Frost & Sullivan

TMT Practice – Strategy and Business Plan Telecom, Media and Technology Practice

Outlook for 2012 and beyond

Agenda 1 2 State of the Industry 2011 ICT Outlook 2012

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analytics and social media as top of mind concerns 9. Rise of mega Platforms – they have hit Telco core e.g. Social web has truly arrived 8. Smart TV shipments gained momentum changing the plans of TV service providers 11. Fiber deployments in developed countries gained momentum in 2011 early LTE deployments in 2011 10. Mobile marketing grew at a scorching pace 3 . however data deluge has cost challenges 3. Telecom Operators are struggling to find growth in their core business – voice 5.2011 State of the Industry: Summary 1. The post PC era is here – with mobile dominating every discussion (~ 150 mn smartphones and ~ 5 million tablets) 2. Data revenue growth has been robust for most markets. IT spending would grow by around 7-8 percent in the year 2011 with cloud ready architecture. Cloud computing continued to gain momentum in the region with > 40% growth in revenues accruing to public cloud providers 7. Telecom operator margins are declining so profitable data growth is key 6. SMS revenues 4.

Agenda 1 2 State of the Industry ICT Outlook 2012 4 .

#1: Post PC era will transform APAC into the largest mobile internet market Global Trends ~ 480mn Tablets ~ 380mn Netbook PCs Smartphones Desktop PCs ~ 155mn Tablets Smartphones 2011 2011 (e) 2011 (e) 2011 600 mn ~ 150mn Netbook PCs Desktop PCs Asia Pacific Trends Mobile device sales Mobile internet growth 1250 mn • In APAC. India and Indonesia will double 5 . mobile devices have overtaken PCs in 2011 • ‘Browsing minutes’ to exceed voice minutes by 2012 • Mobile internet market lead by China.

vendors and enterprises alike Market Seeding Upto 2008 Device Driven growth 2009-11 • More mobile BB devices than fixed BB devices • Packet data exceeded voice data on mobile networks in 2010 • Apps are the new internet Mass Market Phase 2011. automotive Networked Society 2015+ Wide penetration of devices and networks Cross industry business models Information ubiquity • Initial seeding to monetize 3G networks • Flat rate as a demand simulation mechanism 6 .#1: Mobile Platforms hitting critical mass across smartphones and tablets Mass market phase will aggravate the challenges for operators.2015 Video driving the growth of mobile date traffic Data Traffic per user (Moore’s Law): Doubling nearly every 18 months Smartphone is mass market 80% of internet users to have mobile internet IT needs to support such devices Initial creation of new business models – healthcare.

0 Graph not to scale Video overtook Mobile devices Digitization – Digital content overtook analog static pages sold> Fixed devices content 7 .0 + Aug Reality Mobile Cycle 2G Based Comm Internet Cycle Email/ Web Web 2.#2: Platform play across the ICT sector would be the critical value generator 3 ecosystems are converging in the mobile computing ecosystem with diverse approaches 1990s 2000s 2010s 2015 2020s Collision Phase Convergence Phase Computing Cycle Client-Server Computing PC as Workhorse Cloud PC as Computing Entertainme Web nt/Personaliz OS ed Laptops/Netboo ks Tablets Mobile Fixed BBSmartphone Mobile Cloud Customized internet Tablets/phone Growth s s Apps Soft SIMs Web 3.

Facebook platform Apple’s platform Google platform Inhouse? ?? Communication Platforms Entertainment Platforms Information Platforms (monetized by ads) NFC enablement Skype (Acquired) Xbox/PS3 Hulu ? Microsoft? PayPal Operator alliance Twitter? RIM (Acquired?) 8 Itunes /app store Youtube Google Commerce Platforms Participation/SNS Platforms Experience Platforms – OS + Web NFC enablement Google + iOS Android . Microsoft acquired Skype in 2011 and we can expect to see more action in the coming year. SKT re-organized to SKT and SK Planet to focus on platform business globally. In Asia Pacific.#2: Platform play across the ICT sector would be the critical value generator By 2015 there will 2-3 platform choices for each need and 2-3 overall integrated platforms.

#3: Fixed Broadband and 3G/LTE will provide options for high speed access Fixed Broadband – Asia Pacific 3G/LTE – Asia Pacific 1. • MBB through dongles will touch 41mn in 2011 and reach around 100mn by 2014 9 .25 bn 375mn 212mn 466mn 2011(e) 2016(f) 2011(e) 2016(f) • The fixed broadband market continues to grow in Asia Pacific region despite of the heavy penetration of 3G/LTE.

10 .1% NTT DoCoMo (Japan).0% Vodafone (Germany). 80.0 TeliaSonera % (Sweden). 0. 42. 90% 80% CSL (Hong Kong).2. 37.5. 74.3% Conservative pricing: charging a premium for LTE but allowing for reduction due to churn and competition 70 80 Strategic pricing: charging based on specific constraints like network quality and 90 expansionary plans Average LTE Speed (in Mbps) Note: MetroPCS has been omitted in the chart as it has never offered 3G services. 21. 8. 25. 80.9 T-Mobile % (Germany). LTE technology enables mobile operators in mature markets to command a significant price premium over their existing 3G services. 14.#3: Fixed Broadband and 3G/LTE will provide options for high speed access In general.5.2% Aggressive pricing charging large premiums for LTE service Loose correlation between advertised speed and premium 4G Premium over 3G (in %) 70% 60% 50% 40% 30% 20% 10% 0% 0 10 20 30 40 50 60 Verizon Wireless (USA). 8. 21. 80.6. 84.3% Tele2 (Sweden). 37. 42.7% Telenor (Sweden). Most have increased data volume caps with introduction of service.

equipment and gadgets get connected creating opportunities for value creation and new business models The Home Network Mobility on steroids Internet of things ‘S’ Citizen ‘S’ Business ‘S’ City Planning ‘S’ Buildings ‘S’ Mobility ‘S’ Energy • 8-10 Devices per home • Universal Remote • 5-6 Devices per individual • Touch as the default input mechanism 30 bn • 500 per sq km • Smart cities 6 bn 44 bn • Rapid commercialization of enabling technologies • Demand for such services in select sectors driven by productivity requirements • Emergence of early business models to monetize the opportunity 11 .#4: “Internet of Things” will further accelerate as more and more devices.

132 2.000 Note Survey done with IT Managers and CIOs in Australia.000 5.000 4.224 1.575 1.807 16% 3% 5. Hong Kong. 0 2010 2011 2012 2013 2014 2015 APEJ Cloud Computing is market expected to grow at 39% for the 201020102015 period.000 71% 29% 3.#5: Cloud computing is set to become mainstream in Asia Pacific region. 64% with >500 employees and 36% with 200 to 499 employees.000 10% 2.284 US$ millions 4. Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industry Hybrid clouds lead the way. 12 . Cloud adoption growing at a rapid pace 6. India. Singapore and Malaysia in Q2 2011.000 Not adopted yet Public cloud Private cloud Hybrid cloud 1.124 3. China.

#5 Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industry The cloud value chain will disintegrate and consolidate later Yr1 Current View (2010) Interim View (2011-12) Device Presentation SaaS Application Management Tenancy Managers PaaS Platform Brokers/Aggregators IaaS Synchronization Hosters/Infrastructure Source: Frost & Sullivan Yr7 End game Software Reseller Software Reseller 2-3 end to end cloud players Preferred partnershi ps of SPs with software ( retail model) 13 .

Social TV and internet video will transform TV TV gets social and viral TV becomes an app Free flow of internet video and broadcast video 14 .#6: The world of TV is going to change forever – click for 1000 channels Smart TV.

CRM analytics.#7: Big Data and Analytics will see reaching the chasm in 2012 and get deployed through variety of platforms and be enabled by emerging technologies Data is expected to increase dramatically over the next decade. analytics. Data warehouse generation Organization financial / strategy analytics In-line and predictive analytics Move more towards cloud Operations Research Network performan ce & Utilization Big Data Industry Specific Solution Sentiment Analysis & Text Analytics Security 15 . Data from machine communication and IOT is expected to exceed social media in the next half decade Contextual Mining Growth Areas @ Analytics Queries. Advance analytics. Reporting.

#8: Enterprise communications would become richer.Native and new Generation Y workforce 16 .ESN Cloud .Pervasive video Context & presence aware Shift from Capex to Opex Consumerization of IT Collaborative Communications Conferencing . more collaborative and increasingly move towards the cloud Improving Infrastructure Declining Telecom Costs Rich Communications Increasing Globalization .

#9: Telco transformation will evolve Telecom operators need to look at revenue growth and profitability growth Telecom Transformation Services/Business Transformation Protect/ New Revenues • Enterprise ICT Services • Cloud • Data Centers • Mgd services • Unified comms • Appifying Services • Backhaul optimization • Devices • IP Migration Network Transformation Reduce cost per bit • Segmentation of mobile broadband • Demand and pricing management • Migration to LTE Customer Mgmt Transformation Increase agility • Faster rollout of services • Customer centricity Organizational Transformation Be ready • Process re-engineering • Knowledge acquisition • Metric definition • Automation/ IT Factory 17 .

Warren Buffet If you are so smart .#9 Telcos should be a pragmatic pipe and invest effectively Telecom operators need to look at revenue growth and profitability growth Smart Pipe Strategy Dumb Pipe Strategy People reward difficult complex behavior more than simple behavior. but simple behavior is more effective . The Black Swan Pragmatic Pipe 18 . why aren’t you rich ? -Nicholas Taleib.

#9: Consumer’s communication behaviour is changing Communication doesn’t mean voice and SMS any more 19 .

VLSI and smart power management will change the scale and scope of BTS • Antenna collapsed into the cell – the cube can be as small as 10 cms Femtos • USB drive form factor for femtos • Femtos can be added to other devices like gateways Sharing • Active sharing • All – IP networks More of the same • Spectrum refarming • Hetnet • Offloads 20 .#9: Network transformation is key to achieve the ambitions of a pragmatic pipe Metamorphosis of networks – Small is Big Small Cells– rapid scaling of sites • Light Radio pioneered by ALU. HP and Freescale shows how SDR.

#10: Digital Engagement will change marketing Gamification So-Lo-Mo Mobile marketing 21 .

#11: Security will be the Achilles Heel Huge security issues – in every data that is shared IBM : No passwords by 2016 22 .

Urban Planning Healthcare Automotive SMART LIVING Electric Vehicles SMART PUBLIC SPACE ***** Financial Services Retail Virtual Shopping Consumer Electronics From 2D to 3D HDTV Morphing Energy Biotechnology Solar PV Cells Travelling Wave Reactor (TWR) 23 . move beyond pure ICT industry to drive growth. value and margins in the future .#12: ICT as an enabler will continue to gain momentum as telcos. SIs. ISVs etc.

Sneak preview for 2013 24 .#13: World of flexible materials.

Summary Till 2010 5 Till 2020 80 Penetration 0.9 Growth in connected devices 6 Connections (bn) Connected devices (bn) Explosive growth >12% Mature Growth 4-5% Telecom Outside Acquisition focused Telecom inside Smart enabler 25 .

Thank You Global Growth Partnership Company 26 .