"Airtel Pricing Strategies"
The future of wireless Presentation to Anna Hillers Loyola University GSB 400 N. McClurg Ct. 1912 technology and its impact Chicago, IL 60611 Dr. Linda Salchenberger on e-business April, 2000 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 1 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 2 GSM Global System for Mobile Communications With 200 million subscribers world wide and international coverage, GSM is the most successful digital mobile telephone standard BTS = Base Conversion: Encoding/ MSC= Mobile BTS = Base Mobile Phone: (Transceiver) Analog/Digital Compression Switching Center Station Data, Voice Station Global System for Mobile Communications (GSM) Features: • SIM (Subscriber identity module) allows for identification independent from phone • International Roaming (worldwide) • Voice and Data Service (SMS, 2 way messaging -> 14.4 Kbit/sec) • Call forwarding, Caller ID, Wait/Hold, Voicemail Anna Hillers 3 Upcoming Standards HSCSD, GPRS, EDGE, UMTS HSCSD, GPRS, EDGE are GSM-based standard, which enhance data transmission through enhanced software. UMTS, the European version of 3G will reach up to 2Mbit/sec through higher bandwidth. HSCSD: High • Circuit Switching: Speed Circuit • Allows for ISDN speed: 56.7Kbit/sec Switched data • Introduced 1999 by some GSM carriers GPRS: General • TCP/IP protocol (Internet protocol), supports a wide range of bandwidth Packet Radio • Allows for up to 115 Kbit/sec Service • Will be introduced by the end of 2000 EDGE: Enhanced • Allows for up to 384 Kbit/sec Data Rates for the GSM Evolution • Will be introduced by 2001 3G: Third • Increase of bandwidth Generation • Allows for 2 Mbit/sec (UMTS) • Will be introduced by 2002 Anna Hillers 4 UMTS Total mobility Integrating other systems, UMTS will offer total mobility with a trade off between mobility and capability, leading to different levels of service International Roaming Next 2.4-9.6 kbit country (rest of world) Major roads: <384 kBit City: 2 MBit Suburbs: >384 kbit <115 kbit (GSM) Anna Hillers 5 UMTS Technical features compared with GSM UMTS is downward compatible to GSM technology but will be capable to offer advanced features beyond existing GSM systems UMTS GSM • Up to 2 Mbit mobile packet data • 9.6 Kbit/s data, up to 112 Kbit/s with GPRS • Up to 384 Kbit mobile video • Up to 64 Kbit/s mobile video with • Fixed/mobile convergence of protocols HSCSD • Switching platform based on GSM II+ • Services similar to ISDN • Wide range of terminals: voice, data • GSM switching platform only, multimedia • Primarily voice terminals, • Downward compatible to GSM first organiser announced networks • No compatibility to other networks • Coverage limited but roaming available • Full coverage, worldwide roaming Anna Hillers 6 UMTS Development path The present differences in coverage and service between GSM and UMTS will disappear in future as GSM evolves, while UMTS expands coverage UMTS • UMTS will initially only be available in urban areas, relying on GSM outside covered areas Service/Capacity Speed UMTS • Early UMTS terminals will only offer limited service (speed data <64Kbit), later developing towards high speed 2Mbit/s services GSM GSM • GSM is the standard with highest mobility (coverage footprint) worldwide Coverage • GSM will develop data up to 384 Kbit via GPRS Anna Hillers 7 UMTS Time schedule for introduction of UMTS The EU requirement will force UMTS licensing in most EU countries during year 2000 but Japan and UK will take the lead Licensing Licensing of Service Licensing of Preparation UMTS I development UMTS II Mid 1999 Year 2000 in EU allows UMTS auction UMTS licensing max. 12 month in UK period licensing delay License condition March 2001, Jan 2002, in D, DK, F, S DoCoMo plans to UMTS to be (others) published launch UMTS in launched in Japan Europe The three major stakeholders are 1. Customers, which demand service 2. Telecommunications operators, which want to stay ahead of the competition 3. Governments, which strive for the highest price Anna Hillers 8 UMTS Example for UMTS licensing in the UK Not only telecom companies might apply for UMTS licenses but also non- telecommunication firms such as IT-companies and equipment suppliers Non-telecom companies Telecom companies Regional players Industry Groups • Cellnet • Virgin • Vodafone • Orange 3-5 UMTS licenses • Hutchison are currently IT-companies auctioned Microsoft Eurpean players • Vodafone-Airtouch • Telia • Deutsche Telecom Distributor • European telecom Fixed network operators Service provider • Internet SP • debitel • Energis • Mobilcom • NTL • Talkline • Airtel License includes • 4 licenses with 2x15Mhz + 5Mhz unpaired each • Service requirement: 80% population coverage =70% area by the end of 2007 • License limitation for 20 years • No mandatory roaming, but roaming expected by government Anna Hillers 9 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 10 Wireless meets Internet Middleware/Critical Services WAP The wireless application protocol (WAP) is the standard for bringing content, commerce, and other value-added services to wireless networks and mobile devices. Client WAP Gateway Origin Server CGI Encoded Request Request Scripts User Encoders etc. Agent and Decoders Encoded Response Response (Content) Content WAP Programming Model Benefits • Globally open standard that has already reached critical mass (80% of the industry) • Enables easy, secure access to relevant Internet/Intranet information and other services through mobile phones, pagers or other wireless devices • Provides the technology to develop, deploy and support wireless application, namely e-commerce Anna Hillers 11 Wireless meets Internet Middleware/Critical Services Bluetooth The Bluetooth phenomenon will likely have a powerful impact on this industry in the near future. Description Applications • An evolving specification of short- • Device-independent mobile data range radio frequency being – User could use Bluetooth to receive an e-Mail on a PDA from a notebook without having to developed with most wireless power on the notebook vendors and some PC manufacturers – User could access the Internet via cell phone while receiving Web pages on a laptop or PDA • Enables networking between • Wireless access to peripherals devices within a range of 10 – Connection of PCs with printers, faxes, other peripherals (e.g., PDAs) meters (30 feet through a radio frequency link in the unlicensed • Ad hoc conferencing 2.4 gHz band) – Facilitate ad hoc meetings (e.g., airports, hotels) that include data-sharing • Will be embedded in most cellular phones and laptop devices by the • Integration of digital cameras with mobile digital devices end of 2000 and cost between $5 – Can send pictures directly from a Bluetooth-equipped camera to a PDA, notebook, or printer; or and $15 per module it could transmit to a wireless network • Will be capable of speeds approaching 1 Mbps • Backed by an alliance between Intel, Nokia, Ericcson, Toshiba, and IBM Implications • Reduces burden of creating single, complicated, small devices • Improves connectivity between devices Anna Hillers 12 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 13 Current Industry Dynamics The Global Field At this early stage of development, the market for mobile data over cellular services will be more developed in Europe and Asia than in the United States. Current Situation SMS Users by Region 50 (millions of subscribers) Europe • Thanks to the consistent GSM Europe and 40 30 Asia are ahead of the fragmented U.S. market 20 U.S. . 10 Asia/Pacific 0 • The U.S. have seen higher growth in part of 1998 1999 2000 2001 2002 2003 the value chain, which is closer to the Internet Cellular Data Users by Region (middleware, value-added services, content, 16 (millions of subscribers) Europe commerce). 12 8 U.S. • Wireless “smart” phones dominate in Europe 4 and Asia, while PDA-based wireless units are Asia/Pacific 0 more prevalent in the United States. 1998 1999 2000 2001 2002 2003 Future Trends Worldwide Smart Handheld Device Shipments (millions of units) 1998–2003 CAGR U.S. 32% 12 • Multinational cross-border partnerships will Japan 42% 10 blur geographic distinctions. 8 Western 38% • Migration toward 3G will fuel more uniform 6 Europe Rest of 67% growth globally. 4 World • Mass market will fuel need for high capacity 2 data transmission 0 1998 1999 2000 2001 2002 2003 Anna Hillers 14 Current Industry Dynamics Wireline Versus Wireless Networks Growth of Data Traffic We have seen explosive growth of data traffic over wireline networks in the past 10 years. In the next five to seven years, an analogous explosion will occur over wireless networks. Migration to Data in Wireline and Wireless Networks Market Growth Forecasts 100 100% Incumbents Evolving IP to IP-Based Networks “The compound annual Data Wireline growth rate (CAGR) for Incumbents Revectoring Evolution to IP-Based Networks wireless data from 1996 through 2003 is projected to New Entrants Using be 35%. The market is IP-Based Networks expected to reach close to $2.5 New Entrants/Lead Wireless Incumbents Evolve to billion by the year 2002.” Traffic Mass Market IP-Based Wireless ISP/e-Commerce Source:Frost & Sullivan Market Carried by 50% 50 Research. Carrier Client/Server Business Application Sub-$100 Devices Networks (IT) Solutions Enablers “Two million wireless data Business/ Commercial Network subscribers existed in 1997. Browser (Netscape) Improvements Over 40 percent average Technology Adoption Micro- Lower $/MOU Air Interface annual growth is expected Browsers Improvements through 2002.” Incumbents Focused on Voice Source:U.S. Mobile Data Voice Marketplace. Mass Market Voice 100% 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1990 1995 1998 2002 2005 Source: Nortel Networks and the Yankee Group. • Wireless will follow wireline model. Key Messages • Network evolves to an IP architecture as data traffic carried over the network increases (more than 50 percent). Anna Hillers 15 Current Industry Dynamics Technology meets customers Opportunities in the mobile data market are immense. Convergence Customers Convenience Simple Text Corporate/ Institution Wireless Connectivity e-Mail Business PC Usability Internet and Power Access Content Consumer Commerce The convergence of three Applications, once confined to The true potential has yet to strong and powerful industries large corporate infrastructure, be realized. The evolution of is creating a flood of are finally becoming available advanced content and opportunity. and affordable to the mass commerce will cause this market. market to explode. Anna Hillers 16 Current Industry Dynamics Technology and Market Barriers Several technology and market barriers exist to impede the rapid development of wireless data services. Technology Barriers Market Barriers Device Ergonomics (Form Factor) Lack of ―Killer‖ Apps Data Security Cost of Access Data Throughput Cost of Handheld Devices Network Reliability Pricing Models Network and Technology Standards Integration of Various Components Perceived Value to Customer Anna Hillers 17 Current Industry Dynamics Technology Barriers Current Initiatives Trends indicate that most of these technology and market barriers are expected to be addressed in the next two years by several key enablers. Technology Trends Market Trends GPRS, EDGE and UMTS Throughput will increase transmission speed Intranet/extranet Lack of browsing Increased Customer Value Network coverage and “Killer Apps” is vital to mobile work Network infrastructure is improving Reliability force (build-out) Cost of Access Prices will fall similar to Device SIM Applications, WAP the wire line industry Ergonomics will improve the interface Devices with server- Equipment and based micro-browsers Data middleware providers are Cost of Security Handheld Devices cost considerably less addressing security than devices with built-in micro browsers WAP is becoming a Network and Technology standard protocol, Standards Migration paths to 3G are Providers must develop Pricing Models developed new pricing schemes Integration of Various Bluetooth will improve Components connectivity Anna Hillers 18 Current Industry Dynamics Mobile Data Mass Market Applications Over time, as wireless technology and the Internet have evolved, mobile data services have finally begun to penetrate the mass end-user market. Type of Service Content e-Mail Services Drivers of Mass Market Internet Access Adoption Wireless Intranet Access Knowledge Large-Scale Use of News the Internet and Dependence on It Text-Based Information Services Financial Travel Improved Reliability and Speed of Weather AccuWeather Wireless Networks Sports Entertainment Development of Data-Capable Content Information Devices Aggregators and Distributors e-Commerce Anna Hillers 19 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 20 The Wireless Value Chain To best capture the abundance of opportunities available in this growing market, we must understand the dynamics of each value chain segment. Telecom IT Middleware/ Value- Infra- Access Carriers Critical Added Content Commerce structure Devices Services Services Create Phones Provide Software that Large range of Create and Common Technologies Pagers wireless optimizes services: bundle Web and wireless PDAs etc. voice networks and Synchronization, Content Commerce architectures access or Browser Commerce for providers services Internet capabilities enabling Provide access applications, Application Document tools compatibility • What role does the segment play? Key Issues • Who are the leading participants? to Understand • What are the most significant trends in each segment? Anna Hillers 21 Value Chain From Content to Customer Today, multiple content distribution models exist – some models gain advantage of value chain disintegration, by providing more direct service Carrier Value Added Services Content Sources Wireless Device • Online Anywhere software converts Yahoo! content to Customized and a wireless format in real Packaged Data time Services Value-Added Wireless Information Selected Network of Device Wireless Reseller Content Providers • Reuters • Infospace.com • CNN • Intelligent Information Incorporated • The Weather Channel Carrier Network Content in and Proxy WML Format Server Web Content in HTML Format WWW WAP- (Phone.com) Compliant Device • Converts HTML Web documents into WML, thus readable by WAP-compliant wireless devices Anna Hillers 22 Market Forces by Value Chain Segment Access Devices The wireless access device serves a critical function as the primary interface between the user and data applications. Wireless PDAs Mobile Computers Modem Devices Others Handsets Qualcomm Sharp Mobilon Sierra Wireless Rocket eBook 3Com Palm VII PDQ Phone Tripad Aircard 300 from NuvoMedia • Europe/Asia will • Windows CE- • An extremely • Market will • Wireless see first devices based PDA will large market will flourish since it is applications for • Data entry become an open up when a compelling nonstandard methods will also increasing threat throughput rates alternative to devices will begin need to improve to Palm increase to 115 purchasing to gain dominance kbps and beyond wireless-ready acceptance as • Increased devices the market competition continues to mature Anna Hillers 23 Best-In-Class Segment Players Access Device 3Com Palm Products (Palm VII) Palm computing has shot to the forefront of convenient, handheld Internet access products with the introduction of the Palm VII. Maximize revenue streams from product sales, service, Key licensing and commission on commerce Success Factors Increase customer base through shift from “organize” to “access” information Key Initiatives and Strategic Direction Effectiveness • Hundreds of content providers signed up for • Connection speed is limited at 8 kbps content provision • Pricing structure somewhat limited in usage. • Wireless manufacturers are creating wireless • Limited success for the Palm because of attachments distribution only in New York. Technical, billing, • Joint venture with Aether to form Open Sky – customer support, and other issues need to be offer services nationwide over any standard worked out as well. pdQ-800 pdQ-1900 Target Market and Services Business Model Strategic Positioning • Consumer and business markets. • Revenue streams: product sales, • First to market, solid reputation, • Device offerings include the recurring service revenues, licensing brand name recognition Qualcomm PDQ phone and the agreements and commissions on • Palm VII has a slight change in Palm VII. commerce transactions target market: Goes from ―people • Internet access and wireless • Service provided is branded by Palm who want to organize their services available through (Palm.net). Service revenue potential information‖ to ―people who want BellSouth’s Wireless Data network ranges from a cost of $120 to $300 to access information.‖ covering 260 U.S. regions per year, shared with Palm Anna Hillers 24 Market Forces by Value Chain Segment Carriers The growth of wireless subscribers, coupled with strong Internet growth, are the primary drivers for the service provider market and will lead to new relationships and increased competition between carriers • An increase in Internet use results in increased air-time for service Opportunities: providers, and increased revenue per user. Internet + Wireless = • Ability to provide Internet and e-Commerce-based services will increase “lock-in” and reduce churn. Equipment Manufacturer Network ISP operator • New relationships between network operators, IPS and wireless equipment manufacturers all aiming to provide wireless access and content • Incumbents and new entrants are racing to sign up content providers and establish relationships Anna Hillers 25 Best-In-Class Segment Players Carrier GoAmerica GoAmerica is a new breed of service provider that specifically targets the mobile data market. “one-stop” shopping concept for nationwide Key wireless data services through strategic partnerships Success with equipment makers and content providers Factors Focuses on building brand image Key Initiatives and Strategic Direction Effectiveness • Formed partnerships with Yahoo and Ericsson • Reached strong market penetration for its Wireless Solutions services • Teams up with best-in-class players to provide its services Target Market and Services Business Model Strategic Positioning • Offers services to corporations • Resells air time from AT&T. • Positions itself as the leading carriers, and mobile professionals. • Acts both as a content aggregator nationwide wireless ISP • Offers an interactive Web content as well as a wireless service • Partners with best-in-class service service provider and provides content providers, content providers and • Service is compatible with several aggregation services on a device manufacturers such as popular devices. wholesale basis. AT&T, 3Com, BellSouth Wireless • Offers wireless services to Data, and Wireless Knowledge traditional ISP Anna Hillers 26 Market Forces by Value Chain Segment Middleware/Critical Services The middleware segment includes a broad variety of software solutions, often consisting of a client/server architecture designed to optimize the mobile link. www-Protocol Stack WAP Server-Level Middleware Protocol Other Server-Based Middleware Stack Network Protocol SAMA+ GPRS IS95-B SMS Other CDMA+ Client-Level Middleware WAP Other Device-Based Middleware Client (Nettech’s InstantRF, Smart IP . . .) Device Value-Added Services Micro e-Mail Fax Other and Applications Browser Device OS Windows Symbian’s Apple’s CE EPOC 32 Newton Anna Hillers 27 Best-In-Class Segment Players Middleware/Critical Services Phone.com Phone.com’s positioning as the converter of mass market phones to wireless ―companions‖ has been a huge success. Positioning as the ubiquitous standard for wireless Key Internet applications (creator of WAP) Success Factors Market leadership with strong penetration to all major carriers and manufactures worldwide. Key Initiatives and Strategic Direction Effectiveness • 75% of the wireless phone browser market • Phone.com’s unique platform is the only under multi-year contracts to embed its product integrating Internet and wireless system. into new devices • ―push‖ data to its customers, increase • 31 global carriers under multi-year contracts, customer loyalty (by reducing churn), and raise some of which are prepaid licenses potential revenue per user (RPU) are strong • Contracts with a lot of manufacturers to use incentives for carriers and phone subscribers to technology in their next phone generation use Phone.com’s technology. Target Market and Services Business Model Strategic Positioning • Offers platforms for carriers and • 2 sources of income: Serves as a • First-to-market leader in wireless for device manufacturers, Content, bridge between device and Internet integration (Former and Network Management manufacturers and carriers Unwired Planet) Systems • Push Server technology allows for • Set the standard for wireless data • Software optimized for mass increased revenue potential services through its leadership of market wireless telephones, • Network management and content the WAP forum. supports all wireless protocols, and applications cater to carrier and • Major competitive threats are is operating system and processor- developer markets, respectively Nokia, Ericsson, and Microsoft independent. Anna Hillers 28 Market Forces by Value Chain Segment Value-Added Services Value-added software providers create applications to enhance the ease with which wireless/Internet devices function. Sample Value-Added Service Offerings Synchronization The segment is very young and highly fragmented. Many services, once considered value-added— such as e-Mail—are now essential. Conversion of Software Large device manufacturers are generally not as concerned with true interoperability as the consumer; therefore, the role these entrants play will be important. Information Management Some device manufacturers have shown strong, proactive interest in developing these services, as evidenced by Motorola’s involvement in Starfish. Access Software for Content Overall, this segment will continue to grow rapidly. and Applications Anna Hillers 29 Best-In-Class Segment Players Value-Added Software AvantGo With its product expertise in transforming ―Web content‖ to ―wireless data‖ and its capability to aggregate numerous content partnerships, AvantGo is positioning itself to become a true ―wireless portal.‖ Strives for industry leadership through high profile Key partnerships Success Factors Bundles e-Commerce opportunities with content channels Key Initiatives and Strategic Direction Effectiveness • "wireless portal‖ for Palm OS and Windows CE • 40 Fortune 500 companies use AvantGo to devices, like AOL for desktop PCs provide mobile information • Bundling agreements on devices from HP, • Supports hundreds of thousands of registered Phillips, Casio, Palm Computing, IBM, and users of both Palm OS and Windows CE Symbol handheld devices Target Market and Services Business Model Strategic Positioning • Enterprise product and a free • Mobile enterprise solutions and • Spearheading the Mobile Link consumer service. Web-based application hosting to initiative, an open industry • Scalable solution for transferring Fortune 1,000 companies standard for connecting mobile data and applications onto • Partnerships with a variety of devices to server-based handheld computers. content providers applications • Personalized content offline or • Free service as a promotion for • Microsoft and 3Com are investors. wirelessly in real time—anytime, business solutions AvantGo serves as an anywhere Compatible with independent software vendor (ISV) PalmOS/Windows CE platforms to both Anna Hillers 30 Market Forces by Value Chain Segment Content In today’s wireless data market, there are three main groups of companies that are providing content to all types of wireless devices. Information Value-Added Web Suppliers Information Resellers Portals • Media and news • Act as intermediaries by • Act as intermediaries by companies that author, aggregating, customizing, and aggregating, customizing, and publish, and syndicate transforming Web content transforming Web content Description content • Resell content and services • Large brand presence and primarily to carriers and/or subscriber base on the Web end-users • No brand presence on the Web • CNN • Intelligent Information Inc. (iii) • Yahoo! Mobile • Reuters • AvantGo.com • MSN Mobile • The Weather Channel • GoAmerica • AOL Anywhere Players • Fidelity • Infospace.com • @Mobile • Palm.net • Basic news, financial and • Personalized content including • Personalized content including weather information news, financial information, news, financial and and weather alerts entertainment information Features • Limited content • Large breadth and depth of • e-Mail, calendar tools, and content targeted e-Commerce • e-Mail, calendar tools, and e- Commerce Anna Hillers 31 Best-In-Class Segment Players Content Yahoo! Yahoo! is positioning itself to be the leading content provider for wireless Internet users. Continue to build strategic content distribution agreements Key with a number of wireless service providers. Success Factors Increase revenue stream by incorporating more content- driven commerce opportunities and value added services. Key Initiatives and Strategic Direction Effectiveness • Acquired Online Anywhere, a provider of Web • Strong commitment and investment by Yahoo! delivery solutions for non-PC appliances, which • Difficult to assess since wireless Internet tackles the non-PC market access and content distribution is in a very • Announced several wireless content early stage distribution agreements: PageNet, Sprint PCS, Palm Computing Target Market and Services Business Model Strategic Positioning • Users of Palm and Microsoft CE • ―Stickiness‖ shall generate • First portal to align itself with a computing platforms revenues through Yahoo online service provider to provide Web • Markets Yahoo mobile! Via Yahoo storefront and auction site access site • Fees for the distribution of • Wireless partners for access to • Targets Yahoo!’s existing 35 million personalized news and content Yahoo content ―anytime and subscribers and that of its alerts to pagers and PDAs anywhere‖ wireless partners’ (Sprint PCS, • Personalized content and direct • International expansion PageNet) marketing Anna Hillers 32 Market Forces by Value Chain Segment Commerce With WAP as a standard and mobile Internet access growing, wireless e-Commerce is set to explode. Online Banking Players Auctions Online Stock Trading • Wellsfargo.com • Banks will push their • eBay and SkyTel have • Discount brokerages services to wireless • Paybox.com partnered to provide already offer wireless stock users • Citibank auctioning services to trading SkyTel’s two-way • Fidelity has teamed up paging customers with Palm to offer brokerage services Players • eBay Players • onsale.com • Fidelity • Yahoo! auctions • e-Trade Entertainment • Mydiscountbroker.com Wireless User • Showtimes.com currently transmits Retail showtimes to Yahoo! • Books and CDs represent mobile users; next step low-cost impulse purchase is to sell tickets opportunities for wireless • Look for traditional users ticket houses to sell • Expect significant wireless Travel tickets wirelessly e-Tailing Players • Ability to purchase Players Players airplane, train, and • Travelocity bus tickets and • Ticketmaster.com • Amazon.com • Expedia.com reserve car and hotel • Showtimes.com • Buy.com reservations • Biztravel.com • Barnesandnoble.com Anna Hillers 33 Best-In-Class Segment Players Content/Commerce Intelligent Information Incorporated Intelligent Information Incorporated is striving to make the user experience more personalized, a key success factor in this industry. Increase number of content distribution partnerships Key with wireless service providers Success Factors Expand content and services to meet the immediate and high value-added needs of users Key Initiatives and Strategic Direction Effectiveness • Partnered with AT&T Wireless to provide • Ability to customize information leads to personal news service for its digital/PCS reduced churn and increased revenue per user subscribers. through longer on-phone times and more • Customer base: 50% of the largest U.S. paging outbound calls. carriers and 8 PCS/digital cellular carriers Target Market and Services Business Model Strategic Positioning • Provides wireless personalized • Revenue through the distribution of • Cooperation with Nokia for and customizable information and content to wireless service activities focused on supporting consumer e-Commerce services providers and new media WAP and the growing demand for by creating a ―wortal‖ enterprises. mobility • Markets content and services to • Value-added services to wireless • Developing local/national content wireless carriers and media carriers: customer care and billing enterprises for news services Anna Hillers 34 Evolution of wireless technology Wireless meets Internet Everything – everywhere - always Best-in-Class Segment Players Trends and Emerging Business Models Anna Hillers 35 Trends and Emerging Business Models Trends Partnership and alliances fuel the current evolution, however it is unclear how the customer can reached and who ―owns‖ him or her How would wireless What Type of Who Keeps the E-Commerce e-Commerce Opportunities Transaction Revenues? be marketed? Should Be Delivered? User Anna Hillers 36 Emerging Business Models The Device-Centric Model The new Palm model is a compelling example of how a device manufacturer can capture value in this new industry. Middleware/ Value- Access Infrastructure Carriers Critical Added Content Commerce Devices Services Services Customer Palm.Net Experience User logs on to mySimon.com User auctions for Palm.net User compares product on eBay prices and reads Customer reviews through purchases mySimon.com $$ Additional Palm VII potential device $$ recurring revenue $$ stream Value Captured “Traditional” $600 revenue stream Retail $10–$25 mySimon and Palm earns price per month other content commission on providers strike transaction deals to embed software on Palm Anna Hillers 37 Trends and Emerging Business Models The Carrier Owns All In a carrier-centric model, the carrier truly ―owns all‖—the service, the content, and most importantly, the customer experience. Middleware/ Value- Access Infrastructure Devices Carriers Critical Added Content Commerce Services Services Select Content/Commerce Partnerships Wireless WWW Customer Pays for Network Select Content and Commerce Partnerships ―Air Time‖ and Access to Content • Customer pays carrier for network “air time” and access to content. Revenue • Models can vary: Subscription-based, pay-as-you-go, Flows and “free device/charge for service.” • Carriers pay content aggregators and suppliers. Anna Hillers 38 Trends and Emerging Business Models The Wireless Portal: “Wortal” In the ―wortal‖ business model, established Internet portals still provide free content, thus successfully owning the customer in the wireless world. Middleware/ Value- Access Infrastructure Devices Carriers Critical Added Content Commerce Services Services Wireless WWW Pays for ―Air Time‖ and Not Content Other Companies Pay for Advertisements and Selected Content/Commerce/Applications Marketing Services • Customer pays carrier for network “air time” (i.e., flat monthly service fee or per-minute usage rate). Revenue • The “wortal” earns revenues from advertising and Flows targeted marketing services for e-Merchants. • Content is free for end-user. Anna Hillers 39 Trends and Emerging Business Models Summary The success or failure of wireless Internet will depend on the capability of all participants to offer superior value to the customer Success? • Commitment of big players • Mobility is a customer need • 3G = ww success like GSM Wireless + Internet • 2 Mbit/sec will be needed Bubble? • Volatile stock markets • Fierce competition • 3G = 3rd generation or third failure • Inherent fixed infrastructure, 2Mbit/sec = overkill? Anna Hillers 40