Three Consumer Market Trends that are Impacting Telecom Industry (2014)

COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
Marc Jadoul
May 2014
THREE CONSUMER MARKET TRENDS
THAT ARE IMPACTING TELECOM INDUSTRY

WHILE HUGELY
POPULAR,
THE LINEAR TV
CHANNEL MODEL
IS RIPE FOR
REPLACEMENT.
THE TREND HAS
BEEN THAT MOBILE
WAS WINNING.
IT'S NOW WON.
IN ABOUT TEN
YEARS WE MAY
FIND OURSELVES
WITH MAYBE TEN
OF THESE DEVICES
ON OUR BODY.

3
THE TREND HAS
BEEN THAT MOBILE
WAS WINNING.
IT'S NOW WON.
Eric Schmidt
Executive Chairman, Google
Source: http://mashable.com/2013/12/30/eric-schmidt-predictions-2014
3

4
MASLOW’S HIERARCHY REDEFINED
Source: http://www.simplypsychology.org/maslow.html
PSYCHOLOGICAL
food, water, shelter, warmth, …
SAFETY
security, stability, safety
BELONGINGNESS & LOVE
intimate relationships, friends
SELF-ESTEEM
prestige & feeling of accomplishment
SELF-
ACTUALIZATION
achieving one’s full
potential& creativity

5
MOBILE DATA TRAFFIC KEEPS GROWING
Browsing
Music
Video
Games & Apps
Other
2013 2014 2015 2016 20172012
5,326
PB
21,500
PB
Source: Strategy Analytics, Handset Data Traffic (2013)

6
DEMAND FOR (DENSE) WIRELESS ACCESS
IN PUBLIC PLACES IS RISING
Sports stadium
Train/bus station
Airport
Office
Hospital
Shopping mall
Convention center
High street
School
Hotel
Supermarket
Retail shop
Multi Dweller Units
House
0.0 0.1 0.2 0.3 0.4 0.5 0.6
Average Mb/s per 10m2
Source: Ruckus Wireless (2012)

7
EVEN WITHIN THE HOME,
MOBILE MULTIMEDIA IS BECOMING PERVASIVE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017
Outdoor mobile data usage Indoor mobile data usage
70%
80%
90%
100%
iPad iPhone Blackberry
% OF USE INDOORS
Source: Mobile Experts (2012), GigaOM (2012)

8
SMARTPHONE AND TABLET VERSUS… EVERYTHING ELSE
Source: The Nielsen Company, 2012
25%
64%
10%
21%
65%
13%
25%
56%
11%
14%
72%
11%
3%
16%
64%
18%
26%
49%
22%
3%
12%
60%
25%
16%
56%
24%
3%
22%
50%
23%
13%
55%
30%
9%
56%
32%
3%
Internet
Connected TV
Smart
Phone
Internet to
TV Player
GPS Gaming
Console
Portable
Gaming
Console
Portable
Media
Player
eBook NetBook Laptop PC Desktop
PC
TABLETS ENHANCE
THESE DEVICES
TABLETS REPLACE
THESE DEVICES
Use device moreDon’t use device Use device less Same device usage

9
SMARTPHONES AND TABLETS
TEND TO PLAY DIFFERENT ROLES
67%
65%
53%
31%
74%
68%
51%
49%
75%
74%
65%
60%
58%
34%
22%
20%
Living room
Bedroom
Kitchen
Home
office
While
traveling
Car
Public
trarnsport
Daily
commute
Restaurant
Friend’s
house
Outdoors
Work
Other
Library
School
In stores
Where do you access
the internet on your
SMARTPHONE ?
72%
63%
40%
26%
48%
18%
15%
9%
30%
28%
26%
20%
14%
12%
10%
8%
Living room
Bedroom
Kitchen
Home
office
While
traveling
Car
Public transport
Daily
commute
Restaurant
Friend’s
house
In stores
Where do you access
the internet on your
TABLET?
Outdoors
Work
Other
Library
School
Source: Forrester Research (2013)

10
NEED FOR DIFFERENT ‘MIXES’ OF
MOBILITY, CAPACITY AND COVERAGE
Macro coverage Small cells & Wi-Fi
Mainly low
bandwidth services
Often high
bandwidth services
Full mobility Nomadic usage

11
NOMADIC VIDEO IS SOARING WITH A 73% CAGR
200,000
160,000
120,000
80,000
40,000
0
180,000
140,000
100,000
60,000
20,000
2010 2011 2012 2013 2014 2015
Home video users
(premium content)
Nomadic video users
(premium content)
Mobile video users
(premium content)
Source: The NPD Group (US, 2011)

13
DEFINING THE IDEAL NETWORK FOR WIRELESS NOMADS
a wireless HetNet mixing 3G/4G
macro cells, small cells and Wi-Fi
automatic network discovery,
selection and authentication,
with seamless handover between
cellular and Wi-Fi access
a high-capacity, fiber-based mobile
backhaul and transport network

14
COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.
14
Source: http://www.dezeen.com/2014/03/10/interview-fitbit-designer-gadi-amit-wearable-technology/
IN ABOUT TEN YEARS
WE MAY FIND OURSELVES
WITH MAYBE TEN OF
THESE DEVICES ON
OUR BODY, OR MAYBE
WOVEN INTO OUR
CLOTHES, MAYBE EVEN
UNDER OUR SKIN.
Gadi Amit
Designer, Fitbit Activity Tracker

15
SENSORS AND ACTUATORS EVERYWHERE
(*) Sensors in the Nike+ Fuelband: 3-axis accelerometer, ambient light sensor; (**) Sensors in the Samsung Galaxy S4: accellerometer,
barometer, geomagnetic sensor, gesture sensor, Hall sensor, gyroscope, proximity, RGB light, temperature/humidity; (***) Sensors in today’s
cars: air–fuel ratio, blind spot monitor, crankshaft position, curb feeler, defect detector, engine coolant temperature, Hall effect sensor,
manifold absolute pressure, mass flow, oxygen, parking sensors, radar gun detector, speed, throttle position, tire-pressure, torque, transmission
fluid temperature, turbine speed, variable reluctance, water-in-fuel, water-on-windshield, wheel speed, etc.
9
**
FUEL2 *
100+
***

16
THE NEXT STEP IN INTERNET EVOLUTION
Pre-
internet
Internet of
CONTENT
Internet of
SERVICES
Internet of
PEOPLE
Internet of
THINGS
SOCIAL
WEB
WEB 2.0WWWH2H M2M
+ + + +

17
THE “INTERNET OF THINGS” IS COMING
AND IT’S GONNA BE BIG (NO… HUGE)
$8.9 TRILLION
GLOBAL REVENUES BY 2020
212 BILLION
“THINGS” IN 2020
Source: IDC 2013, http://enterpriseinnovation.net/article/idc-internet-things-poised-change-everything-1713674431

18
WEARABLE TECHNOLOGY ON THE GO
Sources: http://www.policymic.com/articles/65371/galaxy-gear-watch-could-be-a-goldmine-for-advertisers
http://mashable.com/2013/11/17/taptap-wristband-communication-relationships

19
DIGITAL LIFE IN THE CONNECTED HOME
Source: http://www.lgnewsroom.com/ces2012/view.php?product_code=95&product_type=95&post_index=1828

20
CONNECTED CARS SOON AN EVERYDAY REALITY
Source: http://reviews.cnet.com/8301-13970_7-57570801-78/at-t-general-motors-to-sell-4g-lte-connected-cars-next-year
€ 45,000
€ 40,000
€ 35,000
€ 30,000
€ 25,000
€ 20,000
€ 15,000
€ 10,000
€ 5,000
€ 0
2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E
(millions)
IN-VEHICLE SERVICES
HARDWARE
TELEMATICS
SERVICE
PROVIDERS
TELECOM
SERVICE
PROVIDERS

21
WHY THIS IS HAPPENING RIGHT NOW
IoT

22
SOME CHALLENGES RELATED TO THE IOT
SCALABILITY
PERFORMANCE
MANAGEABILITY
INTEROPERABILITY
SECURITY
MONETIZATION
HORIZONTALIZATION
VERTICALIZATION
PARTNERING
INNOVATION
REGULATION
GLOBALIZATION
GOVERNANCE
IDENTITY
PRIVACY
TECHNOLOGY BUSINESS SOCIETY

23
WHILE HUGELY
POPULAR,
THE LINEAR TV
CHANNEL MODEL
IS RIPE FOR
REPLACEMENT.
Reed Hastings
Netflix CEO
Source: http://qz.com/203192/the-track-changes-version-of-netflixs-vision-for-the-future-of-tv/

24
WHICH ONE OF THESE WOULD YOU MISS DOING THE MOST?
TOP-5 MENTIONS AMONG ADULTS
Source: Business Insider (May 2014)
42%
13%
32% 34%
48%
58%
68% 69%
22%
47%
36%
26%
17%
7%
2%
15%
18%
15%
20%
15% 14%
11%
3%
7%
4%
4% 8% 7% 8%
12%
13%
2%
2% 4%
3%
9%
TOTAL Aged
16-24
Aged
25-34
Aged
35-44
Aged
45-54
Aged
55-64
Aged
65-74
Aged
75+
Read
newspapers/
magazines
Listen to
the radio
Go online
Use a
smartphone
Watch
television

25
TV VIEWERS ARE LOOKING FOR A
MORE FLEXIBLE VIDEO EXPERIENCE
Device flexibility
Location flexibility
Interaction flexibility
Schedule flexibility
Content flexibility
Plan flexibility
?

26
THE VIDEO DELIVERY MODEL IS SHIFTING
Sources: Bell Labs, 2012
4.8
HOURS
PER DAY
7.0
HOURS
PER DAY
2012
2020
PayTV linear PayTV VOD Video comm Cloud video OTT video

27
ONLINE VIDEO TRAFFIC WILL HAVE
AN ENORMOUS IMPACT ON NETWORKS
Source: Bell Labs, 2012
0
20,000
40,000
60,000
80,000
100,000
2012 2013 2014 2015 2016 2017
Linear TV - Multicast
Managed VoD - Unicast
OTT Video - Unicast
Average traffic at Tier 2 CO
UNICAST TRAFFIC
DOMINATES NETWORK
BANDWIDTH
MULTICAST TRAFFIC
HAS MINIMAL IMPACT
Mbps

28
THE YOUNGER THE VIEWER,
THE MORE THEY WATCH ONLINE TV
MILLENIALS
Source: The New York Times, 2013
GEN X
BOOMERS
No TVMostly online videoTV + online videoMostly TV

29
HOW MUCH BANDWIDTH DOES
AN AVERAGE HOUSEHOLD USE?
~45 Mbps
Father watching with friend a
soccer match in HD on large
flat screen TV
Mother watching an HD
movie on regular TV screen
Daughter watching an HD
video on her tablet
In the background, two HD
videos being recorded
Son starting an online streamed
multiplayer video game
10Mbps
8Mbps
8Mbps
1-2Mbps
2x8Mbps

30
BUT… 10 YEARS FROM NOW, HALF OF NORTH
AMERICAN HOUSEHOLDS MAY ALREADY BE ON 4K TV
Source: ABI research, BI Intelligence, March 2014
0%
25%
50%
75%
100%
2012 2017 2022 2027 2030
NETFLIX HAS ANNOUNCED THAT MORE 4K ULTRA
HD CONTENT IS COMING TO ITS VIDEO LIBRARY.
THE HEVC COMPRESSION FORMAT OFFERS A
BITRATE OF JUST OVER 15 MBPS.
20242014

31
DVR FUNCTIONALITY IS SLOWLY MIGRATING
FROM THE SET TOP BOX TO THE CLOUD
2013 2017
Source: SNL Financial LC, 2014
STB-based
DVR HHs
Network DVR
HHs
Cloud DVR
HHs
BY END 2017, TRADITIONAL SESTBBASED DVR HOUSEHOLDS STILL DOMINATE,
BUT NETWORK AND CLOUD DVR HOUSEHOLDS WILL HAVE GROWN TO 13%

32
WITH MORE OTT COMPETITION,
PAY TV PROVIDER VOD GETS UNDERUSED
HOW MANY VOD PURCHASES DOES YOUR HOUSEHOLD MAKE ON
AVERAGE, EACH MONTH, FROM YOUR PAY TV PROVIDER?
Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada)
ZERO
ONE
TWO
5.6%
73.8%
11.2%

33
WHY DO CONSUMERS PREFER OTT ALTERNATIVES
TO TV PROVIDER VOD?
Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada)
Ability to watch on smartphone
Ability to watch on tablet
Easier to find content
Don't have VOD
Better selection
Convenience
Cheaper
Other

34
THE FUTURE OF TV
Personalized; understanding a viewer’s
purpose/need in the moment; social,
interactive, profile and context-based.
Broader choice of content; linear,
on-demand and OTT.
Multi-screen with a seamless CX;
cross device search & discover functions.
Cloud-based VOD and DVR;
ultra HD and 4K TV are coming.

35
Michel Combes
CEO Alcatel-Lucent
INNOVATION IS HAPPENING
EVERYWHERE — IN THE
APPLICATIONS, IN THE
CLOUD AND CERTAINLY
STILL IN THE NETWORK
WHETHER IT IS
VIRTUALIZED OR NOT —
IT IS EXCITING TO BE A
PART OF MAKING THAT
HAPPEN.
35
Source: htttp://broadbandworldforum.com/interview-with-michel-combes-ceo-alcatel-lucent/

marc.jadoul@alcatel-lucent.com
www.linkedin.com/in/mjadoul
@mjadoul

Three Consumer Market Trends that are Impacting Telecom Industry (2014)

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