NxtWave - InWireless-A Preview

The Next Wave in Wireless
Jan Dawson
Chief Telecoms Analyst
+1 973 457 5814
jan.dawson@ovum.com
@janovum
Agenda
Introduction
The next wave of connections

Prepaid
M2M and emerging devices
Data, including 4G
Emerging markets
The next wave of competitors
The next wave of content and services
Q&A
Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.
Introduction
The global wireless market is characterized by dramatic differences

between regions
Some are reaching saturation, with stagnating revenues and subscriber
numbers
Others continue to grow rapidly, primarily in emerging markets in Africa,
the Middle East, Latin America and Asia
However, all operators are seeking new revenue opportunities, and

wondering where the next round of customers, connections and
revenues will come from
Theres no single answer, and of course there are also new threats
emerging at the same time
Global connections and revenues, 2008-2015
$1,200
8,000
7,000
$1,000
6,000
$800
5,000
CAGR:
Connections: 9.5%
Revenues: 2.9%
4,000
3,000
$600
$400
2,000
Connections (millions)
1,000
Revenues ($ billions)
$200
$0
2008
2009
2010
2011
2012
2013
2014
2015
Share of global connections, 2010 and 2015

100%
90%
80%
70%
Middle East
North America
Eastern Europe
Western Europe
South & Central America
Africa
Asia-Pacific
60%
50%
40%
30%
20%
10%
0%
2010
5
2015
Share of global revenues, 2010 and 2015

100%
90%
80%
70%
Eastern Europe
Middle East
Africa
Western Europe
North America
Asia-Pacific
60%
50%
40%
30%
20%
10%
0%
2010
6
2015
THE NEXT WAVE OF

CONNECTIONS
Where will the next wave of connections come from?
Emerging markets, where penetration is low and growth rates are

still high
Prepaid in some mature markets, capturing subscribers not

previously reachable
M2M in many markets, creating new addressable market where none

existed previously
Tablets and other multimedia devices which are either new or

newly connected
Converting voice customers to voice and data customers
Growth rates, mobile connections, 2009-2010
Africa
Middle East
Middle East & Africa
Asia-Pacific
Eastern Europe
Western Europe
Europe
North America
World
0%
9
10%
20%
30%
40%
50%
60%
Growth rates, 2009-2015, Global and Regional

25%
World
North America
Europe
Western Europe
Eastern Europe
Asia-Pacific
Middle East
Africa
20%
15%
10%
5%
0%
2009 2010 2011 2012 2013 2014 2015
10
Prepaid a major source of future connections
In markets such as the US, where the focus has historically been on
postpaid, the need for good credit has limited the addressable market
However, prepaid opens up a new customer base which is rapidly

growing, especially for operators aggressively targeting this segment
This includes specialists such as Tracfone, MetroPCS and Leap
But also sub-brands of postpaid operators, especially Sprint
11
But prepaid is no longer just the poor mans wireless option it holds
attraction for many customers with good credit too
We will increasingly see hybrid models mixing the best of postpaid

and prepaid worlds
Total US mobile connections, millions

500
Prepaid
Postpaid
400
23%
Penetration
24%
25%
26%
27%
30%
25%
19%
20%
300
14%
200
15%
11%
10%
100
5%
0%
0
2008
12
2009
2010
2011
2012
2013
2014
2015
M2M an idea whose time has finally come?
M2M like many other technologies is a concept which has been

bouncing around in the industry for many years
However, it does seem that its time has finally come, due to a variety
of factors:
The widespread availability of 3G broadband networks
Strong interest and investment from operators
Specific use cases often in vertical industries with a business case
13
This is not to say it will take off overnight, as standardization is still a

major hurdle to deployment, but we will see growth in this area
M2M numbers for a couple of US operators

10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
The two companies do

not report data the same
way, so the relative size
and direction of the lines
is less significant than
the absolute size
AT&T
Verizon
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2009 2009 2009 2009 2010 2010 2010 2010
14
Tablets are the emerging battleground in devices
Competition in smartphones is well established, but tablets are the

emerging battleground in devices
Smartphone vendors (and some PC vendors) are entering the space

mostly with smartphone-based operating systems
Apple reinvented the tablet space with the iPad running iOS
Early Android tablets used stretched versions of the smartphone OS, and
newer tablets are using a tablet-oriented version Honeycomb
RIM and HP (Palm) have announced but not yet launched tablets based
on proprietary OSs QNX and WebOS
Microsoft has yet to enter the market, partly because neither its
smartphone OS nor the PC version of Windows seems appropriate
15
Tablet forecast, 2010-2015

250,000
Asia-Pacific
200,000
of which Eastern Europe

of which Western Europe
150,000
Europe
North America
100,000
50,000
0
2010
16
2011
2012
2013
2014
2015
Global connections and revenues, 2008-2015
$1,200
8,000
7,000
$1,000
6,000
$800
5,000
CAGR:
Connections: 9.5%
Revenues: 2.9%
4,000
3,000
$600
$400
2,000
Connections (millions)
1,000
Revenues ($ billions)
$200
$0
2008
17
2009
2010
2011
2012
2013
2014
2015
Global mobile service revenues, $ billions

1,200
Data
1,000
Voice
800
600
400
200
0
2008
18
2009
2010
2011
2012
2013
2014
2015
United States service revenues, $ billions

250
Data
200
Voice
150
100
50
0
2008
19
2009
2010
2011
2012
2013
2014
2015
Data doesnt have to mean 4G
20
Some operators around the world including the US are banking on

4G as a source of data growth
However, it will be some time before 4G mostly in the form of LTE

becomes a significant force in the overall market
In addition, it is not yet clear that LTE will provide a boost to revenues
many services are being sold at similar price points to 3G
As such, operators will have to figure out how to monetize the shift to
4G, and also how to make the rollout as cost effective as possible
Network sharing is a major strategy being adopted elsewhere to deal

with these challenges
Global connections by technology, millions

5,000
4,000
3,000
1-2.5G
3-3.5G
LTE
WiMAX
2,000
1,000
0
2008
21
2009
2010
2011
2012
2013
2014
2015
United States connections by technology, millions

250
200
150
1-2.5G
3-3.5G
LTE
WiMAX
100
50
0
2008
22
2009
2010
2011
2012
2013
2014
2015
Network sharing benefits
23
THE NEXT WAVE OF

COMPETITORS
The next wave of competitors
New competitors are entering the market in every segment
Operators:
New operators, often with new 4G licences e.g. Clearwire and
Lightsquared in the US, Wind Mobile and Mobilicity in Canada
Regional competitors are going national notably Metro PCS and Leap
Wireless
Existing operators are acquiring MVNOs and/or launching sub-brands,
with Sprint as the primary example
Handset vendors:
Chinese vendors Huawei, ZTE and others making an aggressive push in
mid- to low-end smartphones using Android
25
Players from adjacent markets
26
Players from traditionally separate markets are starting to enter the

telecoms market and compete with or displace operators
Apple and Google are taking powerful positions

in the platforms space, and becoming the brands
consumers are loyal to
Google is also taking a prominent position in mobile

advertising, online services, identity, video and other
areas
Facebook is a player with a great deal of potential to

disrupt the telecoms market in a variety of ways
THE NEXT WAVE OF

CONTENT AND SERVICES
The next wave of content and services
As with the iPad, Apple reinvented an existing concept with apps
Smartphone apps have now become the default way to get content of
all kinds onto such devices news, magazines, audio, video and so
on
Even full-length movies with WBs launch of the Dark
Knight and Inception on iOS
28
The problem for operators is that they dont control

this channel
Some operators have launched flavors of Android

stores, while others are participating in WAC
Apps in app stores (thousands), most recent numbers

400
350
300
250
200
150
100
50
0
iOS
29
Android
Ovi
BlackBerry
WP7
But the major platforms are not the only players
Apple App Store. Launched July

2008, 350,000 apps
Orange app store. Launched Dec

2009, 10,000 apps
Getjar. Launched Dec 2004,

70,000 apps
Google Android Market. Launched

October 2008, 150,000 apps
Telefonica mStore Launched Sept

2009 1,000 apps
Handster. Launched May 26, 2005,

6,500 apps
Palm App catalogue. Launched

June 6, 2009. 4,062 apps
Vodafone 360. Launched Sep 2009,

8,500 apps
Blackberry App World. Launched

April 2009, 20,000 apps
Mobango. Launched Dec 2004,

35,000 apps. Acquired by Mauj
Mobile
China Mobile. Launched August

2009, 300 apps
Windows Marketplace. Launched

Oct 2009, 9,000 apps
Handango. Launched 2000 49,634

apps. Acquired by Pocketgear
Bharti Airtel App Central.

Launched Feb 2010, 71,000 apps
Samsung Apps. Launched Sept

2009, 1250 apps
Pocketgear. Launched Jun 2008,

140,000 apps
Verizon VCast App. Launched

March 2010, 300 apps at launch
Sony Ericsson Play Now.

Launched Aug 2009, 1,264 apps
OpenMarket. Launched May

2009, 500 apps
LG app store. Launched July

2009, 2,969 apps
M1 AppStore. Launched May 2010,

400 apps
SlideME. Launched April 2008,

642 apps
China Unicom 3G WoStore.

Launched November 2010,
targeting 2 million users and 10
million downloads by the end of
2010
30
Apple iPad store. Launched April

2010, 65,000 apps
Operators will be forced to innovate more quickly
31
Because others are taking leadership positions in content and service

delivery to the mobile device, operators must innovate quickly
We are seeing promising strategies from operators to foster

innovation in their businesses, to bring new products and services to
market
We are seeing many examples of such innovative products and

services being launched around the world
We have begun tracking these in our mobile services innovation radar

product, which Emeka leads
Mass Market
Evidence from the Innovation Radar H1 2010
Nigeria: Starcomms
StarTrack location service
Norway: Telenors WiMP music service
Leadership Potential
Growth Potential
India: Reliance to offer cartoon comics
Niche
Malaysia: Maxis
mobile jukebox
Defense Potential
USA: Verizon Wireless

Backup Assistant
Global: Vodafones security

solution from F-Secure
Goodwill Potential
Italy: Telecom Italias
Line@Medica Diabete service
Me too
32
Unique
Conclusions
33
There is growth in the market, especially in emerging economies and

in data
However, saturation is a real issue and future growth will be harder to

come by
New skillsets and business models are necessary to capture a share

of the emerging opportunities
New players are emerging or entering the market who threaten to

disrupt existing models and players
But there are also opportunities all around for those able to tap into
them. And were here to help!
More on some of these topics later in the day
34
Application Stores Eden Zoller 12pm
Operator Innovation Emeka Obiodu 1pm
M2M and Emerging Devices Mike Sapien 2pm
Devices & Platforms Jan Dawson 3pm
Facebook, Google and other disruptors Eden Zoller 4pm
The Future of Prepaid Emeka Obiodu 5pm
Thank you!
Jan Dawson
Chief Telecoms Analyst
+1 973 457 5814
jan.dawson@ovum.com
@janovum
North America service revenues, $ billions

250
Data
200
Voice
150
100
50
0
2008
36
2009
2010
2011
2012
2013
2014
2015

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The Next Wave in Wireless

The next wave of connections

The next wave of competitors

The next wave of content and services

The global wireless market is characterized by dramatic differences

However, all operators are seeking new revenue opportunities, and

Global connections and revenues, 2008-2015

Share of global connections, 2010 and 2015

Share of global revenues, 2010 and 2015

THE NEXT WAVE OF

Where will the next wave of connections come from?

Emerging markets, where penetration is low and growth rates are

Prepaid in some mature markets, capturing subscribers not

M2M in many markets, creating new addressable market where none

Tablets and other multimedia devices which are either new or

Converting voice customers to voice and data customers

Growth rates, mobile connections, 2009-2010

Growth rates, 2009-2015, Global and Regional

Prepaid a major source of future connections

However, prepaid opens up a new customer base which is rapidly

We will increasingly see hybrid models mixing the best of postpaid

Total US mobile connections, millions

M2M an idea whose time has finally come?

M2M like many other technologies is a concept which has been

This is not to say it will take off overnight, as standardization is still a

M2M numbers for a couple of US operators

The two companies do

Tablets are the emerging battleground in devices

Competition in smartphones is well established, but tablets are the

Smartphone vendors (and some PC vendors) are entering the space

Tablet forecast, 2010-2015

of which Eastern Europe

Global connections and revenues, 2008-2015

Global mobile service revenues, $ billions

United States service revenues, $ billions

Data doesnt have to mean 4G

Some operators around the world including the US are banking on

However, it will be some time before 4G mostly in the form of LTE

Network sharing is a major strategy being adopted elsewhere to deal

Global connections by technology, millions

United States connections by technology, millions

Network sharing benefits

THE NEXT WAVE OF

The next wave of competitors

New competitors are entering the market in every segment

Players from adjacent markets

Players from traditionally separate markets are starting to enter the

Apple and Google are taking powerful positions

Google is also taking a prominent position in mobile

Facebook is a player with a great deal of potential to

THE NEXT WAVE OF

The next wave of content and services

As with the iPad, Apple reinvented an existing concept with apps

The problem for operators is that they dont control

Some operators have launched flavors of Android

Apps in app stores (thousands), most recent numbers

But the major platforms are not the only players

Apple App Store. Launched July

Orange app store. Launched Dec

Getjar. Launched Dec 2004,

Google Android Market. Launched

Telefonica mStore Launched Sept

Handster. Launched May 26, 2005,