Ict Mobile Summit 2009 Eduardo Fernandez Plenary Session Short Def

Session, 11th June 2009 ICT-MobileSummit 2009 Copyright 2009 Eduardo Fernandez Rojo - BlackBerry

Smartphone Operating Systems,

mobile services and market impact

Eduardo Fernandez Rojo

Research In Motion


Setting the scene: major trends

• Value shifting towards mobile services and applications

• Smartphone era

Value Shift in mobility

• Mobile OS and

SW platforms are reshaping thewireless landscape

• Innovation driventhrough developercommunity and partnerships

Wirelesslandscapechanging

• Consumersembracingmassively mobileservices and applications.

• Enterprise mobility has become strategic

Demand & market growth

Carriers as maincatalyzers

• Value propositions

• LifeTime Value revenues

ARPU and Revenue opportunities


Value is shifting towards mobile Services and

Applications

• Hardware is becoming a commodity:

strong price and margin erosion

• Differentiation through hardware alone

is becoming increasingly difficult

• Enterprises have long required software and services beyond just

hardware — same trend now in the consumer market

• Valueshifting towards mobile services and applications

• Smartphone era


• Mobile OS and SW platformsare reshaping thewireless landscape

• Innovationdriven through developercommunity and partnerships


• Consumersembracingmassivelymobileservices and applications.

• Enterprise mobility has becomestrategic


Carriers as main catalyzers

ARPU & Revenue opportunity


Value is shifting towards mobile Services and

Applications

• Differentiation and value-add comes from software and services

• Consumers are increasingly making purchasing decisions based on software

and services driven propositions.

• The enterprise market has consolidated around most integrated, flexible and

scalable mobility platforms.

• Software and service-led model (platform) players are outperforming in

today’s economic climate. (RIM BlackBerry, Apple, etc)


Mobile OS and Software Platforms are

reshaping wireless landscape

• As Bill Gates taught the world, one who controls

the operating system controls de hardware world.

Mobile OS form the foundation for SW platforms and developer communities

who in turn deliver innovative servicesand applications

serving – through optimized mobileplatforms ensuring a positive end user

experience –

A growing worldof fragmentedpreferences

for

consumers

and

professionals


• Smartphone era













• Mobile operating systems and platforms are the key enabler for

uptake of value added services and applications.

• Vendors strategically positioning/extending mobile OS and

platforms as a key differentiator:

• OS differentiation will happen through UI/hardware (devices) and

application support (including application distribution models)

• Smartphones determine ultimately market impact, OS penetration

and evolution.

.

Different

approaches, similar

drivers

• Reduce cost, achieve economies of scale

• Reduce time to market

• Create platforms for the delivery of

applications and services


Hardware

Applications

ServicesSource: CCS Insights 2008 – Adapted for BlackBerry template

• Players are diversifying

• The long-term winners will be those

who can deliver wide-ranging

experiences through tight integration

of hardware, services and software

• Software platforms and mobile OS

are at the core of this strategy.

• The same trends apply to both consumer and enterprise

• More fragmentation in the short term, but future consolidation will happen

• Partnerships are critical for everyone in the value chain.

• Smartphone vendors in fierce competition

shift to royalty free/open source OS.

but still balancing on multi OS approach.



http://images.google.com/imgres?imgurl=http://www.xatakamovil.com/images/2006/08/telefonica_logo.gif&imgrefurl=http://www.xatakamovil.com/categoria/futuro&h=150&w=200&sz=4&hl=en&start=2&tbnid=8Mwnz-cieNdL9M:&tbnh=78&tbnw=104&prev=/images?q=telefonica+logo&svnum=10&hl=en&lr=


Mobile OS platform ecosystem: driving

innovation through developer communities


• Smartphone era











Partner Community – Consumer Applications

Music, Video and

Multimedia

Information & News

Services

Mapping & Navigation

eCommerce

Travel & Reference

Guides

Search, Messaging and

Sharing

Games and

Entertainment

http://www.j2x.ca/index.php

http://www.ft.com/

http://www.reuters.com/home

http://www.ftd.com/528/?int=1

http://www.digby.com/index.php

http://www.amazon.com/ref=topnav_gw_gw/002-1127914-7504817

http://www.ebay.com/

http://www.allsportgps.com/

http://www.barnesandnoble.com/index.asp?z=y

http://www.xmradio.com/index.xmc


Partner Community – Business Applications

Sales Force Automation

Field Service Automation

Fleet Management &

Dispatch

ERP – SCM, HR,

Financials, CRM

Unified Communications

Business Intelligence

IT Systems Management

Document Management &

Printing

Security & Compliance

http://www.businessobjects.com/

http://www.microsoft.com/dynamics/crm/live/default.mspx

http://www.sage.com/index.php

http://www.avaya.com/

http://www.cisco.com/en/US/hmpgs/index.html

http://www.ca.com/

http://www.content-beamer.com/

http://www.salesforce.com/web-common/assets/doccache/MultiForceDir/01530000000Er13AAC.jpeg

http://www.webalo.com/mobile_dashboard.html

http://www.goldmine.com/micro.aspx?id=4398

http://www.act.com/Home/index.cfm

http://www.hp.com/country/us/en/welcomeBC.html


Partner Community – Industry Solutions

Health Care & Life

Sciences

Government & Law

Enforcement

Manufacturing

Financial Services

Real Estate

Professional Services

http://www.microsoft.com/dynamics/crm/live/default.mspx

http://www.salesforce.com/web-common/assets/doccache/MultiForceDir/01530000000Er13AAC.jpeg

http://www.atspublicsafety.com/

http://www.bio-key.com/index.asp

http://www.reuters.com/home

http://www.skyscape.com/

http://www.topproducer.com/

http://www.remax.com/index.aspx


Demand and Market growth

Social networking phenomenon is turning to mobile. Mobile likely to become leading

interface for social networking and user-generated content

• Facebook has 15 million active mobile users

• BlackBerry Facebook application downloads of 2.5 million

• AT&T MySpace text service saw 75 million premium text messages sent in eight months

• Top four searches on Vodafone Mobile Internet: Facebook, Bebo, Ebay and Windows

Live Hotmail (May 2008)

Broader interest in mobile applications

Apple’s App Store has seen over 200 million cumulative downloads

since 11 July 2008

App Store now has a catalogue of more than 5,500 applications


• Smartphone era










Evidence that end users are embracing massively

applications and services

Web services are driving consumer uptake of non-voice

and non- text services

• Social networking sites have a combined membership of over 350 million

usersMySpace: 200+ million users, Facebook: 125 million users (50 million in Jan 2008)


Enterprise Mobility evolving, now strategic


ARPU and Revenue opportunities

Mobile Data usage is growing but

ARPU is decreasing


• Smartphone era











ARPU and revenue opportunities are ahead

driven by Lifetime Value propositions

• Lifetime Value (LTV)

– LTV is the measure of all future cash flows for a customer discounted back to a present day value.

• Carriers use of LTV

– The high expense of acquiring new customers means that their value to the carrier is negative for the first year or more.

– Carriers use LTV to assess the long-term profitability of acquiring customers today.

• Example of Customer Lifecycle to Carrier:

Day 1 Day 30/60/90/… Day 720+

Customer Buys a Phone Customer pays Bill $50+ Customer Churns

or

Carrier Carrier Customer Upgrades

- Subsidizes phone - Pays ongoing usage costs

- Pays commission to retail/dealer - Pays customer support costs

- Network Capacity already built - Approximately 53% margin

Net Cash Flow Net Cash Flow

$400-$600 negative Approximately $30+ positive per month


BlackBerry Value PropositionDriving Partner Profitability - ARPU and LTV (North America)

Source: OPEX Data from Yankee Group (US Mobile Carrier Monitor Sept 2008)

Source: ARPU Data from Nielson Mobile Q1 2008

ARPU /

LTV


BlackBerry Value PropositionLifetime Value Calculation

Source: OPEX Data from Yankee Group (US Mobile Carrier Monitor Sept 2008)

Source: ARPU Data from Nielson Mobile Q1 2008

Source: Opex and COA based on Yankee estimates. Adjustments for Blackberry

SAF & additional subsidy based on RIM estimates.

Source Formula Basic Phone

Non BB

Smartphones Blackberry

Carrier ARPU

Voice ARPU Neilson a 37.48$ 44.23$ 50.47$

Other ARPU Neilson b 7.11$ 9.02$ 12.20$

Data ARPU Neilson c 7.89$ 20.85$ 25.94$

Total ARPU d = a + b + c 52.48$ 74.11$ 88.61$

Total OPEX Yankee e (24.67)$ (34.83)$ (39.07)$

Gross Margin f = (d-e) / d 53% 53% 56%

Churn Yankee g 1.27% 1.27% 1.27%

Discount Rate h 12.50% 12.50% 12.50%

PV of Gross Margin j = d x f / (g + h/12) 1,203.28$ 1,699.08$ 2,143.01$

HandHeld Subsidy Yankee k (150)$ (150)$ (200)$

Other Acquisition Costs Yankee l (375)$ (375)$ (375)$

Network Infrastructure Costs Yankee m (99)$ (140)$ (105)$

Lifetime Value n = j - (k + l + m) 578.89$ 1,033.76$ 1,462.53$

Breakeven Period (months) o = (k+l+m) / (d x f) 22.4 16.9 13.7


Conclusions

• Value is shifting from hardware to software & services

• Users have high expectations in all areas — device, UI, ubiquitous

access, applications and services, both in the enterprise and consumer

space

• Partnerships are critical — no single player can deliver solutions

independently

• Demand for applications and services is tangible and a significant

growth opportunity for everyone in the value chain

– And specifically for carriers in terms of ARPU/revenue generation.

The wireless landscape is undergoing a

fundamental change with Mobile OS and

SW platforms at the core

• Value shifting towards mobile services and applications

• Smartphone era


• Mobile OS and SW

platforms are reshaping thewireless landscape

• Innovation driventhrough developer communityand partnerships

Wireless landscapechanging

• Consumersembracingmassively mobileservices and applications.

• Enterprise mobility has become strategic

Demand & marketgrowth



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Ict Mobile Summit 2009 Eduardo Fernandez Plenary Session Short Def

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