Evolution of Mobile Handsets and the Impact of Smartphones

Evolution of Mobile Handsets and

the Impact of Smartphones

February 2012

Yoko Miyashita

InfoCom Research, Inc.

Lecture Document

Today’s Lecture Outline

Mobile handset history outlook:

Handsets have changing dramatically especially in this decade.

What are the future phones like???

Industry structure is changing after the growing smartphone

populality

Handset development trend is also changing with the smartphone

2

Feature Phone vs. Smartphone

Smartphone? OR Feature phone?

3

Mobile Handset Market Overview

4

Global Mobile Subscriber Number & Penetration History

0

1,000

2,000

3,000

4,000

5,000

6,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

（in million）

Subscriber Number

Net increase

Penetration Rate

Subsc

ribers

Penetra

tion

12/200512/200012/1995

Source: US Census Bureau, Informa and 4G Americas. As of September, 2011

12/2010

► 5.4 billion mobile phone subscribers and 77% of mobile penetration, globally

5

2,624

859

121

328

569 531 511 538

287

69.6%64.4%

95.2% 95.3%

96.1%

129.3% 127.0%

53.1%

89.8%

0100200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,3002,4002,5002,6002,7002,800

0%

20%

40%

60%

80%

100%

120%

140%

アジア太平洋 （中国） （日本） 北米 中南米 西欧 東欧 アフリカ 中東

MILLION

携帯電話加入者数 普及率

携帯電話加入者数

普及率

Mobile Subscriber and Penetration Rate by Region

※Source: Informa and US Cencer Bureau

■ As of December2010

Asia

Pacific

China Japan North

America

South

America

West

Europe

East

EuropeAfrica Middle

East

Su

bs

crib

er

Pen

etra

tion

Subscriber

Penetration

6

GSM77.0%

UMTS12.6%

CDMA9.5%

その他0.9%

Subscriber Number by Technology

Data: As of March 2011

Technology based subscriber share: Global

※Source: 4G Americas

Technology Subscriber Market share

GSM 4,300 77.0%

UMTS(W-CDMA)-HSPA 692 12.6%

CDMA 521 9.5%

Others（Analog、iDEN、PDC、TD-SCDMA、TDMA）

46 0.9%

【Unit: Million】

Others

7

Handset Market Structure

High-end/

Smartphone

Middle range

Low End

including ultra low end

One of the best selling phone in historyMarket Structure

Price range and its volume

←Price：$ 800～

←Price：$ 20-50

• Low end

• Black-white display

• 86 gram

• SMS

• Color variation

• Target: emergingmarket

※NO InternetNO Camera

Nokia 1100

←Price：$ 300～

8

ZTE5.5%

RIM3.5%

Huawei3.9%

Apple5.7%

LG6.9%

Samsung20.7%

HTC3.3%

Motorola3.0%

Nokia24.7%Others

22.9%

Mobile Handset Share by Vendor

Source: Strategy Analytics

VendorShipment

(Million)

Market

Share

Nokia 88.5 24.7%

Samsung 74.0 20.7%

LG 24.8 6.9%

Apple 20.3 5.7%

ZTE 19.6 5.5%

Huawei 13.9 3.9%

RIM 12.5 3.5%

HTC 11.9 3.3%

Motorola 10.6 3.0%

Others 81.9 22.8%

Total 358.0 100.0%

Mobile Handset Shipment Based Vender Share 【2011.2Q(April to June)】

9

Evolution of Mobile Handset

10

Evolution of the Cell Phone

Miniaturize Functionalize, Thin/High Speedmail, camera, data internet cloud

Motorola

DynaTAC

Approx. 1kg

Nokia 1011

495g Motorola

StarTAC

88g

Sony Ericsson

P800

smartphone

158g

RIM

BlackBerry Quark 6210

smartphone

136g

Apple

iPhone 3G

smartphone

140g

1983 1990 2000 2007

1st generation 2ndgeneration 3rd generation

11

Characteristic of the 1st Generation

Period: From 1980s to 2000

Analog based mobile network

No data communication, only SMS

Heavy and bulky handset

Extremely expensive, starting from $1,000

“Miniaturize” is the most important for development

Targeted only for the business and for special segment

12

Mobile Handset History: 1st Generation

1983 1993 1996 1999

Handset Trend Transition

Source: GigaOM and Newgrounds.com 13

Characteristic of the 2nd Generation

Period: From appx. 2000 to 2007

Mobile phone for the mass people

Relatively slow data connection/ Internet usage by phone

Golden time for handset vendors: handset vendors were the most influential and powerful

Various kinds of handsets

Handset development environment is relatively closed

14

Mobile Handset History: 2 nd Generation

Hig

h E

nd

Lo

w E

nd

Handset Design Trend Transition

2000 2001 2002 2003 2004 2005 2006 2007

Nokia 3310:

133g Nokia 1100:

86g

Nokia 6310:111g*with Ultra Slimbattery

Nokia 3410:

114g

NEC L1:11.9mm *

Motorola V60:

109g

Motorola

V70:83g

MotorolaV600:115g*

*Camera、 ★ Touch display

Panasonic A100:

66g:

SamsungSPH-V9900:6.9mm *

Smaller Multimedia Design/ Thinner

VK Mobile:48g:

SamsungU100:5.9mm *

LGChocolate:

15.2 mm*

Motorola RAZR v3:13.9mm*

LGPRADA phone:12mm*★

SamsungP520 :8.9mm *★

SharpGX10:110g*

2nd Generation: Handset vendors have the strongest power

15

Ｒｅｆｅｒｅｎｃｅ ①： Unique Feature phones

← Xelibri ５•74 gram

•139Euro

Xelibri 7 →•83グラム

•価格：179ﾕｰﾛ（約23,800円）

Xelibri 8 →•Neck less Type

•NO button(Voice Recognition)

•179Euro

“Xelibri“ by Simens, was one of the most unique series of handset…

Commercial Image

← Xelibri 6•Compact type

•90 gram

•179 Euro

16

LG F7100 Qiblah

◆“Phone for Muslim Community”

Ｒｅｆｅｒｅｎｃｅ ②： Unique Feature phones

“Qiblah“ by LG Electronics, was one of the best selling feature phones by LG for Islamic people

▸ Points the direction of MECCA(With the Compass function)

▸ Make alerts 5 times a day to pray

▸ Arabic language

▸ SMS/MMS capability

▸ LG’s best selling feature phone* LG’s s strategy to carter for the specific needs of the Muslim people

Weight

Display

Talking

time

Waiting

hour

Technology

Release date：July, 2004

89g

LCD65K Color

GSM900/1800/GPRS

210 mim

200 hour

17

Characteristic of the 3rd Generation

Period: appx. 2007 ~

Smartphone era

Higher speed network

More internet connection

Many new entrants to mobile handset industry, such as Google and Apple

Industry structure revolution

18

Sony Ericsson「XPERIA X1」

Nokia「N96」

LG「KF-700」

Almost all the high-end handset “look alike” after iPhone

Year 2007: “iPhone” released

Mobile Handset History: 23rd Generation

Beginning of Smartphone Era with iPhone

19

Industry Definition of “Smartphone”

Open Operation System(OS)

Specification is disclosed to the third party

Broad application development environment

Mobile network capabilitye.g. Not Wi-Fi only handset

Apple: iOS、Google; Android、RIM: BlackBerry、Nokia: Symbian、Microsoft: Windows Phone(Windows Mobile)and Linux

What is Smartphone?

Smartphone?

20

Smartphone Market Projection

0

100

200

300

400

500

600

700

800

20072008

20092010

20112012

20132014

2015

21.4%

78.6%

41.0%

59.0%

0

2

4

6

8

10

12

14

16

18

20

20072008

20092010

20112012

20132014

2015

2015年2010年

11.1%

88.9%

49.7%

50.3%

Global

Japan

【Unit: Million】

【単位：100万】

Data: Strategy Analytics, MCPC

Smartphone Not Smartphone

【西暦（年）】

21

Smartphone Industry Structure

Smartphone has its own ecosystem

Smartphone OS providers have strong power.

“Vertical integration structure”: Smartphone OS provider controls the service,

application and even handsets.

Service

Network

Application

OS/Platform

Handset

Smartphone

Market share

(Email, Search, Maps…)

*Smartphone market share: Top line: 2011.2Q, bottom: 20102Q22

Smartphone OS based handset market share

2010.2Q to 2011.2Q 2011.2Q

►Android and iPhone OS are becoming two most powerful players

►Nokia’s Symbian losing much market share

※Source：Strategy Analytics 23

Data Traffic Explosion caused by Smartphone

Source：”AT&T + T-Mobile: A World-Class Platform for the Future of Mobile Broadband”, AT&T, March 21, 2011.http://www.att.com/Common/about_us/pdf/INV_PRES_3-21-11_FINAL.pdf

AT&T’s iPhone brought huge revenue with the dramatically growing trafficHowever, the carriers worry to become “Dumb Pipe” only providing the network.

24

Global Mobile Data Traffic Forecast

Sauce：Ciscohttp://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.htmlhttp://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf

CAGR (Compound Annual Growth Rate)

Global Mobile Data Traffic Forecast

25

Smartphone Application Store

•”Application Store” is the place to provides third party developed

application and contents

•It makes the mobile industry even much more global

App Store by App;e Android Market by Google

26

Variation of Android Smartphone

27

Mobile Handset Vendor Profit

501

2,286

11,381

754

971

820

-1,091

2,225

-10004000

9000

Apple

Samsung

Nokia

HTC

RIM

LG

Motorola

SonyEricsson

Year 2007

【In million US dollars】

9,356

3,779

4,710

1,446

2,718

-607

-198

227

-1,0004,000

9,000

Apple

Samsung

Nokia

HTC

RIM

LG

Motorola

SonyEricsson

Year 2010

【In million US dollars】

Source：Strategy Analytics. Exchange rate as of August 2011 for both charts28

Analysis of the Mobile Phone Evolution

～ What are the futures phone like?

29

SmartphonesFeature PhonesBasic Phones

What the Future Mobile Handset Be Like?

Analog

1st Generation

Voice, SMS only

Network

Handset

Category

Function

Handset itself getting more intelligent

Digital

2nd Generation

Multimedia

capability

W-CDMA(UMTS)

3rd Generation

Application, PC

like function•Cloud computing,•handset commoditization…

?

4G/ LTE

Cloud computing

Next Generation

Extremely

limited

Data/

Internet Limited

More internet use, congested

Getting huge

No device intelligence

Low device intelligence

High device intelligence What do you

think???

30

Half of the mobile handset will be smartphone in 2015

Mobile handsets will be more commoditized and hard to differentiate the terminal itself

Mobile network will be getting much faster

More players flooding into mobile industry, such as internet company, SNS, and so on…

The 4th Generation Handset Factor

31

What are the future mobile phones and

services be like???

InfoCom Research, Inc.

Yoko MiyashitaChief Consultant

www.icr.co.jp

Email: [email protected]