2010 Outlook & Forecast Mobile & Wireless Communications

J. Gerry Purdy, Ph.D. VP & Chief Analyst Mobile & Wireless Communications North America

Analyst Briefing December 1, 2009

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Wireless Subscribers: Past, Present & Forecast

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Worldwide Wireless Subscriber Market

Description World Mobile Subscribers World Population World Mobile Penetration

2006 1960.0 6575 30%

2007 2281.8 6625 34%

2008 2591.3 6675 39%

2009 2824.5 6726 42%

2010 3022.3 6778 45%

2011 3203.6 6831 47%

2012 3363.8 6885 49%

2013 3531.0 6940 51%

2014 3685.6 6997 53%

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US Wireless Subscriber Market

Description U.S. Population U.S. Mobile Subscribers U.S. Mobile Penetration

2004 291.0 182.1 63%

2005 294.0 208 71%

2006 297.0 233 78%

2007 300.0 249 83%

2008 303.0 267 88%

2009 306.0 281 92%

2010 309.0 295 95%

2011 312.0 307 98%

2012 315.0 316 100%

2013 318.0 325 102%

2014 321.0 333 104%

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Wireless Handset Sales: Past, Present & Forecast

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Global Mobile Device Forecast

Source: Frost & Sullivan 6

Global Smartphone Device Forecast

Source: Frost & Sullivan 7

Global Smartphone Device Market Share
Nokia will see increased competition, but will remain the global leader.
With devices like the iPhone from Apple, the Magic and Dream from HTC, and the Tour from Research in Motion, and upcoming smartphones from the likes of Samsung and LG, Nokia will continue to see its dominant foothold on the smartphone market shrink from 44% today, to around 36% in 2014. RIM should continue to hold around 17% of the market, while companies like Apple, HTC, Samsung, and LG should account for a large part of the bite out of Nokia’s share of the market.
Chart 2.3: Global Smartphone Market Share Forecasts Global Smartphone Market Share (2008) Global Smartphone Market Share Forecast (2014)

Source: Frost & Sullivan

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Global Smartphone Operating System Forecast

Source: Frost & Sullivan 9

Global Smartphone Operating System Market Share
Android will make the biggest jump in market share by 2014.
Due to the low cost and availability of the Android OS, it is expected to grow from approximately 1% of the global smartphone market to the third largest share – 12% by 2014. This could become the fastest growth for a mobile product in the history of the mobile industry.

Apple will remain strong, but is limited by its proprietary model.
Although the iPhone is the most popular product on the market, ultimately, Apple will be limited by having fewer models available. This could change if Apple decides to release multiple iPhone product lines similar to its business model with the iPod product.
Chart 2.5: Global Smartphone OS Market Share Forecasts Global Smartphone OS Market Share (2008) Global Smartphone OS Market Share Forecast (2014)

Source: Frost & Sullivan

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North American Smartphone Operating System Forecast

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North American Mobile Operating System Market Share
RIM maintains the dominant smartphone OS in North America, but their market share will be significantly reduced by 2014.
With 58% of the North American smartphone market share, RIM hasn’t had a lot of competition from its competitors. Although Apple has been successful with it’s iPhone product, it hasn’t been able to gain on the breadth of RIM’s blackberry product line. Windows Mobile has been limited by licensing fees and underperformance. However, with the introduction of Android and Palm WebOS, competition and products will be coming from all angles. This competition should provide the variety in the North American smartphone market that will really fuel the growth of the market as a whole.
Chart 3.2: North America Smartphone OS Market Share Forecasts North American Mobile Operating System Market Share (2008) North American Mobile Operating System Market Share Forecast (2014)

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Mobile & Wireless: 2010 Outlook

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2010 Mobile & Wireless Trends

App Stores explode o Device manufacturers, carriers, 3rd parties o Make vs. buy o Next new thing in Apps: Mobile Application Generators eBooks finally enter mainstream o Kindle followed by Nook followed by Plastic Logic followed by Apple o Barnes & Noble Mobile ad exchanges o Google buys AdMob o Exchanges serve agencies which serve brands Mac increases market share o Outlook for the Mac & conversion tools will make a difference o Windows 7 is good (finally) but Windows Mobile isn’t great

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2010 Mobile & Wireless Trends

SmartPhone OS platform wars o The stakes are very high ($ billions at stake) o Android, Apple, Samsung, Palm & Motorola prospects are up o RIM, MS & Nokia prospects are down Wi-Fi MiFi My-Fi … every phone becomes a MiFi

LBS becomes pervasive and embedded in all apps Google Voice o Will the FCC intervene? Will it change voice in mobile? Google Navigation o Will it end paid turn-by-turn navigation? Future of PND o Replacing in-dash navigation in cars o Will PNDs be replaced by SmartPhone?
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2010 Mobile & Wireless Trends

Hybrid approach to Cloud Computing o Many services managed in the cloud o Device capabilities continue (more processing, display resolution, graphics and storage) Net Neutrality has limitations in the world of wireless o Open, interstate highways o Toll roads with QOS, throughput and low latency Moores Law will squeeze netbook market share o Integrated wireless bundles migrate to notebooks o Notebook prices keep falling thus squeezing out netbooks All wireless handsets for consumer use become SmartPhones Within five years, all phones in US will be SmartPhones Enterprise mobile becomes more centralized & managed as a service
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Mobile & Wireless Leads the Global Economic Recovery

Mobile and wireless experienced slower growth during the recession o But, the number of subscribers actually grew o And, the growth in SmartPhones was amazing People have become very dependent on the mobile phone o They would return home to get it if left behind (along with wallet & keys) o It is their primary contact method for business and personal o You need it to get a new job In 2010, mobile & wireless is a shining star in the economy o Mobile becomes a leader in the rise from recession o And, innovation will continue with new eBooks & SmartPhones

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Next Steps
Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678)

Register for the next Chairman’s Series on Growth: How to Be a Visionary: Leveraging the CEO’s 360 Perspective Model, January 12, 2010 (http://www.frost.com/growth)

Register for Frost & Sullivan’s Growth Opportunity Newsletters and keep abreast of innovative growth opportunities (www.frost.com/news)

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For Additional Information
For Additional Information

J. Gerry Purdy, Ph.D. Principal Analyst, Mobile & Wireless Communications (404) 406-5309 gerry.purdy@frost.com

Brent Iadarola Global Research Director Mobile & Wireless Communications (210) 481-0752 biadarola@frost.com

Craig Hays Director of Sales Information & Communication Technologies (210) 247-2460 chays@frost.com

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