Using S60 to increase revenues in mature markets

Innovation and Open Source from an operator perspective

Telefónica Móviles España Devices Innovation April 25th, 2007

Index

01 02 03

Operator challenges in an open environment How S60 helps operators to succeed Summary

Telefónica Móviles España Devices Innovation

2

Operator challenges in an open environment

Telefónica Móviles España Devices Innovation

3

01 Current environment

Data services beyond SMS

SMS no longer is the unique relevant data bearer (TEM)

3G and 3.5G is here (TEM)

Telefónica Móviles España Devices Innovation

4

01 Current environment

Advanced devices, more enablers
Millions

Smartphone market is expected to exceed 250 million units in 2008 Smartphones of today are small computers connected to internet

25 20 15 10 5 0
Others RIM Linux Palm M S Symbian M OAP Symbian UIQ S80/ 90 S60

03'Q1

03'Q2

03'Q3

03'Q4

04'Q1

04'Q2

04'Q3

04'Q4

05'Q1

05'Q2

05'Q3

05'Q4

06'Q1

06'Q2

06'Q3

Telefónica Móviles España Devices Innovation

5

06'Q4

01 Current environment

Openess as the key on the new ecosystem

Main players are taking this path with different level of commitment and evolution:
Certain Technical Knowledge Shared With the Partners Technical Development of some core technology within OpenSource User Generated Content Communities Web 2.0

Open APIs

Openess as partnership
Telefónica Móviles España Devices Innovation

Openess as Openess as Openess as developer community growing tool a source of innovation a part of the business model
6

01 Current environment
Customer perspective
“I understand telcos and ISP tariffs”

“I know that my mobile phone is like a little computer connected to Internet”

“Data services are good for me, as the voice and SMS” “I belong to an open world, with endless choice”
Telefónica Móviles España Devices Innovation

7

01 Current environment
Operator perspective

Traditional barriers have been removed and the competitive environment is complex:
— — —

Third party access to device’s operating system Endless choice by customers Defensive strategies will not work in the long term

Operators need to provide superior value to succeed:
— — —

Delight the customers with the best care and services Using effectively customer knowledge Giving the best experience through technology

Telefónica Móviles España Devices Innovation

8

01 Capturing innovation
And the Open Source role

Innovation is one of the roots of sustainable competitive advantage Innovation is derived from diverse groups with specialized expertise

The greatest breakthrough for open source is applying collaborative methodologies for development Inherent in collaborative practices could be a greater opportunity for innovation than competitive practices

But not only software!!!
— —

Shared and superior knowledge (i.e Wikipedia) User Generated Content

Telefónica Móviles España Devices Innovation

9

How S60 helps operators to succeed

Telefónica Móviles España Devices Innovation

10

02 Innovation and Open Source

The browser and the “Write once - runs everywhere” promise revisited

One of the best mobile browsers in the market with an Open Source Core:
— — —

Reliable: Tested by the community Committed to standards Interoperable: Proven on desktop environments (Safari)
Apple Safari Browser S60 Web Browser

KHTML web core engine (Open Source)

With full HTML support, AJAX and other open protocols like RSS, the promise of “write once - runs everywhere” for convergence applications looks feasible

Telefónica Móviles España Devices Innovation

11

02 Innovation and Open Source

Open C: Bringing open source methods and current applications to mobile

Telefónica welcomes the announcement of S60 to provide more than 4000 C function calls with its Open C environment, allowing the industry (and the community):

To easily port relevant applications within the mobile environment:
– –

Apache Web Server Python and Perl execution environments

To reduce the current differences between connected PCs and mobile phones is key for converging applications To be closer to the Open Source methodology , commitment with standards and quality of generated software To increase the competitiveness on the application market

Telefónica Móviles España Devices Innovation

12

02 S60 as source of differentiation
Operator Variant

Unique user experience allows operators to:
— — —

Increase the commitment with the brand Have a consistent Movistar user experience: look & feel Simplify the access and promote new services and applications

New enablers available on S60 allows the remote updating of all this stuff, creating:
— —

Deep segmentation, on the limit, customer by customer “Updated Value” of the Operator Variant concept

Telefónica Móviles España Devices Innovation

13

Summary

Telefónica Móviles España Devices Innovation

14

03 Summary
We are entering in a brand new environment, within a new way of understanding of the mobile communications by the customers

The sources of differentiation from the operator perspective are also new and we need to evolve to keep relevant on the new ecosystem

S60 is an outstanding tool that could help operators to capture innovation, reduce the time to market and the fragmentation, and provides sources for a deep differentiation

Telefónica Móviles España Devices Innovation

15