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Three Consumer Market Trends that are Impacting Telecom Industry (2014)

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Three Consumer Market Trends that are Impacting Telecom Industry (2014)

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  1. THREE CONSUMER MARKET TRENDS THAT ARE IMPACTING TELECOM INDUSTRY Marc Jadoul May 2014 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  2. THE TREND HAS BEEN THAT MOBILE WAS WINNING. IT'S NOW WON. IN ABOUT TEN YEARS WE MAY FIND OURSELVES WITH MAYBE TEN OF THESE DEVICES ON OUR BODY. WHILE HUGELY POPULAR, THE LINEAR TV CHANNEL MODEL IS RIPE FOR REPLACEMENT.

  3. THE TREND HAS BEEN THAT MOBILE WAS WINNING. IT'S NOW WON. Eric Schmidt Executive Chairman, Google Source: http://mashable.com/2013/12/30/eric-schmidt-predictions-2014 3 3 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  4. MASLOW’S HIERARCHY REDEFINED SELF- ACTUALIZATION achieving one’s full potential & creativity SELF-ESTEEM prestige & feeling of accomplishment BELONGINGNESS & LOVE intimate relationships, friends SAFETY security, stability, safety PSYCHOLOGICAL food, water, shelter, warmth, … Source: http://www.simplypsychology.org/maslow.html 4 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  5. MOBILE DATA TRAFFIC KEEPS GROWING 21,500 PB Other Games & Apps Video 5,326 PB Music Browsing 2012 2013 2014 2015 2016 2017 Source: Strategy Analytics, Handset Data Traffic (2013) 5 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  6. DEMAND FOR (DENSE) WIRELESS ACCESS IN PUBLIC PLACES IS RISING Sports stadium Train/bus station Airport Office Hospital Shopping mall Convention center High street School Hotel Supermarket Retail shop Multi Dweller Units House 0.0 0.1 0.2 0.3 0.4 0.5 0.6 Average Mb/s per 10m2 Source: Ruckus Wireless (2012) 6 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  7. EVEN WITHIN THE HOME, MOBILE MULTIMEDIA IS BECOMING PERVASIVE 100% 90% 80% % OF USE INDOORS 100% 70% 90% 60% 80% 50% 70% 40% iPad iPhone Blackberry 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 Outdoor mobile data usage Indoor mobile data usage Source: Mobile Experts (2012), GigaOM (2012) 7 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  8. SMARTPHONE AND TABLET VERSUS… EVERYTHING ELSE TABLETS ENHANCE THESE DEVICES TABLETS REPLACE THESE DEVICES 9% 13% 12% 14% 16% 16% 25% 21% 22% 25% 26% 56% 55% 60% 56% 64% 50% 72% 49% 56% 65% 64% 32% 30% 23% 24% 25% 22% 18% 11% 3% GPS 13% 11% 10% 3% Portable Gaming Console 3% eBook 3% Desktop PC Internet Connected TV Smart Phone Internet to TV Player Gaming Console Portable Media Player NetBook Laptop PC Don’t use device Use device less Same device usage Use device more Source: The Nielsen Company, 2012 8 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  9. SMARTPHONES AND TABLETS TEND TO PLAY DIFFERENT ROLES Living room Living room Library Bedroom Bedroom 72% 67% School 65% 20% 63% In stores 22% Kitchen Other Kitchen 53% 8% 34% 40% School 10% Where do you access the internet on your SMARTPHONE ? Where do you access the internet on your TABLET? Home office Library 31% Home office Work 58% 12% 26% Other 14% Friend’s house 74% Car 60% Work 20% While traveling 68% Outdoors 26% 65% While traveling 48% Restaurant Friend’s house 28% 51% Public trarnsport 74% 18% Car 30% 49% 15% 75% 9% Outdoors Restaurant Public transport Daily commute Daily commute In stores Source: Forrester Research (2013) 9 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  10. NEED FOR DIFFERENT ‘MIXES’ OF MOBILITY, CAPACITY AND COVERAGE Full mobility Nomadic usage Mainly low bandwidth services Often high bandwidth services Macro coverage Small cells & Wi-Fi 10 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  11. NOMADIC VIDEO IS SOARING WITH A 73% CAGR 200,000 Home video users (premium content) 180,000 160,000 140,000 Nomadic video users (premium content) 120,000 100,000 80,000 60,000 Mobile video users (premium content) 40,000 20,000 0 2010 2011 2012 2013 2014 2015 Source: The NPD Group (US, 2011) 11 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  12. DEFINING THE IDEAL NETWORK FOR WIRELESS NOMADS a wireless HetNetmixing 3G/4G macro cells, small cells and Wi-Fi automatic network discovery, selection and authentication, with seamless handover between cellular and Wi-Fi access a high-capacity, fiber-based mobile backhaul and transport network 13 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  13. IN ABOUT TEN YEARS WE MAY FIND OURSELVES WITH MAYBE TEN OF THESE DEVICES ON OUR BODY, OR MAYBE WOVEN INTO OUR CLOTHES, MAYBE EVEN UNDER OUR SKIN. Gadi Amit Designer, Fitbit Activity Tracker Source: http://www.dezeen.com/2014/03/10/interview-fitbit-designer-gadi-amit-wearable-technology/ 14 14 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  14. SENSORS AND ACTUATORS EVERYWHERE 2 * FUEL 100+ *** 9 ** (*) Sensors in the Nike+ Fuelband: 3-axis accelerometer, ambient light sensor; (**) Sensors in the Samsung Galaxy S4: accellerometer, barometer, geomagnetic sensor, gesture sensor, Hall sensor, gyroscope, proximity, RGB light, temperature/humidity; (***) Sensors in today’s cars: air–fuel ratio, blind spot monitor, crankshaft position, curb feeler, defect detector, engine coolant temperature, Hall effect sensor, manifold absolute pressure, mass flow, oxygen, parking sensors, radar gun detector, speed, throttle position, tire-pressure, torque, transmission fluid temperature, turbine speed, variable reluctance, water-in-fuel, water-on-windshield, wheel speed, etc. 15 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  15. THE NEXT STEP IN INTERNET EVOLUTION Internet of CONTENT Internet of SERVICES Internet of PEOPLE Internet of THINGS Pre- internet + + + + SOCIAL WEB H2H WWW WEB 2.0 M2M 16 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  16. THE “INTERNET OF THINGS” IS COMING AND IT’S GONNA BE BIG (NO… HUGE) 212 BILLION “THINGS” IN 2020 $8.9 TRILLION GLOBAL REVENUES BY 2020 Source: IDC 2013, http://enterpriseinnovation.net/article/idc-internet-things-poised-change-everything-1713674431 17 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  17. WEARABLE TECHNOLOGY ON THE GO Sources: http://www.policymic.com/articles/65371/galaxy-gear-watch-could-be-a-goldmine-for-advertisers http://mashable.com/2013/11/17/taptap-wristband-communication-relationships 18 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  18. DIGITAL LIFE IN THE CONNECTED HOME Source: http://www.lgnewsroom.com/ces2012/view.php?product_code=95&product_type=95&post_index=1828 19 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  19. CONNECTED CARS SOON AN EVERYDAY REALITY € 45,000 TELECOM SERVICE PROVIDERS € 40,000 € 35,000 € 30,000 (millions) € 25,000 TELEMATICS SERVICE PROVIDERS € 20,000 € 15,000 HARDWARE € 10,000 € 5,000 IN-VEHICLE SERVICES € 0 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E Source: http://reviews.cnet.com/8301-13970_7-57570801-78/at-t-general-motors-to-sell-4g-lte-connected-cars-next-year 20 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  20. WHY THIS IS HAPPENING RIGHT NOW IoT 21 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  21. SOME CHALLENGES RELATED TO THE IOT TECHNOLOGY BUSINESS SOCIETY SCALABILITY MONETIZATION REGULATION PERFORMANCE HORIZONTALIZATION GLOBALIZATION MANAGEABILITY VERTICALIZATION GOVERNANCE INTEROPERABILITY PARTNERING IDENTITY SECURITY INNOVATION PRIVACY 22 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  22. WHILE HUGELY POPULAR, THE LINEAR TV CHANNEL MODEL IS RIPE FOR REPLACEMENT. Reed Hastings Netflix CEO Source: http://qz.com/203192/the-track-changes-version-of-netflixs-vision-for-the-future-of-tv/ 23 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  23. WHICH ONE OF THESE WOULD YOU MISS DOING THE MOST? TOP-5 MENTIONS AMONG ADULTS 3% 9% 2% 4% 2% 12% 4% 8% Read newspapers/ magazines 7% 8% 7% 4% 13% 15% 11% 15% 14% 15% 3% 20% 18% 2% Listen to the radio 7% 17% 22% 36% Go online 26% 47% 69% 68% Use a smartphone 58% 48% 42% 34% 32% Watch television 13% TOTAL Aged 16-24 Aged 25-34 Aged 35-44 Aged 45-54 Aged 55-64 Aged 65-74 Aged 75+ Source: Business Insider (May 2014) 24 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  24. TV VIEWERS ARE LOOKING FOR A MORE FLEXIBLE VIDEO EXPERIENCE Device flexibility Schedule flexibility ? Location flexibility Content flexibility Interaction flexibility Plan flexibility 25 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  25. THE VIDEO DELIVERY MODEL IS SHIFTING 2020 2012 7.0 HOURS PER DAY 4.8 HOURS PER DAY PayTV linear PayTV VOD Video comm Cloud video OTT video Sources: Bell Labs, 2012 26 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  26. ONLINE VIDEO TRAFFIC WILL HAVE AN ENORMOUS IMPACT ON NETWORKS Average traffic at Tier 2 CO 100,000 80,000 UNICAST TRAFFIC DOMINATES NETWORK BANDWIDTH Mbps 60,000 40,000 20,000 MULTICAST TRAFFIC HAS MINIMAL IMPACT 0 2012 2013 2014 2015 2016 2017 Linear TV - Multicast Managed VoD - Unicast OTT Video - Unicast Source: Bell Labs, 2012 27 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  27. THE YOUNGER THE VIEWER, THE MORE THEY WATCH ONLINE TV BOOMERS GEN X MILLENIALS Mostly TV TV + online video Mostly online video No TV Source: The New York Times, 2013 28 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  28. HOW MUCH BANDWIDTH DOES AN AVERAGE HOUSEHOLD USE? Father watching with friend a soccer match in HD on large flat screen TV 10 Mbps Son starting an online streamed multiplayer video game 8 Mbps ~45 Mbps Mother watching an HD movie on regular TV screen 8 Mbps Daughter watching an HD video on her tablet 1-2 Mbps In the background, two HD videos being recorded 2x8 Mbps 29 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  29. BUT… 10 YEARS FROM NOW, HALF OF NORTH AMERICAN HOUSEHOLDS MAY ALREADY BE ON 4K TV 100% 75% 50% 25% 0% 2014 2024 2012 2017 2022 2027 2030 Source: ABI research, BI Intelligence, March 2014 NETFLIX HAS ANNOUNCED THAT MORE 4K ULTRA HD CONTENT IS COMING TO ITS VIDEO LIBRARY. THE HEVC COMPRESSION FORMAT OFFERS A BITRATE OF JUST OVER 15 MBPS. 30 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  30. DVR FUNCTIONALITY IS SLOWLY MIGRATING FROM THE SET TOP BOX TO THE CLOUD 2013 2017 STB-based DVR HHs Network DVR HHs Cloud DVR HHs BY END 2017, TRADITIONAL SESTBBASED DVR HOUSEHOLDS STILL DOMINATE, BUT NETWORK AND CLOUD DVR HOUSEHOLDS WILL HAVE GROWN TO 13% Source: SNL Financial LC, 2014 31 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  31. WITH MORE OTT COMPETITION, PAY TV PROVIDER VOD GETS UNDERUSED HOW MANY VOD PURCHASES DOES YOUR HOUSEHOLD MAKE ON AVERAGE, EACH MONTH, FROM YOUR PAY TV PROVIDER? ONE 11.2% ZERO 73.8% TWO 5.6% Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada) 32 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  32. WHY DO CONSUMERS PREFER OTT ALTERNATIVES TO TV PROVIDER VOD? Ability to watch on smartphone Ability to watch on tablet Easier to find content Don't have VOD Better selection Convenience Cheaper Other Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada) 33 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  33. THE FUTURE OF TV Personalized; understanding a viewer’s purpose/need in the moment; social, interactive, profile and context-based. Broader choice of content; linear, on-demand and OTT. Multi-screen with a seamless CX; cross device search & discover functions. Cloud-based VOD and DVR; ultra HD and 4K TV are coming. 34 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  34. INNOVATION IS HAPPENING EVERYWHERE — IN THE APPLICATIONS, IN THE CLOUD AND CERTAINLY STILL IN THE NETWORK WHETHER IT IS VIRTUALIZED OR NOT — IT IS EXCITING TO BE A PART OF MAKING THAT HAPPEN. Michel Combes CEO Alcatel-Lucent Source: htttp://broadbandworldforum.com/interview-with-michel-combes-ceo-alcatel-lucent/ 35 35 COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

  35. marc.jadoul@alcatel-lucent.com www.linkedin.com/in/mjadoul @mjadoul

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