Wireless Data Services

Simon Garth
Vice President, Marketing - Symbian
7/3/2006

1
Overview
• The mobile phone
…Where it is today
…Where it is going
…Modelling the opportunity
• Background - product adoption lifecycle
• Applying this to Wireless Data Services
• Example services
• Conclusion

2
Phone Evolution

Digital Revolution

3
Smaller, Faster, Better, Cheaper
From this...

to this...

…in twenty years...

4
 Consumer electronics device sales 2004
Units (Millions)

5
Worldwide mobile phone subscribers

Source: Merrill Lynch global wireless matrix

6
 Mobile phone penetration by country
100%
Korea
W. Europe
80% Japan
North America

60%
E. Europe

China
40%
World
South America
20% Rest of Asia
Africa & ME
India
0%
1995 1997 1999 2001 2003 2005 2007

Source: Symbian market model, Feb 2004

7
 Enabling smartphone evolution Established
Internet
Different markets have different evolutionary speeds Micro payments
Security
and directions Games
Multimedia
Imaging
Video
MP3
ID verification
Terrestrial TV
Emerging
Push-to-Talk
Automatic transactions
TDMA / GSM / CDMA / RFID
EDGE / CDMA2000 GSM → W-CDMA Personal monitoring
Established Terrestrial TV
Enhanced Voice Location based services
Internet Remote control
Established
Push-to-Talk Games
CDMA → CDMA2K
Wifi Multimedia
GPS MP3
Imaging PDC, CDMA → W-CDMA, CDMA2K
Enterprise apps
Emerging Emerging
Multimedia GPS
Internet Radio
Location Based Services Video
Music Broadcast services
Games Security
Location based services

8
The mobile phone today
• 3 Broad technologies
…GSM (Europe, Asia, Africa, some USA)
…CDMA (USA, Asia)
…W-CDMA, (evolution of GSM)
• Transition from voice phone to data phone
…Data added to voice services
…Priced by usage rather than connection time
…Stepping stone to 3G
• … but what do people what to do with 3G
• … will it turn out like the Internet?

9
Economics
• In Europe Licenses sold by auction
…Total cost of approx $100Bn
…+ Roll-out cost of $150Bn
• Funded by about 50% of the bond market from
1998-2002
• Total investment significant proportion of UK GDP
• Payback over 20 years
…Approx 2008 with substantial data take up
…Approx 2011 without

10
 2.5G, 3G bottleneck clearing
Market Dynamic Demand for non-voice services
Combination of new technologies
New device categories imminent
Over-hype!

100 fold
3. Content
market goes
increase in 10 mobile
years Over-criticism!
It’s easy to exaggerate
2. Stabilisation the short-term impacts
1. Voice Some market saturation of technological change,
goes 3G license debts and under-estimate the
wireless US economic slowdown long-run effects
Time

Expectations; Reality 11
The mobile phone device

12
Why do you need an OS?
Phone software is increasingly valuable
2000 2006

Software More complex phone technology

Effort required to build phone

1-2Mb
Software
More software applications
20-128Mb

Hardware Better user experience

Standardization of components Hardware

13
Evolving the phone with software
im i sed
ent opt
Segm
Phone Functionality

er ience
he d exp
Enric

ic e centric
Vo

Increased software

Fit-for-purpose
Differen- Portability Features Applications, brand, form
tiators Size, weight, battery life Display, memory, camera factor, end-to-end
solutions

Phone Fundamentally, smartphones will increasingly develop like consumer

vision electronic appliances

14
Projected handset sales
• Growth coming from emerging markets in Asia
• Growing 3G substitution assumed in Europe

Handset sales by region

Africa & ME
1,400 1,247 1,271
1,300 1,159 Americas
1,200 1,029 USA and Canada
1,100 912
1,000 Europe
810
900
Rest of Asia
800
Millions

651
700 Korea
600
Japan
500
400 India & Indonesia
300
China
200
100
- 2010
2004

2005

2006

2007

2008

2009

Source: Symbian market model, Oct 2005

15
 Replacements form the bulk of total sales

1600
1342 1364
Mobile phone unit sales (Millions)

1400 1247 1282

1159
1200 1029
912
1000 810
800 651
509
600 391 409 402
400 280
168
200 68 106

0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Replacements Net additions
Source: Symbian market model, Feb 2006

16
 In the hands of a small number of players
Fraction of sales volume (2004) 2004 Total
= 628m
100%
Others Others
Others Siemens
80 LGE LGE
SEMC SEMC
LGE SEMC
Siemens
60 Siemens
Samsung
Motorola Samsung
40
Motorola
Motorola
20 Nokia
Nokia
Nokia
0
<$120 $120-200 >$200
Average sales price ($)
Source: Dresdner Kleinwort Wasserstein estimates, 21 April 2005

17
Modelling a consumer electronics device

(Symbian estimates)
Typical BOM cost breakdown
(direct cost only at June '02 prices)
Software
250 Mechanical parts
225 PCB
200 Camera
175 Battery
Cost ($)

150 Display
125 Other semiconductor
100 Bluetooth
75 CPU
50 Baseband + RF
25 RAM
ROM
-
8210 T68 7650 P800

18
 Sizing the smartphone market

Addressable market forecast

700 180
585 598 601
600 568
544 150
Unit sales (Millions)

489
500

BOM Cost ($)

427 120
400
90
300 265
229
177 60
200
123
87
100 57 30
26
0 0
2002 2003 2004 2005 2006 2007 2008
So urce: Symb ian market mo d el, Feb 2 0 0 4

Source: Symbian market model, Feb 2004

19
Estimating volumes from price information

700 180
Unit sales (m)

BOM cost ($)

0 0
2002 2003 2004 2005 2006 2007 2008

Minimum specification Addressable market Total handset sales

bill of materials

20
What this tells us
• Mobile phone is mass-market
…One for every 5 humans on the planet
…One in 2 by end of decade
…Market won’t tolerate user complexity
• Its personal, not family oriented
…(unlike PC, TV)
…Opportunity
• Attractive to emerging economies
…Limited existing fixed line infrastructure
…China, India set to become mass markets

21
The future
• Move to full IP backbone
• 3G
…Higher bandwidth
…Simultaneous voice and data
…IPv6
• 4G
…Adds local wireless (integrated telco and wireless)
…VoIP
…IEE 802.11 (Wireless LAN), Bluetooth
…Short range, high bandwidth, low cost potential

22
Product adoption lifecycle

23
Industry business concerns
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tuurraattio Compelling features
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24
 Operators seeking future revenue from mobile
data
ARPU Breakdown for Orange

70

60

50
ASP / transaction
€ / Month

40 Content
Data Access
30
All voice
20

10

0
1998 1999 2000E 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E 2009E 2010E

Source: DKWR – Corporate information 25

Product lifecycle

Early Early Late Laggards

Adopters Majority Majority
26
High Tech adoption lifecycle
• After Geoffrey Moore “Crossing the Chasm”
• Requires “Whole Product Offering”

“Chasm”

27
Services overview

28
The services
• Voice
• Messaging
• Browsing
• Multimedia
• m-commerce
• games
• applications (delivered over the air)
• location-based services
• Corporate/enterprise

29
Requirements
• 3 Classes of service
…Vertical
…Publish/subscribe
…Peer to peer
• “Whole product” is critical
…“Value chain” (who gets what revenue)
…“Delivery chain” (who delivers what)
…End user enchantment (cf WAP experience)

30
Example - Multimedia Messaging
• Peer-to-peer
• “SMS with pictures and sounds”
• Whole product?
…Value chain
…Delivery chain
• Composer on the phone
• Needs a community
…Enchanting experience
• How to roll out
…Viral marketing
…Trojan horse/market power
31
Changing behaviour and business models
in adjacent markets

32
Impact on Imaging
Ever present, Always Connected
• Creating new usage models
and new experiences
… Life Diaries
… Video Chat
… Interactive content
… Remote monitoring
… Onboard photo editing
… Personalisation
… Remote printing
• New Business Models and
New winners

33
Increasing Accessibility
New Sources of Images: Changing the production of Images
e.g. BBC & Cameraphones
… 2003: BBC issues 40 2.5G Symbian OS phones to BBC journalists
for fast on-the-scene video capture
… 2004: 3G phones being rolled out to reporters
… Other broadcasters now running similar experiments
• Fox News, Reuters

More Accessible Content:

e.g. Mobile TV
…Mobile operators offering
Mobile TV services on
Symbian OS phones
• Including: TIM, Telefonica,
ATT Wireless

34
 Music and Mobility
Market Momentum
• The worldwide ringtone market:
… $3.5 billion in 2003, up 40% from 2002
… Representing about 10% of the global
music market
… Forecast global sales > $5.3 billion in
2008
Source ARC Group
• 2007: 52% of data enabled phones will
be music enabled.
Source: Strategy Analytics
• The under-25 age group in the UK
spends five times as much on mobile
phone calls, texts and content as on
traditional music formats
Source: mobileYouth
Next generation iPod?
• Onboard Storage in increasing e.g.
4Gbyte phone from Samsung
• Integrated Application Architecture,
allowing users to do more with music
New Industry Players
• New record labels – Operators..?
• New distributors - Coca Cola, Sony,
MSN, Tiscali, Wanadoo, HMV, Virgin,
Woolworths, Wal-Mart, Carphone
Warehouse, artists direct to customer
• E.g. Carphone Warehouse, European
Retailer becomes Content Distributor
… Robbie Williams album sold on
memory card in phone retailer
35
 Emerging services
• Multimedia Services
… TV – DVB-H, DMB
… Music
• Convergence Services
… Operators looking at fixed and &
mobile assets
… Infrastructure, service and device
convergence
… Dual-Mode devices shipped will
increase rapidly over the next 3 years,
reaching 26.8 million by 2009 (Yankee)
• BT Fusion
• Orange/FT NExT strategy
• Telecom Italia, T-Online/T-Com…

36
 Sky Mobile – Content on mobile
• Client-server solution to integrate TV
with additional services
… Performance
… Functionality (vs browser)
… Phone Integration
• Shows how content providers will use
Smartphones as a delivery channel
• Early example of major content going
mobile

37
Games - consumer applications driver

• Growth market
• Channels are in place
• Very profitable use of
data

38
High performance games

39
 New Service Paradigms
Virtual Identity

Mood
Generic & Custom
Messages Location

Phone Status

40
Conclusion
• Snapshot of mobile telecoms market
• Complex problem
…Technology
…Market
…Economics
…Social engineering
• Has the power to reshape the world
…Rather like the railways
…But like the railways – who will make the money?

41
• Questions or comments:

• simon.garth@symbian.com

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