Keynote presentation at Cisco's Service Provider forum in Lima, Peru.

1. Revolutionizing the Way We Work, Live, Play, and Learn
Jožek Gruškovnjak
Director, Cisco Internet Business Solutions Group
Lima, Perú – April 9th, 2013
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2. THE INTERNET
A series of tubes.
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3. “The new electronic interdependence recreates the world in the
image of a global village.”
— Marshall McLuhan, 1962
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4. © 2010 Cisco and/or its affiliates. All rights reserved.
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5. 120
Exabytes per Month
100
CAGR of 29%
3.6 x increase
110
94
80
77
60
59
40
20
0
44
31
2011
2012
2013
2014
2015
2016
Source: Cisco VNI Global Forecast, 2011–2016
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6. 120
CAGR an
How much is of 29%“exabyte”?
3.6 x increase
110
Exabytes per Month
100
94
80
110,000,000,000
77
60
59
40
20
0
44
31
2011
2012
2013
2014
2015
2016
Source: Cisco VNI Global Forecast, 2011–2016
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7. 120
40
80
Exabytes per month
Exabytes per Month
100
35
Projected in 2007
Actual
32
31
30
23
25
20
20
15
10
5
0
60
IP Traffic in 2011
Internet Traffic in 2011
Source: Cisco VNI Global Forecast, 2011–2016
Cisco Confidential
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6
40
43
20
0
7
2007
11
2008
16
2009
24
2010
32
2011
2012
Source: Cisco VNI Global Forecast, 2011–2016; Cisco VNI Global Forecast, 2007–2012
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8. 120
40
35
Exabytes per month
Exabytes per Month
100
80
17x increase
37% CAGR
Projected in 2007
Actual
32
31
30
23
25
20
20
94
15
10
5
0
IP Traffic in 2011
77
Internet Traffic in 2011
Source: Cisco VNI Global Forecast, 2011–2016
60
Cisco Confidential
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6
59
40
44
20
0
110
7
11
16
24
31
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Cisco VNI Global Forecast, 2011–2016; Cisco VNI Global Forecast, 2007–2012
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9. More Devices
Nearly 19 Billion Connections
More Internet Users
Growth
Catalysts
3.4 Billion Internet Users
Faster Broadband Speeds
4-Fold Speed Increase
More Rich-Media Content
2 Years of Video Minutes/Second
Source: Cisco VNI Global Forecast, 2011–2016
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10. Which key technology trends are changing the world?
What could the ICT industry look like in the next 5 to 10
years?
What are the national and policy implications of these
changes?
“Prediction is very difficult, especially about the future.”
— Niels Bohr, Physicist and Nobel Laureate
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11. 10 Technology Trends
Changing the World
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12. Source: foodfamilyfinds.com
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13. Source: wired.com
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14. Mobile Traffic Forecast
Global Mobile Subscribers
by Application
7,500
12
125
Subscriptions
100
5,000
75
50
2,500
-
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12*
'13*
25
-
Source: ITU World Telecommunication/ICT Indicators database
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10
Exabytes per Month
Per 100
Inhanbitants
Per 100 Inhabitants
Mobile-Cellular Subscriptions (Millions)
(2001-2011)
8
Mobile File Sharing (3.5%)
Mobile M2M (5.1%)
Mobile Web/Data (24.9%)
Mobile Video (66.5%)
6
66% CAGR
2012–2017
4
2
0
2012
2013
2014
2015
2016
2017
Source: Cisco VNI Global Mobile Data Traffic Forecast, 2012–2017
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15. Virtualization
Clouds
Web
Client Server
Minicomputer
100 B$ Market
In 2015
Mainframe
1960
1970
1980
1990
2000
2010+
Source: Cisco IBSG, Forrester
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16. Power
Generation
Dynamos
in Enterprise
1870
Steam Engine
Outside power to
consumers / shops
1900
Information
Technology
Print Shops
1995
Enterprise team
running IT
1920
Thermal turbines – AC distr.
Scalable Compute – Internet
No technical standards
No distribution network
1960
Household
Light
Centralized
Utilities
Commonwealth Edison
Time
Improved Quality & Uptime
Business Leader
20xx
Utility computing to
consumers & SMB
Enterprises link into the
cloud (public, hybrid, …)
Source: The End of Corporate Computing – MITSloan Management Review (Spring 2005, Vol.46 No. 3)
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17. Voice
Messaging
Video
Conferencing
Music
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18. Voice
Messaging
Video
Conferencing
Music
Global market for voice traffic only grew by 4% in 20111
The growth figure would have been 13% if report included
Skype voice traffic
Operators lost $13.9 billion, or 9%, of messaging revenues
to social messaging apps in 2011.1
Netflix subscribers in the United States consumed 30 GB
per month in 2012 – 30% of peak-hour internet traffic
25% of streaming video users reduced or eliminated TV
42% of all Skype calls include video, equating to 300
million minutes of Skype video per day
Globally, online music sales accounted for 32% of recordcompanies’ profits in 2011; 3.4 million consumers
subscribe to music services
Sources: TeleGeography, Ovum, OMA, Sandvin, Consumer Reports 2012, skype.com, Internet Retailer 2012
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19. Market Cap, Revenue, EBITDA of
Leading SPs and OTTs
(US$ Billion)
Market Cap Trends for Top 200 Global firms
In Telco / Cable, Traditional Media and OTTs
100%
90%
80%
9.5%
17.7%
20.6%
24.1%
AT&T
36
14.3%
Market Cap
15.1%
70%
127
16.3%
15.3%
Verizon
37
60%
126
110
50%
Google
40%
30%
20%
76.2%
67.2%
63.0%
16
60.6%
Facebook
10%
0%
2008
216
2009
Telco/Cable
2010
Trad. Media
OTTs
2011
4
1
0
38
46
Revenue
EBITDA
216
Google’s valuation rivals AT&T’s
with only 44% of AT&T’s EBITDA
Google’s valuation 70% higher
than Verizon’s with 42% of
Verizon’s EBITDA
100
200
$ Billion
300
Note: Telcos include ATT, Verizon, Vodafone, NTT DoCoMo. Media include Comcast, Time Warner. OTTs include Amazon, eBay, Google, LinkedIn. For
Google and Facebook, unique users calculated in terms of average daily unique users in 2011
Source: Oliver Wyman 2012 SOI analysis, Cisco IBSG Analysis
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20. Demand = Supply
Smarter Businesses
Customer Experience
Customer Value
Customer Retention
Marketing Effectiveness
Technology Delivers
Storage
Computing power
Flexible databases and analysis
Valuable data surplus
Network as source and distributor of
data
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21. The Network is Important
l Search
l Browsing
l Friends & Family
l Likes & Hobbies
Public Internet
u Banking
l Content Consumed
u Oil & Gas
Internet of Things
Network Data Exchange
l Applications
Corporate / Private
Internet
u Retail
u Manufacturing
u Healthcare
n City
Cameras
u Public Sector
u Business Applications
n Consumer
Devices
u Company-Specific Analytics
n Medical
Network Data Exchange
Data is being collected everywhere,
but the network is always in the
middle, able to see, correlate
patterns and take action
n Meters
n Cars / Fleets
Action can be taken
through network control points
(Policy, Security, QoS, Fog,
Routing, etc.)
n Tolls
Context can be seen by the network
(Location, Identity, Presence, X-Platform, etc.)
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22. Korea, Rep
Sweden
Japan
Finland
Norway
Denmark
Israel
United States
Australia
Singapore
United Kingdom
Switzerland
Canada
Ireland
France
Estonia
Luxembourg
Austria
Germany
Netherlands
Poland
Portugal
New Zealand
Spain
Slovenia
Belgium
Italy
Latvia
Taiwan, China
Croatia
Lithuania
Hungary
Greece
Romania
Uruguay
Slovak Republic
Chile
Puerto Rico
Turkey
Argentina
Brazil
Venezuela
Mexico
China
Ecuador
Panama
Colombia
Dominican Republic
Peru
South Africa
Ukraine
Jamaica
El Salvador
Honduras
Guatemala
Paraguay
Bolivia
Nicaragua
Subscribers per 100 Inhabitants
120
100
Wireless
80
Fixed
60
40
20
Source: The Global Information Technology Report 2012, WEF & INSEAD
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23. 5 C’s of Devices
Connected
Cleverer
Cheaper
Converged
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Cooler
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24. 60%
Knowledge workers who use a
mobile device for work
42%
Employees who own the smartphones they use
for work
84%
IT leaders who are seeing BYOD
growth in the enterprise
89%
Companies that enable BYOD in some form
#1
Employees want an any-device, anywhere work
style (37%)
Source: Cisco IBSG, 2012
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25. World
Population
6.3 Billion
6.8 Billion
7.2 Billion
7.6 Billion
Connected
Devices
500 Million
12.5 Billion
25 Billion
50 Billion
1.84
3.47
6.58
2010
2015
2020
Connected
Devices per
Person
0.08
2003
More
connected
devices
than
people
Source: Cisco IBSG, 2012
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26. “Fixed” computing
(you go to
the device)
Mobility / BYOD
(the device
goes with you)
200M
Internet of
Things
(age of devices)
Internet of Everything
(people, process,
data, things)
Doubles
every
(?) years
Doubled
every
1.4 years
50B things
10B
Doubled
every
1.3 years
1995
2000
2011
2020
Source: Cisco IBSG, 2012
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27. Connecting the unconnected
People to
People (P2P)
People
People to
Machine (P2M)
Home
Mobile
Process
Things
Data
Business
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Machine to
Machine (M2M)
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28. The Internet of Everything builds on the foundation of the Internet of Things by
adding network intelligence that allows convergence, orchestration, and visibility
across previously disparate systems.
The Internet of Things
The Internet of Everything
Intelligence
Convergence
Visibility
Source: Cisco IBSG, 2012
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29. Citizens
Citizens
Security
Government
Government
Privacy
Societal /
political issues
Reliability
Standards
Standards
bodies
Bodies
Businesses
Businesses
Source: Cisco IBSG, 2012
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30. Converging Forces
1.
2.
3.
4.
3rd Generation Applications—
Average Daily Usage by
Location – Mexico
Your home
video, social networks, music,
books, etc.
Friends' homes
Devices—
At work at
normal location
bigger, powerful
Rise of Wi-Fi—
availability, ease of use
Nomadic Use—
versus mobile
At work, but at
remote location
Retail locations**
Public locations*
Travel locations
On-the-go
0.0
1.0
2.0
3.0
4.0
Hours per typical day
Full population
Source: Cisco IBSG Mexico Mobile Study, 2012
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31. Global IP Traffic by Local
Access Technology
Average Daily Wi-Fi Data
Consumption
120
52.6
51.7
55.4
53.4
50
80
40%
60
40
53%
20
2011
2012
2013
2014
2015
2016
Megabytes
Exabytes per Month
100
0
60
7%
40
30
20
13.5
10
Sep-12
12.9
Oct-12
13.9
12.8
Nov-12
Dec-12
Mobile Data (70% CAGR)
Avg. Daily Mobile Data Consumption/User
Fixed/Wired (20% CAGR)
Avg. Daily Wi-fi Data Consumption/User
Average daily Wi-Fi data consumption is
4X greater than cellular data consumption.
Fixed/Wi-Fi (34% CAGR)
Source: Cisco VNI Global Mobile Data Traffic Forecast, 2012–2017
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Source: Cisco Data Meter, Sep 2012–Dec 2012
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32. Location of Mobile Use
Percentage of Total Time Spent in Activity
In transit
20%
Other indoor
location
20%
Office
18%
Home
42%
Mobile Internet
16%
21%
14%
49%
The few late-majority/
laggard consumers using
mobile Internet and video
are more likely to be at
home than early adopters,
so fixed-location usage
could rise as market
matures
80% of Internet
use and
84% of video
viewing occur in
fixed locations
Mobile Video
More than 80% of mobile video and mobile Internet use (via mobile device) is not mobile
This usage takes place when the user is indoors and stationary, and could be supported by
Wi-Fi / femto solutions
Source: Cisco IBSG Connected Life Market Watch, 2011
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33. Public Hot Spot Usage per Week
Payment for Public Wi-Fi
(all locations)
(Regular Users – All Locations)
Free
Mexico
Part of broadband
subscription
Brazil
Part of customer
loyalty program
UK
Part of mobile
subscription
Canada
Pay-per-use
US
N = varies
Wi-Fi provider or
aggregator
0%
20%
40%
60%
80%
100%
Use at Least One Type of Public Hotspot
Do Not Use Any Type of Public Hotspot
Q37. How frequently do you use public Wi-Fi hot spots
during a typical week in each of the following locations?
0%
10%
20%
30%
40%
50%
60%
70%
Percentage of Respondents
Q38. When using public Wi-Fi hotspots, how do
you most often pay?
Source: Cisco IBSG – Mexico SP Wi-Fi primary research, July 2012
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34. Importance Of Free Wi-Fi in
Broadband Provider Choice
Changing Broadband Provider
for Free Public Wi-Fi
(answering yes to bundled in subscription)
50%
76%
N = 448
N = 769
Not at all likely
Percentage of Respondents
40%
Slightly likely
30%
Moderately likely
20%
Very likely
10%
64%
Completely likely
0%
Extremely
Very
Moderately Slightly
important important important important
Q29. How important was free access to public Wi-Fi
hotspots in your choice of home broadband service
provider?
Source: Cisco IBSG – Mexico SP Wi-Fi primary research, July 2012
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0%
Not at all
important
10%
20%
30%
40%
50%
Percentage of Respondents
Q30. If another home broadband provider offered you
free access to public Wi-Fi hotspots at the same
price as your current broadband price, how likely
would you be to switch to that provider?
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35. Interest in Bundled Flat Fee for
Mobile/Cellular and Wi-Fi
Access
50%
Percentage of Respondents
45%
82%
Most Important Benefits
(Neutral and Above)
Flexibility of location / coverage
Average = 4.2 / 5
40%
Lowers overall cost
No additional Wi-Fi access charges
Unlimited data (i.e., no overage
35%
Improving performance / internet
30%
Reliability
25%
Trust / familiarity with current service
20%
N = 769
15%
Automated login
10%
N = 727
Ease of doing business
5%
0%
Seamlessly transfers between
None of the above
Very Somewhat Neutral
interested interested
Not very Not at all
interested interested
Q48. Imagine a service in which you pay a low flat fee for a combined mobile/
cellular and Wi-Fi solution with unlimited data access throughout the country
(does not include voice service). Your Service Provider will seamlessly
transfer your service to the lowest cost and best suited network with no
degradation of quality. This offer would replace your current mobile data plan
and would be at least the same cost, or lower, than your current data plan.
0%
10%
20%
30%
40%
50%
Percentage of Respondents
Q50. What do you think would be the most important benefits of this service
(select up to 3)?
Source: Cisco IBSG – Mexico SP Wi-Fi primary research, July 2012
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36. New Internet Platform
2.
3.
4.
5.0
HetNets Access—
Cloud Datacenter
macro cellular, Wi-Fi, small cell
Integrated Core—
Zettabytes per Year
1.
Data Center Traffic
converged IP networks
Content Delivery—
federated CDNs
Network-Data Centers—
virtualization, real-time availability
Traditional Datacenter
4.0
3.0
34%
33% CAGR
2010–2015
2.0
66%
11%
1.0
89%
0.0
2010
2011
2012
2013
2014
2015
Source: Cisco Global Cloud Index, 2012
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37. Consumers
Technology
Huge demand for all things digital and
connected
Hunger for new and innovative apps,
devices, and solutions
Network- and technology-agnostic
Everything is wireless with fat pipes
Cloud drives openness and
interoperability
Everything is connected across
multiple networks
Industry
Economy
Lower costs for technology and
connectivity
Data-, innovation-, and connectivitydriven
Increased competition and blurring of
segments
Creates new sources of
value
Seek new sources of business value
Raises citizens’ quality of life
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economic
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38. Challenges Across the ICT Industry Value Chain
Content
Providers
Service
Providers
Equipment
Providers
Creators and
originators of
digital content;
e.g. music,
pictures, videos,
and news
Companies that
build and
maintain networks
Providers of
infrastructure
hardware and
networks
Producers of
software and
applications
Producers of
online services
that broadly
aggregate and
disseminate
digital content
Producers of
devices through
which content,
apps and services
are consumed
e.g. Sony, Disney,
News Corp., …
e.g. AT&T, T-Mobile,
BT, Orange, AMX,
Telefonica, …
e.g. Ericsson, EMC,
Alcatel-Lucent, Cisco,
…
e.g. Microsoft,
Adobe, Oracle, …
e.g. Google, eBay,
Amazon, Netflix, …
e.g. Samsung, Apple,
Nokia, RIM, …
Balancing
revenues and
costs
HetNet
Integration
OTT
collaboration
Cost leadership
Innovation
Product
leadership with
open standards
Innovation
Cloud
integration
Mobile
enablement
Alternative
business
models
New distribution
models
Multi-rights
ownership
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Software
Internet Business Solutions Group
Internet
Services
Business model
innovation
Cloud
Value-chain
collaboration
Devices
Innovation
Beyond
handsets
Connected
home
Cloud extension
Cisco Public
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39. SP Profitability versus Traffic Growth
Category
CAGR
40
Exabytes per Month
45
Traffic
48%
Revenue
5%
EBITDA
4%
600
35
30
43
400
32
25
24
20
15
5
0
Value
Opportunity
300
200
16
10
500
11
Growth Index (2007 = 100)
50
100
7
2007
2008
2009
IP Traffic Index
2010
Revenue
2011
2012
-
EBITDA
Source: Cisco IBSG Analysis of S&P Capital IQ. Data is based on figures from 124 publicly traded integrated SPs (fixed and mobile) from around the
world, and on the Cisco Visual Networking Index, 2007-11.
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40. 1. Encourage competition
2. Nurture innovation
3. Promote standards—global, open
4. Ensure consumer protection and trust
5. Live openness—networks, industry policy
6. Create frameworks for viable economic models
Moving Up the Stack, Beyond Infrastructure
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41. 1
Leadership and
Vision
Clear goals and
objectives
Broad approach—not
just about one area
Integration across
laws, tax, regulation,
etc.
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2
3
Coordination
Creating
Opportunities
Collaboration and
communication across
groups and agencies
Formalized
coordination structure
Consensus
Internet Business Solutions Group
Open up
“permissionless”
opportunities for new
businesses
Create growth
platforms and let
competition thrive
Promote competition
and consumer trust
structures
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42. Major technology disruptors are creating the next generation of the
Internet
More than ever, the Internet will be the platform for the future of society
—the way we work, live, play, and learn
These changes will bring both challenges and opportunities the ICT
industry
Governments have an important role to play in “moving up the stack” by
creating an environment that encourages business and maximizes the
benefits to citizens – and the ICT industry should influence the
development of the environment
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43. The document “Then Next Generation of the Internet” is available on
Cisco IBSG web site
www.cisco.com/IBSG
For more information, please feel free to contact me at
jgruskov@cisco.com
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44. Thank you.
Follow Cisco IBSG for trends and updates:
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