You are on page 1of 37

Booz & Company World Telecommunications Outlook 2012

+
February 2012

Booz & Company Febrero 2012

In 2011 we have observed how certain Communication and Technology trends became a massive reality, opening a new world of opportunities...
Enablers of Change New Business models New Reality

1

Devices

3

Data centricity

5

Social Media

2

Ultra Broadband

4

Cloud

6

Digitalization

... and thus forcing the ICT sector and other industries to rethink their future reality
Booz & Company February 2012

1

Enablers of Change

New Business models

New Reality

1

Devices
Ultra Broadband

3

Data centricity

5

Social Media

2

4

Cloud

6

Digitalization

1 Devices: Smartphones The mobile arena is undergoing a radical change of its handsets towards smartphones Handsets sales mix (Western Europe) 90% Forecast Smartphones 32% Smartphones per capita (Dic ’11) 47% 54% 61% 64% 72% 52% 81% 47% 46% 44% 44% 43% Feature 58% Phone 45% 39% 8% 2012 28% 7% 2013 22% 6% 2014 Low cost 9% 2010 8% 2011 14% 5% 2015 Singapore Hong Kong Sweden Austria Spain Denmark Israel Finland Source: Pyramid Research Smartphone Forecast Pack 2Q11. Booz & Company analysis Booz & Company February 2012 3 .

8 million iPhones between October and December 2011.3 billion (43 cents a share). January 2012 Source: KPN. but the cost of subsidizing Apple’s smartphone raised the company’s losses to $1.1 Devices: Smartphones The decrease on cost of smartphones has proven critical. of which roughly 720. PCWorld x3 3. The losses after excluding one-time costs were 35 cents a share—lower than the 38 cents analysts had forecast.000 were new customers. compared with $929 million (31 cents a share) year-onyear. Booz & Company Analysis (1) Most common smartphones by sales – Western Europe Booz & Company February 2012 4 . JP Morgan.7 Broad range 120€-500€ Sprint losses hit $1. however current subsidy policies are becoming non-sustainable Commercial costs increase driven by Smartphone subsidies Average relative handset cost (based on the average cost of LC) x3 8.3 billon over iPhone costs by Matt Peckham. Pyramid Research Smartphone Forecast Pack 2Q11.0 Low Cost Feature Phone Smartphone Examples Sprint says it sold 1.1 1.

Android will capture the biggest market share. while Apple stabilizes around its core customer segment Handset base by Operating system (Western Europe) Forecast Android Apple iOS Blackberry OS 3% 11% 12% 19% 20% 15% Symbian 57% 14% 13% 19% 11% 4% 2015 21% 22% 29% 32% 36% Windows Phone Other 26% 8% 3% 2013 13% 2% 2009 3% 6% 2011 Source: Strategy Analytics 2011 Nota: Windows evolution remains a big question mark Booz & Company February 2012 5 .1 Devices: Smartphones Among smartphones.

1 Devices: Tablets Tablet sales are expected to reach 252M units by 2014… half of PCs units expected to be sold that year Expected MarketShare M units 350 300 Tablet sales forecast Worldwide (M of units) Forecast 326 252 250 200 150 178 40-50% 104 100 64 50 20-30% Other (1) 18 0 2010 Units Sold Tablets /PCs 2011 18% 2012 27% 2013 41% 2014 52% 2015 61% 20-30% 5% Source: Gartner (1) Windows evolution remains a big question mark Booz & Company February 2012 6 .

Jan 2011. 35% EU.5 2.1 Devices: Tablets Early adopters used it as a complement to the PC (at home for News and Games). 330 respondents worldwide.5 25% paid Source: Booz & Company Survey. but in H2 2011 already 75% use it for work Tablet Use of early adopters (H1 2011) 70% Home 65% Where 29% Travel Commute 6% Work Role 30% 25% 5% My home PC My work PC My home PC My work PC Complement of Substitute of Work Related General Usage Downloaded Apps 70% News Games Social … 70% 55% 40% <2 h/day How Much 2-4 h/day >4 h/day 7% 3% 90% What for Email Office docs Pdf Only personal 45% 40% 25% 4. 30% rest Booz & Company February 2012 7 .5 10. 35% US.

Enablers of Change New Business models New Reality 1 Devices 3 Data centricity 5 Social Media 2 Ultra Broadband 4 Cloud 6 Digitalization Booz & Company February 2012 8 .

01 0.5 min 6 min 16 min 27 min 3.5 hours Expected future incrrease of demand Network that serves that bandwidth Inacceptable by current standards Booz & Company February 2012 4G+ LTE advanced Optic Fiber FTTB FTTH Fixed xDSL VDSL FTTC Cable 9 .5 hours 11 hours 100 mbps <1 sec <1 sec 8 sec 2.5 days 3.2 Infrastructure: UltrabroadBand Consumer behavior increases the bandwidth demand and thus adds pressure for the development of new networks Consumer Needs Needs Size GB 0.5 hours 1.5 hours 4.50 12 25 150 Mobile Graphical website Music track Music album 250 photos DVD movie 1 hour of personal HD video HD movie Full online back-up Required Bandwidth for each Need 1 mbps 4 sec 40 sec 13 min 4.5 hours 10 hours 27 hours 2.10 2.5 days 14 days 3G UMTS ADSL 10 mbps <1 sec 4 sec 1 min 27 min 1 hour 2.5G 4G LTE 30 mbps <1 sec 1 sec 27 sec 9 min 20 min 53 min 1.00 4.001 0.

2 Infrastructure: UltrabroadBand A mix of F&M Technologies will have to be deployed depending on their location and traffic profile Potential Future Technology Deployment Map Location Urban Limited Volume ILLUSTRATIVE Sub-urban LTE <900MHz LTE 2.6GHz 3G Rural Mobile High Speed Traffic Demand Profile Bursty traffic FTTB/FTTH WiFi ADSL VDSL High Volume Fixed Medium Speed Real-time/ Streaming Booz & Company February 2012 10 .

2 Infrastructure: UltrabroadBand However the development of the Ultra Broad Band infrastructure will depend on several factors FFTH LTE (Fixed UBB infrastructure) (Mobile UBB infrastructure)  Regulation towards investments KSF for rapid development  Government moves/decisions  Co-operation models – Depending on competitive and regulatory environment  Regulation – Auction conditions and covenants  Cooperation models – Depending on competitive and regulatory environment Booz & Company February 2012 11 .

Enablers of Change New Business models New Reality 1 Devices 3 Data centricity Cloud 5 Social Media 2 Ultra Broadband 4 6 Digitalization .

3 Data centricity Consumers are demanding a wider range of communication services to engage with a larger group of contacts than in the past Consumer Mobile Communication Services Trend Location sharing Group Messaging Status File/Video sharing SMS Activity sharing Invites (viral) Social reviews Opinions Presence Voice Calls SMS Video Calls Voice Calls MMS Voice mail Email Instant messaging Collaborative music playlists Voice mail In-game messaging MMS Email Social networks twitting Social mobile Video games Conference Past Booz & Company February 2012 Today 13 .

Messaging. Booz & Company analysis Booz & Company February 2012 14 . PTS. excluding usage for mobile internet surfing) Source: Bofa/ ML wireless report Q12011.3 Data centricity In the mid-term operators will experience Voice/SMS-to-data substitution to a much larger degree HIGH LEVEL ESTIMATE MOU(1) 700 600 500 400 300 200 100 0 Forecast OTT impact in Usage Selection of New Communication Service Apps Voice. Video Mobile Communication Usage1 Minutes of use Nordic countries Forecast 10% 35% OTT Messaging 20% SMS Ping beluga 35% Voice 2008 2009 2010 2011 2012 2013 2014 2015 1) Messaging calculated in minutes of use based on average time usage per messaging type of service (including social media apps like FB.

3 Data centricity Today. which needs to be addressed by the Telcos SMS revenues cannibalization by OTT services SMS growth destruction by OTT services Y Axis Smartphone adoption impact on SMS revenues* SMS consumption decrease among Whatsapp users 60%-80% SmartPhone Whatsapp impact in the youth segment WhatsApp Penetration Annual SMS growth 35% 13% 12% 9% 2% -8% 1Q 2Q 2010 3Q 4Q 1Q 2011 70% 100 20-40 6 months Month 0 * Among What´sApp users Month 6 Source: KPN. Análisis Booz&co Booz & Company February 2012 15 . this substitution is already a visible reality. Pyramid Research Smartphone Forecast Pack 2Q11. JP Morgan.

3 Data centricity Telcos have to choose their strategic alternatives in meeting IP-based OTT communication services Telco Operators Strategic Options Launch own rich communication offerings Value Chain Control “Go-to-it-alone” HD Video Call Voice Blogging Video/File sharing Roaming VoIP App Rich Comm Serv-Europe Plattform Partners with OTTs Leverage existing OTT functionality Pipe & Access Service Provider + + + + + No Action 2008 2011 Booz & Company February 2012 16 .

Telcos will have to redesign their offering structure to rebalance the revenues between voice and data provide angles of differentiation in data services Offering structure evolution Past Today Packages Price Price Price Price Current transition Future Volume Volume Services Volume Download Speed limitations % over revenues Service Levels (QoS) DATA VOICE Booz & Company February 2012 17 .3 Data centricity Additionally.

Enablers of Change New Business models New Reality 1 Devices 3 Data centricity 5 Social Media 2 Ultra Broadband 4 Cloud 6 Digitalization .

4 Cloud services Cloud Computing is seen as next stage in the evolution of IT delivery: seamlessly scalable and standard in a virtual way Cloud Computing Data Servers Applications Storage Cloud Computing is the delivery of IT capabilities in a scalable. virtualized. • Provided over Internet standards and infrastructure • High level of hardware abstraction • Pay-per-use / variable cost pricing Products Services Solutions Source: Booz & Company analysis Booz & Company February 2012 19 . and standardized manner.

purchase CPU. storage.4 Cloud services Many services have emerged across the cloud ‘stack’ around the three areas which cover from just infrastructure to a full application Infrastructure as a Service [IaaS] Platform as a Service [PaaS] Software as a Service [SaaS] Application Operating System Middleware API Automation Software CPU Storage Network Connectivity Standard infrastructure to run own solution . memory as a service Source: Booz & Company analysis Cloud Service Stack     Hosting Remote storage Back-up Network connectivity Pure infrastructure      Hosting Application engines Billing Universal Address Book API hosting Frameworks for applications       ERP CRM Salesforce automation Virtual Office Messaging Web / m-commerce/ social/ retail enablement Full application Integrated development platform offered as a service Run software on standardized platforms Purpose-built applications delivered over the web Booz & Company February 2012 20 .

74 EUR) 21 .Market overview of cloud IT services from major Telcos. Gartner. Booz & Company analysis Booz & Company February 2012 Source: IDC. Booz & Company analysis (1 USD = 0. with nearly a third of businesses already using them Adoption of Cloud Services (Businesses) Europe and North America 80% 9% Sales Forecast Cloud Services Europe (in billion euros) 12 Sevices 9 Software SaaS CAGR 34% 40% 7 5 12% Platform PaaS 55% 4 2 12% 7% Infrastructure 41% IaaS Adopters Not decided Interested Piloting Implementing Expanding 31% already uses it 2009 2010 2011 2012 2013 2014 Source: Forrester .4 Cloud services Strong demand for all cloud service models is expected in the next years.

thanks to an easier selling proposition (pay-as-you-go.4 Cloud services Cloud services will represent a relevant change and important opportunities for all stakeholders Selection of benefits from cloud services Telcos  Increase of their offering to Business customers (alone or as a trusted broker or aggregator)  Increase client’s BroadBand needs and network utilization  Better buy-in of the Quality of Service premium         Focus on key value adding activities Seamless operations throughout multiple locations Standardization and fast deployment of solutions Cost reduction and CAPEX-free IT Relevant cost reductions and control Speed up the e-government initiatives Increase collaboration between agencies Continuity of operations/Disaster recovery Industry Government SaaS PaaS IaaS Vendors  Higher turnover. high automatization/low implementation requirements)  Broader portfolio of products on reach  Better visibility on client’s real product usage  Access to services previously reserved for corporations  Scale your IT as needed  Increased level of competition will foster better services and lower prices SME and Consumers Booz & Company February 2012 22 .

making asset-light bets Web and Cloud Masters End-to-end IaaS to SaaS players with huge data centers. Booz & Company analysis. players looking to enable “NaaS” services and play selectively in PaaS Enterprise SW Specialists Like cloud masters. Booz & Company February 2012 . logos are illustrative only. and exploiting reach and cloud-relevant assets Virtualization & Automation SW Specialists PaaS focused players partnering broadly. many going asset-heavy. PaaS. SaaS Asset-light integrators Already strong in outsourcing. PC and handset/device OEMs seek to exploit device proliferation Network equip. seeking to set standards Equipment Players Computing. can be asset-heavy or light Pure Play ISVs Broad swath of SaaS ISVs vying for pieces of cloud market Aggregators Potential new class of SaaS/ PaaS players. including SaaS app stores Web VAPs Fragmented. but could leverage strength in web services into cloud Note: This is an idealized view of the future cloud ecosystem.4 Cloud services Many players are chasing the opportunity – Telcos must seek a way to solidify their position as value adding players Integrated Giants SI and outsourcing powerhouses with assetheavy offers across IaaS. partnering for IaaS. but focused on enterprise suites. showing the primary player types. significant scale economies Service Providers and Telcos Role evolving.

Enablers of Change New Business models New Reality 1 Devices 3 Data centricity 5 Social Media Digitalization 2 Ultra Broadband 4 Cloud 6 .

Linkedin reporting at November 2011. already represent more than 845 million users > 1200 M user accounts Reach of Social Networks  1 out of 13 world’s inhabitants has a Facebook account. led by Facebook. G+ 90 million Linkedin 135 million Twitter 200 million Facebook 845 million  With more than 845 million of users. Google reporting at jan2012. it would be the 3rd in the world. it is still growing 50% y-on-y +53% 360 608 845 Dec 2009 Dec 2010 Dec 2011 Source: Facebook IPO 2012. Booz & Company analysis Booz & Company February 2012 25 .5 Social Media Social networks.  If Facebook was a country.

… CORPORATE SOCIAL NETWORK MICROBLOG LOCATION Booz & Company February 2012 26 . travels.5 Social Media A developing ecosystem. with new and continuous additions that are exploiting the micro segmentation of this phenomenon Explosion of Social Networks PHOTOGRAPHY RECOMMENDATION MUSIC  More than 400 social network initiatives have been set up…  … in many different categories and segments: automobile. languages.

 .000 companies are using Yammer as a corporate social network…  … including 85% of the Fortune 500 companies # Yammer Users (MM) # Companies using Yammer ( ‘000)  Walmart is vey active in social networks – Get on the Shelf.5 4.5 Social Media Corporations and businesses should take social networks very seriously: upgrade from the fans site to making social-business Collaboration between employees Collaboration with customers  More than 200. where customers vote the products they would like to find in Walmart’s shelfs – Shopycat. it acquired Kosmix for $300 Millon. it acquired companies specialized in mobile publicity and retail technology associated to mobile phones X2. Additionally. Walmartlab Booz & Company February 2012 27 .6 80 X3 250 2010 2011 2010 2011 Source: Yammer.0 1.. …. a company specialized in social media and mobile commerce.. that recommends gifts based on your Facebook’s profile  Back in 2011.

social spend today is mostly focused at “top of funnel” – we believe there is even greater promise further down the funnel Marketing Funnel Typical Activities Branding What Social Media Enables  New environment for promoting broader brand  Forum for new social/viral content (often user-generated) Awareness Typical focus today Content Creation Traffic Generation  Additional ways to drive traffic to own site or social network presence  New microsites/widgets/apps to engage potential customers  Engage customers proactively in product/service innovation  New mechanisms for targeting and incenting potential customers  Additional e-commerce channel  Unique buying propositions  Purchases as syndicated social content  Deeper connection with customers after-sale  Activation of brand loyalists to market/sell on your behalf  Additional mechanism for community-based support  Rich sociographic data set for effective real-time social targeting 28 Consideration Engagement 1 Innovation / Ideation 2 Lead Generation Purchase Decision Conversion Greatest ROI transparency 3 4 Loyalty / Advocacy After-Sale Service Loyalty / Service 5 Booz & Company February 2012 Measurement .5 Social Media However.

Booz & Company analysis Booz & Company February 2012 Source: Marketing & media Ecosystem 2010 survey and Booz & Company analysis 29 . OMD Germany.5 Social Media Social Network relevance and the increasing digitalization changes marketing and requires a stronger presence in digital channels… Change towards Digital Marketing in Germany Media Usage evolution (Media use minutes/day) 594 96 67 (% of respondents changing their marketing expenses) 623 140 109 Marketing Expenses evolution Internet Messaging. others TV 574 44 49 220 Use of digital media ~10% CAGR Reduction Digital Mobile Direct advertisng TV Increase 209 189 Radio Print 221 40 194 166 Print Radio 100 -50 0 0 20 40 60 80 100 28 2010 19 2015 2005 % of subscribers Source: Media map in 2010-2015. Gaming.

5 Social Media … having the media companies. the first to be affected and to react. the geographical origin of comments…  Regarding advertisers. the profile of the most hooked viewers. given the potential of information and of real time interaction Social Media Response Analysis for Media Companies Social Media Sentiment analysis for Advertising (Superbowl 2012)  BlueFin detects. they have been able to identify that ads efficiency not only depends on creativity and “prime time” but also on the contents of programs taking place before and after the ads Advertising Analysis Superbowl 2012 The most appreciated advertisement Segmentation Source: Booz & Company Análisis. Bluefinlab Booz & Company February 2012 30 . registers and analyzes all the comments and the “sentiment” that is being generated in the social network regarding TV programs and advertisements  In near-real-time. you can visualize the success of the TV programs.

Enablers of Change New Business models New Reality 1 Devices 3 Data centricity 5 Social Media 2 Ultra Broadband 4 Cloud 6 Digitalization .

environment aware devices. near range ad hoc communication The Internet of Machines. location aware services.ubiquitous and seamless connectivity at no incremental cost or effort Smart Cloud .flexible working times. flexible employment relationships OnLineLife .6 Digitalization of industries Digital habits will be increasingly embedded in our daily life Upcoming Eras 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 VIEW 2012 Working Nomads .remote data storage.proliferation of machine-to-machine interfaces and interaction Semantic Networks Booz & Company February 2012 32 . teleworking. distributed computing SensorEconomy . software as a service.

Bounds and Fall-Backs eRecords for Patients Track & Trace Toll Roads Connected Supply Chain Smart Metering CRM Connected Health Ecosystem Converged Personal Health Self-optimizing Transportation Congestion Management Self-Adapting Supply Chain Crowdsensing Early Exploration eCommerce Virtual Business Augmented Reality Smart Infrastructure Immersive Converged Shopping Real-Time Segment-of-1 SelfAdministrating Infrastructure Now Today’s Opex: What Companies currently worry about 3-5 years eCommerce 5-10+ years The End-Game: What you should have in mind Tomorrow’s Growth: Where Venture Money currently goes to Booz & Company February 2012 33 .6 Digitalization of industries Transformation will happen in waves over more than a decade – but it pays to have the end vision in mind today The Digitalization Waves Transformational Impact Leaps.

generating increased demand for connectivity and ICT infrastructure Examples of New Digital Demands CAGR 2009-2014 1.5%  M2M solutions  Smart fields.2% 5.6 Digitalization of industries Digitalization is expanding to all industries. in billion EUR (Germany) CAGR 2009-2014 Booz & Company February 2012 34 .1% 2. Media & Services Financial Services ICT Spending 2014 2 Possible ICT Solutions  eLearning  Collaboration  Communication networks  Payment solutions  Supply Chain Management (RFID…)  Payment solutions  Supply Chain Management (RFID…)  Mobility solutions  eHealth solutions 1.4% 1. telecommunication equipment and services.7% 2.0% 3.0% 1.7% 2.6% 4 2 4 5 6 16 18 22 26 Industry Education Transportation Wholesale Trade Retail Healthcare Providers Utilities Government Manufacturing Com..5% 2. Smart grids  eGovernment solutions  Safety and security solutions  M2M solutions  IPTV / Mobile TV  Interactive content and games  Transaction infrastructure/systems  M-banking 1) Gartner:Total ICT in 2014 incl.

6 Digitalization of industries Digital opportunities and shift of the paradigm in other industries Possible ICT Solutions E-govement M2M Digital Security e-health Optimize supply of pharmaceuticals & medical equipment Enhance primary care services National Healthcare Plan Financial services Implement quality assurance programs Optimize hospital capacity Improve healthcare skills and expertise Loyalty Ticketing Facilitate patient transfer between facilities Develop patient transfer systems Promotions & coupons Self-scanning & Self-checkout Shopping lists In-store price comparison Develop a National eHealth strategy Store location Payment Booz & Company February 2012 35 .