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

COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

Marc Jadoul May 2014

THREE CONSUMER MARKET TRENDS THAT ARE IMPACTING TELECOM INDUSTRY

WHILE HUGELY POPULAR, THE LINEAR TV CHANNEL MODEL IS RIPE FOR REPLACEMENT.

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.

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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

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4


MASLOW’S HIERARCHY REDEFINED

Source: http://www.simplypsychology.org/maslow.html

PSYCHOLOGICALfood, water, shelter, warmth, …

SAFETYsecurity, stability, safety

BELONGINGNESS & LOVEintimate relationships, friends

SELF-ESTEEMprestige & feeling of accomplishment

SELF-ACTUALIZATIONachieving one’s full

potential & creativity

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MOBILE DATA TRAFFIC KEEPS GROWING

Browsing

Music

Video

Games & Apps

Other

2013 2014 2015 2016 2017 2012

5,326

PB

21,500

PB

Source: Strategy Analytics, Handset Data Traffic (2013)

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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)

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EVEN WITHIN THE HOME,

MOBILE MULTIMEDIA IS BECOMING PERVASIVE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016 2017

Outdoor mobile data usage Indoor mobile data usage

70%

80%

90%

100%

iPad iPhone Blackberry

% OF USE INDOORS

Source: Mobile Experts (2012), GigaOM (2012)

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SMARTPHONE AND TABLET VERSUS… EVERYTHING ELSE

Source: The Nielsen Company, 2012

25%

64%

10%

21%

65%

13%

25%

56%

11%

14%

72%

11%

3%

16%

64%

18%

26%

49%

22%

3%

12%

60%

25%

16%

56%

24%

3%

22%

50%

23%

13%

55%

30%

9%

56%

32%

3% Internet

Connected TV Smart Phone

Internet to TV Player

GPS Gaming Console

Portable Gaming Console

Portable Media Player

eBook NetBook Laptop PC Desktop PC

TABLETS ENHANCE

THESE DEVICES

TABLETS REPLACE

THESE DEVICES

Use device more Don’t use device Use device less Same device usage

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SMARTPHONES AND TABLETS

TEND TO PLAY DIFFERENT ROLES

67% 65%

53%

31%

74%

68%

51%

49% 75%

74%

65%

60%

58%

34%

22%

20%

Living room

Bedroom

Kitchen

Home office

While traveling

Car

Public trarnsport

Daily commute

Restaurant

Friend’s house

Outdoors

Work

Other

Library

School

In stores

Where do you access

the internet on your

SMARTPHONE ?

72% 63%

40%

26%

48%

18%

15%

9%

30%

28%

26%

20%

14%

12%

10%

8%

Living room

Bedroom

Kitchen

Home office

While traveling

Car

Public transport Daily

commute

Restaurant

Friend’s house

In stores

Where do you access

the internet on your

TABLET?

Outdoors

Work

Other

Library

School

Source: Forrester Research (2013)

10


NEED FOR DIFFERENT ‘MIXES’ OF

MOBILITY, CAPACITY AND COVERAGE

Macro coverage Small cells & Wi-Fi

Mainly low bandwidth services

Often high bandwidth services

Full mobility Nomadic usage

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NOMADIC VIDEO IS SOARING WITH A 73% CAGR

200,000

160,000

120,000

80,000

40,000

0

180,000

140,000

100,000

60,000

20,000

2010 2011 2012 2013 2014 2015

Home video users (premium content)

Nomadic video users (premium content)

Mobile video users (premium content)

Source: The NPD Group (US, 2011)

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DEFINING THE IDEAL NETWORK FOR WIRELESS NOMADS

a wireless HetNet mixing 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

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COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED. COPYRIGHT © 2014 ALCATEL-LUCENT. ALL RIGHTS RESERVED.

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Source: http://www.dezeen.com/2014/03/10/interview-fitbit-designer-gadi-amit-wearable-technology/

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

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SENSORS AND ACTUATORS EVERYWHERE

(*) 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.

9 **

FUEL2

*

100+ ***

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THE NEXT STEP IN INTERNET EVOLUTION

Pre-

internet

Internet of

CONTENT Internet of

SERVICES Internet of

PEOPLE Internet of

THINGS

SOCIAL

WEB WEB 2.0 WWW H2H M2M

+ + + +

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THE “INTERNET OF THINGS” IS COMING

AND IT’S GONNA BE BIG (NO… HUGE)

$8.9 TRILLION GLOBAL REVENUES BY 2020

212 BILLION “THINGS” IN 2020

Source: IDC 2013, http://enterpriseinnovation.net/article/idc-internet-things-poised-change-everything-1713674431

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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

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DIGITAL LIFE IN THE CONNECTED HOME

Source: http://www.lgnewsroom.com/ces2012/view.php?product_code=95&product_type=95&post_index=1828

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CONNECTED CARS SOON AN EVERYDAY REALITY

Source: http://reviews.cnet.com/8301-13970_7-57570801-78/at-t-general-motors-to-sell-4g-lte-connected-cars-next-year

€ 45,000

€ 40,000

€ 35,000

€ 30,000

€ 25,000

€ 20,000

€ 15,000

€ 10,000

€ 5,000

€ 0

2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E

(millions)

IN-VEHICLE SERVICES

HARDWARE

TELEMATICS

SERVICE

PROVIDERS

TELECOM

SERVICE

PROVIDERS

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WHY THIS IS HAPPENING RIGHT NOW

IoT

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SOME CHALLENGES RELATED TO THE IOT

SCALABILITY

PERFORMANCE

MANAGEABILITY

INTEROPERABILITY

SECURITY

MONETIZATION

HORIZONTALIZATION

VERTICALIZATION

PARTNERING

INNOVATION

REGULATION

GLOBALIZATION

GOVERNANCE

IDENTITY

PRIVACY

TECHNOLOGY BUSINESS SOCIETY

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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/


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WHICH ONE OF THESE WOULD YOU MISS DOING THE MOST?

TOP-5 MENTIONS AMONG ADULTS

Source: Business Insider (May 2014)

42%

13%

32% 34%

48%

58%

68% 69%

22%

47%

36% 26%

17%

7%

2% 15%

18%

15%

20% 15% 14%

11%

3%

7% 4%

4% 8% 7% 8% 12%

13%

2% 2% 4%

3%

9%

TOTAL Aged 16-24

Aged 25-34

Aged 35-44

Aged 45-54

Aged 55-64

Aged 65-74

Aged 75+

Read newspapers/ magazines

Listen to the radio

Go online

Use a smartphone

Watch television

25


TV VIEWERS ARE LOOKING FOR A

MORE FLEXIBLE VIDEO EXPERIENCE

Device flexibility

Location flexibility

Interaction flexibility

Schedule flexibility

Content flexibility

Plan flexibility

?

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THE VIDEO DELIVERY MODEL IS SHIFTING

Sources: Bell Labs, 2012

4.8 HOURS

PER DAY

7.0 HOURS

PER DAY

2012 2020

PayTV linear PayTV VOD Video comm Cloud video OTT video

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ONLINE VIDEO TRAFFIC WILL HAVE

AN ENORMOUS IMPACT ON NETWORKS

Source: Bell Labs, 2012

0

20,000

40,000

60,000

80,000

100,000

2012 2013 2014 2015 2016 2017

Linear TV - Multicast

Managed VoD - Unicast

OTT Video - Unicast

Average traffic at Tier 2 CO

UNICAST TRAFFIC DOMINATES NETWORK BANDWIDTH

MULTICAST TRAFFIC HAS MINIMAL IMPACT

Mbps

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THE YOUNGER THE VIEWER,

THE MORE THEY WATCH ONLINE TV

MILLENIALS

Source: The New York Times, 2013

GEN X

BOOMERS

No TV Mostly online video TV + online video Mostly TV

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HOW MUCH BANDWIDTH DOES

AN AVERAGE HOUSEHOLD USE?

~45 Mbps

Father watching with friend a

soccer match in HD on large

flat screen TV

Mother watching an HD

movie on regular TV screen

Daughter watching an HD

video on her tablet

In the background, two HD

videos being recorded

Son starting an online streamed

multiplayer video game

10 Mbps

8 Mbps

8 Mbps

1-2 Mbps

2x8 Mbps

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BUT… 10 YEARS FROM NOW, HALF OF NORTH

AMERICAN HOUSEHOLDS MAY ALREADY BE ON 4K TV

Source: ABI research, BI Intelligence, March 2014

0%

25%

50%

75%

100%

2012 2017 2022 2027 2030

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.

2024 2014

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DVR FUNCTIONALITY IS SLOWLY MIGRATING

FROM THE SET TOP BOX TO THE CLOUD

2013 2017

Source: SNL Financial LC, 2014

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%

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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?

Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada)

ZERO

ONE

TWO 5.6%

73.8%

11.2%

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WHY DO CONSUMERS PREFER OTT ALTERNATIVES

TO TV PROVIDER VOD?

Source: Digitalsmiths, Q2-2013 Video Discovery Trends Report (US & Canada)

Ability to watch on smartphone

Ability to watch on tablet

Easier to find content

Don't have VOD

Better selection

Convenience

Cheaper

Other

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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.

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Michel Combes CEO Alcatel-Lucent

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.

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Source: htttp://broadbandworldforum.com/interview-with-michel-combes-ceo-alcatel-lucent/

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@mjadoul

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

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