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Information Appliance and Market Perspectives

• What Are Information Appliances?• Information Appliance Market Dynamics• IA Revenue Streams & Business Models• Information Appliance Market Potential• 2010 IA Scenario and Summary

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What is Information Appliance?

• An inexpensive device• An easy to use device• Based on computer technology• Dedicated to do one or a few functions• An application-specific computer• Most devices will have Internet accessand may be called Web Appliances

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An Information Appliance Segment

Add-On IAs• Existing devices with IA functions added:

• Web set-top boxes• Web digital TVs• Web cellular phones• Web screen phones• Personal VCRs/DVRs

New IAs• New devices or form factors with IA functions:

• Web PDAs & PDAs• Web terminals• Web pads• Web music players• Electronic book readers

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Information Appliance Types

Web/Internet IAs

Products designed to access the Internet. Other functions may also be included.

Communications IAs

Products designed for communications plus web access or other IA functions

Entertainment IAs

Products designed for entertainment plus web access or other IA functions

Computing IAs Products designed for single/few PC functions.

Other IAs Products designed for new functions. IAs are standalone or built into existing products

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Information Appliance Examples

IA TypesIA Types Information Appliance ExamplesInformation Appliance Examples

Web/InternetWeb/Internet • • Web TerminalsWeb Terminals

• • MSN Companions IAsMSN Companions IAs

• • Web Pads Web Pads

• • AOL CompanionsAOL Companions

CommunicationsCommunications • • Web Cellular Phones Web Cellular Phones

• • Web Screen Phones IAsWeb Screen Phones IAs

• • Web Video PhonesWeb Video Phones

• • Email StationsEmail Stations

Entertainment DVRsEntertainment DVRs • • Web Set-Top Boxes Web Set-Top Boxes

• • Web Music Players IAsWeb Music Players IAs

• • Web TVs Web TVs

• • Personal DVRsPersonal DVRs

Computing IAsComputing IAs • • PDAs & Web PDAs PDAs & Web PDAs

• • Thin Clients Thin Clients

• • Handheld Computers Handheld Computers • Data Collection IAs• Data Collection IAs

Other IAsOther IAs • • Electronic Book ReadersElectronic Book Readers

• • Car IAs (Telematics)Car IAs (Telematics)

• • Medical IAs Medical IAs

• • Vertical Market IAsVertical Market IAs

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IA Product Overlaps

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IA Driving Forces

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IA Market Characteristics

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IA Market Dynamics

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IA Hindsight

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IA Business Models

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IA Revenue Flow

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IA Revenue Flow Estimate

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IA Revenue Flow Estimate

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IA Revenue Stream Perspectives

• IA service is the largest revenue generator: 50-80% of

customers’ expenditure over products’ economic life• IA purchase is 15-30% of customers’ expenditure• IA aftermarket is 5-25% of customers’ expenditure• More future IA services will further boost its share• E- & m-commerce fees (3-10% of purchase price) will add 6-10% to total IA vendors’ revenue potential• IA industry fees are proportional to each segment’srevenue size and IA users, but are difficult to estimate

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IA Business Model

Perspectives• Recurring revenue model is preferred. Start-up companies must be

early in a new segment or enter via large service companies• One-time revenue products should become customers’ repeat and

replacement products• Two types of Internet access business models– In “Open Access” end-user controls Internet access pattern– In “Walled Garden” service provider controls Internet access pattern– Most IA customers prefer open access– ISPs prefer walled garden due to high referral fees– Walled garden is viable for small devices due to text entry problems

• Influence products generate multi-year customer loyalty, which

generate recurring revenue (i.e. walled garden products)• IA hardware device price discounting/bundling has subsided. Maycome back as customer spending pattern is better understood

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IA Forecast Methodologies

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IA Related Markets

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Interactive Service Networks

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IA Service Networks

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Web IA: Between Rock & Hard Place• Web IA expectations have been unrealistic

– First business models were unbelievable– Early products need better features– High-tech slowdown forced several product withdrawals– Cost/benefit versus PCs need improvements

• Is there a need for web-only IAs?– Will web add-on IAs eliminate need for web-

only IAs?– Will PC price decline prevent web-only IA

success?• Web IAs still have opportunities

– Web Pads will succeed due to mobility advantage– Low-priced flat displays will help tremendously

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Total Unit Shipment

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World Wide: New IAs vs. Add-on IAs

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IA Market Growth Perspectives• Add-on IAs will have a much larger market than new, standalone IA products• IA product category success will vary by region and country • Current PC Internet user penetration level will impact the success of many IA product segments• Web enabled devices in use will be higher than subscribers • Many products will have IA functionality, but user subscriptions will lag until the user experience improves• IA product features for existing web users are different from the needs of new web users • “Killer apps” will vary by product segment & region/country

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U.S. Telematics Potential

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2010 IA Scenario: USA

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2010 IA Scenario: Worldwide

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IA Summary Perspectives