Frost & SullivanFrost & Sullivan

TMT Practice TMT Practice –– Strategy and Business Plan Strategy and Business Plan Telecom, Media and Technology Practice

Outlook for 2012 and beyond

Agenda

1

2

State of the Industry 2011

ICT Outlook 2012

2

2011 State of the Industry: Summary

Telecom Operators are struggling to find growth in their core business – voice

Data revenue growth has been robust for most markets; however data deluge

has cost challenges

Telecom operator margins are declining so profitable data growth is key

The post PC era is here – with mobile dominating every discussion

(~ 150 mn smartphones and ~ 5 million tablets)

Cloud computing continued to gain momentum in the region with > 40% growth

1.

2.

3.

4.

5.

6.

Rise of mega Platforms – they have hit Telco core e.g. SMS revenues

3

Cloud computing continued to gain momentum in the region with > 40% growth in revenues accruing to public cloud providers

Social web has truly arrived

IT spending would grow by around 7-8 percent in the year 2011 with cloud ready

architecture, analytics and social media as top of mind concerns

Fiber deployments in developed countries gained momentum in 2011 early LTE

deployments in 2011

Smart TV shipments gained momentum changing the plans of TV service

providers

6.

7.

8.

9.

10.

Mobile marketing grew at a scorching pace 11.

Agenda

1

2

State of the Industry

ICT Outlook 2012

4

#1: Post PC era will transform APAC into the largest mobile internet market

Global Trends Asia Pacific Trends

NetbookPCs

Tablets

~ 380mn

~ 480mn

~ 150mn~ 155mn

Mobile device sales Mobile internet growth

600 mn

1250 mn

5

DesktopPCs

PCs

Smartphones

2011 (e)

DesktopPCs

NetbookPCs

Smartphones

Tablets

2011 (e)

• In APAC, mobile devices have overtaken PCs in 2011• ‘Browsing minutes’ to exceed voice minutes by 2012 • Mobile internet market lead by China, India and Indonesia will double

~ 150mn

2011 2011

#1: Mobile Platforms hitting critical mass across smartphones and tablets

Mass market phase will aggravate the challenges for operators, vendors and

enterprises alike

• Initial seeding to monetize 3G networks

Market SeedingUpto 2008

Device Driven growth2009-11

Mass Market Phase2011- 2015

• More mobile BB devices than fixed BB devices

Video driving the growth of mobile date traffic

Data Traffic per user (Moore’s Law): Doubling

Networked Society2015+

Wide penetration of devices and networks

Cross industry business models

6

• Flat rate as a demand simulation mechanism

• Packet data exceeded voice data on mobile networks in 2010

• Apps are the new internet

nearly every 18 months

Smartphone is mass market

80% of internet users to have mobile internet

IT needs to support such devices

Initial creation of new business models –healthcare, automotive

Information ubiquity

#2: Platform play across the ICT sector would be the critical value generator

3 ecosystems are converging in the mobile computing ecosystem with diverse

approaches 1990s

Client-Server Computing

2000s 2010s 2020s

Cloud Computing

Web OS

PC as Entertainment/Personalized

PC as Workhorse

Laptops/Netbooks Tablets

2015

Computing Cycle

Collision Phase Convergence Phase

7

Mobile Cycle

Mobile internet

Email/ Web Web 2.0

2G Based Comm

Fixed BB Growth

Customized Tablets/phones Apps

ks Tablets

Smartphones

Digitization – Digital content overtook analog content

Web 3.0 + Aug Reality

Video overtook static pages

Internet Cycle

Mobile Cloud

Graph not to scale

Soft SIMs

Mobile devices sold> Fixed devices

#2: Platform play across the ICT sector would be the critical value generator

By 2015 there will 2-3 platform choices for each need and 2-3 overall integrated platforms.

Microsoft acquired Skype in 2011 and we can expect to see more action in the coming year.

In Asia Pacific, SKT re-organized to SKT and SK Planet to focus on platform business

globally.

Communication Platforms

Entertainment

Facebookplatform

Inhouse?

Apple’s platform Google platform

?? Skype (Acquired)

Itunes /app Youtube Xbox/PS3

8

Entertainment Platforms

Information Platforms (monetized by ads)

Commerce Platforms

Google

Participation/SNS Platforms

Experience Platforms – OS + Web

Microsoft?

PayPal

RIM (Acquired?)

Operator alliance

Twitter?

Android

Itunes /app store

NFC enablement

NFC enablement

Youtube Xbox/PS3Hulu ?

Google +

iOS

#3: Fixed Broadband and 3G/LTE will provide options for high speed access

Fixed Broadband – Asia Pacific 3G/LTE – Asia Pacific

375mn

1.25 bn

9

212mn

2011(e) 2016(f)

466mn

2011(e) 2016(f)

• The fixed broadband market continues to grow in Asia Pacific region despite of the heavy penetration of 3G/LTE.

• MBB through dongles will touch 41mn in 2011 and reach around 100mn by 2014

In general, LTE technology enables mobile operators in mature markets

to command a significant price premium over their existing 3G services.

Most have increased data volume caps with introduction of service.

Tele2

(Sweden), 80, 74.2%

CSL (Hong

Kong), 21, 84.3%

60%

70%

80%

90%

4G

Pre

miu

m o

ve

r 3

G (

in %

)

Aggressive pricing charging large premiums for LTE service

Loose correlation

between advertised

speed and premium

#3: Fixed Broadband and 3G/LTE will provide options for high speed access

10

Note: MetroPCS has been omitted in the

chart as it has never offered 3G services.

Verizon Wireless

(USA), 8.5, 0.0%

TeliaSonera

(Sweden), 80, 25.1%

Telenor

(Sweden), 80, 14.3%

Vodafone

(Germany), 21.6, 42.9

%

T-Mobile

(Germany), 42.2, 37.0

%

NTT DoCoMo

(Japan), 37.5, 8.7%

0%

10%

20%

30%

40%

50%

0 10 20 30 40 50 60 70 80 90

4G

Pre

miu

m o

ve

r 3

G (

in %

)

Average LTE Speed (in Mbps)

Conservative pricing: charging a premium for LTE but allowing for reduction due to churn and competition

Strategic pricing: charging based on specific constraints like network quality and expansionary plans

#4: “Internet of Things” will further accelerate as more and more devices, equipment and gadgets get connected creating opportunities for value creation and new business models

The Home Network Mobility on steroids Internet of things

‘S’ City

Planning

‘S’ Business‘S’ Citizen

‘S’ Buildings

11

• 8-10 Devices per home• Universal Remote

6 bn

• 5-6 Devices per individual • Touch as the default input

mechanism

30 bn

• 500 per sq km • Smart cities

44 bn

‘S’

Energy

‘S’ Mobility

• Rapid commercialization of enabling technologies• Demand for such services in select sectors driven by productivity requirements• Emergence of early business models to monetize the opportunity

#5: Cloud computing is set to become mainstream in Asia Pacific region. Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industryHybrid clouds lead the way; Cloud adoption growing at a rapid pace

3,132

4,284

5,807

3,000

4,000

5,000

6,000

US

$ m

illio

ns71%

3%

16%

29%

12

APEJ Cloud Computing is market APEJ Cloud Computing is market expected to grow at 39% for the 2010expected to grow at 39% for the 2010--

2015 period.2015 period.

1,124

1,575

2,224

0

1,000

2,000

3,000

2010 2011 2012 2013 2014 2015

US

$ m

illio

ns

10%

Not adopted yet Public cloud Private cloud Hybrid cloud

NoteSurvey done with IT Managers and CIOs in Australia, Hong Kong, China, India, Singapore and Malaysia in Q2 2011. 64% with >500 employees and 36% with 200 to 499 employees.

#5 Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industry

SaaS

Current View (2010)

Yr1 Yr7

Device Presentation

Interim View (2011-12)

Application Management

End game

Software Reseller

Software Reseller

The cloud value chain will disintegrate and consolidate later

13

Source: Frost & Sullivan

PaaS

IaaS

Management

Tenancy Managers

Platform

Brokers/Aggregators

Synchronization

Hosters/Infrastructure

2-3 end to end cloud

players

Preferred partnerships of SPs

with software (

retail model)

#6: The world of TV is going to change forever – click for 1000 channels

Smart TV, Social TV and internet video will transform TV

14

TV gets social and viral TV becomes an app Free flow of internet video and broadcast video

#7: Big Data and Analytics will see reaching the chasm in 2012 and get deployed through variety of platforms and be enabled by emerging technologies

Contextual Mining

Network performan

ce & Utilization

Operations Research

Data is expected to increase dramatically over the next decade; Data from machine

communication and IOT is expected to exceed social media in the next half decade

Growth Areas @ Analytics� Queries, � Reporting, analytics,� Advance analytics,

15

Big Data

Utilization

Sentiment Analysis &

Text Analytics

Security

Industry Specific Solution

� Advance analytics,� CRM analytics,� Data warehouse generation � Organization financial /

strategy analytics� In-line and predictive analytics� Move more towards cloud

#8: Enterprise communications would become richer, more collaborative and increasingly move towards the cloud

RichCommunications

- Pervasive video- Context & presence aware

Increasing Globalization

Improving Infrastructure

Declining Telecom Costs

Shift from Capex to Opex

16

CollaborativeCommunications

- Conferencing- ESN

Cloud- Native and new

Globalization

Consumerization of IT

to Opex

Generation Y workforce

#9: Telco transformation will evolve

Telecom Transformation

Services/Business Transformation

Network Transformation

Customer Mgmt Transformation

OrganizationalTransformation

Telecom operators need to look at revenue growth and profitability growth

17

• Enterprise ICT Services

• Cloud • Data Centers • Mgd services • Unified comms

• Appifying Services

• Devices

• Segmentation of mobile broadband

• Demand and pricing management

• Migration to LTE

• Backhaul optimization

• IP Migration

• Faster rollout of services

• Customer centricity

• Automation/ IT Factory

Protect/ New Revenues Reduce cost per bit Increase agility Be ready

• Process re-engineering

• Knowledge acquisition

• Metric definition

#9 Telcos should be a pragmatic pipe and invest effectively

Telecom operators need to look at revenue growth and profitability growth

Smart Pipe Strategy

If you are so smart , why aren’t you rich ?

-Nicholas Taleib, The Black Swan

Dumb Pipe Strategy

People reward difficult complex behavior

more than simple behavior, but simple

behavior is more effective - Warren Buffet

Pragmatic Pipe

18

Pragmatic Pipe

#9: Consumer’s communication behaviour is changing

Communication doesn’t mean voice and SMS any more

19

Sharing

• Active sharing

• All – IP networks

Small Cells– rapid scaling of sites

• Light Radio pioneered by ALU, HP and Freescale shows how SDR, VLSI and smart power management will change the scale and scope of BTS

• Antenna collapsed into the cell – the cube can be as small as 10 cms

#9: Network transformation is key to achieve the ambitions of a pragmatic pipe

Metamorphosis of networks – Small is Big

20

Femtos

• USB drive form factor for femtos

• Femtos can be added to other devices like gateways

More of the same

• Spectrum refarming

• Hetnet

• Offloads

#10: Digital Engagement will change marketing

Gamification So-Lo-Mo Mobile marketing

21

#11: Security will be the Achilles Heel

Huge security issues – in every data that is shared

22

IBM : No passwords by 2016

#12: ICT as an enabler will continue to gain momentum as telcos, SIs, ISVs etc. move beyond pure ICT industry to drive growth, value and margins in the future.

SMART LIVING

SMART PUBLIC SPACE

Urban Planning

Retail

AutomotiveHealthcare

Electric Vehicles

Financial Services

23

*****

Solar PV Cells

Virtual Shopping

Travelling Wave Reactor (TWR)

Morphing

From 2D to 3D

HDTV

Consumer Electronics Energy Biotechnology

#13: World of flexible materials- Sneak preview for 2013

24

Summary

Penetration

Till 2010

Growth in connected

devices

Till 2020

0.9

5

6

80

Connections (bn) Connected devices (bn)

25

Explosive growth >12% Mature Growth

Telecom Outside

Telecom inside

4-5%

� Smart enabler � Acquisition focused

Thank You

26

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