Innovation in the mobile ecosystem Prepared by Claudio Feijoo - PowerPoint PPT Presentation

1 Innovation in the mobile ecosystem Prepared by Claudio Feijoo (Universidad Politecnica de Madrid), Jean-Paul Simon (IPTS) for the Acorn-Redecom Conference, Brasilia May 14-15, 2010 European Commission - Joint Research Centre Institute for Prospective Technological Studies - IPTS http://ipts.jrc.ec.europa.eu/ Disclaimer The views expressed are those of the presenter and may not in any circumstances be regarded as stating an official position of the European Commission. Neither the European Commission nor any person acting on behalf of the Commission is responsible for the use which might be made of this presentation.

2 European Commission – Joint Research Centre Institute for Prospective Technological Studies (IPTS) IPTS Part of DG JRC of the EC Mission “to provide customer -driven support to the EU policy-making process by developing science-based responses to policy challenges that have both a socio-economic as well as a scientific/technological dimension”

Summary 3  The state of the industry  The global market  The US market  The EU market  Some trends  Key innovation areas  Appendix: case study  The content provider view: Lagardère International

4  The state of the industry  The global market  The US market  The EU market

Market Data Summary (Q2 2009) Source GSMA 2010 5 Africa 416,303,821 Americas 475,193,998 Asia Pacific 1,906,764,743 Europe: eastern 462,040,510 Europe: western 506,982,364 Middle East 243,953,091 USA/ Canada 299,057,084 World 4,310,295,611

Market Data Summary Source: ITU, IDATE 2010 6 Total mobile subscriber base evolution 7.000,0 Millions 5.756,9 6.000,0 5.198,0 4.714,7 5.000,0 4.272,5 3.818,9 4.000,0 3.410,7 3.058,8 3.000,0 2.000,0 1.000,0 0,0 2007 2008 2009 2010 2011 2012 2013 11% 13% 1% 9% 10% 2009 world distribution of mobile subscribers (ITU) 13% 12% 31% North America South America West Europe East Europe Far East & China Indian Sub Continent Rest of Asia Pac Africa & Middle East

Mobile Internet Source: ITU, EC, Juniper, Informa 2009 7 Mobile penetration 2008 (%) Mobile internet penetration (%) North America 70% 11% South America 77% 4% West Europe 119% 16% East Europe 110% 15% Far East & China 69% 19% Indian Sub Continent 21% 5% Rest of Asia Pacific 62% 8% Africa & Middle East 57% 8%

World revenues Source: IDATE 2009 8 742 800 678 700 610 600 World mobile revenues 500 ($ billions) 400 300 200 100 0 2006 2007 2008 23 $ 22,4 22 $ World average monthly 21 $ revenue per user – 20,16 ARPU ($) 20 $ 18,96 19 $ 18 $ 17 $ 2006 2007 2008

ARPU breakdown into voice and data Source: own estimations from industry data 2009 9 25,00 $ 20,00 $ 3,2 3,6 3,7 15,00 $ 10,00 $ 17,7 16,5 15,1 5,00 $ 0,00 $ 2006 2007 2008 Voice Data

Mobile subscribers by technology Source: own estimations from industry data 2008 10 2.500.000.000 100% 2.314.889.685 90% 2.000.000.000 80% 70% 62,8% 1.500.000.000 60% 50% 943.649.298 1.000.000.000 40% 30% 25,6% 500.000.000 20% 375.985.267 10,2% 10% 51.605.821 1,4% 0 0% 2G 2,5G 3G 3,5G+ 9,8% 9,6% Global mobile susbscribers by access technology Access technology penetration 7,6% 10,9% 8,6% 15,9% Distribution of subscribers of 2G+ 24,5% mobile technologies 13,1% North America South America West Europe East Europe Far East & China Indian Sub Continent Rest of Asia Pac Africa & Middle East

Mobile handsets Source: Gartner, IDATE 2009 11 10% 5% 29% Market share of smartphones 56% suppliers 60% 54% 53% Basic Phones Enhanced Phones 50% Smartphones — Entry Level Smartphones — Feature 39% 40% 37% 30% 29% 29% 20% 17% 11% 9% 15% 10% 7% 0% 0% 2006 2007 2008 RIM Nokia Apple Others

Mobile applications Source: Own elaboration from industry data 2010 12 250 200 150 Thousands of 100 applications available in app stores 50 0 jul-08 sep-08 ene-09 mar-09 jul-09 sep-09 ene-10 mar-10 nov-08 may-09 nov-09 may-10 5 4,5 4 3,5 3 2,5 Billions of accumulated 2 downloads in app 1,5 stores 1 0,5 0

13  The US market

Wireless Quick Facts I (Source: CTIA 2010) 14 Year 2009 2005 2000 1995 (Year End Figures) Wireless 285.6 207.9 109.5 33.8 Subscribers (millions) Wireless 91% 69% 38% 13% Penetration (% of total U.S. population) Wireless-Only 22.7% 8.4% N/A N/A Households (% of U.S.)

Internet: going mobile 15  « Broadband services have experienced explosive growth . The number of homes receiving broadband services increased twenty-fold between 2000 and 2007. ” U.S. Dep’t of Justice, Voice, Video and Broadband: The Changing Competitive Landscape and Its Impact on Consumers (November 2008), “ Mobile wireless services are the fastest growing broadband segment ”, id.   “Symposium participants expected continued growth and competition among telephone providers, cable companies, and other technologies, including wireless services” id.  Broadband wireless networks ( Wimax: Clearwire/ Sprint, 4G/LTE or meshed/ city networks) are seen as a potential alternative third pipe  i.e in the 2010 National Broadband Plan 200,000 applications are available to U.S. consumers   through four recently created application stores with three already existing stores  40% increase due to the “iPad effect”.  The U.S. has the highest percentage of consumers actively using mobile Internet capabilities  more than any other country measured by Nielsen.  Subscriber counts for high-speed lines (over 200 kbps in at least one direction) more than doubled and advance service lines (over 200 kbps in both directions) more than tripled since 2007  the last year that FCC surveyed consumers.  There are more new wireless Internet subscribers (approximately 58 million) than new cable and DSL combined (approximately 41.5 million).

16  The EU market (the EU success story) 120 100 80 60 USA Penetration EU Penetration 40 20 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 … but in the EU we measure SIM cards, while in the USA one subscriber=one phone …

The most dynamic of the electronic markets 17  Mobile services have enjoyed strong growth since their introduction in the early 1980s, accompanied by rapid network and service investments.  With total revenues of € 174 billion (rising from € 88 billion in 2000)  Mobile now ranks amongst Europe’s most important industries  Mobile services are now available to nearly 100% of the population and 400 million Europeans have a mobile phone.  Europe has the highest mobile penetration rates in the developed world, as a result of high mobile handset subsidies and prepaid propositions  The average EU penetration rate continued to grow and has now reached 119%.  There are now only 4 Member States that have not exceeded 100% penetration.  While this could be seen as a sign of a maturing market, notable increases are still taking place in Member States with high penetration in previous years such as Italy with 152% and Lithuania with 149%.  Over the last decade, the use of mobiles has increased very strongly.  On average, Europeans now make 116 minutes of calls from their mobiles and send 42 mobile messages every month (per head of population).  Though still emerging, use of mobile data services is starting to take off  The mobile market remains, along with fixed broadband, the most dynamic of the electronic communications markets, due to increasing call volumes and the take-off of mobile broadband.

But a maturing market 18  The benefits of mobile are illustrated by very high levels of customer satisfaction.  Consumers are far more satisfied with mobile than other services, including fixed-line, banking and utilities  The mobile industry has enjoyed revenue growth of 10% per annum over the last eight years – however,the market is maturing and revenue growth rates now stand at 5% per annum  This has led to continued operator growth over the past year despite a further decline in voice revenues due to price decreases in domestic markets  Competition between mobile network operators is very intense  As illustrated by the growing share of third / fourth mobile operators and the additional pressure from the market entry of MVNOs (Mobile Virtual Network Operators) over the last five years.  This competitive intensity is clearly evidenced by growing customer churn rates ( 22% on average)  and steeply declining prices – to an extent rarely witnessed in any other industry: across the EU25, mobile prices fell by an average of 13% per annum between 2004 and 2006  The view from the industry: 2008 (for the 30 EEA countries)  " This report shows the European mobile industry at a crossroads: through innovation and further investment operators can maintain a growth path, albeit in a climate of intense competition which will require even more efforts on cost efficiency and industry consolidation ". A.T. Kearney project leader, Laurent Viviez, for the GSMA, European Mobile Industry Observatory