1. The Mobile Data Revolution
– Overview of trends and
impact on mobile operators
Ziv Baum
zbaum@cmu.edu

2. Executive Summary
The data revolution is already here
Better devices
Appropriate data plans
Better user experience
iPhone was the break through
Got people to really “eat all they can”
Created new set of problem for operators
Data is the new golden egg for all the players
The open-mobile initiative is after the operators’ control
Operators should consider new scheme for controlling the end-user
Building an operator platform is the best solution
Give 3rd parties access to network assets
Participate in revenue stream and maintain some control
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3. Agenda
Overview of current trends
The smartphone space
iPhone saves the day
Open mobile
Wireless CE
Opportunities and risks
The problems operators are facing
Opportunities and risks for mobile operators
Recommendations
Analyzing the strategic choices available for operators
Recommendations
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4. OVERVIEW OF CURRENT
TRENDS
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5. Smartphones – the Holy Grail of the
Mobile Industry
Smartphones enable… Global Smartphone Shipments and % of
Total Mobile-Device Shipments
OEMs to sell high priced product
Dedicated, pure-play smartphone vendors
have become super-profitable. RIM, HTC
and Apple are all registering larger profit
margins than Nokia.
Operators to attract high ARPU subs
iPhone data ARPU: 35$/Month – X4 the
average data ARPU in the US
And content providers to provide better
content
Larger, browser-friendly displays
Global Operating Margin for Handset
Messaging-friendly keyboards
Division in 2007
Expandable software
Global smartphone shipments will grow 3
times faster than the total industry average in
2008… and still 2 times faster by 2015
More brands
Lower ASP
* Data from Strategy Analytics / Sep 2008
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6. The Power of the Smartphone wasn’t
Unleashed Until the iPhone Appears
The chicken or the egg?
Implications of the iPhone revolution:
Smartphone prices are going
down
iPhone 3G (8G) - $199, iPhone
EDGE - $499
Unlimited data plans are more
affordable
iPhone 3G – 30$ unlimited data
Intuitive UI and simplified user
experience
OEMs are finding “over-the-top”
ways to end-users
OVI, MobileMe, Google Maps
Open Mobile, aka Mobile 2.0, is
the new buzz word
Not social networks but rather
open access
The next holly grail is around the
corner – monetizing the mobile
applications – mobile ads and
LBS
* Data from M:Mobile
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7. The Next Big Leap – Open Mobile
Ecosystem (1/2)
Application and
Platforms Networks User Devices
content
Aggregation platforms
Devices with open
where Networks allowing
Unmanaged “Over the
architecture upon which
external applications
developers and content
Top” services from
developers can write
online and devices access to
owners can directly
tightly
reach
players core network functions
integrated apps
consumers
Operator response to consumer and competitive pressures
“All you can eat” data plans
Consumer demand the same internet experience they get on their PC
Operators are opening networks to external devices and application
Open ecosystems facilitated by device development
Better device capabilities
OEMs want part of the pie
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8. The Next Big Leap – Open Mobile
Ecosystem (2/2)
Architecture of Yahoo! ‘Mobile Developer Increasing availability of
Platform’ unmanaged applications
Application Developers
Gmail, Google Mobile Maps,
Skype….
Create a single application using Yahoo!
Multiple device/network
Mobile Developer Platform and SDK
agnostic platforms
Android, Yahoo! Mobile SDK
Client side software to
help access these
Hardware manufacturers will
applications on
multiple handset types
want a piece of this pie as well
Applications
are
viewed as
Mobile
Widgets
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9. Wireless CE – The New Segment
How interested would you be in having one of these products
connected to the internet?
New opportunities for operators to utilize their pricey 3G networks
New revenue stream, possibly advertising based
Most obvious candidates are Laptops and Navigation Devices
But other will follow – mobile TV, Kindle..
New class of products – Mobile Internet Devices will supply operators with even
more opportunities
* Data from Compete.com
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10. OPPORTUNITIES AND RISKS
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11. The Walled Garden is Open – Operators
Need a New Plan
Worldwide Mobile Voice and Data Revenue,
ARPU from voice is declining
2002-2011
Verizon Wireless’ voice ARPU dropped
by 11% from the end of 2004 to the end
of 2006
Data is the new source of ARPU
In order to promote more data
consumption, some of the wireless
industry paradigms should be
examined
The biased model the operator enjoyed is
out-dated and will disappear
Worldwide Mobile Advertising Spending,
Customers demand it 2002-2011
Other players push for it
Operators need it as well
700Mhz auction put the last seal on it
Mobile advertising is at the doors
This is the time to find new ways to
control the user in order to better
benefit from mobile ads
* Data from Strategy Analytics / Wireless Media Strategies
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12. Opportunities and Risks for Mobile
Operators
Risks
Opportunities
Being left as the dreaded “dumb-
Set up MobileMe & Appstore
pipe”
equivalents to get control back in
services Industry growth is 6% and
saturating.
Provide APIs for third parties to
hook into wireless networks to Voice revenue growth is at 7%
leverage customer relationships, Growth stagnation in costumers
billing, services joining and voice revenue will
Play greater role in helping users drive consolidation – be a big fish,
find relevant third party services or be eaten
and content (both mass market Loss of costumer confidence
and long tail)
Cannot support 3rd party
Promote new business models to applications
benefit from new class of
VOIP and video services consume
wirelessly connected CE
huge chunks of bandwidth
The investment in the network and
in the upgrade needs to be covered
* Data from Strategy Analytics, Limbo
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13. RECOMMENDATIONS
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14. Analyzing the Strategic Choices
Available for Operators
Application Platform Network User Devices
and content
Free access to all
Open applications. No operator control – All external devices
Open access to the
Network 3rd party controls the
Operator is not an are allowed on the
network – ISP model
active participant in platform network
Access value chain
Differentiated Subscribers to
3rd party aggregation
Operator is involved
premium plans get
Network in delivering some platforms – operator Prioritized access
subsidies on
applications may be involved
access handsets
Operator offers a
platform with
Higher level of
3rd party applications open APIs, a Only authorized
Owning the prioritized access –
+ operator content development toolkit handsets on the
application/service
Platform and applications and hosting and network
type
billing
functions
* Data from TME
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15. Recommendations
Owning the platform offers the most for operators
Embrace and extend:
Get 3rd parties to extend the application offering on the network
Use data assets to participate in revenue sharing
Use core network assets (voice, messaging) to participate in revenue sharing
Applications are granted prioritized access to the network and at the same time are
adherent to the fair use rules
Operators can supply applications with billing and hosting services
Operators should focus on owning the platform rather
than owning the network, the content and the devices
The result: revenue uplift in addition to retaining
significant control over the end-user
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16. Questions + Answers
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17. Thank You
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