Aupa, Barça! Key Takeaways from the 2011 Mobile World Congress (MWC)

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  1. 1. Aupa, Bara! Key Takeaways from the2011 Mobile World Congress (MWC)Ronald GruiaProgram Leader, Principal Analyst - Emerging TelecomsFrost & Sullivan ICT Practice February 24th 2011
  2. 2. Todays Presenter Ronald Gruia, Principal Analyst Frost & SullivanFunctional Expertise14 years of telecom industry expertise accumulated at Frost & Sullivan (10 years) and Nortel Networks (4years). Particular expertise in: -NGN Transition: LTE (4G), IP Multimedia (IMS) and VoIP applications, services and standards -Telco 2.0: business models, next-gen VAS (Value Added Services), service brokering -The Enterprise of the Future: IP Telephony, WLANs, Unified Communications, Speech, IVR apps3+ years of power systems experience at Ontario Hydro including areas such as system and capacityplanning, energy transmission, BPL (Broadband over Power Lines), reliability, etc.Industry Expertise -Strong experience base covering telecom and power systems industry: -U.S. Patent holder: principal inventor of an algorithm optimizing a multimedia application -100+ speaking engagements at telecom conferences and industry shows -Featured columnist at IMS / NGN Magazine; wrote articles for Processor Magazine and TMC.net -Quoted on Business Week, Financial Times, Forbes, Wired, API, Reuters, MarketWatch, etc. -Appearances on CNBC (US), BNN, Report on Business Television and TechTV (Canada), Decision TV (Brazil) and Telecom TV (UK, live from Spain) 2
  3. 3. Aupa, Bara! - MWC Roundup 3
  4. 4. Aupa, Bara! Key Takeaways from the 2011 MWCAgenda MWC 2011: More Upbeat than Last Year Smartphone Growth, Advent of the Tablet Network Congestion / Data Explosion Policy Control / Management: Big Topic at MWC Migration to 4G/LTE: Under Way Move to All-IP Networks RCS, WAC and Other App Initiatives Emerging Technologies Potpourri Conclusions4
  5. 5. MWC 2011: More Upbeat than Last Year 20% increase in attendance over 2010, with over 60k visitors from200 countries, 800 wireless operators and 2,400 press members Show will be back in Barcelona in 2012 but scheduled later in Feb. Rumors that the GSMA might move the 2013 edition of MWC toParis, so exhibitors need to boost marketing budgets accordingly CTIA: please learn from the GSMA and increase show floor hours Key show themes: Intelligence moves to the edge: smartphone growth, advent of the tablet Network congestion/data explosion still a hot topic of discussion Migration to 4G/LTE: under way Move to all-IP networks is already happening, as voice goes from circuit switched to packet switched networks, creating many new opportunities Applications: RCS/WAC being pushed by GSMA, new business models Others: Mobile commerce (NFC) and in-app transaction/subs. billing5
  6. 6. Impressive Smartphone Growth Continues Overall vendor consensus: 2011 will be a good year (~ 50% YoYgrowth; est. CY11 global shipments: 415M) Qualcomm: beneficiary from the NOK/MSFT deal as it is the onlyvendor supporting WP7 today; announced next-gen Snapdragon quadcore processors (up to 2.5GHz) & up to 150 Mbps data rates; appearsto move into computing faster than Intel is diving into mobile Initial NOK WP7 device: targeted for X-mas 11; we believe Nokia willpay Microsoft a royalty fee of $7/smartphone for the use of WP OS Many new devices w/ a few noteworthy launches: LG: Optimus 3D, with Wi-Fi, 8GB memory, 2 5-megapixel cameras HTC: 5 new smartphones inc. Salsa & ChaCha w/ Facebook button Sony/Ericsson: Xperia Play Android device w/ gaming capabilities Samsung: Galaxy S II Android w/ super AMOLED+, NFC support Android (MMI, HTC) and Apple keep gaining OS share; RIM strengthinternationally; Nokia will lose share as it transitions to MSFT6
  7. 7. 2011: The Year of the Tablet Tablet tsunami continues, with tablets following the smartphone leadand coming into the enterprise via the employees door Explosive growth in 2011 fueled by fast product cycles, subsidies andvanity; about tablets will be used at work CY 2011 global shipments est. to be in the 45-50m range Apple: early leader (~82% share in 2010) but share will slip in 2011with entrance of new players (HP, Samsung, RIM, Motorola, etc.);unquestionably tablets will make up a multi-platform market At MWC, HTC, LG, RIM, Samsung all announced new units w/launches to take place during March/April 2011 RIMs Playbook GA date might slip to April, but price tag ( ~10% of service revenues Unintended consequences: mobile data growth -> lower MTRs (e.g. Sweden) Source: Broadband Forum 8
  8. 9. Mitigating Congestion1. Adopt network management policies Source: NSN2. Buy up additional spectrum (upcoming 700 MHz digital dividend auctions)3. Macro offload: Femtocell and Wi-Fi4. Site / network sharing (e.g.,, Tele2 / TeliaSonera, Bell / Telus HSPA overlay, 3UK / T-Mobile, etc.) Network savings from 4 to 11%5. Technology evolution to get extra TeliaSonera Sweden monthly pricing: efficiency (e.g,. LTE) Premium Fri: 249SEK. 5GB, highest pos. speed Lower latency (delay) Premium P Gng: 229 SEK, 3GB, high speed Increased throughputs (~ DSL) Premium Start: 39 SEK, 1 GB; max 399 SEK Greater spectral efficiency Once cap reached, user throttled to 57 kbps6. Service Tiering (e.g. TeliaSonera Sweden & Vodafone Spain) 9
  9. 10. Policy Control / Management: Big Topic at MWC Ongoing migration to 4G LTE & IMS is creating new growthopportunities in areas such as subscriber data management, policycontrol and deep packet inspection Consolidation already under way, with Tekelec buying Camiant(PCRF vendor) for $130m and Blueslice (SDM vendor) for $35m in2010; NSN bought Apertio (SDM vendor) for 140m in 2009 A host of other vendors remain, including Bridgewater Systems,Broadhop, Openet, RedKnee and Volubill; NEVs such as Alcatel-Lucent, Cisco, Ericsson, Juniper and NSN maintain relationshipswith the above pure play suppliers (e.g. JNPR/Bridgewater) Players such as IBM and HP could join the fray in this area via M&A Acme Packet announced its Net-Policy Director for LTE/IMS w/support for roaming, over-the-top and MVNO federation Sandvine (DPI vendor) introduced its Policy Traffic Switch (PTS22000) which combines IMS PCEF and PCRF functionality10
  10. 11. Migration to LTE Under Way LTE Operator Commitments (Global)EMEA Asia / Pacific North America EMEA EMT, EstoniaHutchison 3 AustriaAustraliaNew Zealand USAKPN, Netherlands TelstraNew Zealand TelecomHutchison 3 Ireland AircellElisa, Finland ChinaPhilippinesMobilkom AustriaPiltel AT&T MobilityDNA, Finland China Mobile, ChinaOrange AustriaSingapore CenturyTel SFR, FranceChina Telecom, ChinaOrange France M1 CoxCell C, South Africa Hong KongTele2 SwedenStarhub Metro PCSVodacom, South AfricaChina Mobile South KoreaT-Mobile Austria T-Mobile USA Zain, Saudi Arabia CSL LimitedKTFT-Mobile Germany Verizon Wireless STC, Saudi ArabiaHutchison 3LG TelecomTelecom Italia, Italy CanadaPCCW SK TelecomTelefonica O2, SpainTaiwan Bell Canada SmarTone-VodafoneTelia Sonera, SwedenChunghwa Telecom Rogers Wireless JapanTelia Sonera, NorwayUzbekistan Telus eMobileTelenor SwedenMTS BrazilKDDI UCellTelenor Norway VivoNTT DoCoMoTMN128 operator commitments forVivacell-MTS Armenia SoftBank MobileLTE in 52 countries (Jan. 2011) Vodafone GermanySource: GSMA, GSAZain, Bahrain 52 additional LTE trials ongoing (at the pre-commitment stage) 17 commercial LTE networks launched At least 64 networks anticipated to be in commercial service by the end of 201211
  11. 12. Will Pricing Pressures Help 4G/LTE? Operators shifting from CAPEX to OPEX-based models Service providers are moving towards utilization-driven pricing structures andopting for a just-in-time model as opposed to over-provisioning their systemsas much as in the past Some carriers are reluctant to embrace the latest technology as they areincreasingly realizing thatearly adopters often paymore (e.g., Vodafone 3Gexample - Node B) HSPA+ first, LTE laterCurrent LTE Price points: Orange: 50 - 100M to upgrade2 large French cities from 3.75 to4G Telenor LTE overlay tender isworth ~$200M over 6 yrs. Source: Vodafone (based on its 3G experience) 4G kit prices expected to drop over time, faster than for 3G 12
  12. 13. Move to All-IP Networks As voice-based mobile core networks transition to data based cores,existing RAN infrastructure vendors (ALU, Ericsson, NSN) faceincreasing pressure from IP plays such as Cisco and Juniper Operators plan to provision LTE using VoLTE w/o the need for CSfallback, which eliminates the need for many network boxes whilecreating new opportunities for components such as the SBC (APKT) At MWC Juniper introduced its EPC offering (MobileNext, formerlyknown as Project Falcon) w/ a GA date by the end of Q2,supporting HSPA+, TD-LTE and LTE TAM of $2B today growing to $3.2B by 2014 Juniper believes that ~80% of LTE vendor decisions have yet to bemade, so 3G packet core contracts using GGSN/SGSN architecturewill need to be re-bid as 3G solutions are not scalable for 4G ALU, Cisco (Starent), Ericsson and NSN: fierce competitors 13
  13. 14. RCS, WAC and Other App Initiatives An enhanced version of RCS, i.e., RCS-e (or RCS light asnicknamed in the blogsphere) was announced by the GSMA toenable IM, live video sharing and file transfer across any device onany operator (initiative thus far has the support of the big 5 fromEurope: Orange, T-Mobile, Telefonica, TIM and Vodafone, alongsideBharti, Orascom, SK Telecom and Telenor) GSMA still remains committed to original RCS effort (R4 under way) RCS-e changes the way presence is being tackled (moving frompresence server to dynamic capabilities discovery based on SIP) so itwill require a minor adaptation from RCS, requiring 1 month effort WAC also gained momentum in its 1st b-day, totaling 68 vendors(after 10 firms including Adobe, IBM and Panasonic joined in Feb.) WAC announced the rollout of WAC 2.0, which supports HTML 5multimedia apps and handset orientation and calendar functionality Promising developments w/ Telefonica (Frigo) & SK Telecom/K-WAC 14
  14. 15. Emerging Technologies Potpourri NFC (Near Field Communications) was another hot topic at MWC, withsome high profile announcements including T-Mobiles introduction ofa mobile wallet service (initial rollout in Germany and Poland in 2011followed by the Czech Republic, Netherlands and the U.S. in 2012); DTis partnering w/ Samsung for NFC-enabled devices The GSMA is also spearheading an NFC initiative with severaloperators including America Movil, Bharti, China Unicom, DT, KT, MTS,Orange, SK Tel, Softbank, TIM, Telefonica, Telenor, Telekom Austriaand Vodafone Among handset vendors, RIM announced support for NFC in the future In-application transactions: emerging trend (e.g., in-app transactionsacross free and premium apps total 49% of iPhone developer revenues;RIM and Android app stores are also supporting in-app transactions) Next logical step: in-app billing (e.g., The Daily, a digital news journalbeing offered on Apples iTunes digital storefront) Following Apples lead, Google also offered One Pass, a competingdigital content subscription platform 15
  15. 16. Conclusions 2011: a more upbeat edition of the MWC Interesting observations (via Ericsson): the first billion telephonyusers were accumulated over a 100-year period, however it onlytook 25 years to reach 5B mobile subscribers For many emerging markets, the first Internet end-user experiencewill be via a mobile handset Every 1,000 new broadband connections yields 80 new jobs, whileeach 10% increase in BB penetration translates to a 1% increase inGDP, according to several industry sources The migration to 4G/LTE is under way and will span several years As operators transition to the NGN, they will have to tackle a varietyof issues including app strategy, business models, congestionmanagement, migration to IP cores, etc. 16
  16. 17. Q & A SessionThank You Ronald F. GruiaProgram Leader - Emerging Telecoms, Principal Telecom Analyst rgruia@frost.com +1-416-490-0493 Twitter: rgruia 17
  17. 18. Next Steps Request a strategic approach document for a Growth Partnership Service or Growth Consulting Services to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2011: A Frost & Sullivan Global Congress on Corporate Growth, September 11-14 2011, Fairmont San Jose, San Jose, CA (www.gil-global.com)) Register for Frost & Sullivans Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 18
  18. 19. Your Feedback is Important to Us What would you like to see from Frost & Sullivan?Growth Forecasts?Competitive Structure?Emerging Trends?Strategic Recommendations?Other? Please inform us by taking our survey. Frost & Sullivans Growth Consulting can assist with your growth strategies 19
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  20. 21. For Additional InformationRonald Gruia Brian Cotton, PhDProgram Leader & Principal Analyst,Vice PresidentEmerging TelecomsInformation & Communication(416) 490-0493 Technologiesrgruia@frost.com (416) 490-0983 bcotton@frost.com Angie MontoyaJake Wengroff Global Analyst Briefing CoordinatorGlobal Director, Social Media Strategy Marketingand Research(210) 247-3806 (210) 247-2435jake.wengroff@frost.comamontoya@frost.com 21