Building a Service Innovation Ecosystem Learning from Experience, TADSummit 12-13 November, Istanbul. www.tadsummit.com. Mac Taylor, Huawei.

1. Building a Service Innovation Ecosystem
Learning from Experience
HUAWEI TECHNOLOGIES CO., LTD.

2. 2
Industry Trends and Disruptions
3
4
Case Studies – Real Commercial Service Innovation
Operator Pain Points – How to get out of the box
Huawei Operation and Aggregation
1
HUAWEI TECHNOLOGIES CO., LTD. Huawei proprietary. No spread without permission. Page 2

3. 01
Disruptive
Trends Market Changes Business
Changes
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4. Core Telecom Trends
Commoditization of Message and Voice.
$100B revenue gap by 2018
ITization / IPization of Telecoms (Cloud, Virtualization,
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SDN, Free
and Open Source
Software, any IP device)
Opex savings
of 20% by 2018 being
demanded by Telcos
Global scale and a global
ecosystem, with adaptation
to local market needs.
Essential to be competitive against
web-based service providers.
Focus on lean and agile.

5. What this means for Telecom Operators
Commoditization of Message and Voice.
$100B revenue gap by 2018
ITization / IPization of Telecoms (Cloud, Virtualization, SDN, Free
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and Open Source
Software, any IP device)
Opex savings
of 20% by 2018 being
demanded by Telcos
Global scale and a global
ecosystem, with adaptation
to local market needs.
Essential to be competitive against
web-based service providers.
Focus on lean and agile. NOT
yet more failed TMF
transformation projects
New Services are now critical across
voice, messaging, IoT, M2M, connected
devices, smart city, telematics,
connected car, video, etc. to plug the
gap.
The web has won, copy Amazon,
Google, Microsoft to deliver the flexible
IT/IP-centric multiple control platforms
(IMS/M2M/IoT/WebRTC) the new
services require.
Global Cloud, Global Ecosystem. Only
the Network Equipment Providers can
deliver the necessary global scale
Its not just the services and supporting
infrastructure, model extends to all
operations – break free from legacy
telecom processes.

6. Prediction on Messaging and ARPU
Telco messaging will become niche, anticipate rapid revenue decline as SMS moves to data. Analysys Mason is predicting a
>25% ARPU decline by 2018 in Western Europe.
Industry needs to find >$100B in new revenues within 5 years, else face decline.
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7. Services are the key to future profits
Horace Dediu Asymco: April 2014 http://www.asymco.com/
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8. Digital Services Opportunity
There is an opportunity for Telco and Digital Services to
expand horizontally as part of Internet of Things “Service”
provider into the other vertical industries
HUAWEI TECHNOLOGIES CO., LTD. Huawei Confidential 8

9. Huawei Confidential Page 9
02
Case Studies:
Service
Examples
Real Commercial Innovative
Services Available Today

10. API-Enabled Service Examples: $180M
• All service examples
commercially launched in other
markets
• APIs make technical
implementation relatively easy
• The 16 API-enabled service
examples shown could generate
$180+M, and there are
hundreds more API-enabled
services opportunities.
• Addresses OTT revenue decline
to maintain telco revenues.
Huawei Confidential Page 10
$10M+
$5-10M
Estimated
Total
Annual
Revenue
if Launched
by Operator
X
7 Million
Subs
$1-5M
Low Implementation Difficulty Moderate Implementation Difficulty

11. Different Types of Business Models
Cloud Based Communication Services (e.g. Twilio et al)
For the simple calling, messaging and number provision the business model is clear and commoditized.
Simple per minute / per message / per telephone number per month. With discounts at volume. ( e.g. 0.5 to 0.25c per min)
Service Innovation Business Models
1. Simple professional services deals where operator keeps all the services revenue
2. Revenue share with operator as a go-to-market partner
3. Flat monthly fee for API usage
4. Stimulate API usage with revenue share
5. Bundling to lock-in enterprises to operator network
The key word is flexibility, this requires a willingness to be entrepreneurial, to
experiment, to focus on the customer value and find business models that work for all
parties.
Huawei Confidential Page 11
11
© 2010 Alan Quayle Business and Service Development

12. Huawei Confidential Page 12
Business Model and
Go-to-Market example W4Call
• Business Model
› Pricing $2 per call!
› How is that possible?
› CPC of Insurance keyword is $54.91
› Its not P2P its A2P, underserved market
› Its revenue from your business customers
• Go-to-Market
› All operator business customers with a website
should have a widget4call
› 10 calls per day, across 20k business websites
gives a revenue of $80M per year!
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13. G2M for Service Innovation Ecosystem
Huawei Confidential Page 13
Enterprise SME
Platform Partners
Integrated
Hosting Centre
Offer
Services
Direct
Offer
Services
using
operator
channel
Consumer, SME, Enterprise, other SP
Successful
Ecosystem
•APIs make implementation
easy
• Import a partner ecosystem.
Commercial
Proven
services
•There are hundreds of API-enabled
services from around
the world that can be
launched
Low
Investment
•No investment in
infrastructure needed
•Simple proven integration
with Huawei hosting platform
Global
Experience
•All service examples
commercially launched in
other markets
•Huawei success stories in
China, Latin America and SE
Asia
Smart City
Operator
X, Y, Z

14. Huawei Confidential Page 14
03
Case Studies:
Get out of
the Box
Learning and feedback from
real test-cases ,trials and
operator pain points and
demands

15. A simple analysis of the problem facing operators, vendors
and the whole telco industry on its journey of digital transformation
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16. Trying to retrofit Digital Services - causes failure
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17. Traditional Telco - an all - in one business. “IN-THE-BOX”
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18. Operators NOW have THREE distinct businesses
Services Platform
Business -
The new telco Opportunity: build an ecosystem to drive
distribution of new Digital Services
Traditional VAS
Business – Telco BOX
Connectivity
Business – Telco BOX
Asymetric Competition: OTTs offer services for free (e.g.,
Viber), close to free (e.g., Whatsapp). The “bundle” biz model
of “service + connectivity” of telcos makes it difficult to
compete .
A symbiotic relationship between telcos and OTTs: (e.g.
iPhone apps drive data revenue.)
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19. Lets look at some real operators and real pain points to
illustrate the problem and the opportunity
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20. Operator X Key Pain Points – launching innovative
services
1. Internal processes and procedures – slow and bureaucratic
• Before a service can be launched needs consultation with
• IT, OSS/BSS, Core network
• and other inside-the-box stake holders and regulators
2. Any purchase or capital expenditure needs RFP and CFO approval
• Refusal to buy platforms or technology
• But willing to work on Flexible Business models and RS
• Will only invest in infrastructure when Service is successful
3. Go-to-market teams not familiar with Innovative Services
• Need support and quick launch
• POC test and feedback on multiple long-tail services
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21. Operator Y: Key Pain Points – Digital Services
1. Integration “In-the-box” is almost impossible
• Any new services needs agreement with
• IT, OSS/BSS, Core network etc
• Needs “open heart surgery” on existing network just to launch a service
• SDP and other “abstraction” platforms do not help service TTM
2. Digital Services a NOT being launched because of BAU delays
• Lots of ideas but few make it to the market
• Spent millions of USD on consultants - but no result
• Will only invest in infrastructure when Service is successful
3. DS team wants to launch services
• NO APPETITE to invest in more failed infrastructure, software of platforms
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22. 04
Huawei
Operation
and
Aggregatio
n
Building a Service
Innovation Ecosystem
Practical Steps
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23. Core Principle: Enable Our Customers to be Globally
Competitive
1. Huawei enables its customers to be globally competitive
• Global scale, Global innovation pipeline, Proven services, Services Ecosystem
• In communications, IoT, connected car, health, life style, home, payments, etc
.
2. Telco can then focus on local go-to-market services
3. Telcos find it VERY difficult to work with innovative companies
• Huawei has critical role between 2 divergent cultures
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24. Global Service Aggregation – Local Service Delivery
Global Innovative IoT and Digital Services
Specialist Platform Partners
Huawei Aggregation and Operation
Operator 1 Operator 2 Operator 3
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Customers
New business value
ME
SMEs
and
Enterprises
LOCAL Go-to-Market
for global Services
GLOBAL service
aggregation and
brokering

25. Hosting - Brings Global Partners and Services to you
500+ contracted partners
North America
Verisign
SONY
Warner
Navteq
TCS
…
Acotel
Waumovil
Cyclelogic
Yavox
Takenet
…
Latin America
CIS, M Asia
i-Free
Inform-mobile
…
Rotana
Info2cell
Cadic Sodi
Mobile-Zon
…
Europe
Arenamobile
Opera
Jamba
Index
EMI
Net-M
Exit Games
…
Starfish
Leaf
SGK
Mobile Planet
...
Africa
Asia
Tencent
Access
Navitime
JIG
Netqin
MobileExtrem
e
Sina
…
Middle East
8 Hosting Centers covering global market
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Dubai
8
3 Centers of Excellence (COE) 30+ Service Branch Offices
50+ Consultancy experts 300+ Senior Business Operation Managers

26. Practical Steps – Building the Service Ecosystem with
Operators
Integrated
Approach
•Work with Partners who have PROVEN
service success stories worldwide
•Developer communities, deployed
applications, solved real business needs
•Integrate Partners into Huawei/Operator
platform
•Create open environment to develop and
test new applications for business and
enterprise
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•Identify key services and applications
•Define kick-starter projects
•Create business activity plan for testing
the services with key customers
•Build business cases – for initial investment
needs
•Build dedicated G2M support team to
grow the business
• Engage SME, Enterprise and M-government
•Launch services
•Get feedback and improve

27. Five Recommendations and Takeaways
1. The opportunity is in market proven commercial services, available today
2. Platforms, APIs, standards, developers and ecosystems are distractions
3. Focus on building an effective, independent GO-TO-MARKET team
4. Deliver innovative services to customers and drive new revenue
5. Use Hosting: a quick, low cost way to build a Service Innovation Ecosystem
HIUSAILWICEOI TNE SCEHMNIOCOLONGDIUECST COOR., LTD. Page 27

28. For More Information on
Huawei Service Innovation Ecosystem
Please contact
mac.taylor@huawei.com
Page 28 HUAWEI TECHNOLOGIES CO., LTD.

29. Thank you！
www.huawei.com
Copyright©2014 Huawei Technologies Co., Ltd. All Rights Reserved.
The information in this document may contain predictive statements including, without limitation, statements
regarding the future financial and operating results, future product portfolio, new technology, etc. There are a
number of factors that could cause actual results and developments to differ materially from those expressed or
implied in the predictive statements. Therefore, such information is provided for reference purpose only and
constitutes neither an offer nor an acceptance. Huawei may change the information at any time without notice.
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