1 Wireless Data Services Simon Garth Vice President, Marketing - Symbian 7/3/2006
1
Wireless Data Services
Simon Garth
Vice President, Marketing - Symbian
7/3/2006
2
Overview
• The mobile phone
…Where it is today
…Where it is going
…Modelling the opportunity
• Background - product adoption lifecycle
• Applying this to Wireless Data Services
• Example services
• Conclusion
3
Phone Evolution
Digital Revolution
4
Smaller, Faster, Better, CheaperFrom this...
to this...
…in twenty years...
5
Consumer electronics device sales 2004U
nit
s (
Millio
ns)
6
Worldwide mobile phone subscribers
Source: Merrill Lynch global wireless matrix
7
Mobile phone penetration by country
Source: Symbian market model, Feb 2004
0%
20%
40%
60%
80%
100%
1995 1997 1999 2001 2003 2005 2007
Korea
North America
World
Africa & MERest of Asia
South America
W. EuropeJapan
China
E. Europe
India
8
Enabling smartphone evolutionDifferent markets have different evolutionary speeds and directions
EstablishedPush-to-TalkWifiGPSEnterprise appsEmergingMultimediaInternetLocation Based ServicesMusicGames
EstablishedInternet
Micro paymentsSecurityGames
MultimediaImagingVideoMP3
ID verificationTerrestrial TV
EmergingPush-to-Talk
Automatic transactionsRFID
Personal monitoringTerrestrial TV
Location based servicesRemote control
TDMA / GSM / CDMA /
EDGE / CDMA2000 GSM → W-CDMA
PDC, CDMA → W-CDMA, CDMA2K
CDMA → CDMA2K
EstablishedEnhanced VoiceInternetGamesMultimediaMP3ImagingEmergingGPSRadioVideoBroadcast servicesSecurityLocation based services
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The mobile phone today
• 3 Broad technologies
…GSM (Europe, Asia, Africa, some USA)
…CDMA (USA, Asia)
…W-CDMA, (evolution of GSM)
• Transition from voice phone to data phone
…Data added to voice services
…Priced by usage rather than connection time
…Stepping stone to 3G
• … but what do people what to do with 3G
• … will it turn out like the Internet?
10
Economics
• In Europe Licenses sold by auction
…Total cost of approx $100Bn
…+ Roll-out cost of $150Bn
• Funded by about 50% of the bond market from 1998-2002
• Total investment significant proportion of UK GDP
• Payback over 20 years
…Approx 2008 with substantial data take up
…Approx 2011 without
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Market Dynamic
1. Voice goes
wireless
3. Content goes
mobile
100 fold market
increase in 10 years
2. Stabilisation
Some market saturation
3G license debts
US economic slowdown
2.5G, 3G bottleneck clearing
Demand for non-voice services
Combination of new technologies
New device categories imminentOver-hype!
Over-criticism!It’s easy to exaggerate the short-term impacts
of technological change,
and under-estimate the long-run effects
Time
Expectations; Reality
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The mobile phone device
13
Software
1-2Mb
Hardware
Software
20-128Mb
Hardware
2000 2006
More complex phone technology
More software applications
Better user experience
Standardization of components
Eff
ort
required t
o b
uild
phon
eWhy do you need an OS?Phone software is increasingly valuable
14
Fundamentally, smartphones will increasingly develop like consumerelectronic appliances
Voice centric
Enriched experience
Segment optimised
Ph
on
e F
unctio
na
lity
Increased software
PortabilitySize, weight, battery life
FeaturesDisplay, memory, camera
Fit-for-purposeApplications, brand, formfactor, end-to-endsolutions
Differen-tiators
Phonevision
Evolving the phone with software
15
Projected handset sales
• Growth coming from emerging markets in Asia
• Growing 3G substitution assumed in Europe
Handset sales by region
651
810
912
1,029
1,1591,247 1,271
-100200300400500600700800900
1,0001,1001,2001,3001,400
2004
2005
2006
2007
2008
2009
2010
Millio
ns
Africa & ME
Americas
USA and Canada
Europe
Rest of Asia
Korea
Japan
India & Indonesia
China
Source: Symbian market model, Oct 2005
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Replacements form the bulk of total sales
68 106168
280391 409 402
509
651
810912
10291159
1247 12821342 1364
0
200
400
600
800
1000
1200
1400
1600
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Mo
bil
e p
ho
ne u
nit
sale
s (
Mil
lio
ns)
Replacements Net additionsSource: Symbian market model, Feb 2006
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In the hands of a small number of players
Source: Dresdner Kleinwort Wasserstein estimates, 21 April 2005
Others
LGE SEMC
Siemens
Motorola
Nokia
Others
LGE
SEMC
Siemens
Samsung
Motorola
Nokia
Others
LGE
SEMC Siemens
Samsung
Motorola
Nokia
<$120 $120-200 >$200
2004 Total= 628m
0
20
40
60
80
100%
Fraction of sales volume (2004)
Average sales price ($)
18
Typical BOM cost breakdown(direct cost only at June '02 prices)
-
25
50
75
100
125
150
175
200
225
250
8210 T68 7650 P800
Cost ($
)
Software
Mechanical parts
PCB
Camera
Battery
Display
Other semiconductor
Bluetooth
CPU
Baseband + RF
RAM
ROM
Modelling a consumer electronics device
(Symbian estimates)
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Sizing the smartphone market
Source: Symbian market model, Feb 2004
Addressable market forecast
427
489
544568 585 598 601
2657
87123
177229
265
0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008
Un
it s
ale
s (
Millio
ns)
0
30
60
90
120
150
180
BO
M C
ost ($
)
Source: Symb ian market model, Feb 2004
20
Estimating volumes from price information
Total handset sales
0
700
2002 2003 2004 2005 2006 2007 2008
Unit s
ale
s (
m)
0
180
BO
M c
ost ($
)
Minimum specificationbill of materials
Addressable market
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What this tells us
• Mobile phone is mass-market…One for every 5 humans on the planet
…One in 2 by end of decade
…Market won’t tolerate user complexity
• Its personal, not family oriented…(unlike PC, TV)
…Opportunity
• Attractive to emerging economies…Limited existing fixed line infrastructure
…China, India set to become mass markets
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The future
• Move to full IP backbone
• 3G
…Higher bandwidth
…Simultaneous voice and data
…IPv6
• 4G
…Adds local wireless (integrated telco and wireless)
…VoIP
…IEE 802.11 (Wireless LAN), Bluetooth
…Short range, high bandwidth, low cost potential
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Product adoption lifecycle
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Thre
ats
Declining voice
Declining voice
Excess capacity
Excess capacityMarket saturation
Market saturation
Grow APPUGrow APPU
Control c
hurn
Control c
hurn
Lower
cost
s
Lower
cost
s
Mobile Industry
Faster Tim
e-to-M
arket
Compelling features
Simplify cost base
Industry business concernsN
eeds
Triple/Quad plays
25Source: DKWR – Corporate information
Operators seeking future revenue from mobile data
ARPU Breakdown for Orange
0
10
20
30
40
50
60
70
1998 1999 2000E 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E 2009E 2010E
€ / M
onth
ASP / transaction
Content
Data Access
All voice
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Product lifecycle
Early Majority
Early Adopters
LateMajority
Laggards
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High Tech adoption lifecycle
• After Geoffrey Moore “Crossing the Chasm”
• Requires “Whole Product Offering”
“Chasm”
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Services overview
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The services
• Voice
• Messaging
• Browsing
• Multimedia
• m-commerce
• games
• applications (delivered over the air)
• location-based services
• Corporate/enterprise
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Requirements
• 3 Classes of service
…Vertical
…Publish/subscribe
…Peer to peer
• “Whole product” is critical
…“Value chain” (who gets what revenue)
…“Delivery chain” (who delivers what)
…End user enchantment (cf WAP experience)
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Example - Multimedia Messaging
• Peer-to-peer
• “SMS with pictures and sounds”
• Whole product?
…Value chain
…Delivery chain
• Composer on the phone
• Needs a community
…Enchanting experience
• How to roll out
…Viral marketing
…Trojan horse/market power
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Changing behaviour and business models in adjacent markets
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• Creating new usage models and new experiences
… Life Diaries
… Video Chat
… Interactive content
… Remote monitoring
… Onboard photo editing
… Personalisation
… Remote printing
• New Business Models and New winners
Impact on ImagingEver present, Always Connected
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Increasing Accessibility
More Accessible Content:
e.g. Mobile TV
…Mobile operators offering Mobile TV services on Symbian OS phones
• Including: TIM, Telefonica, ATT Wireless
New Sources of Images: Changing the production of Images
e.g. BBC & Cameraphones
… 2003: BBC issues 40 2.5G Symbian OS phones to BBC journalists for fast on-the-scene video capture
… 2004: 3G phones being rolled out to reporters
… Other broadcasters now running similar experiments
• Fox News, Reuters
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Music and Mobility
Market Momentum
• The worldwide ringtone market:… $3.5 billion in 2003, up 40% from 2002
… Representing about 10% of the global music market
… Forecast global sales > $5.3 billion in 2008
Source ARC Group
• 2007: 52% of data enabled phones will be music enabled.Source: Strategy Analytics
• The under-25 age group in the UK spends five times as much on mobile phone calls, texts and content as on traditional music formats Source: mobileYouth
Next generation iPod?• Onboard Storage in increasing e.g.
4Gbyte phone from Samsung
• Integrated Application Architecture, allowing users to do more with music
New Industry Players
• New record labels – Operators..?
• New distributors - Coca Cola, Sony, MSN, Tiscali, Wanadoo, HMV, Virgin, Woolworths, Wal-Mart, Carphone Warehouse, artists direct to customer
• E.g. Carphone Warehouse, European Retailer becomes Content Distributor
… Robbie Williams album sold on memory card in phone retailer
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Emerging services
• Multimedia Services
… TV – DVB-H, DMB
… Music
• Convergence Services… Operators looking at fixed and &
mobile assets
… Infrastructure, service and device convergence
… Dual-Mode devices shipped will increase rapidly over the next 3 years, reaching 26.8 million by 2009 (Yankee)
• BT Fusion
• Orange/FT NExT strategy
• Telecom Italia, T-Online/T-Com…
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Sky Mobile – Content on mobile
• Client-server solution to integrate TV with additional services
… Performance
… Functionality (vs browser)
… Phone Integration
• Shows how content providers will use Smartphones as a delivery channel
• Early example of major content going mobile
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Games - consumer applications driver
• Growth market
• Channels are in place
• Very profitable use of data
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High performance games
40
Mood
Generic & Custom Messages Location
Phone Status
New Service Paradigms
Virtual Identity
41
Conclusion
• Snapshot of mobile telecoms market
• Complex problem
…Technology
…Market
…Economics
…Social engineering
• Has the power to reshape the world
…Rather like the railways
…But like the railways – who will make the money?