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MID Webinar Business Models November 11, 2008 Moderated by Jim McGregor Principal Analyst and Research Director In-Stat
Transcript of MID Webinar Business Models - ti.com · MID Webinar Business Models ... Full web browsing • High...
MID Webinar Business Models
November 11, 2008
Moderated by Jim McGregor Principal Analyst and Research DirectorIn-Stat
Introduction• Welcome to the Mobile Internet Device (MID) webinar
series featuring:– MID Market Overview – 6/26/08– MID Hardware Architectures – 8/7/08– MID Software Architectures – 9/24/08– MID Business Models – 11/12/08
• Today’s host:– Jim McGregor, Principal Analyst & Research Director, In-Stat
• Agenda– 5-minute overview – 30-minute discussion by panelists – 45-minute live Q&A
• Archive of webinar available at:– www.ti.com– www.instat.com
Panelists• Seshu Madhavapeddy
– General Manager, Mobile Internet Device Business Unit, Texas Instruments– Joined TI in 2008– Former president, CEO and founder of various technology start-up companies– Guides TI’s MID business strategy, software and hardware platforms, strategic
partnerships and customer relationships
• Mike Woodward– Vice President, Smart Devices, AT&T– Joined AT&T in 2001– Leads AT&T’s wireless data device strategy for business and consumer segments
including both stocked and non-stocked
• Bob Sullivan– President and CEO of Sullivan and Associates Consulting – 28 Years – Senior Broadcast Management Positions Including:
• Vice President, Gannett Television (CBS Division) Oversaw five, Gannett CBS TV Station• President and General Manager, WUSA-TV, the Gannett owned, flagship, CBS affiliate in
Washington, D.C.
Successful MIDs offer solutions
Smartphone WLAN/3G/ WiMAX/LTE…
Content & applications
Internet
Web 2.0
MusicVideo
Social networking
Ringtones
Internet
NavigationNews & information
Devices Services
Software
Ecosystem overview
Semiconductor
ODMs &OEMs
Software
ServiceProviders
DistributionChannels
Content,Apps/Services,& Advertising
Consumer
CommunicationInfrastructure
Ecosystem overview
Semiconductor
ODMs &OEMs
Software
ServiceProviders
DistributionChannels
Content,Apps/Services,& Advertising
Consumer
CommunicationInfrastructure
Mix of business models
Existing• Subsidized devices• Minute-by-minute/bit-by-bit• Service tied to device• Multiple services• Closed platforms/one point
of contact
Emerging• Subsidized services• All you can get• Service tied to customer• Multiple devices• Open platforms/multiple
points of contact• Single log-on• Ad revenue sharing• Content revenue sharing• Service/application
revenue sharing
Business model requirements
• Support technology innovation• Support growth for the entire ecosystem• Support investment in new communications
infrastructure• Support enhanced services, content, and
applications for consumers• Must meet consumers’ growing and varying
expectations• Must reduce strain on discretionary income to
support continued growth
Technology Provider PerspectiveSeshu Madhavapeddy General Manager, Mobile Internet Device Business UnitTexas Instruments
Consumer expectations for MID performance
Base Line Requirements:• Full web browsing• High resolution display• Wireless broadband• All day power• True portability• Intuitive UI
TI Delivers:• Complete hardware and software
reference platform for MIDs• OMAP™ 3 processor provides laptop-like
performance at low power
Opportunities• Build ongoing relationship with
customers• Create new revenue streams for
applications and services
• No-compromise internet browsing• HD video & music player• Ultimate TV & radio experience• Games, e-mail, photo viewer, widgets• Media Club – movie purchase
• 4.8” WVGA• Touch• WLAN• HSDPA• 60 GB Hard Drive• 13 mm thickness
ARCHOS 5
It’s about delivering content and services
Content & services delivery platform
Music
Video
Social networking
Gaming
Movies
MapsNews & information
Widgets
Content & Services Client
User Interface
Applications
Middleware
Kernel
Internet
OMAP™ 3MID H/W Platform
OMAP™ 3MID H/W Platform
Engaging with ARCHOS Media Club
TI and its ecosystem ease delivery of new applications and content
TIProvide
Optimized System Solution
TI Ecosystem Apps, UI, Content
CustomersDefine solution
that offers content & services
Service Provider Perspective
Mike WoodwardVice President of Smart DevicesAT&T
Overview
• Existing smartphone model is thriving• Mobile broadband is becoming ubiquitous• MIDs offer a compelling opportunity• Ecosystem value chain / revenue sources• MID business model considerations
Existing smartphone model is thriving
• Business email drove early smartphone adoption
• Processing power, battery life, screen size, keyboard usability have converged for great devices
• Now 3G handsets combine with rich browsers and apps to deliver compelling handheld experience
• Business model: – Incoming: data plan revenue– Outgoing: device subsidy to customers
SUBSIDIZED
Device Evolution
Mobile Broadband is becoming ubiquitous
• Network and device speed and performance have reached critical mass to grow the market
• 3G is a household name
• “Built-in” mobile broadband laptops has been a slow starter but is gaining momentum
• Business model: – Incoming: data plan revenue– Outgoing: either commission to PC-
OEMs (embedded) or Subsidy (cards)
Worldwide WWAN by device
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011
Ship
men
ts (M
illio
ns)
External Cards
Internal Modems
USB Modems
Future Roadmap
10 Mbps
1 Mbps
100 Mbps
2006
3.6
07-08
7.2
08-09
14.4
2009+
80
>2010
200
2005
1.8
HSDPA HSUPA HSPA+ LTE
COMMISSIONED
Source: IDC
MIDs offer a compelling opportunity• Rich browsing, open access and new embedded form factors
are combining to create the new MID category
Feature Phone
Smartphone
MID
Netbook
Premium Notebook
Porta
bilit
y
Functionality
COMMISSIONED
SUBSIDIZED
Ecosystem value chain / revenue sources
Chipset / OS Devices CarrierDistribution
Customers
Hardware sales and OS licenses
Hardware sales Service fees, activation bounties,
equipment margin
MID business model considerations
Up-front/Wholesale-Network/Wireless usage is specialized and therefore predictable and often manageable from a cost perspective
Service subsidized with application revenue- Similar to subsidy based on wireless contract, payback occurs over time with revenue on application usage or downloads
Advertising- Combination of mobile internet, GPS, search and advertising may deliver compelling customer experience that could generate revenue to offset equipment cost
Carrier Subsidy- Smartphones and MIDs, e.g. iPhone subsidized through carrier distribution for long-term customer commitments
Third Party Dealer -AT&T certified equipment where AT&T pays a bounty for the activation but the dealer may or may not subsidize the device
?
?
Moving and Selling Content
Bob SullivanPresident & CEOSullivan & Associates
“Pulse Check”• TV-still dominant: 2008*
-TV viewing: 389 billion viewing hours -Online viewing: 800 million viewing hours
• 1/3 of all household Internet activity happens while also watching TV+– Growing paradox: rising TV viewership and growing
popularity of new media
• TV viewership: 127 hours per month• Internet usage: 26 hours per month
*Black Arrow (10-08’)+Nielsen (10-08’)
Video: “Prime Time To My Time”• 11 billion clips viewed online in July, 2008*
What’s working:
5 Billion clips viewed in July, 2008*
(30,000 Videos) +(1,000 TV Shows / 400 Movies)
*Source: comScore (07-08’)
New applications
• New: Just Announced
MTVMusic.com(22,000 Music Videos)
30 million profilesadding video / programs
New applications• NFL on cell phones: (last Thursday)
(Broncos vs. Browns)
• Feature movies:
• Videos: +
(Most frequently cited movie information web source ages 15-24*)
*Source: Nielsen
Video Internet TV
• New crop of special purpose devices:
+ 12,000 movies / shows on demand(Streamed by Netflix on Internet)
Trends• “Cable Cutters”
Video: “Prime Time To My Time”
Misses:• Titan media: closed summer 08’
• Break media / ManiaTV / Veoh: October layoffs
• Yahoo: 1,400 jobs cut: 2009
Local news• “Backpack journalists”• Multi-tasking staff:
-Reporters who shoot video-Photographers who report-Producers who edit-Assignment editors who write
• Newsrooms of the future• “Information centers”• Internet editorial staff hiring• Stand alone site development: HS football
Online advertising: Print - TV• Old model:
– Selling Internet as “value add”– Banner display ads
• New model: (not about transactions-about interactions)
– Stand alone web sales– Search / usage / behavioral targeting– Precision advertising – paying for results
(Decreasing sales employee bonuses for print only sales from 95% to 70% in 2009)
Online advertising: Print - TV• Total local advertising on the web 2008:
$12.9 billion (5 x more than 2004)
• Total revenue local newspaper sites-2008:$3.7 billion* (6.5 % of gross revenues (2011 estimate: 10% of gross revenues)
But:
44% of local Internet revenue in 200427% of local Internet revenue in 2008
• Total revenue local television sites-2008:$1.2 billion* (3 % of gross revenues)(2011 estimate: 6% of gross revenues)
*Source: Borrell Associates
Online advertising2009:
• “Like skeet shooting in the wind”*– Got the velocity and trajectory down pat– Gusts caused by credit crisis-hard to pinpoint the
target
Offline media: Down 1.4%Online media: Up 7.2% ($13.9b)
*Source: Borrell Associates
0
2
4
6
8
10
12
14
2007 2008 2009
Billions
Online advertising
Automotive:The 300 pound gorilla is losing weight
• September / October 08: sales down 30%• By year end: 700+ dealership closures• 2008 sales platforms
# 1: Television (# 1 in 2007)# 2: Internet (# 3 in 2007)# 3: Newspaper (# 2 in 2007)
Newspapers: Last call?• Current: Still most profitable media web sites
but…..Challenges up / revenues down
• Future: Will be surpassed by TV*• Since 2002:
-Overall web advertising: 40.5% compound annual growth rate-(Newspapers: same period: 33%)-(TV: same period: 67%)
• Layoffs / shrinkage
*Source: Borrell Associates
Online advertising
Keys to survive:• Skate to where the puck will be –Wayne Gretsky
• Go where your customers are going• Use their technologies to engage• Explore unique / creative “touch points”• Create new sales designs to stay connected• Monitor brand reputation constantly• Constantly scan on your competition
Summary
• The MID market– Has elements of existing markets– Is dynamic and changing rapidly
• The business model– No single business model– Likely to influence traditional markets and applications– Requires closer partnerships throughout the value
chain
Q & A
• To participate, click on the Ask a Question link on the left side of the interface; enter your question in the box on the screen; hit “Submit.” We’ll answer them during the Q&A session or after the webcast.
www.ti.com/midcommunity.ti.com/blogs/mobilemomentum
Contact information
Jim McGregorPrincipal Analyst & Research [email protected]
Seshu Madhavapeddy General ManagerMobile Internet Device Business UnitTexas [email protected]
Bob SullivanPresident & CEO Sullivan & [email protected]
Mike WoodwardVice President of Smart DevicesAT&[email protected]
SWPT033
