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Wireless OpportunitiesWireless Opportunities

Jesse Berst, Managing Director

THE ATHENA INSTITUTE

jesse@jesseberst.com

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AgendaAgenda

Sector Overview

Opportunities

Washington Wireless Sector

Playing with the Big Boys• Strategic partnering

Q&A&C

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THE ATHENA INSTITUTETHE ATHENA INSTITUTE

The science of business success• Practice areas:

– Partnering– Market mapping– Strategic planning

• Emerging markets:– Wireless– New Energy– Digital home– IT (legacy)

Contact information• jesse@jesseberst.com• 425-458-4598

• Slides, networking, references, further assistance

IT WirelessNew

EnergyDigital Home

Partner Assets X X X soon

Market Wealth X X soon

Strategic Leadership X X X X

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2003 - Networks2003 - Networks

2.5G widely deployed, handsets catching up

Modestly higher ARPU

Capex cut, cash flow better

Cutthroat pricing competition

Consolidation overdue• From six to three or four

Now. . . can they create apps business wants

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2003 - Handsets2003 - Handsets

10-15% unit growth, 440-450M

Revenues up 3-5%, if color and high-end catch on

Wildcard – end of subsidies

Replacement outpaces new 2-1• Must constantly offer Next New Thing to spur

replacement market

Next New Thing?– Color screen . . . probably not

– Convergent devices. . . maybe, starting with enterprise

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2003 – WiFi2003 – WiFi

T-Mobile• Starbucks and others

Cometa• Intel, IBM, and AT&T

Boingo• Own label

• Private label

Intel Centrino Chip• #2 initiative across entire company

• Wireless enabled laptops

• Major co-marketing funds

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2003 Recommendations2003 Recommendations

From October 2002 report

Rapid Wi-Fi growth

Think enabling technology that is still missing• Roaming

• Security, authentication

• Push-to-Talk– Nextel’s big win

Think enterprise tools• Mobile workforce

Think enterprise applications

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2003 -- Apps2003 -- Apps

Mobile data finally starting to catch on• (if you call SMS data)

Teen market• Big in Japan and parts of Europe

• Growing in U.S. but cultural differences

• Teens are a pass-through market

Enterprise apps where the long-term money is• e.g NEC MobilePro Synchronization, Lotus,

Sybase, etc., etc.

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2003 Recommendations2003 Recommendations

Blended business models• Air time, premium services, impulse (e.g. ringtones),

handsets, corporate apps

3G will continue to disappoint

Long Delays for mobile commerce and location-based

Prepare for standard platforms• Slowly but surely will evolve

• Operating systems with basic capabilities

• Gradual move from vertical to horizontal

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Vertical Horizontal

Computers

Vertical Horizontal

Computers

Hardware

Software

Sales and Service

Storage

PCs

ChipsIntel AMD nVidia

Operating Systems

Business Applications

Gaming

Support and Repair

Retailers

Systems Integrators

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Vertical Horizontal

Telecomm

Vertical Horizontal

Telecomm

Carrier

PBX

Handsets

Regional Carriers

Long Distance Carriers

Wireless Carriers

PBXes

Voice Mail

Call Centers

Cell Phones

900MHz Wireless

Handsets

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2003 Recommendations2003 Recommendations

Carrier-Class products and services• Platform or suite

• Channel to the networks or partner to get

• Outsourcing option

• They want stability and single source

Enterprise-Class products and services• Systems Integrators a key channel

Consumer-Class products and services• Point solutions will fail (many have already)

• Channel is the key

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Drivers of DemandDrivers of Demand

Communications• Voice, walkie-talkie, pictures, SMS,

convenience email

• In some countries = games that connect with others

Convenience• Walkie-talkie, email (especially thumbboard equipped),

calendar

Customization• Ringtones, buddy lists, faceplates

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It’s NOT AboutIt’s NOT About Games

• In some countries, yes

• In N.A, a little. . . but just 5-10% of total revenues

• Why use a bad handheld gaming device when can get a good one from Nintendo

Content• Web surfing

• News alerts

Commerce• fuggetaboudit

Location driven services• Not yet and not for a long time

• No e-911

• Few location enabled services

• Little demand, except fleet operations

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Opportunities in WirelessOpportunities in Wireless

Drivers / Enablers• Growth in international sales of advanced

services

• Multiple platforms in U.S. market leading to integration approaches

• Ineffective 3G technology driving 2.5G and 4G development

• Debt-burdened industry looking for less expensive build-outs

Wireless infrastructure, equipment and services for voice/data

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Areas to Watch in WirelessAreas to Watch in Wireless

Voice over WiFi• Cisco® Wireless IP Phone 7920• Campus applications, meshes with Mobility

Multi-modal roaming• WiFi plus 2.5G, 3G

Enterprise wireless applications• Lotus Workplace Messaging

– $29 per seat + $1/month for “deskless” workers• Fujitsu, HP/Intel and others• Nextel success story

WLAN

• Grow 30% a year (Meta Group)

• Hotspots collect $12B in revenue in 2007 (Visant Strategies)

4G infrastructure sales $5.3B by 2007

Solve the Last Mile with WiFi????

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Opportunities in MobilityOpportunities in Mobility

Empowering workers on the move• Truly mobile, not stop-and-plug-in

Mobile workforce• IDC: will increase 12.7M between 2001-

2006• Non-mobile: decline 2M

Drivers/Enablers• Huge untapped market• WiFi

– 802.11a, 802.11g, mesh networks

• Lower-priced, higher-powered, standard platforms

– Handhelds– Tablets– Smartphones

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Areas to Watch in MobilityAreas to Watch in Mobility

Gold rush already underway• 2002 $2.8B VC investments in WiFi (Thomson Venture Economics)

Campus solutions• Bases, hospitals, warehouses, factories, headquarters• UPS distribution centers -- $120M WiFi upgrade

Custom solutions on standard platforms

Infrastructure• Security

– GM WiFi in 90 plants but waiting on headquarters

• Network management• Tools

Form factors• Wearable• I/O innovations -- bar code, heads-up, voice

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Washington Wireless SectorWashington Wireless Sector

Seattle and Portland top 10 “unwired” cities

McCaw gang• AT&T

• T-Mobile

• Nextel

Just struck again• rovingIP

• Roaming between wireless networks

• McCaw alums

• Major financing Intel and others

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Key AreasKey Areas

Carriers• AT&T Wireless

• T-Mobile USA

• Western Wireless (Cellular One)

• Nextel Partners (holding company)

WiFi• T-Mobile & Starbucks

• Microsoft

• Numerous small companies, Seattle, Portland, Spokane

Carrier-class software• Wireless Services

• QPass

• 4thPass (acquired)

• Infospace

• Microsoft

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Washington WinnersWashington Winners

NetMotion Wireless• Internetwork roaming

QPass• Mobile data platform

TeleSym• Wireless voice over IP• Telephony Magazine’s "Product of the Year“• Strategic investment Intel’s Communications

Fund

Access Line• One number call forwarding• Virtual PBX

Wireless Services• Platform for enabling and managing applications

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Strategic PartnersStrategic Partners

Strategic investors in general . . .

Are still investing

Listen to business units

Listen to VCs

Must be central to a major company initiative

Might not be who you expect• Think infrastructure

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MicrosoftMicrosoft Business unit tie-in

• All funding tied to a P&L

Political correctness a must• Windows on server and device

Current wireless interests• Data services for network providers• Enterprise applications

Funding plus other assistance• Fund in later rounds• Software• Technical support• Go-to-market support and money

Often acquire Paul Sausville, Senior Finance Manager Daniel Lewin, .NET Emerging Business Team

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IntelIntel

Build out the eco-system

Numerous wireless investments in 2003

Centrino push

Works through VCs, lawyers, other scouts

Matt Gordon, Portland

Mike Rocke, Santa Clara

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BoeingBoeing

Connexion by Boeing• Hope can bring billions in extra revenue

Miller Adams, President, Boeing Phantomworks• Advanced R&D, 4,000 people

Boeing Ventures• Internal incubator

Fund companies when think can bring technology inside, but . .

No direct investments, works through VCs• TechnoCap

• Chrysalix (Vancouver, BC)

• Alexander Hutton

• NextGen

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Q&A&CQ&A&C

Jesse Berst, Managing Director

THE ATHENA INSTITUTE

jesse@jesseberst.com