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1
Wireless OpportunitiesWireless Opportunities
Jesse Berst, Managing Director
THE ATHENA INSTITUTE
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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• [email protected]• 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