Mobile driving Internet to the masses - Mobile Internet World 2012

IBM Institute for Business Value

Mobile driving Internet to the masses
Rob van den Dam
Global Telecommunications Industry Leader

© 2012 IBM Corporation


The IBM Institute for Business Value creates fact based
thought leadership that help clients realize business value

Future Value Realization CXO
Agendas Studies Surveys

3 to 10 year industry outlook In-depth assessment of today’s Chief Officiers studies – CEO,
with action oriented next steps critical issues, opportunities, etc CIO, CMO, CFO, CHRO, etc.

2 © 2012 IBM Corporation


Agenda

 A short Look Back

 Disruptive Forces

 A Connected and Smarter world

 Telecom as Middleware for a smarter world



Over the past decade global communications penetration - and
mobile cellular telephony specifically - has been phenomenal
Telecom Penetration 1999 - 2011

90% Mobile subscriptions
Internet Users
80% Fixed Telephone lines
Fixed BB Subscriptions
70%
Mobile BB Subscriptions
60%

50%

40%

30%

1999: 2011: 20%
Access to Mobile- 10%
telephone cellular
of any kind subscriptions 0%
1999

2001

2003

2005

2007

2009

2011
± 15% ± 85%
4 Source: ITU Statistics database © 2012 IBM Corporation


CSPs* in developing markets have shown strong growth and even
lead the way in adoption of the SMS-based data lifestyle applications
Mobile Cellular Subscriptions 140%
Telecom Penetration
120% Developed
100% Developing
China
80%
2001 60%
Total 719 40%
million 20%
0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
2011 SMS-based data lifestyle applications
Total 6
billion China Mobile offers
Developed
‘Nong Xin Tong’ for
Developing farmers to provide news,
weather information and
details of farming-related
government policies (50
million users)
± 1 billion

5
*Communications Service Provider © 2012 IBM Corporation


Then came the era of mobile internet, data, a mass of applications, and
the ability to also send images/video from everyone to everywhere

Mobile internet subscriptions Q3 2011
Mobile data
50%
40%
Data
30%
20% Developed
Developing Voice
10%
0%
2007

2008

2009

2010

2011 Smartphones/Tablets
App Stores
In 2011 sold:
Nbr applications: - 490 Mio Smartphones
(63% 10/11 growth)
- iPhone Apps > 500K
- 210 Mio Notebooks
- Android Apps > 600K (7.5% 10/11 growth)
- Window Phone > 100K - 63 Mio Tablets
(274% 10/11growth)


In China, as in many other Asian markets, mobile devices are the
primary device to access the Internet

Mobile Internet as percentage of Mobile subscriptions and Internet users
(January 2011)

100% Mobile Internet Users as % of Mobile Subscriptions
Mobile Internet Users as % of Internet Users
80%

60%

40%

20%

0%

South Japan China US Indonesia India
Korea

37% June 2012 72% June 2012
Source: ITU Statistics database


In China, the number of 3G subscribers is growing fast; China
surpassed US in smartphone shipments
30% Share of global
3G subscriptions in China
40% Smartphone shipments
as percentage of Mobile
30% subscriptions 20%
20%
2011
10% 10%

0%
2009 2010 2011 2012 2013F 2014F 2015F 2016F 0%

30%
Internet & Mobile Internet users
600
Internet Users Mobile Internet Users
20%
500 2012
400
10%
300
200

100 0%

0 China US India Brasil UK
2008Dec 2009Jun 2009Dec 2010Jun 2010Dec 2011Jun 2011Dec 2012Jun
8 Source: China Internet Network Information Center, 2012; IDC 2012


Dramatic forces are radically altering the telecommunications land-
scape, confronting CSPs with both major challenges and opportunities

Disruptive Over- Empowerment of
the-Top (OTT) Consumer
Competitors

Rise of Social Active Government
Media Involvement

Explosion of Change in Global
Mobile Data Hierarchy



OTT providers are expanding their dominant position in the
communications landscape

Market Value

Market
Value of Market
Top 25 Value of
drivers = 1/2 Top 150
Telecom
of
Internet Providers
traffic 70% of market cap

The massive shift in value continues towards the OTTs as capital markets
prize the direct customer relationship and value provided by OTTs,
>>>>>>> reducing the CSP valuation back to utility status!


Almost each Social Media tool as the world knows it has
its equivalent in China

Source: MCI China 2011


Chinese Consumers are increasingly communicating over-the-
top: IM, Chat, Internet Video streaming, Social Networks, VoIP
Daily
UNDER 25s Usage

1 Email/IM/Chat 87%
2
3
Mobile Telephony

Social Networking
85%
62%
62%
of under 25s
4 Video Streaming 57% use social
networks
5 Fixed Voice 47% daily
6 VoIP 26%

1 Email/IM/Chat 89%
2 Mobile Telephony 87% 57%
of under 25s
3 Fixed Voice 68%
with Internet
4 Social Networking 60% stream or
5 Video Streaming 59%
download
video daily
ABOVE 25s 6 VoIP 41%
Source: 2011 IBM Global Telecom Consumer Survey


Internet users in China use mobile/wireless devices to
access the internet more than consumers in mature markets

Half of Chinese internet users access UGC, Daily Mobile/Wireless Internet access:
live video broadcasts and audio content daily comparison between China and mature
markets (% of survey respondents)
User Generated
Content 49% 45%
(e.g. YouKu) 51%

20%
Live Video 51% 41%
Broadcast

Audio Content 43%
(e.g. online music, 54% 37%
Internet radio) 19%
Daily Use Weekly

China
21%
Microblog users in China
(in millions & percentage of internet users) Mature
10%
markets
2010 63,1 (13.8%)
(47,7%)
2011 249,9

Source: 2011 IBM Global Telecom Consumer Survey,; China Internet Network Information Center, Jan 2012


According CNNIC instant messaging is by far the most used
mobile Internet application, putting pressure on CSP revenue

Population of users of mobile Internet services to total mobile Internet
population in China (end June 2012)

Instant Messaging 83%

Search 67%

News 58%

Music 0,492

Microblogs 44%

Online books 42%

Social Networks 41%

Games 30%

Videos 28% Source: China Internet Network Information Center, 2012;



Mobile data (really video) explodes, causing significant capex
and opex pressures on CSPs

Global Mobile Data Traffic, 2011–2016
(TB x 1000/ month)
10 8 0 4
10804
Mobile VoIP Middle East & Africa
Mobile Gaming Central & Eastern Europe
Mobile File Sharing
20%
Latin America
6896
78% 6896
18%
Mobile M2M North America CAGR
Mobile Web/Data Western Europe
4 2 15 4215 23%
Mobile Video Asia Pacific
2379
2 3 79
70.5
12 52 % 1252
40%
59 7
597

2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016

2011 2016
• Global mobile data grew 2.3-fold • Mobile data traffic will increase 18-fold
• Mobile video traffic exceeded 50% • 2/3 of mobile data traffic will be video
• China accounts for 5% of mobile traffic • China will account for > 10% of mobile traffic

Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011–2016.


Consumers now have unprecedented power to build & demolish
brand strength as they blog, text and comment via Social Media

Perceived Quality
Mobile Internet Connection What happens when being disconnected?
Availability Disconnections Most/
Always sometimes Never
Sometimes/
Never

7% Always Attempt to
redial/reconnect 34% 61%
25% Most 93%
23% of Tell friends about my Tell friends/
the poor experience 14% 79% family bout
time their poor
Most of the time

Avoid providers with experience
whom friends had bad 15% 75%
43% experiences
Contact customer
90%
8% 77% Avoid
service
Providers
Never/Sometimes

69% with poor
Switch providers, - 8% 62% experience
e.g. use a different SIM
Always

32% My provider proactively 9%
58%
contact me

16 Source: 2011 IBM Global Telecom Consumer Survey, China © 2012 IBM Corporation


Family/Friends, Internet search and Social Media have
become the preferred sources of information in China
What are you preferred sources of information when you are looking
for communication products and services?

66%
Recommendations/ advice 72%

56%
Internet search 57%

45%
Social media 59%

34%
Websites of communication providers 24%

20%
Emails/ promotional offers 15%

18%
Traditional advertising 19%

8%
Shopping portals/ auctions 10% All Ages
Under 25s
8%
Retail stores 11%

Source: IBM Institute for Business value 2011 IBM Global Telecom Consumer Survey,
17 Question: What are you preferred sources of information when you are looking for communication products and services? © 2012 IBM Corporation


Active government involvement means increasing
regulations

2010 70% of Telecom CEOs
Global anticipate heavier
CEO Study regulations ahead
Small government, light Big government, heavier
16% 14% 70%
regulation regulation
Move or return to unrestrained Greater government involvement,
market with limited state more regulation and government
ownership or regulatory reform as a stakeholder in strategic
businesses

CH EU
Broadband
regulations

18


The global hierarchy is changing as we see a shift of economic
power from mature to emerging markets
Expected Consumer Spending Mature Expected Consumer Spending
Mature
Net Increase/Decrease markets Net Increase/Decrease

Mobile Telephony M obileTelephony
40% Utilities Utilities 4%

Mobile Broadband M obile broadband
36% Food &&drinks
Food drinks -3%

Transportation Transportation 33% Transportation
Transportation -6%

Fixed Telephony. Fixed Telephony 33% MobileMobile
Broadband
broadband -10%

Holidays
Holidays/vacations
32% MobileTelepony
Mobile Telephony -14%

Clothing Clothing 28% PayPay television
television -16%

Utilities
Electric/Gas Utilities 27% Sports Sports -18%

Food & drinks Food & drinks 27% Fixed Telephony
Fixed Telephony -19%
Going out Going out
20% Clothing
Clothing -19%

Elect. Appliances Electrical appliances
16% Holidays
Holiday/vacation -23%

Pay television Pay television 16% +26%average
Electrical
Elect.Appliances -24%
appliances

Sports Sports 5% Going out out
Going -32%

Q4 2011 Mobile Operators Q4 2011 Mobile Operators
Service Revenue Growth YoY: 14.6% Service Revenue Growth YoY: 0.6%
Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?


In China, people expect to significantly increase spending
on mobile broadband

Net Increase / Decrease Consumer
spending MOBILE Broadband
(2011 – 2014)
Emerging
Markets 45%

Netherlands
35%
31%

Germany
Czech R.

Australia
Canada.
Portugal

Belgium

Sweden
Greece

France
Cyprus

Japan
Spain

USA
Italy

15% 15%
UK

12%
8%
5% 6%

-3% -2%

South Africa
Russia
UAE

China
Poland

India

Korea
Mexico

Brazil
-7% -7% -6% -6%
-10% -9%
-13% -12%
-16% -15%
-20%
-25%
-32%

-43%

Q05 Compared to 2010 and previous
Mature Markets years, are you likely to spend less, the
same or more on the following products /
services in the next 2-3 years?
20 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865; Emerging Countries N=4372; © 2012 IBM Corporation
Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?


IBM’s Telco 2015 Scenario envisioning study reveals four contrasting
likely future scenarios for the telecommunications industry

FUTURE INDUSTRY SCENARIOS
•• Disaggregation of
Carrier collaboration
CLASH OF • Carrier Assets
Co-op of
GENERATIVE
and alliances
GIANTS infrastructure
•• Involvement Vertical
Common Critical
BAZAR
End-to-end Govern-
Success Attributes
providers
ment, Municipalities
Market solutions
• Fragmentation
•• Mega & Affordable
OpenCarriers
Cost-effective ultra-fast
broadband strategy
connectivity to in
•• Driven
Network /customer insights to by Brands
Emerging Carriers
optimize experience & costperson/object
any
Mature markets
Agile, flexible, reconfigurable
processes & infrastructure
•Reduce Spending
Cost containment
Consumers
Culture of innovation and
• ARPU Erosion
collaboration
• Investor Loss of
SURVIVAL MARKET
Confidence
CONSOLIDATION SHAKEOUT
• Cash Crisis



For all four scenarios rollout of new technologies are required to
solve the problem of disassociated revenue and costs
500

WiFi
Million
subscribers
MEA

Traffic 400
Latan
Volume / Voice Traffic
300 Asia/Pacific WiFi
Revenue Dominant
Mobile
200 CEE Data
Network Cost
Offload
(existing 100 Western Europe
technologies)
North America
0
2012 2015
Ecosystem Revenue

Telecom Revenue

Network Cost
China accelerates plans to
(future issue 4G LTE permits by 2013
technologies) 11/09/12, Beijing
China may be getting 4G LTE considerably
earlier than previously suggested the
government. The Minister for Information and IT,
Data Dominant Miao Wei, had previously told regional carriers
that 4G permits would not be issued until 2014,
Time however a report by Chinese state press Xinhua
claims he is instead preparing to issue 4G
permits next year.
Source: Nokia-Siemens; IBM Institute for Business Value (IBV) Analysis


Our world is changing and becoming smarter

It is becoming increasingly
INSTRUMENTED
Billions of camera phones, billions of RFID
tags embedded into our world and across
entire ecosystems

It is becoming more
INTERCONNECTED
At the end of 2011 2.3 billion people were on
the Web …. and a trillion connected objects –
cars, appliances, camera, roadways, pipelines
– will comprise the “Internet of Things”

Systems are becoming more
INTELLIGENT
90% of the world’s data was created in the
past 2 years. 2.5 quintillion bytes of data
created every day


By investing in smarter networks, Cloud, analytics and security CSPs
can play a crucial role in enabling smarter industries ….

Smarter energy Smarter Smarter Smarter Smarter solutions
and utilities government healthcare transportation for retail

Smarter Smarter Smarter Smarter
Smarter banking chemical and
insurance education electronics
petroleum



….and use the mobile internet and smarter applications to
improve lifestyle of people
Retail/Shopping Banking/Insurance Healthcare

Vertical Market applications ranked as #1
by consumers surveyed in CHINA
Nbr 1: Receive Mobile Nbr 1: Manage bank Nbr 1: Reminders for
coupons/Discounts (57%) accounts through mobile medications/appointments (54%)
device (59%)
Public Services Travel & Transport Utilities

Nbr 1: Authentisate for Nbr 1: Pay for public Nbr 1: Alert when monthly usage
public/local services (56%) transportation (60%) reaches pre-set threshold (61%)
25
Source: 2011 IBM Global Telecom Consumer Survey, China


Thank you

Rob van den Dam
Global Telecom Industry Leader
www.ibm.com/iibv rob_vandendam@nl.ibm.com


Mobile driving Internet to the masses - Mobile Internet World 2012

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Destacado

Destacado (20)

Similar a Mobile driving Internet to the masses - Mobile Internet World 2012

Similar a Mobile driving Internet to the masses - Mobile Internet World 2012 (20)

Más de Rob Van Den Dam

Más de Rob Van Den Dam (20)

Mobile driving Internet to the masses - Mobile Internet World 2012