Overview of Mobile Services and Applications

1
Overview of Mobile Services and Applications
2
Agenda

• Current Trends
• SK Telecom in Korea
• I-Mode FOMA in Japan
• SMS in Europe
• RIM in North America
• Key Success Factors

3
A 1X example SKT

• Very successful in generating ARPU from data
  services
• SK Telecom has more than 20 wireless data
  customers in its subscriber base
• Korea success is attributed to
• Inexpensive terminals
• Volume availability of terminals
• Innovative services
• Localized applications
• Contiguous coverage

Data ARPU (in Korean Won)
Data ARPU As of Total ARPU
Data ARPU has nearly doubled as a percentage of
total ARPU
4
KTF - Top Five Applications

• Theme Park ring tones, picture download

4. Magic Book Magazine comic book store, news
center
2. Magic Stocks

• Duam Café
• Message board, member search, SMS

3. Skylove Chatting
5
ARPU Driver Large Variety of Color Handset
Data
10,981

• 1. Compared to 2G phones
• 1XRTT with Color has
• 76 more voice ARPU
• 456 more data ARPU
• 2. Compared to 1xRTT B/W
• 1xRTT with color has
• 26 more voice ARPU
• 117 more data ARPU

ARPU (Won/Month)
5,056
1,974
49,955
39,622
Voice
28,378
Source SK Telecom
Data 7 11 18
Encourages users to access high traffic
applications such as games and picture down-loads
6
i-mode Success in Japan

• Launch Date 22 Feb 1999
• Number of Subs 32.2 M (March 2002)
• Content providers 3000 official sites 50
  000 voluntary sites
• E-mail is used by approximately 75 of customers

7

i-mode Success in Japan

• Access Fee
• 3 per Subscriber
• Usage Fee
• 19-20 per month
• DoCoMo ARPU
• 70 (source DoCoMo 01)
• Decreasing according to Docomo

Data ARPU for the whole subscriber base
7.7/month (more than 10 of overall ARPU)
8
i-mode Demographics users by age
I-mode attracts a variety of segments
9
Foma, First 3G services in the world

• FOMA (freedom of Mobile Multimedia Access)
• 89 000 Subs in March 2002 (Launched Winter 2001)

FOMA ARPU 10,400 (US78) (Oct to Dec
2001) i-mode ARPU of 8,540 (US66) (Oct to
Dec) DoCoMo forecasts i-mode ARPU will fall to
8,500 by the end of March
10
Foma
User Age
FOMA Subscriber Growth
89
Teens below 2
60s 1
50s 7
Subscribers (K)
40s 16
60
20s 39
30
30
30s 35
14
11
Source NTT DoCoMo, 3/21/02

• Limited Success?
• Lack of coverage coupled by single mode terminals
• Services Hick-ups interruptions (problems with
  streamed video clips)
• Limited number of applications available
  requiring Foma
• Terminals price too high
• KDDI competition

FOMA Services
11
Europe - Todays Source of Revenue

• SMS represented 90 of mobile Data revenue in
  2001. SMS Growth is slowing down in Western
  Europe
• SMS used by 80 of mobile user in WE. SMS is used
  once-a-day by 41 in Europe, 33 in Asia and 5
  in the U.S. Survey from A.T. Kearney's
• Internet Browsing WAP services represent less 5
  of mobile data revenue.
• Only 5 of subs say using WAP regularly. Survey
  from A.T. Kearney's
• Entertainment Ring tones 300m in 2001 in WE

SMS and WAP represent the majority of the revenue
12
Todays Source of Revenue

• SMS Usage 30 Billion/mth 9000 in 4 years, SMS
  represented 90 of mobile Data revenue in 2001.
• Internet Browsing WAP services represent less 5
  of mobile data revenue.
• Entertainment Ring tones 300m in 2001 in WE

• Obvious Disparity
• Europe SMS mainly
• US low Data revenue
• Japan more advanced with data revenue coming
  from Games 20, Ring tones 12, Images 13

Vodafone Group Non-Voice Services Share of Total
Service Revenues
SMS represent the majority of the revenue in
Europe
13
Key Success Factors for SMS

• Pricing Attractively priced to compete with
  voice for certain user segments, particularly
  during traditional "peak hours."
• Interoperability between competitors' networks
  and handsets with ubiquitous access through
  standard GSM handsets providing a distinct
  advantage.
• Unobtrusiveness Can be used to either complement
  or displace voice calls, according to user
  preferences.
• Store-and-forward implementation Delivering an
  apparent real-time messaging experience for the
  user.
• The "fun" element Taking mobile communications
  beyond the communications paradigm, to deliver an
  entertainment-centric value proposition.

14
RIM Blackberry success in US
Average Time Spent on Laptop
11.1

• RIM is adding nearly 1M subs per year
• Most of the users of RIM are corporate users

6.1
Laptop hours per month
RIMs impact on Laptop Usage
of users increasing laptop usage
Laptop Usage after RIM Deployment
of users decreasing laptop usage
34
66
Source Goldman Sachs Global Equity Research, WSJ
October 15, 2001
15
Reasons for RIM Success

• Always on
• PDA form factor vs. phone form factor
• Intuitive user interface
• Attacked enterprise segment
• Zeroed in on e-mail as killer app
• Cost of Ownership advantage
• 9,700/user/year for laptop vs 2,000/user/year
  for RIM (source Goldman Sachs)

Areas for Improvement

• Attachments
• Integration with universal messaging
• Voice Integration

16
Agenda

• Current Trends
• SK Telecom in Korea
• I-Mode FOMA in Japan
• SMS in Europe
• RIM in North America
• Key Success Factors

17
Terminals Diversity

• Open apps to terminals model
• Diversity to suit all market segments
• New Capabilities
• Learn from WAP and GPRS Errors!

Value Add comes from Content and
Applications Terminals are just the mediator
18
Data Applications Market

• Key to successful data offering
• Appropriate Applications to Terminals Pairing
• Culture, evolution of past user experiences
• Business Model Content players need to be
  motivated to join the value chain (Open APIs,
  revenue sharing, etc)
• Apps diversity - New service capabilities in
  order to enrich the offer MMS Location based
  Services
• Aggressive offering critical to take off
• Need Open Systems (e.g. J2ME), Attractive
• Pricing, Customised Terminal
  Variety

19
(No Transcript)
20
BACK-UP
21
Why is GPRS late ?
Current trends

• Carriers perceived GPRS is risky
• Avoid another WAP flop no hype would endanger
  UMTS
• Carriers submitted to financial market pressure
• Lack of content Mobile Internet start ups die
  one after the other
• Technical issues once initial instability is
  solved, still to resolve..
• Roaming is not in place
• Terminals not harmonized in terms of user I/F and
  IOT with infrastructure
• End to End optimization
• Adequate billing and associated systems is still
  an open question
• The Mobile Data Eco-System is still at infancy
•  Walled Garden  approach vs Open Business Model
  and associated business plans

Hopes issues being solved in 02 / H1 03 MMS
22
4 Waves of Applications
Multimedia

• Mobile Multimedia
• Instant Interactive multimedia
• Video Messaging / Streaming
• Enriched Personalized Services

• Personalized Services
• Instant Messaging/MMS
• Infotainment
• Location Based Services
• m Commerce

Infrastructure Focus Applications Focus
Mobile Data Service Maturity

• Enhanced Mobile Browsing
• Internet
• Intranet/Extranet

• UMTS is Perceived
• as a continuum from
• 2.5G
• Richer Content
• Better User Experience

Simple Text Messaging (SMS) Internet Browsing
(WAP)
GSM
UMTS
GPRS
23
SMS paving the way towards open business model
Key Success Factors
Apps/ content provider
Apps/ content provider
Apps/ content provider

• Higher value of content to drive usage and
  revenue (premium services)
• Share network resources with Third party
• Share revenue with Third party

• Peer to peer SMS
• 90 of SMS traffic
• 80 of SMS revenue

• 3rd party Generated SMS Premium services
• 10 of SMS traffic
• 20 of SMS carrier revenue
• more than EUR 32 million was spend on premium
  services in Norway ( 2001) source the razor

SMSC
Premium SMS based on Content Value Revenue Share
24
The future of Wireless RevenueNew revenue
streams in addition to increased airtime
Key Success Factors
Customer
Hosting applications and/ or third-party portal
Subscription and/or access fee and/or service
charge
Pays for hosting/ portal service
Site fee
Banks/financial service providers
Content provider
Site fee
And/or revenue sharing
Mobile operator
And/or revenue sharing\
Cut of transaction
Site fee
Pays site fee
Advertiser
Retailers e-commerce merchants
Big portal player, eg AOL, Yahoo! etc
Source Ovum, May 2001
How To Control Numerous Accounting Relationships?