Outlook 2012: The Overall ICT Perspective

Nitin Bhat

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Agenda

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State of the Industry 2011

ICT Outlook 2012

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2011 State of the Industry: Summary

Telecom Operators are struggling to find growth in their core business – voice

Bigger threats are looming – OTT platforms hit Telco core e.g. SMS revenuesData revenue growth has been robust for most markets; however data deluge has cost challengesTelecom operator margins are declining so profitable data growth is keySmartphone and Tablets shipments showing rapid growth in the year 2011 (~ 150 mn smartphones and ~ 5 million tablets)

Cloud computing continued to gain momentum in the region with > 40% growth in revenues accruing to public cloud providers

Overall unified communication growth of around 9 percent with double digit growth in conferencing, mobility, IM/presence and services

It is expected that the total IT spending would grow by around 7-8 percent in the year 2011 with IT consumerization, cloud ready architecture, analytics and social media as top of mind concernsFiber deployments in developed countries gained momentum in 2011 due to both private sector initiatives and government-driven National Broadband Networks; early LTE deployments in 2011Pure play IPTV to Smart TV gained momentum on back of massive shipments in smart TVs

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Agenda

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2

State of the Industry

ICT Outlook 2012

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#1: Mobile Platforms hitting critical mass across smartphones and tablets

Global Trends Asia Pacific Trends

Desktop PCs

Netbook PCs

Smartphones

Tablets

2011 (e)

Desktop PCs

Netbook PCs

Smartphones

Tablets

2011 (e)

• Globally in Q4 2010, smartphone & tablet shipments exceeded desktop & PC shipments

• In the Asia Pacific region, we expect the shift to happen by end of Q4 2011/Q1 2012

~ 380mn

~ 480mn

~ 150mn ~ 155mn

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#1: Mobile Platforms hitting critical mass across smartphones and tablets

Mass market phase will aggravate the challenges for operators, vendors and enterprises alike

• Initial seeding to monetize 3G networks

• Flat rate as a demand simulation mechanism

Market SeedingUpto 2008

Device Driven growth2009-11

Mass Market Phase2011- 2015

• More mobile BB devices than fixed BB devices

• Packet data exceeded voice data on mobile networks in 2010

• Apps are the new internet

Video driving the growth of mobile date traffic

Data Traffic per user (Moore’s Law): Doubling nearly every 18 months

Smartphone is mass market

80% of internet users to have mobile internet

IT needs to support such devices

Initial creation of new business models – healthcare, automotive

Networked Society2015+

Wide penetration of devices and networks

Cross industry business models

Information ubiquity

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#2: Platform play across the ICT sector would the critical value generator

3 ecosystems are converging in the mobile computing ecosystem with diverse approaches

Mobile Cycle

1990s

Client-Server Computing

Mobile internet

2000s 2010s 2020s

Email/ Web Web 2.0

Cloud Computing

2G Based Comm

Fixed BB Growth

Customized Tablets/phones

Web OS

Apps

PC as Entertainment/Personalized

PC as Workhorse

Laptops/Netbooks Tablets

Smartphones

Digitization – Digital content overtook analog content

Web 3.0 + Aug Reality

2015

Video overtook static pages

Internet Cycle

Computing Cycle

Mobile Cloud

Graph not to scale

Collision Phase Convergence Phase

Soft SIMs

Mobile devices sold> Fixed devices

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#2: Platform play across the ICT sector would the critical value generator

By 2015 there will 2-3 platform choices for each need and 2-3 overall integrated platforms. Microsoft acquired Skype in 2011 and we can expect to see more action in the coming year.

In Asia Pacific, SKT re-organized to SKT and SK Planet to focus on platform business globally.

Communication Platforms

Entertainment Platforms

Information Platforms (monetized by ads)

Commerce Platforms

Facebook Inhouse?

Apple’s platform Google platform

??

Google

Participation/SNS Platforms

Facebook

Experience Platforms – OS + Web

Microsoft?

PayPalVisa

Skype (Acquired)

MS-Nokia? RIM (Acquired?)

Operator alliance

Twitter ?

Akamai

Android

Itunes /app store

NFC enablement

NFC enablement

Youtube Xbox/PS3Hulu ?

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#3: Real use cases in the business environment driven by enterprise social networking

Asia Pacific Enterprise Social Networking Software Market

2008 2009 2010 2011 2012

Total Market 5.2 11.0 20.9 34.2 62.8

Growth % 110.5% 89.3% 64.0% 83.7%

0%

20%

40%

60%

80%

100%

120%

0

10

20

30

40

50

60

70

Rev

enue

Gro

wth

Rat

e (%

)

Rev

enue

s ($

Mill

ion)

Challenges with Social Collaboration Adoption

Enterprise-grade solutions for Social Collaboration emerging in the market

Market adoption to see sharp increase in 2012

CIOs wary of IT policies on information sharing, access to information across the organization & security

Lack of successful case studies & demonstrating clear ROI has been another challenge

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#4: Fixed Broadband and 3G/LTE will provide options for high speed access

Fixed Broadband 3G/LTE

212mn

343mn

2011(e) 2014(f)

466mn

1bn

2011(e) 2014(f)

• The fixed broadband market continues to grow in Asia Pacific region despite of the heavy penetration of 3G/LTE.

• MBB through dongles will touch 41mn in 2011 and reach around 100mn by 2014

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#4: Fixed Broadband and 3G/LTE will provide options for high speed access

KEY CHALLENGES:

Limited Device Range Lack of Subscriber Adoption Spectrum QoS/Indoor Coverage

Source: Frost & Sullivan analysis.

2012

2012

2012

20142014

2014

2014

2012

2012

Lot more LTE deployments expected in 2012 and 2013

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#5: “Internet of Things” will further accelerate as more and more devices, equipment and gadgets get connected creating opportunities for value creation and new business models

The Home Network Mobility on steroids Internet of things

• 8-10 Devices per home• Universal Remote

6 bn

• 5-6 Devices per individual • Touch as the default input

mechanism

30 bn

• 500 per sq km • Smart cities

44 bn

‘S’ City Planning

‘S’ Energy

‘S’ Business

‘S’ Mobility

‘S’ Citizen

‘S’ Buildings

• Rapid commercialization of enabling technologies• Demand for such services in select sectors driven by productivity requirements• Emergence of early business models to monetize the opportunity

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#6: Big Data and Analytics will see reaching the chasm in 2012 and get deployed through variety of platforms and be enabled by emerging technologies

Big Data

Data is expected to increase dramatically over the next decade; Data from machine communication and IOT is expected to exceed social media in the next half decade

Growth Areas @ Analytics Queries, Reporting, analytics, Advance analytics, CRM analytics, Data warehouse generation Organization financial /

strategy analytics In-line and predictive analytics Move more towards cloud

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#7: Cloud computing is set to become mainstream in Asia Pacific region. Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industryHybrid clouds lead the way; Cloud adoption growing at a rapid pace

APEJ Cloud Computing is market expected to grow at 39% for the 2010-

2015 period.

2010 2011 2012 2013 2014 20150

1,000

2,000

3,000

4,000

5,000

6,000

1,124

1,575

2,224

3,132

4,284

5,807

US

$ m

illio

ns

CAGR: 39%

71%

10%

3%

16%

29%

Not adopted yet Public cloud Private cloud Hybrid cloud

NoteSurvey done with IT Managers and CIOs in Australia, Hong Kong, China, India, Singapore and Malaysia in Q2 2011. 64% with >500 employees and 36% with 200 to 499 employees.

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#7: Cloud computing is set to become mainstream in Asia Pacific region. Platform-as-a-service (PaaS) is set to be the new battleground in the cloud computing industry

Source: Frost & Sullivan

SaaS

Current View (2010)

PaaS

IaaS

Yr1 Yr7

Device Presentation

Interim View (2011-12)

Application Management

Tenancy Managers

Platform

Brokers/Aggregators

Synchronization

Hosters/Infrastructure

End game

2-3 end to end cloud

players

Preferred partnerships of SPs

with software ( retail

model)

Software Reseller

Software Reseller

The cloud value chain will disintegrate and consolidate later

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#8: Telco transformation will evolve as more and more telcos come under revenue growth pressure even across the emerging markets

Telecom Transformation

Services/Business Transformation

Network Transformation

Customer Mgmt Transformation

• Enterprise ICT Services

• Cloud • Data Centers • Mgd services • Unified comms

• Appifying Services

• Devices

• Segmentation of mobile broadband

• Demand and pricing management

• Migration to LTE

• Backhaul optimization

• IP Migration

• Faster rollout of services

• Customer centricity

• Automation/ IT Factory

Protect/ New Revenues Reduce cost per bit Increase agility

OrganizationalTransformation

Be ready

• Process re-engineering

• Knowledge acquisition

• Metric definition

Telecom operators need to look at revenue growth and profitability growth

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Mi-fi devices at the consumer end

• MiFi devices can make any device network-agnostic allowing GSM, CDMA and WiMAX carriers to offer any Wi-Fi enabled device.

• Offloading data traffic will ease strain on existing 3G networks.

Small Cells– rapid scaling of sites

• Light Radio pioneered by ALU, HP and Freescale shows how SDR, VLSI and smart power management will change the scale and scope of BTS

• Antenna collapsed into the cell – the cube can be as small as 10 cms

Femtos

• USB drive form factor for femtos

• Femtos can be added to other devices like gateways

#8: Telco transformation will evolve as more and more telcos come under revenue growth pressure even across the emerging markets Metamorphosis of networks – Small is Big

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#9: Enterprise communications would become richer, more collaborative and increasingly move towards the cloud

RichCommunications- Pervasive video

- Context & presence aware

CollaborativeCommunications

- Conferencing- ESN

Cloud- Native and new

Increasing Globalization

Consumerization of IT

Improving Infrastructure

Declining Telecom Costs

Shift from Capex to Opex

Generation Y workforce

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#10: ICT as an enabler will continue to gain momentum as telcos, SIs, ISVs etc. move beyond pure ICT industry to drive growth, value and margins in the future.

SMART LIVING

*****

SMART PUBLIC SPACE

Solar PV Cells

Virtual Shopping

Travelling Wave Reactor (TWR)

Morphing

From 2D to 3D HDTV

Urban Planning

Consumer Electronics Energy

Retail

AutomotiveHealthcare

Electric Vehicles

Biotechnology

Financial Services

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#10: ICT as an enabler will continue to gain momentum as telcos, SIs, ISVs etc. move beyond pure ICT industry to drive growth, value and margins in the future.

Co-Create Co-Market Co-Deliver Co-Exist

Web 2.0 philosophy

Consumers to Prosumers

With new partners in the eco-system

Add to the value of the other creators

Re-jig marketing channels with focus on digital channels

Lend and borrow “brand equity”

Use partners across the value chain

Define your delivery differentiator

Borrow and add to the co-creator’s differentiator

Define roles and responsibilities based on actual competences

Define SLAs

Accept real and sustainable revenue sharing approaches

Focus on real-time and automation

Leverage the co-existence of technology to deliver convergence

The following 4Cs are the key pillars/conditions to build a Enabler play edifice

1. Increasing commoditization2. Disruptive Innovation not led by traditional ICT players3. Competencies can stretch at best to adjacent markets

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Global Growth Partnership Company

Thank You

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For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+603 6204 5832djeremiah@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 5910carrie.low@frost.com

Jessie LohCorporate CommunicationsAsia Pacific+65 6890 0942jessie.loh@frost.com