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Embedded Mobile ProgrammeTon Brand, Programme Manager Embedded Mobile

The GSMA Embedded Mobile ProgrammeWorking towards a Connected Life

© GSM Association 2010 Strictly Confidential

Mobile Beyond Voice

A WORLD OF CONNECTIONS…

Healthcare UtilitiesGovernmentConsumer Electronics Automotive

2

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Embedded Mobile is gaining momentum…

3

For years the promise of M2M had been held back by :The fragmented nature of both, the technology vendors and the solutions they

provide. Network Operator fears of low ARPU (Average Cost per Unit) Lack of any single killer application

The complex nature of M2M solutions

An inability to express the benefits of M2M in anything other than cost savings, rather than exploiting the service enablement capabilities of M2M.

Now momentum is being generated by legislation in segments such as energy and automotive as well as mobile operators taking a more

serious look at this potentially huge opportunity

© GSM Association 2010 Strictly Confidential

Scenario Comparison (by 2020)

4

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Realistic Medium High

Other

Transportation

Vehicles

Remote / Green Technology

Retail Outlets

Building Automaton

Maintenance

Office Metering / utilities

Office Security

Home Automation

Consumer Electronics

Smart Metering / utilities

Home Security

Public Healthcare

Home Healthcare

3.6B

7.6B

19.0B

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GSMA Strategy

The Embedded Mobile Programme has a three year outlook into the market.

Strategic objectives to be achieved by 2013:– Enable the market expansion to reach 500 million connected

devices• Create the conditions for the reduction of module costs and

the total cost of ownership• Reduce barriers associated with Test & Certification,

Provisioning, Wholesale and Roaming and Regulatory – Stimulate and accelerate innovation in the verticals of Health,

Transport, Utilities and Consumer Electronics

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Modules was the first step

Cost of modules can represent a considerable share of the total cost of device (e.g. 21% of Kindle);

2G module price previously declined by 10-15% year on year; Scale and production efficiency (e.g. Volume increase from 500,000

to 20mn units) brings down module prices on average by ~ 15%; GSMA objective: facilitate module price decline to its long-term

target by enabling scale.

2G low-end 3G

high-end 3G

$0

$40

$80

$120

Module Prices, US$2008 price

2009: < 500K units price

2009: 20m units price

Long-term price

Kindle component cost

Source: GSMA

4% Battery5% Multimedia App Processor

5% Printed Circuit Board

21% Wireless BB module

32% Display module

17% OtherCosts

15% Other Components

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Total Cost of Ownership is the next step

Device hardware costs are only a small portion of the total costs of ownership for embedded mobile service. While the cost breakdown will vary depending on a use case, the following ranges, calculated based on several specific cases, provide an indication of the cost drivers (as a percentage of the total cost of ownership (TCO))TOTAL COST OF OWNERSHIP % of TCO

Module Hardware 3%-7%

Certification – device level versus platform approach 4%-5%

Device Hardware and Non-recurring Engineering Costs (NRE, e.g. device development and integration)

20%-40%

Support – provisioning, activation, ongoing support and upgrades

9-25%

Connectivity and Value-Added Service costs– based on average revenue per user (ARPU) vs connections -oriented business models

30%-57%

Source: GSMA EM Guidelines release 1