6

32

25

19

18

17

24

28

31

0

Cross-industry


homogeneous opinions on the topic, regardless the segment or industrial sector to which they belong to.

According to the interviewed opinion leaders of the industry, Vodafone, with 34% of weighted answers, is the player which will

experience the highest growth of market shares in mobile broadband segment in the next four years, followed by MEO1 and

Grupo ZON2, 26% and 17% of weighted value answers respectively.

41

Vodafone

MEO

Grupo ZON

Optimus

Other

34

26

17

12

7


The results of the survey reveal that Vodafone, MEO, and Grupo ZON2 will experience the highest growth of shares in the Portuguese mobile broadband market.

S3.3 Players with highest growth of market shares in the mobile broadband segment in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

Cross-industry


opinions, regardless the segment to which the actors belong. Nevertheless, it is worth mentioning slight discrepancies of

opinions of the services sector. This group placed Vodafone and Grupo ZON2 sharing the first position of the ranking of

players with highest growth of market shares in the mobile broadband segment in the next four years, followed by MEO1.It is

remarkable that these three players account for 81% of weighted answers.


42

According to the interviewed executives in the services sector, Vodafone and Grupo ZON2 will be the players with highest growth of market shares in the Portuguese mobile broadband market in the next four years.

S3.3 Players with highest growth of market shares in the mobile broadband segment in the next four years. Weighted scores normalized on base 100. Comparison among global and services areas results.

2.3.4. Business Models (4S)

The business models of the telecom service sub-sector can be subdivided into two main groups. In the first group are included

those models based on traditional revenues streams, which are unilateral and highly dependent on market and customer

needs evolution. In the second one are included the alternative models characterized by revenue sharing schemes with other

actors, either being part of the same telecom value chain, or external to the value chain.

In this context, the opinion leaders outline revenue models based on flat rates of voice and data as the most relevant model

for the telecommunications operators.

In second position of the ranking the pool of professionals that participated to the survey placed the revenue models based

on service packages tailored upon market segment, followed by pricing models based on services quality and speed in third

place.

The top five ranking is closed by “Premium” pricing revenue models for ultra-broadband services, and the FTTX networks

exploitation by means of a mix public-private model. These models are ranked respectively in fourth and fifth position in the

top 5 ranking.


Vodafone

MEO

Grupo ZON

Others

Vodafone

MEO

Grupo ZON

Others

Total Services

21

17

34

26

1931

19

31


43

The professionals of the industry consider that the most relevant business model for telecom operators in the next four years will be the one based on flat rates of voices and data, followed by revenue models based on service packages tailored upon market segment, and pricing models based on service quality and speed.

Revenue model based on flat rates of voice and data

Revenue model based on service packages tailored upon market segments

Pricing models based on service quality and speed

“Premium” pricing revenue models for ultra-broadband services

Mix public-private model for the FTTX networks exploitation

22

21

15

14

11

S4 Most relevant business models for telecom operators in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

Cross-industry


opinions, regardless the segment to which the actors belong. Nevertheless, industry experts from the services area increase

the importance of pricing models based on service quality and speed to the second position, with 19% of total weighted

answers. On the other hand, this group of professionals reduce the relevance of revenue models based on service packages

tailored upon market segments to the fourth position, at the same level of mix public-private models for the FTTX networks

exploitation.

2.3.5. Business Strategies (5S)

Communications services market is moving towards Internet access (fixed and mobile) services, and pay TV, accompanied by

the decline of fixed and mobile telephony services consumption. For this reason, the different actors of this industrial area

have been called to reshape their strategies with the aim of achieving the best positioning in the marketplace.

The pool of interviewed industry executives believes that the most valuable strategy for Portuguese telecom operators to

operate in the future marketplace will focus on a converged services offering (ADSL, mobile, fixed and TV).

Although far behind, the development of innovative services in terms of advertisement and contents, and exploitation of data

and customers behavior patterns is the next most valuable business strategy for telecom operators. With the same percentage

of weighted answers (8%), the exploitation of group synergies, consolidating activities in several markets segments is

considered one of the top three most valuable business strategies for telecom operators in the next four years.

Finally, the ranking is closed by three strategies related to wide distribution networks, development of alliances to offer

converged services, and costs reduction by increasing outsourcing of non-core activities.


44

According to the opinion of the interviewed industry executives, the most valuable business strategy for Portuguese telecom operators in the next four years will

focus on a converged services offering (ADSL, mobile, fixed and TV).

Focus on a converges services offering (ADSL, mobile, fixed and TV)

Development of innovative services in terms of advertisement and contents, and exploitation of data and customes behavior patterns

Group synergies explotation, consolidating activities in several markets segments

Focus on a wide distribution network

Development of alliances with cable operators, mobile/fixed telecom operatores, and Pay TV and Media Groups, to offer converged services

26

8

8

7

7

7Costs reduction by increasing outsourcing of non-core activities

S5 Most valuable business strategies for telecom operators in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

Cross-industry

The benchmark of the results obtained from different industrial sectors shows a certain degree of homogeneity of opinions,

regardless the segment to which the actors belong. Nevertheless, it is worth mentioning slight discrepancies of opinions of

the services sector. This group introduces assets divestments strategy in the top five of most valuable business strategies for

telecom operators in the next four years, with 11% of weighted responses.

2.3.6. Key Competitive Factors (6S)

The services market has been facing the transformation of business models. Therefore, the different players tend to specialize

or change their current services by means of new formats and prices, as well as seek for new complementary services in other

new areas. Nowadays the number of players involved in this sector has increased, and traditional players have been facing

tough competition from new entrants, which in turn undermined their growth. Actually, new entrants have emerged bringing

other competencies and offering services required by users at a very competitive price.

According to the results of the survey, the Key Competitive Factor considered by the pool of industrial leaders as the most

critical for telecom operators to successfully compete in the next four years in Portugal is the capability to offer a converged

service offering (ADSL, mobile, fixed and TV).

Far behind, in second position, the interviewed professionals mention the capabilities to offer innovative/differential pricing

plans, with a weighted value of 20%.

Capabilities to provide an end to end service offering, manage business model transformation toward entertainment and

contents, and financial capacity to invest have been also identified as relevant KCF.


45

Capabilities to offer a converged service offering (ADSL, mobile, fixed and TV)

Capabilities to offer innovative/differential pricing plans

Capabilities to provide an end to end service offering

Capabilities to manage business model transformation toward entertainment and contents

Financial capacity to invest

33

13

9

9

9

Capabilities to offer a converged service offering (ADSL, mobile, fixed and TV) are considered as the most critical Key Competitive Factors for telecommunications services providers

in the next four years, to successfully compete in the Portuguese panorama

S.6 Most critical Key Competitive Factors for telecom operators in the next four years. Weighted scores normalized on base 100. Sample size: 11 interviewees answered to this question.

Cross-industry

Comparing the results from a sectorial perspective, it is interesting to highlight that executives from the services group

give more importance to the capabilities to manage business model transformation toward entertainment and contents,

placing it in second position with 14% of weighted answers. Moreover, they introduce, with the third highest percentage

of weighted responses (11%), the coverage & service availability, and the extension of services offering into new verticals

(financial services, e-health, etc.) in the ranking.

2.3.7. Investments (7S)

The majority of the interviewees consider the investment in media and entertainment companies to enhance telecom

operators’ connectivity services with value-added contents as the most relevant investment strategy likely to occur in the

Portuguese market in the next four years.

Opinion leaders place the alliances with companies able to provide on-line services in different specific vertical sectors

(financial services, e-health, etc.) as the second most relevant investment strategy for telecom operators.

The sale of telecom operators’ network infrastructure, either totally or partially, establishing rental models with network

owners has been selected by the industry leaders as the third investment strategy with highest probability to occur and

highest impact on the evolution of the Portuguese ecosystem.

The top 5 scoring is closed by the investment in telecommunications services by new global players, and transnational

mergers carried out by some European telecom operators, which respectively occupy the fourth and fifth position of the

ranking.


46

According to the opinion of the opinion leaders, the investment in media and entertainment companies to enhance telecom operator’s connectivity services with value-added contents

will be the most relevant investment strategy likely to occur in the next four years.

Telecom operators will invest in media and entertainment companies to enhance their connectivity services with value-added contents

Telecom operators will establish alliances with companies able to provide on-line services in diferent specific vertical sectors (financial services,

e-health,etc)

Telecom operators will sell out their network infrastructure, either totally or partialy, establishing rental models with network owners

New global players will invest in telecomunications services

Some European telecom operators will carry out transnational merger operations

16

14

13

11

10

S7 Most relevant investment strategies for telecom operators likely to occur in the next four years. Weighted scores normalized on base 100. Sample size: xxx interviewees answered to this question.

Cross-industry

Analyzing the results of the survey at a deeper level from a sectorial viewpoint, it is worth highlighting two investment

strategies that executives belonging to the area of services (telco operators, and service providers of communication and

entertainment) have given certain relevance.

The first one is the investment carried out by telecom operators with the main objective of developing their own wholesale

units with turn-key managed services for B2B segment. The second strategy is the acquisition of MVNOs and the development

of a branded portfolio with service offerings tailored upon target market segments.


47

2.4. Applications

2.4.1. Events (1A)

The most relevant events considered to the development of the applications industry in the face of 2017 are related to the

development of the applications of mobile payment, as well as the growing importance of the industry in Europe and its

impact on jobs creation.

According to the opinion provided by the interviewees, the event considered to be the most relevant for the evolution of

the telecommunications macro-industry, is that related to the global agreement between Visa and Samsung in order to

combine Visa’s expertise in payments with Samsung’s leadership in mobile device technology, with the aim of accelerating

the availability of mobile (NFC) payments globally.

In second position, according to its relevance, the professionals of the industry identify the fact that EU accounts for 22% of

the global production of app-related products and services, with revenues of more than 10 billion Euros per annum, having

contributed to nearly 800.000 jobs to the EU.

Two events related to the launch of a digital wallet app by Google and the boost of mobile app development with backend

toolset by Google App Engine, complete the four main events on the future of the industry for the next four years.

Finally, the weighted ranking is closed by those events related to the investment of 200 million euros across 36 deals in 2013

by mobile app development companies, and the launch of Office app for iPhone and iPad.

Applications


48

Cross-industry

Regarding the classification of respondents according to the sector they belong to, those events with the highest relevance for

the future evolution of the macro-sector have been selected evenly by interviewees, regardless their industrial origin.

However, it is worth noting that the opinion showed by respondents belonging to the industrial segment related to services

identify the fact that Facebook has allowed 3.800 developers to achieve 25 million downloads through its mobile app install

ads, as the most relevant event for the macro-industry. They also give the same level of importance to the winners of Lisbon

Big Apps 2013, focused on carsharing, tourism and transport.

Visa and Samsung announce a global agreement that combines Visa’s expertise in payments with Samsung’s leadership in mobile device

technology, with tje aim of accelerating the availability of mobile (NFC) payments globaly (February 2013)

EU accounts for 22% of the global production of app-related products and services, with revenues of more than 10 bilion Euros per annum,

having contributed to nearly 800.000 jobs to the EU (September 2013)

Google launches digital wallet app on iPhone to compete with Apple’s Passbook (September 2013)

Google App Engine boosts mobile app development with backend toolset (June 2013)

Mobile app development companies have invested over 200 million Euros across 36 deals in 2013 alone (July 2013)

14

12

9

9

7

7

A1 Recent events with the highest impact on the future of the industry for the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Microsoft finally launches an Office app for the iPhone (March 2013)

According to the opinion provided by interviewees, the global agreement between Visa and Samsung aimed at accelerating the availability of mobile (NFC) payments globally, is judged as the event with the highest relevance and the strongest impact on the future of the macro-industry in the next four years.


49

2.4.2. Offering (2A)

Downloads of worldwide applications achieved around 100 billion with nearly 1 million apps available across an increasing

number of app stores. Mobile devices, wireless connectivity and apps together make up the current wave of innovation in

Information and Communication Technology. Mobile devices provide users with access everywhere to computing power and

applications, thus boosting what are possible compared with the fixed area.

Furthermore, mobile users and app stores have lowered entry barriers for developers. At the same time, app stores provide

global market access, discoverability, low cost and application monetization. Consumers can download an enormous variety of

purpose-built apps at low prices from various types of stores, including communication and entertainment, messaging, maps

and other productivity tools. Wider social benefits are also becoming clear with apps for education, health and transport. In

the health sector, for example, apps provide new tools for fitness monitoring, medical self-management, remote consultation

and hospital administration. Additionally, while apps market evolution has been mainly consumer-oriented, the enterprise

market has also benefited from this development.

Furthermore, regarding connectivity, LTE (4G) networks deployment allows to offer lower costs per bit carried and to enhance

the potential of apps and their impact on the European markets. Coverage is expanding, along with enhancements in quality

of service (speed, capacity, latency). Technology advancements are driving also the improvement of devices as well as the

increasing use of cloud computing, thus creating always available connected computing and a growing number of apps.

According to the scores given by industry experts, applications related to social networks will be the most used in the next

four years. Actually, such kind of applications are becoming increasingly popular, allowing users to keep in contact with

friends and family, as well as share information and other digital contents everywhere.

On the other hand, applications related to entertainment are placed in the second position in terms of the level of usage they

will achieve in the future, according to what stated by professionals who participated to the questionnaire.

Mailing apps are positioned in the third position of the weighted ranking, followed by leisure apps (photos, travelling, etc.)

and instant messaging applications.

Social networks, entertainment and mailing applications will be the most used in the future of the Portuguese macro-industry, according to what stated by professionals who participated to the questionnaire.

A2 Most used types of mobile applications in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.

Social Networks

Entertainment

Mailing

Leisure (photos, travelling, etc.)

Instant messaging

22

21

15

12

8


50

Surveyed professionals bet on Google as the most relevant player in the digital entertainment market in 2017, followed by Netflix, Grupo PT1 and Amazon.

Google

Netflix

Grupo PT

Amazon

Apple

17

13

10

10

9

9

A3 Players with highest relevance in the digital entertainment marketplace, over the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.

Microsoft

2.4.3. Players (3A)

According to the opinion showed by opinion leaders of the macro-industry who participated to the survey, Google leads

the weighted ranking as the player with the greatest relevance in Portugal in the next four years, within the leisure and

entertainment market.

The second option selected by the industry professionals that participated to the survey is Netflix.

On the other hand, the third position has been awarded by the industry executives to Grupo PT1 and Amazon, both of them

with the same weighted rating.

After these four players, Apple and Microsoft close the top ranking of players with highest relevance in the digital entertainment

marketplace.

Cross-industry

Considering the results of different sectors, it is interesting to notice how the group of experts from the services sector has

a different opinion with respect to the total sample. Concretely, these professionals highlight e-payment applications as the

most used in the next four years, followed by mailing, social networks and business task applications. Entertainment apps are

also considered in the top five of most used applications till 2017.


Google

Apple

Netflix

Grupo ZON

Amazon

51

Cross-industry

Distinguishing per industrial sub-sectors which the interviewees belong to, some attention must be paid to those differences

identified, especially among the industrial segment devoted to services and the opinion provided by the global industry

executives surveyed.

Particularly, it is worth noting that interviewees from the services group identify Grupo ZON2 as the fourth main player in

Portugal.


Industry experts belonging to the sector of services differs from the global criteria, as considering Grupo ZON2 among the five most relevant players for the future of the macro-sector over the next four years.

Google

Apple

Netflix

Grupo ZON

Amazon

27

20

13

11

11

A3 Players with highest relevance in the digital entertainment marketplace, over the next four years. Weighted scores normalized on base 100. Sample size: 4 interviewees answered to this question. Results from the services area.


52


2.4.4. Business Models (4A)

Within the industry of applications, developers pursue the business models that best suit its particular nature and the success

which is expected from it, with the aim of increasing as much as possible its profitability. However, existing constraints must

be taken into account, since the vast majority of the applications available are either free or low cost.

For applications with a high volume of downloads, the business model is ad-based, since advertisers seek to get their ads seen

the maximum number of times as possible by different users.

A variant of the ad-based model is an option offered to the user, consisting of avoiding the advertising by means of a

payment. Up to date, this variant is already in use within the website services environment, so some applications developers

are expected to opt for it in the future.

In the freemium model the application download is free of charge for users, while they will have to pay for access to added

services. These models are based on the concept of provide users with the possibility to make in-app purchases to download

additional content or functionalities.

In such context, according to the results gathered from the survey, the business models which will account for the highest

relevance for mobile applications in Portugal over the four next years, are freemium and service subscription (free of

advertising), which have the same percentage of weighted answers (15%).

Following the leaders very closely in terms of weighted score obtained, second position is occupied by ad-based revenue

model. Business models based on service subscription (with embedded advertising) and transaction fee (payment or transfer

made trough) close the ranking of most relevant business models in terms of its relevance for the macro-industry in the future.

The freemium model will be, according to what stated by respondents, the most relevant for the market of applications in the next four years, followed in the weighted ranking by models

based on service subscription (free of advertising) and ad-based revenue model.

Freemium model (with in-app purchase)

Service subscription (free of advertising)

Ad-based revenue model

Service subscription (with embedded advertising)

Transaction fee (payment or transfer made trough

15

15

14

13

12

A4.1 Most relevant business models for mobile applications in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.


53

Cross-industry

Professionals from the services sector place service subscription (with embedded advertising) as the main business model

in the next four years, followed by freemium model (with in-app purchase) and transaction fee (payment or transfer made

trough) models, according to the results gathered in the survey.

In the arena of pay TV and video, the same business models described in the section 4.1 for applications can be found. To

those, it is worth adding other models based on pay-per-view, such as the payment for renting a movie, or those focused on

tailoring to the users’ tastes when making movies suggestions based on the user history.

Actually, OTT video services extend the overall market for pay-TV services by appealing to consumers who would not

consider taking up traditional pay-TV services, perhaps because of the cost or level of commitment involved. In particular, the

emergence of OTT video services gives consumers direct access to premium and/or niche content without the requirement

to pay for other subscriptions (either for basic pay-TV or a bundle of services). This in turn brings consumers more freedom

and flexibility.

In this context, “pure-play OTT” such as Netflix are not the only ones benefiting from this new growth opportunity. Pay-TV

operators with niche and/or premium content can broaden their reach by targeting non-subscribers with their own OTT video

services. The key of success is to find a tradeoff that ensures their prices will attract OTT consumers, while minimizing the

risk of cannibalizing their traditional subscriber base.

In such context, the macro-industry opinion leaders bet on business models based on service subscription (with embedded

advertising) as the most relevant for the evolution of the Portuguese macro-industry in the next four years.

Following the leader in at a short distance in terms of weighted scores obtained, the pay per view business model is place in

second position, followed by pay TV/OTT hybrid model.

In accordance to the results extracted from the survey, ad-based revenue model and pure play OTT model share the fifth

position in the top five ranking.

Business models based on service subscription (with embedded advertising) are those that will have the greatest impact of the market of pay TV and video

in Portugal in 2017 according to the opinion of the respondents.

Service subscription (with embedded advertising)

Pay per view

Hybrid model, pay TV/OTT



21

17

16

11

8

8Pure play OTT

A4.2 Most relevant business models for pay TV and video in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.


54

Cross-industry


homogeneous, regardless the industrial area to which the different actors belong.

From the point of view of respondents belonging to networks and services areas, the most remarkable difference is the high relevance given to pay TV/OTT hybrid model by interviewees from the services group.

A4.2 Most relevant business models for pay TV and video in the next four years. Weighted scores normalized on base 100. Comparison among global, network and services areas results.

Service subscription (with embedded advertising

Pay per view



Ad based revenue model

Others


Pay per view



Pure play OTT

Others


Pay per view



Pure play OTT

Others

Total ServicesNetworks

2721

17

1611

8

21

29

17

1310

10

28

12

29

10

12

10


55

2.4.5. Business Strategies (5A)

Rivalry in the applications market is rising steadily, with different players that are increasingly getting involved in it, within

the others:

• Pure applications developers;

• Internet giants as Google, Apple, Microsoft and Facebook, which develop applications and platforms;

• Independent developers such as telecom operators or service companies;

• Players from other industries that are developing applications and platforms as a means to transform their business

from traditional to digital

In this context, the business strategy based on customer experience has been selected as the most valuable for the mobile

applications market in the next four years. The second position is occupied by strategies focused on applications and strategic

alliances with social platforms (Facebook, Twitter, etc.), followed by multi-OS applications and related services development.

Finally, according to the results gathered from the survey, the weighted ranking is closed by alliances with mobile operators

in fourth position, and strategies focus on premium apps in fifth position.

The capabilities to develop multi-platforms web-based applications are the most critical Key Competitive Factors for mobile applications market in Portugal in the next four years.

Capabilities develop multi-platforms web-based applications


Enhance customer experience

Technological innovation capabilities

Capabilities to manage strategic alliances

19

18

17

13

10

A6.1 Most critical Key Competitive Factors for mobile applications in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.

Regarding the Portuguese segment of pay TV and video, the interviewed executives of the industry identify the capabilities to

develop multi-platform services as the most critical Key Competitive Factor in the next four years, followed by a strong brand

positioning and enhancing customer experience, as second and third most critical KCF.

On the other hand, technological innovation capabilities for streaming solutions is placed as the third KCF in the next four

years, sharing this position with the capabilities to provide multi-screen content (for live events) enabling users interaction.


56

Capabilities to develop multi-platform services are identified as the most critical Key Competitive Factors for pay TV and video in Portugal in the next four years.

Capabilities to develop multi-platforms services


Enhance customer experience

Technological innovation capabilities for streaming solutions

Capabilities to provide multi-screen content (for live events) enabling users interaction

30

17

14

10

7

A6.2 Most critical Key Competitive Factors for pay TV and video in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.

Cross-industry

Comparing the results from a sectorial perspective, it is interesting to highlight that professionals from the services group give

more importance to enhance customer experience, placing it in first position with 35% of weighted value answers. Moreover,

they also give certain importance to “Coopetition” capabilities (cooperative competition) with 8% of weighted responses.

Interviewees of the network group place capabilities to develop “social TV” in the top five of the most critical Key Competitive

Factors for pay TV and video in Portugal in the next four years.


57

The majority of industry experts consider the investment by telecom operators to offer mass market applications, as well as corporate and sectorial ones, as the most relevant investment

strategy for mobile applications likely to occur in the Portuguese market in the next four years.

Telecom operators will invest to offer mass market applications, as well as corporate and sectorial ones

New global entrants will invest to create applications for their own ecosystems

Investment funds will explore opportunities for financing potential appli-cations developers startups

Applications developers will invest in social networks advertisement

Applications developers will invest in technological innovation

19

14

13

12

11

11Content providers will invest to offer a complete package of

application and content

S7 Most relevant investment strategies for mobile applications sector likely to occur in the next four years. Weighted scores normalized on base 100. Sample size: 15 interviewees answered to this question.

Cross-industry

Analyzing the results of the survey at a deeper level from a sectorial viewpoint, it is worth highlighting that professionals

belonging to the area of networks consider the investment of network providers in the applications industry as the most

relevant investment strategy for the mobile applications sector likely to occur in Portugal in the next four years.

2.4.6. Investments (7A)

As mentioned above in the section of business strategies, applications segment is attracting a large number of actors, which

are committed to the investment in its development. The venture capital firms have focused on the development of the sector

through startups which develop mobile applications, with great potential for growth and profitability. That is why mobile

application developers have been able to obtain funding sources.

In this context, the majority of the interviewees consider the investment of telecom operators to offer mass market applications,

as well as corporate and sectorial ones, as the most relevant investment strategy for mobile applications likely to occur in the

Portuguese market in the next four years.

The investment of new global entrants to create applications for their own ecosystem has been instead selected by the

industry experts as the second investment strategy with highest probability to occur and highest impact on the evolution of

the Portuguese mobile apps ecosystem.

The fact that investment funds will explore opportunities for financing potential applications developers startups is identified

according to the results gathered from the survey as the third principal investment strategy.

Finally, the ranking is closed by the investment of applications developers in social networks advertisement, technological

innovation and the investment by contents provider to offer a complete package of applications and content.


58

2.5. Contents

2.5.1. Events (1C)

According to the opinion leaders of the macro-industry that participated to the survey, the event with the highest impact on

the evolution of the Portuguese contents sector is the one related to the launch of Google Play All Accesses (February 2013)

in order to beat Apple to the music subscription service.

Other relevant event with high potential impact on the future of the industry, according to the opinion of the interviewees,

is the availability in several countries in Europe (Spain, France, Germany, Finland and UK) of Google’s own video streaming

device Chromecast, allowing the user to steam content to their TV from either the Chrome browser or from their mobile phone

or tablet (October 2013).

Sharing the following position with the same percentage of weighted responses (11%), the agreement between Apple and Sony

Music Entertainment, the launch of iRadio music streaming service (July 2013), and Amazon’s plan to release a television set-

top box that would stream video over the Internet into customers’ homes (April 2013).

The ranking is closed by the fact that Google's YouTube has renewed its contract with music video distributor Vevo, and took

a 7% stake in the company for around 35 million Euros (March 2013).

Contents


59

According to the opinion provided by industry executives, the event with the highest impact on the evolution of the Portuguese contents sector is the one related to the launch of Google Play

All Accesses (February 2013) in order to beat Apple to the music subscription service.

Google beats Apple to the music subscription service with the launch of Google Play All Accesses (February 2013)

Google’s own video streaming device Chromecast is now available in several countries in Europe (Spain, France, Germany, Finland and UK),

allowing the user to stream content to their TV from either the Chrome browser or from their mobile phone or tablet

Apple signs an agreement with Sony Music Entertainment, and launches iRadio music streaming service (June 2013)

Amazon plans to release a television set-top box that would stream video over the internet into customers’ homes (April 2013)

Google’s YouTube renews its contract with music video distributor Vevo, and takes a 75 stake in the company for around 35 million Euros

investment (March 2013

18

17

11

11

9

C1 Recent events with the highest impact on the future of the industry for the next four years. Weighted scores normalized on base 100. Sample size: 8 interviewees answered to this question.

Cross-industry

Among all respondents in the different areas that make up the macro sector, those belonging to the content sector have put

specific focus on the fact that Spotify expands Pandora-Like web radio services while halts music downloads to all customers

in Europe, unless they have gift cards with a specific download link (March 2013).


60

2.5.2. Offering (2C)

According to the weighted scores given by interviewees, professional video, such as cinema, series and TV programs, is

leading the industrial transformation as the main offer in the next for years in Portugal content segment.

On the other hand, content related to professional audio is placed as the second most used content for the next four years,

followed by digital games developed by professionals.

In fourth and fifth position of the weighted ranking, the pool of survived interviewees identify advertising an eBooks, both

produced by professionals, as content with a certain level of usage in Portugal in the next four years.

It is remarkable that professional content accounts for 79% of weighted rating answers.

According to the scores given by interviewees, professional video, such as cinema, series and TV programs, is leading the industrial transformation as the main offer in the next for years in Portugal content segment.

Professional content - Video

Professional content - Audio

Professional content - Games

Professional content - Advertising

Professional content - eBooks

30

17

16

8

8

C2 Most used types of contents in the next four years. Weighted scores normalized on base 100. Sample size: 9 interviewees answered to this question.

Cross-industry

Considering the results of different sectors, it is interesting to notice how the group of opinion leaders from the services

sector introduces the content generated by users in Social Media in the top five most used contents in Portugal in the next

four years, sharing the same percentage of weighted rating answers (13%) with games developed by professionals.


C2 Most used types of contents in Portugal in the next four years. Weighted scores normalized on base 100. Comparison among global network and services areas results.

61

Opinion leaders from the services sector introduces the content generated by users in Social Media in the top five most used contents in Portugal in the next four years.

2.5.3. Players (3C)

According to the opinion showed by professionals of the macro-industry who participated to the survey, YouTube is considered

as the most important packager in the Portuguese contents market in the next four years.

The second option selected by the industry experts that participated to the survey is Spotify, with 23% of weighted answers.

Music providers (EMI, Warner, Universal, Sony, etc.) and Viddi are identified as packagers with high relevance till 2017.





Professional content - eBooks

Others





UGC - Social Media

Others

Total Services

22

30

17

16

8

8

13

17

1338

21


62

Surveyed professionals bet on YouTube as the most relevant packager in the Portuguese contents market in the next four years.

Video - YouTube

Audio - Spotify

Other

Audio - Music providers (EMI, Warner, Universal, Sony, etc.)

Video - Viddy

34

23

17

11

7

C3.1 Most important packagers in the contents market, over the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry

Distinguishing per industrial sub-sectors which the interviewees belong to, some attention must be paid to those differences

identified, especially among the industrial segment devoted to contents where SocialCam video packager is placed as the

fourth most important actor in the Portuguese contents marker.

Another industry segment analyzed is the one related to contents aggregators. These actors operate in a higher layer than

packagers, unifying and updating information from different sources in the same site.

Apart from traditional players such as radio stations, pay TV platforms or distributors, the digitalization of the industry has

allowed the emergence of internet sites for content aggregation. Examples of this stream are portals that bring together

information from other media news sites (Yahoo!, Storify), social networks that distribute information created by professionals

and by the users (Twitter, LinkedIn), or the classic search engine content (Google, Bing, Yahoo!).

In this context, the industry experts that participated in the survey overall believe that the content aggregator with the most

relevant role in the market in the next four years is likely to be Netflix.

In the second position of the ranking the interviewees place Google, followed by Apple (for audio content). While the first has

13% of weighted, the latter reaches 11%.

After these three leaders, the experts of the industry mention TV platforms as relevant players in the future Portuguese

content aggregators segment. Finally, in the last position of the top 5, Twitter is placed as the unique aggregator from Social

Media segment gathering 7% of weighted answers.


Video - Netflix

Google

Audio - Apple

Video - TV platforms

Social Media - Twitter

63

Video - Netflix

Google

Audio - Apple

Video - TV platforms

Social Media - Twitter

20

13

11

8

7

Industry executives that participated in the survey overall believe that the content aggregator with the most relevant role in the market in the next four years is likely to be Netflix.

C3.2 Most important content aggregators in the contents market, over the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

2.5.4. Business Models (4C)

The digitalization process in the content industry, along with the deployment of new support technologies for all types of

audiovisual content, determines the evolution of the business models that support the industry.

In such context, according to the results gathered from the survey, the business model which will account for the highest

relevance for content packagers in Portugal over the four next years, is ad-based revenue model which has a 28% of weighted

answers.

Following the leader in terms of the weighted score obtained, second position is occupied by subscription based model

(periodical, premium content, etc.). The business model based on “Pay per consumption” of digital content (i.e. pay per view,

pay per song) is placed third in the weighted ranking.

Cross-selling and up-selling of additional goods and services, along with revenue sharing model with aggregators and / or

distributors are closing the top five most relevant business models for content packagers.

According to the results gathered from the survey, the business model which will account for the highest relevance for content

packagers in Portugal over the four next years, is ad-based revenue model with 28% of weighted answers.


64

According to industry executives, ad-based revenue model is the business model which will account for the highest relevance for content packagers in Portugal over the four next years.


Subscription based model (periodical, premium content, etc.)

“Pay per consumption” of digital content (i.e. pay per view, pay per song)

Cross-selling and up-selling of additional goods and services

Revenue sharing model with aggregators and/or distributors

28

21

17

12

11

C4.1 Most relevant business models for content packagers in Portugal in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry


homogeneous opinions on the topic, regardless the segment or industrial sector to which they belong.

In the arena of content aggregators, ad-based revenue models are identified by the macro-industry opinion leaders as the

most relevant model in the next four years, closely followed by “Pay per consumption” of digital content model (i.e. pay per

view, pay per song).

Subscription based model (periodical, premium content, etc.) is placed in third position. In other layer, “Razor blade” model

(low price to increase sales of complementary goods and services), rental of digital content (i.e. DVD rental), and cross-selling

and up-selling of additional goods and services, close the weighted ranking of the most relevant business models for content

aggregators.


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“Pay per consumption” of digital content (i.e. pay per view, pay per song)

Subscription based model (periodical, premium content, etc.)

”Razor blade” model (low price to increase sales of complementary goods and services)

Rental of digital content (i.e. DVD rental)

23

22

15

11

10

10Cross-selling and up-selling of additional goods and services

Business models based on “Pay per consumption” of digital content are those that will have the greatest impact of the market of content aggregators in Portugal in 2017 according to the opinion of the respondents.

C4.2 Most relevant business models for content aggregators and / or distributors in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry


homogeneous, regardless the industrial area to which the different actors belong. Nevertheless, it is worth noting that

interviewees from the services sector consider the alliances with Internet service providers as the third most relevant business

model for content aggregators.


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2.5.5. Business Strategies (5C)

The business strategy based on alliances with content aggregators to offer enhanced content services has been selected as

the most valuable for the content packagers in Portugal in the next four years. The second position is occupied by strategies

focused on the creation of content delivery platforms, followed by customized content delivery.

Finally, according to the results gathered from the survey, the weighted ranking is closed by those strategies focus on specific

content for a market niche/segment; strategic alliances with other packagers to offer wide variety of content; and strategic

alliances with social platforms (Facebook, Twitter, etc.).

The strategy focus on alliances with content aggregators to offer enhanced content services will be the most valuable for content packagers till 2017, according to the interviewees.

Alliances with content aggregators to offer enhanced content services

Creation of content delivery platforms

Customized content delivery

Focus on specific content market niche/segment

Strategic alliances with other packagers to offer wide variety of content

22

17

10

9

8

8Strategic alliances with social platforms (Facebook, Twitter, etc.)

C5.1 Most valuables strategies for content packagers in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry


opinions, regardless the segment to which the actors belong. Nevertheless, it is worth highlighting the following differences:

opinion leaders from the services sector, as well as those from contents group, consider the development of innovative and

embedded advertising solutions linked to content (i.e. video advertisement) as the third main strategy for content packagers

in the next four years.


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Alliances with creators/packagers to control the entire content value chain

Distribution of content on all possible devices

Alliances with other aggregators, mobile operators and/or distributors

Cost cutting by sharing resources with other aggregators and/or distributors

Distribution of content on a particular device

22

19

15

11

7

7Mergers and acquisitions with players of other areas

of the macro-industry

Moreover, cost cutting by sharing resources with other packagers, and mergers and acquisitions with players in other areas of

the macro-industry are identified by services and contents professionals in the top 5 of the most valuable strategies.

When focusing the analysis on the content aggregators and/or distributors, it is worth noting that the set of industry experts

consider alliances with creators/packagers to control the entire content value chain as the most valuable business strategy

in the next four years.

Secondly, although at a significant distance from the leader in terms of weighted scores obtained, respondents mention the

strategy based on the distribution of content on all possible devices.

At a third level, industry executives position alliances with other aggregators, mobile operators and/or TV operators as

relevant business strategy, followed in fourth position by the strategy aimed at reducing costs by sharing resources with other

aggregators and/or distributors.

Closing the ranking, the professionals from the industry assigns certain relevance to those business strategies tending to

distribute content on a particular device, and those related to mergers and acquisitions with players of other areas of the

macro-industry.

According to industry executives, alliances with creators/packagers to control the entire content value chain are the most valuable business strategies for content aggregators in the next four years.

C5.2 Most valuable business strategies for content aggregators and/or distributors in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry

Considering the results of different sectors, it is interesting to notice how the group of interviewees from the contents sector

introduces “diversification” as the third most valuable business model strategy for content aggregators and/or distributors in

Portugal in the next four years.


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2.5.6. Key Competitive Factors (6C)

Regarding the most critical Key Competitive Factors in the contents sector in the next four years, the pool of opinion leaders

consider, with the same percentage of weighted answers, the ability to adapt the content to different digital platforms and a

strong brand positioning, as the most important factors to successfully compete in the Portuguese contents market.

Technological innovation capabilities and enhancing customer experience are place, in terms of the weighted score obtained,

in the second layer of the ranking, sharing the same punctuation (13% of weighted answers).

Finally, the professionals who participated to the questionnaire consider “Coopetition” capabilities (cooperative competition)

as relevant KCF to close the weighted ranking.

The ability to adapt the content to different digital platforms and a strong brand positioning are the most critical Key Competitive Factors in the Portuguese content market in the next four years.

C6 Most critical Key Competitive Factors in the contents sector in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Ability to adapt the content to different digital platforms


Technological innovation capabilities

Enhanced customer experience

“Coopetition” capabilities (cooperative competition)

16

16

13

13

12

10Capabilities to manage strategic alliances

Cross-industry

Considering the results of different sectors, it is interesting to notice how the group of interviewees from the services and

network sectors introduce the capabilities to manage strategic alliances as a really important KFC in the contents sector.

In that way, industry experts from contents area consider the ability to manage business model transformation quickly, as

one of the four most important KFC for the Portuguese contents market.


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Content providers will invest in the adaptation of content to multiple devices

Content providers will invest in technological innovation

New global entrants will invest in the content industry as content distributors

Content providers will invest in the adptation of content to multiple platforms

Devices manufacturers will invest in the content industry, positioning themselves as systems providers in the content value chain

26

16

13

11

11

2.5.7. Investments (7C)

Evaluating the most relevant investments in the contents sector likely to occur in the next four years, the majority of the

interviewees consider the investment of content providers in the adaptation of content to multiple devices, as the most

relevant investment strategy in the Portuguese market.

The investment of content providers in technological innovation has been instead selected by opinion leaders as the second

investment strategy with highest probability to occur and highest impact on the evolution of the Portuguese contents

ecosystem.

The fact that new global entrants will invest in the content industry as content distributors is identified, according to the

results gathered from the survey, as the third principal investment strategy.

Finally, the ranking is closed by the investment of content providers in the adaptation of content to multiple platforms, along

with the one likely to be carried out by device manufacturers in order to position themselves as systems providers in the

content value chain.

The majority of industry experts consider the investment by content providers in the adaptation of content to multiple devices, as the most relevant investment strategy in the Portuguese in the next four years.

C7 Most relevant investment strategies for contents market likely to occur in the next four years. Weighted scores normalized on base 100. Sample size: 10 interviewees answered to this question.

Cross-industry

Analyzing the results of the survey at a deeper level from a sectorial viewpoint, it is worth highlighting that opinion leaders

belonging to the area of networks consider that devices manufacturers will invest in the content industry not only for

positioning themselves as systems providers in the content value chain, but also as content creators and distributors.

Furthermore, interviewees from contents area consider the investment in the digitalization of traditional content formats (i.e.

paper books) as the third most relevant strategy for the sector.


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