Annual state of_global_mobile_industry_2012_chetan_sharma_consulting

1. State of the Global Mobile Industry Annual Assessment - 2012 Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits. http://www.chetansharma.com 1 © Copyright 2012, All Rights Reserved. Copying w/o permission is prohibited.

2. Table of Contents • Global Mobile State of the Union - 2012 • Mobile Impacts Everything • Mobile Subscriber and Revenue Growth • Global Markets – Data Growth • Devices – Changing Landscape • Mobile VAS and OTT • Mobile Data Traffic Growth and Solutions • Intellectual Property • Global Markets – Competitive Dynamics • 2012 Expectations http://www.chetansharma.com 2 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

3. Global Mobile State of the Union 2012 1. Total Global Mobile Revenues to hit $1.5 Trillion in 2012, over 2% of Global GDP – Top 10 operators control 42% of the global data mobile revenues 2. Mobile Services Revenue exceeded $1 Trillion for the first time in 2011 – The number of mobile operators with > $1 Billion in yearly data revenues will touch 50 in 2012 3. Total Global Mobile Data Revenues went past $300 Billion in 2011 – Non-messaging data now owns 53% of the global mobile data revenues 4. Mobile Operator Profits have more than doubled over the last 10 years – However, the wealth is not divided evenly. Asia’s share has tripled at the expense of Europe whose profit share has declined by 50%. 5. Total Global Subscriptions to exceed 7 Billion in early 2013 – China exceeds 1 Billion, India 950 Million. Subscriber growth is in Asia, Revenue growth is in Asia+North America 6. China and India represent 27% of subscriptions but only 12% of the global service revenues – US represents only 6% of the subscriptions but 21% of the global service revenues, 26% of the data revenues, and 27% of the global CAPEX 7. Mobile Devices are now exceeding traditional computers in unit sales + revenue – 70% of the device sales in the US are now smartphones. Device Replacement cycle is shrinking 8. Samsung and Apple now account for 50% of the smartphone unit share and 90% of the profit share – Difficult environment for other OEMs esp. when ZTE and Huawei are coming strong from the bottom. It will be difficult for pure play device OEMs to survive long-term 9. Tablets (iPads) has created a new computing paradigm that is having a significant impact on commerce, content consumption, and developer investments – Apple will continue to dominate the segment and iOS will be the leading OS for the segment. Amazon, ZTE, Huawei, to chip away at the sub-$200 tier http://www.chetansharma.com 3 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

4. Global Mobile State of the Union 2012 cont’d 10. Mobile Broadband (4G) is being deployed at a faster rate than previous generations, first time data is leading the charge – Over 1.5 Billion broadband connections by 2012 11. Global Mobile Apps revenue has completely (and irreversibly) tilted to off-deck – The decline is directly proportional to the increase in smartphone penetration by region 12. All major markets are consolidating with the top 3 players at 85% of the market – Regulators will have to be more prudent and proactive about managing competitiveness and growth 13. Mobile data traffic 2x YOY in most markets. Mobile Data will be 95% of the global mobile traffic by 2015 – Many countries are facing spectrum exhaust in the next 2-3 years (in certain markets) 14. Mobile Signaling takes up 2x the resources as Mobile Data Traffic – Signaling traffic is growing faster than the data traffic on broadband networks 15. Connected device segment is growing at the fastest pace in the western markets – Operators will have to quickly adapt their strategies to stay relevant in this segment 16. Several multi-billion dollar opportunity segments are emerging – Mobile Advertising, Mobile Commerce, Mobile Wellness, Mobile Games, and Mobile Cloud Computing to name a few 17. Mobile Ecosystem has become very dynamic and unpredictable – The 5 Platform Amigos – Apple, Google, Amazon, Microsoft, and Facebook dominate though the first two have the real power 18. Mobile Operator Revenue is under pressure from OTT Players – OTT Share of the Global Mobile Revenues increased to 4% http://www.chetansharma.com 4 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

5. Global Mobile State of the Union 2012 cont’d 19. OTT players forcing operators to up their game – Operators are partnering, launching their own OTT apps, increasing tariffs to manage the margins 20. Intellectual Property has become a key component of long-term product strategy – 21% of all patents granted in US are mobile related. Top 20 control 1/3rd of the overall mobile patent pool 21. Mobile Patent Rankings: US – IBM, Microsoft, Nokia. Europe – Alcatel-Lucent, Nokia, Samsung. Overall – Nokia, Samsung, Alcatel-Lucent – OEMs – Nokia, Samsung, Sony. Service Providers – AT&T, NTT DoCoMo, Sprint 22. In 3-5 years, with few exceptions, if a company is not doing majority of its digital business on mobile, it is going to be irrelevant – Majority (by a good margin) of the consumer interactions with brands will be on mobile 23. Mobile has become the single most important digital channel for engaging consumers and it shows – In the US, mobile revenues were > all Ecommerce And > Music, ISP, Hollywood, and Cable revenues combined 24. We have entered the mobile 3.0 era where “data” is all that matters and it disrupts the value chains – Data will drive majority of the network growth, Contextual data will drive majority of the VAS growth 25. There will be more changes in the next 10 years than in the previous 100 – The value chains will keep disrupting every 12-18 months by the new players and business models. Several verticals are already getting redefined e.g. retail, health, education, etc. http://www.chetansharma.com 5 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

6. Key Industry Micro-Milestones • Apple captures 70% of mobile device profits – defies gravity, obliterates competition • Apple mobile appstore downloads exceed 25 Billion, 100 Million on Mac – redefines distribution/ecosystem • Samsung ends Nokia’s 14 year reign as the device king – brutal execution • Android 300M activations – Juggernaut • Paypal does $7B in mobile transaction volume • Square does $5B in commerce transaction volume • Google > $5B in mobile revenues • Microsoft revenues from Android > Windows Mobile • Pandora’s 70% usage is on mobile, Twitter’s 60% of the usage is on mobile – heading towards a mobile-dominant world • Facebook Instagram Acquisition $1B – Mobile only acquisition to beef up mobile strategy • Angry Birds approaches a billion downloads • ESPN does 3.1 billion minutes on mobile in 3/12 – Mobile is where the action is • Skype traffic over 150 billion minutes – OTT pressure http://www.chetansharma.com 6 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

7. Key Industry Micro-Milestones cont’d • KPN messaging volumes decline 15% YOY – OTT pressure • Mobile Security threats grow 7x in last two years, Android threats up 3000% – Mobile IS IT • Cisco BYOD ratio – 70% (up 52% in 2011) - BYOD is creating new opportunities for vendors • US data traffic over 130 quadrillion bytes/month in 2011 – Data traffic 2X YOY, welcome to the yottabyte era • Fandango sells quarter of its ticket on mobile – commerce is happening • Expedia does > $1B in mobile commerce – see above • Microsoft Nokia Multi-Billion partnership – It takes two to tango • Lightsquared fails – Keep your friends close, enemies closer • Google Motorola $12.5B – IP becomes key to strategy • Nortel Patent acquisition $4.5B – IP becomes key to strategy • AT&T/T-Mobile Failure – DOJ/FCC put down the gavel • 40% of Kenya’s GDP comes from mobile money – impact of mobile is pervasive • Millennial Media IPO at $2B – first public market validation of the mobile advertising space • HP gives up on Palm – Competition forces Corporate Schizophrenia http://www.chetansharma.com 7 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

8. MOBILE IMPACTS EVERYTHING

9. Mobile Apps and Services Mobile is fundamentally reshaping how we as consumers spend from housing and healthcare to entertainment and travel, from food and drinks to communication and transportation. Mobile not only influences purchase behavior but also post purchase opinions. When the share button is literally a second away, consumers are willingly sharing more information than ever before. Mobile is thus helping close the nirvana gap for brands and advertisers who seek to connect advertising to actual transactions. The long-term battle is however for owning the context of the users. Having the best knowledge about the user to help drive the transaction is the simply the most valuable currency of commerce. The day is not far when mobile commerce will dominate all digital commerce. http://www.chetansharma.com 9 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

11. Mobile impacts all Maslow levels % of Average Spend 15% Self 35% Safety 50% Physiological Source: US Department of Commerce

12. Mobile is now 50% of the household IT budget

13. Context – the most valuable currency in mobile Demographics/Explicit Profile Interests/Implicit Profile Browsing, Watching, Previewing, Flipping Sensor data Purchasing, Payments User Intent Communications Location Trusted Concierge Presence Search (Local, Online, Media) Physiological parameters Knowledge Transactions DRIVES (about User) (from User) Calendar User Experience Address Book Gifting Social Community Trusted Advisor Advertising Intellectual Community M2M Pricing Preferences Security/Authorization Devices in the vicinity Big Opportunities in becoming the trusted 3 Party Sources rd Concierge/Advisor to the individual user http://www.chetansharma.com 13 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

14. MOBILE SUBSCRIBER AND REVENUE GROWTH

15. The Big Picture • The global mobile industry is the most vibrant and fastest growing industry. We expect the total revenue in the industry to touch approximately $1.5 Trillion in 2012 with mobile data representing 28% of the mix. Mobile data services revenue stood at 33%. Global Mobile Data revenues eclipsed $300 Billion for the first time in 2011. It is also the first year in which non-messaging data revenues will make up the majority of the overall global data revenues at 53%. • By the end of 2011, the global subscriptions exceeded 6 Billion. The first 1 billion took over 20 years and this last one took only 15 months. The primary growth drivers are India and China which are cumulatively adding 75M new subs every quarter. China became the first country to eclipse the 1 billion mark in March 2012. India is likely to arrive at the milestone by early 2013. • Smartphones are driving tremendous growth around the globe. Amongst the major markets, US leads with 69% sales. The global figure stands at approximately 32%. Some operators expect 90- 95% of their device sales to be smartphones in 2012. In terms of the actual smartphone penetration, we expect the US market to eclipse the 50% mark in 2012. • China leads in the number of subs but US dominates in both total and data revenue. A number of emerging nations are now in top 10 – Brazil, India, Russia, Indonesia, Pakistan, Mexico while once dominant – Korea, UK, Italy, Germany have dropped off or slipped in rankings. • The number of mobile operators with more than $1B in data revenues will increase to 50 in 2012. This number was only at 13 in 2005. http://www.chetansharma.com 15 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

16. Global Mobile Market Snapshot 2011 Global Mobile Market Snapshot 2012 Global Subscriptions Global Smartphone Users Global Data Users © Chetan Sharma Consulting, 2012 Global SMS Users Global Mobile Broadband Users Each dude represents approximately 113 million humans on planet Earth http://www.chetansharma.com 16 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

18. Global Mobile Industry continues to grow at a healthy pace • Non Operator OTT Revenues at 4% • Voice will fall below 50% in 2012 • Messaging revenues still growing but flattening growth • Access revenues are growing quicker than any other operator segment http://www.chetansharma.com 18 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

20. Operators around the world are benefiting from mobile data 50 operators with > $1B in data revs http://www.chetansharma.com 20 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

23. Global Mobile Leaders - 2012 Rank By Subs By Total Revenue By Data Revenue 1 China US US 2 India China Japan 3 US Japan China 4 Russia Brazil France 5 Brazil France UK 6 Indonesia Russia Korea 7 Japan UK Italy 8 Pakistan Germany Germany 9 Germany Italy Australia 10 Mexico India Brazil http://www.chetansharma.com 23 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

24. Global Mobile Leaders - 2012 Rank By Sub Penetration By ARPU By Data Usage 1 Hong Kong Japan Sweden 2 Finland Canada Finland 3 Portugal Switzerland Hong Kong 4 Austria US US 5 Singapore Norway Denmark 6 Sweden Australia Canada 7 Denmark France Australia 8 Greece Netherlands New Zealand 9 Germany Singapore Austria 10 Switzerland Israel Belgium http://www.chetansharma.com 24 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

25. Biggest Telecom Groups Rank By Subs By Data Revenue By NM Data Revenue 1 China Mobile Verizon Wireless AT&T Mobility 2 Vodafone NTT DoCoMo NTT DoCoMo 3 Telefonica AT&T Mobility Verizon Wireless 4 Bharti Airtel China Mobile China Mobile 5 America Movil Vodafone Vodafone 6 Orange Sprint Nextel Sprint Nextel 7 China Unicom KDDI KDDI 8 Vimplecom Telefonica Telefonica 9 TeliaSonera Softbank T-Mobile 10 Reliance T-Mobile Softbank http://www.chetansharma.com 25 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

26. US at the epicenter of mobile growth • 2% net-adds, 6% total subs but 21% of service revenues, 26% of data revenues, and 27% of global CAPEX • Networks: LTE/HSPA+ - Most broadband customers • Smartphones: Over 70% of the devices sold (more than twice the global average) • Applications: Billions of downloads (#1) • Pricing: Per Bit, Per Minute, Per Message lowest in developed world http://www.chetansharma.com 26 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

31. GLOBAL MARKETS: DATA GROWTH

32. US, Japan lead in revenues; China, India in subscriptions • Japan continues to be the leader in mobile data with NTT DoCoMo, KDDI, and Softbank Japan ahead of the pack in terms of mobile data revenue and data as a % of total ARPU. Country average is now at 60%. • Next, Australia and the US have made good inroads in the last two years. In fact, if we look at the overall data revenue, US is much further ahead than any other nation due to the size of the market. • While India has the highest subscriber growth rate in the world right now, the revenue generating opportunity remain down right anemic compared to other major markets with average dropping down to $2.50 in overall ARPU. Even with significant subscriber base, there is going to be a general lack of opportunity in the market for the next couple of years relative to other markets. http://www.chetansharma.com 32 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

33. Mobile Internet 3.0 – Data as growth engine Mobile Internet - Leading Global Operators (2011) $40 3.0 Softbank Japan NTT DoCoMo $30 KDDI Mobile Data ARPU (USD) 2.0 Telstra Vodafone Italy 3 Australia $20 Rogers Verizon Sprint 3 Sweden AT&T O2 Germany Singtel 1.0 Orange France © Chetan Sharma Consulting, 2012 SFR T-Mobile US T-Mobile Netherlands Bouygues SK Telecom $10 O2 UK KT T-Mobile Austria 3 UK Vodafone UK Telefonica Vodafone Spain TIM 3 Italy Vodafone Germany T-Mobile UKT-Mobile Germany Orange UK China Mobile Turkcell China Unicom Vodafone India AIS SMART Bharti Reliance $- 0% 15% 30% 45% 60% Mobile Data as % of Total ARPU Source: http://chetansharma.com/Mobile_Internet_3.htm http://www.chetansharma.com 33 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

35. Operators seek new sources of revenue ARPU New Service Revenue Operators can generate Messaging new revenue streams by focusing on the long-tail Revenue in Billions Access Direction of Revenue Growth of VAS Verticals Voice Cloud - Enterprise Today Tomorrow © Chetan Sharma Consulting, 2012 Cloud - Consumer Mobile Advertising Transportation Energy & Smart Grid Hospitality Wellness Payments Messaging Industrial Health Access Voice Service and Application Areas Source: http://chetansharma.com/Mobile_Internet_3.htm http://www.chetansharma.com 35 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

36. DEVICES: CHANGING LANDSCAPE

37. Devices – Apple, Android Dominate • Apple has had the tablet space to itself. Thus far the response from the competitors has been tepid esp. on the pricing dimension. Apple has had such a mastery over the supply-chain and months ahead of the competition that by the time they figure out details, Apple already locks up the pricing advantage for the cycle. OEMs try to catch-up on the features but can’t do on the margins. OEMs can grow the pie by bringing products at a better price points that helps attract different demographics to the mix. Microsoft can make good inroads into the space with its Win8 tablet release in 2012 but it will be again in a catch-up mode as the iOS ecosystem will be even more robust by then. The cheaper Android tablets will do well in the market. As expected, tablets will pretty much eliminate the need for netbooks and are starting to eat into the desktop/laptop revenue. • Apple and Samsung are strong on the top. Huawei and ZTE are coming up strong from the bottom. The middle tier players will have a tough time going forward. • It will be difficult for pureplay device OEMs to survive long-term. • Nokia and RIM are under severe market scrutiny as investors and developers leave in droves. Lack of product planning and execution has left their market share in disarray. Nokia’s valuation has been cut into half. Nokia’s release of N9 shows the engineering and creative design depth but a lot is riding on the first generation of Nokia Windows Phones (Lumia). While the market hasn’t shown much appetite for Windows phone thus far, a good family of devices might be able to slow the loss trajectory and position the combined team for the up-for- grabs 3rd spot in the ecosystem. Given that the computing is shifting to mobile devices, we can expect some of the weaker desktop/laptop players will exit the industry. • Majority of the tablet use is in the WiFi mode because the primary use case is indoors and WiFi gives a better (and cheaper) user experience. However, of the users who use cellular, the churn is low. Once operators start to roll out user-friendly family data plans across multiple devices, we can expect the cellular activation go higher (e.g. Rogers, Vodafone Spain) but will still be dominated by WiFi overall. http://www.chetansharma.com 37 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

39. US leading in smartphone sales US accounts for roughly 40% of the smartphone sales worldwide http://www.chetansharma.com 39 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

42. Apple and Samsung control 50% of the unit smartphone sales. Nokia’s share decimated. http://www.chetansharma.com 42 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

43. Connected devices come in all shapes and sizes High Data Cards/Embedded Superphones Tablets Video Cameras Data Consumption Automotive Smartphones Cameras eReaders Picture Frames Low High Number of Units in Market Feature Phones © Chetan Sharma Consulting, 2011 Digital Signage/Kiosks Security Sensors Health Monitors Copiers, Scanners, Printers Wellness Devices Home Sensors Asset Tracking Energy Meters Vending Grid Sensors Low http://www.chetansharma.com 43 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

44. AT&T – Connected Devices Growth Postpaid growth is slowing down in western markets, Connected device segment growing fastest http://www.chetansharma.com 44 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

48. Platform players – 5 Amigos of mobile Strengths Weaknesses Apple Step ahead of the competition. Pressure on the operator margins Vertical Integration, Brand loyalty, Dev revenues, Commerce, Distribution Google Broad adoption. Broad Support. Open Fragmentation. Dev revenues. Lack of dev platform. Ambitious clear device strategy. Regulatory microscope Amazon Deep understanding of the user, New to the device arms race, Lack of Content, Commerce, Distribution, OS Margin master Microsoft Bank balance, Operators want a 3rd Late to mobile party, Lack of mobile ecosystem execution Facebook ~ 1 B users, 500 M mobile Lack of coherent mobile strategy, Lack of OS http://www.chetansharma.com 48 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

49. Apple dominates the platform ecosystem Apple The overall market is basically iOS and Android. Apple marketcap > Microsoft + Google + Facebook or Amazon Marketcap Microsoft © Chetan Sharma Consulting, 2012 Google Facebook Amazon Users http://www.chetansharma.com 49 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

50. VAS AND OTT

51. The Big Picture • The traditional operator revenue streams of – Voice – declining and under threat from VoIP – Messaging – flattening/declining and under threat from IP messaging – Access – rising but margins are shrinking fast – VAS – declining in proportion to the growth of smartphones • Operators are fighting back with – Voice – launching their own VoIP apps e.g. Bobsled from T-Mobile, partnering with VoIP players e.g. Skype integration, charging for VoIP apps e.g. TeliaSonera €6/month – Messaging – launching their own IP messaging apps e.g. Huddle from AT&T, partnering with IP messaging players e.g. Whatsapp partnership – Access – Tiering – VAS – launch their own VAS apps and industry vertical apps and services http://www.chetansharma.com 51 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

53. Some operators are starting to see the decline in messaging revenues Some operators in Europe are also seeing declines in messaging revenue Total SMS Volumes still increasing but revenue in decline http://www.chetansharma.com 53 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

54. SMS Growth – US takes over Philippines Philippines SMS volumes/sub declining precipitously due to the rise in IP messaging http://www.chetansharma.com 54 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

56. Promising Segments. Leading Companies • Advertising – Google, Millennial Media • Payments/Commerce – Paypal, Square, Google, Amazon • Gaming – Microsoft, Rovio • Enterprise – AT&T, Salesforce • M2M – Vodafone, AT&T, Ericsson • Identity – Facebook, Google, Twitter • Cloud – Amazon, Microsoft, Google, Salesforce • Wellness/Health – Qualcomm, Fitbit, Mobisante Sampling Only http://www.chetansharma.com 56 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

57. MOBILE DATA TRAFFIC GROWTH

58. Mobile Data Traffic Growth • In most western markets, data traffic is doubling YOY • Sweden, Finland, Hong Kong, and US make the top 4 in terms of MB consumed per capita • A Multi-pronged approach is needed to have a sustainable strategy long term http://www.chetansharma.com 58 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

59. Only a holistic strategy to deal with data tsunami can help the operators long-term • As a result of the data tsunami, there are two types of opportunities that are being created, one that take advantage of the data being generated in a way that enhances the user experience and provides value and the other in technologies that help manage the traffic data that will continue to grow exponentially. • To be able to stay ahead of the demand, significant planning needs to go in to deal with the bits and bytes that are already exploding. New technical and business solutions will be needed to manage the growth and profit from the services. Relying on only one solution won’t be an effective strategy to manage rising data demand. A holistic approach to managing data traffic is needed and our analysis shows that the cost structure can be reduced by more than half if a suite of solutions are deployed vs. a single dimensional approach and thus bringing the hockey stick curves of data cost more in line with the revenues and thus preserving the margins. • The decision making process within the operator organizations will need to be streamlined as well. Operators should also consider creating a senior post which focuses on both the cost side and the solution side so they can devise and institute a sustainable long-term policy and keep the margins healthy. http://www.chetansharma.com 59 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

60. Wireless seeing unprecedented growth (US)

63. Managing data margins will be top priority for all operators 50% m iu Philippines br ili Japan qu cE ffi ra -T 40% ue en Data as % of Services v Re Australia China Revenues Indonesia US UK New Zealand 30% Singapore Hong Kong Netherlands Germany © Chetan Sharma Consulting, 2011 Italy Sweden Switzerland Mexico Malaysia France Portugal 20% Canada Denmark Korea Finland Russia Spain Brazil South Africa India 10% Argentina 20% 40% 60% 80% 100% Data as % of Overall Network Traffic Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition http://chetansharma.com/yottabyteera2.htm http://www.chetansharma.com 63 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

64. Management of Data Requires Multiple Strategies Radio Access Network Core Network Mobile Backhaul Copper 2G Core Network Microwave 3G Fiber RNC SGSN GGSN 4G Light Internet Services Networks Offloading Traffic Optimization Offloading Traffic WiFi/FemtoCell Compression/Optimization Compression/Optimization of Data Traffic Policy Management Source: Managing Growth and Profits in the Yottabyte Era 2nd Edition http://chetansharma.com/yottabyteera2.htm http://www.chetansharma.com 64 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

65. INTELLECTUAL PROPERTY WILL REMAIN KEY TO LONG-TERM PRODUCT AND COMPETITIVE STRATEGY SUCCESS

66. IP is critical to long-term product strategy • The IP tussles are playing out as expected • Players with strong IP portfolios will be able to command better negotiating positions, new revenue streams, competitive positioning over the long-term • On average mobile companies file patents 1.7 times more in the US vs. Europe • Mobile Patent Leaders in US: IBM, Microsoft, Nokia • Mobile Patent Leaders in Europe: Alcatel-Lucent, Nokia, Samsung • Mobile Patent Leaders in Infrastructure: Samsung, Alcatel-Lucent, Ericsson • Mobile Patent Leaders in Devices: Nokia, Samsung, Sony • Mobile Patent Leaders in Service Providers: AT&T, NTT DoCoMo, Sprint • Top 20 control 1/3rd of the total mobile communications patent pool http://www.chetansharma.com 66 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

67. Patent Power Rankings – Mobile Communications Related Issued Patents 1995-2012 Rank US Europe US+Europe 1 IBM Alcatel-Lucent Nokia 2 Microsoft Nokia Samsung 3 Nokia Samsung Alcatel-Lucent 4 Samsung Sony Ericsson 5 Ericsson Ericsson Microsoft 6 Sony RIM IBM 7 Motorola NEC Sony 8 Intel NTT DoCoMo NEC 9 Alcatel-Lucent Siemens Motorola 10 Qualcomm Qualcomm Qualcomm Based on an estimation of Mobile Communications Related Patents that have been granted by The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents http://www.chetansharma.com 67 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

68. Patent Power Rankings – Mobile Communications Related Issued Patents 1995-2012 Rank OEM/Software Infrastructure Service Provider 1 Nokia Samsung AT&T 2 Samsung Alcatel-Lucent NTT DoCoMo 3 Sony Ericsson Sprint 4 NEC NEC British Telecom 5 Motorola Motorola Verizon 6 RIM Qualcomm T-Mobile 7 Siemens Siemens Swisscom 8 LG LG Telecom Italia 9 Fujitsu Fujitsu SK Telecom 10 Hitachi HP TeliaSonera Based on an estimation of Mobile Communications Related Patents that have been granted by The USPTO and the EPO. This assessment doesn’t take a look at the quality or the value of the patents http://www.chetansharma.com 68 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

71. Mobile Patent Portfolio of leading mobile players Mobile Patent Portfolio of Leading Players 100% Amazon Google Panasonic HTC ZTE Juniper Huawei RIM 90% Lenovo Adobe Apple EMC SAP Telecom Italia 80% SK Telecom Samsung Kyocera LG Sprint Cisco Verizon Broadcom Ricoh Qualcomm Microsoft % of Patents Issued 2007-12 70% Dell NTT DoCoMo Intel T-Mobile AT&T TeliaSonera Fujitsu Sony 60% Asustek IBM Interdigital Orange Siemens 50% Hitachi HP British Telecom Ericsson Nokia Philips 40% Swisscom NEC Alcatel-Lucent 30% Motorola 20% Oracle Openwave 10% © Chetan Sharma Consulting, 2012 0% 0 2000 4000 6000 8000 10000 12000 Number of Patents Issued 1995-2012 http://www.chetansharma.com 71 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

73. Integration of IP with product strategy is essential for competitiveness in mobile NUMERIC ANALYSIS Improve your PPQ by tight integration with product SUBJECTIVE Patent Portfolio Quotient™ ANALYSIS f(Σ) (PPQ) strategy PATENT PROGRAM ANALYSIS R&D, Other Sources Ideation Market Product Design and Public Disclosure Requirements Requirements Development © Chetan Sharma Consulting, 2011 Licensing IP competitive and IP Analysis IP Protection Process IP Management risk assessment IP driven Product Development Cycle Source: What is your Patent Portfolio Quotient? http://chetansharma.com/patentportfolioquotient.htm http://www.chetansharma.com 73 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

74. GLOBAL MARKETS – COMPETITIVE DYNAMICS

75. Changing Ecosystem Dynamics It is very clear that the ecosystem dynamics can change very quickly, one just can’t take the competitive and friendly forces for granted. In the past, the silos and segments were clearly defined with little overlap. However, over the course of last couple of years, players have been migrating and surfing in segments across the board - from Apple to Visa, from P&G to AT&T, from Facebook to Time Warner, from Google to Best Buy, every company wants to capture the mindshare and piece of the consumer’s pocketbook. The fine line between partners and competitors can get obliterated in a quarter. Apple is competing with Cisco, Comcast is going after AT&T’s business, Visa and Verizon want to be the payment channel of choice, Amazon is gunning for Microsoft’s enterprise business, so on and so forth. One product launch, one acquisition, can change the game in an instant. And this is only the beginning. http://www.chetansharma.com 75 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

76. Competitive Dynamics • The Rule of Three is evident in all major markets. While the percentage market share might vary, on an average, the top 3 control 93% of the market in an given nation. It doesn’t matter if the market is defined by “controlled regulation” like in China, Korea, and Japan or if it is “open market” driven in markets such as the US, UK, and India. Eventually, only top 3 operators control the majority of the market. There are niches that others occupy but they are largely irrelevant to the overall structure and functioning of the mobile market. • Markets such as US and India experienced similar competitive environment in their hyper-growth phase. For the US, this phase was in the nineties-mid-2000s while India has been experiencing the similar environment in the last 3-4 years. In both cases, at the start there are 5-6 players with no more than 25% market share but higher than 10% of the mix but gradually the market forces enable consolidation. Over a period of 18 years, US is settling into a “top 3” operator market. India’s brutal price wars are going to trigger the consolidation in the next 12-24 months and will eventually settle into a structure similar to other markets. • The competitive equilibrium point in the mobile industry seems to when the market shares of the top 3 are 46%:29%:18% respectively with the remaining 7% being allocated to the niche operators. To achieve some semblance of equilibrium in the market the top operator shouldn’t have more than 50% of the market share and the number three player shouldn’t have less than 20%. This helps create enough balance in the market to derive maximum value for the consumer. • Mobile operators will face some hard choices in developing and protecting the role they want to play in a given region and the ecosystem at-large. The strategy they choose will have a direct impact on the expected EBITDA margins, investment required over the long-haul, how investors view them, and on the competitive landscape of the country. Given, the fast pace of globalization, new rules and trends might emerge over the course of this decade that further define “communications” and “computing” as we know it. http://www.chetansharma.com 76 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

77. Competitive Landscape in Major Markets Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm http://www.chetansharma.com 77 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

78. Global Mobile Competitive Index Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm http://www.chetansharma.com 78 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

79. Eventually all markets consolidate to top 3 Source: Competition and Evolution of Mobile Markets. http://chetansharma.com/mobilecompetition.htm http://www.chetansharma.com 79 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

80. WHAT TO EXPECT IN 2H 2012

81. What to expect in 2H 2012 • More Tiering, faster pace of change of plans. More options, family data plans • Cost reduction is as important as revenue generation. More players will align their value-chains and cost structures • Facebook IPO is probably going to be the single biggest event in the technology industry in the next few months. • Radios will start connecting the digital world with the physical world with significant disruption opportunity • Mobile Payment Networks will remain intact for the near future as the ecosystem largely focuses on building value on top of the existing exchange platforms • The intersection of Social, Location, Identity, and Gaming is creating new opportunities • With connectivity becoming pervasive, mobile will fundamentally start to alter the legacy infrastructure – retail, health, education, energy, computing, travel, entertainment • Significant tablet adoption in the enterprise directly impacting the traditional computer manufacturers • Both HTML5 and Apps will continue to grow, the relevancy to any given application will depend on the reach and economics requirements. HTML5 is not going to replace Apps. • Mobile data growth will double again in 2012. Significant opportunities in managing and understanding of mobile data growth • Regulators will need to evolve to keep up with the trend to keep their nation globally competitive • More IP scuffles before licensing settlements • Consolidation of weaker players, more global M&A • Significant progress in emerging areas like mHealth, mPayments will come from the developing world while the western countries get mired in regulatory and legacy mess • Several players face challenging times ahead and 2012 will be critical in their turn around sojourn. http://www.chetansharma.com 81 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

82. MOBILE FUTURE FORWARD MOBILE’S THOUGHT-LEADERSHIP SUMMIT 09.10.12 SEATTLE WWW.MOBILEFUTUREFORWARD.COM

83. Discussions to inform your strategy • Is 4G a Game Changer? • Innovation at the Edges • Mobile Payments and Commerce • Disruption is in the air • Mobile Data Services from the Prism of the CIOs • Solving the 50 year Spectrum Crunch • Managing the Network Growth • Opportunities in the Emerging Markets • The Universe of Connected Devices • Analytics - How to Collect, Manage, and Use Data? • Multi-modal Interactions - How Consumers Adapt? • At the Intersection of Social, Mobile, Commerce, Content • Battle for the Home – playing in the n-screen world • What do Developers Want? • A Smarter Planet - The Role of Mobile in Enhancing Lifestyles and in Making Everyday Decisions • Drivers for New Sources of Revenue • Role of Regulations - Spectrum, Privacy, Net-Neutrality • Mobile Cloud Computing • Monetizing the network • From 3 Screens to Multi-screens • Mobile Universe in 2020 http://www.chetansharma.com 83 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

84. Mobile Executive Summit Sept 10th, 2012 Seattle Ever wondered what the future of mobile looks like? Join us for an extraordinary day of executive mobile brainstorming Contact info@mobilefutureforward.com for sponsorship and speaking opportunities www.mobilefutureforward.com

85. Mobile Breakfast Series June 7th – Seattle – Mobile Operators and OTT Panel Discussion with AT&T June 22nd – Atlanta – Connected Devices Fireside Chat with David Christopher, CMO, AT&T Mobility Panel Discussion with CNN and Synchronoss June 29th – London – Mobile Operators and OTT Panel Discussion with Telefonica, Orange, Rebtel, Horizons Venture Excellent Speakers. Invaluable Insights. Peerless Networking. Contact info@mobilebreakfastseries.com for sponsorship and speaking opportunities www.mobilebreakfastseries.com

86. We look forward to hearing from you Chetan Sharma Mobile Future Forward chetan@chetansharma.com info@mobilefutureforward.com TW: @chetansharma TW: @mfutureforward http://www.chetansharma.com http://www.mobilefutureforward.com Research. Technology. Strategy. Intellectual Property. Thought Leadership Summits. http://www.chetansharma.com 86 © Copyright 2012, All Rights Reserved. Copying w/o permission is strictly prohibited.

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