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VisionMobile research

The New Colours of Mobile

Trends in mobile devices and software
The mobile industry bipole
and the core value chain

Industrial Hardware OEMs & Mobile

design & chipsets Distributors Retailers
ODMS Operators
The mobile industry bipole
and the ecosystem forming around it

services
Operating UI middle-
middle-
Systems ware
ware

Hardware
Industrial System OEMs & Mobile
designs Distributors Retailers
design Integrators ODMS Operators
& chipsets

network
infrastruct. SIM Card
vendors OEMs
The mobile industry bipole
and the ecosystem forming around it

services
Operating UI middle-
middle-
Systems ware
ware

Android Ikivo Myriad

Idem Qualcomm Tieto Nokia Vodafone Brightpoint Carphone W.

Hardware
Industrial System OEMs & Mobile
designs Distributors Retailers
design Integrators ODMS Operators
& chipsets

Ericsson Gemalto

network
infrastruct. SIM Card
vendors OEMs
The mobile industry bipole
and the ecosystem forming around it

services
Operating UI middle-
middle-
Systems ware
ware

70%
15% of industry
of industry revenue
revenue

Hardware
Industrial System OEMs & Mobile
designs Distributors Retailers
design Integrators ODMS Operators
& chipsets

network
infrastruct. SIM Card
vendors OEMs
 Background: how industries change
Industries move between horizontal and vertical structures

Horizontal industry structure Vertical industry structure

modular components integrated components

standardised interfaces proprietary interfaces
low barriers to entry high barriers to entry
mix and match all or nothing

Maturing product markets Emerging product markets

which focus in flexibility, customisation which focus in performance, functionality

based on: Charles Fine: Clockspeed and Clayton Christensen: Skate to Where The Money Will Be
 Evolution of the handset business
from vertical to horizontal and back

Horizontal industry structure Vertical industry structure

2003 2002
outsourced first MNO 2008-9 2010
operating systems customised devices Apple:
RIM, Apple:
best-in-class
service+device
‘experience’ products
propositions
from chipsets to
2005 ad networks
manufacturing for 1 in 3
phones outsourced

2007
open source
browsers and 1980s
operating systems the mobile industry
2009 was born here
Product leap
OEM app stores
Apple, RIM
OEM sync services

2002
Club Nokia 1999 1990-8
2010 first ODMs standardisation of radio
Windows appear and SIM interfaces
2007-8 Phone
Nokia Ovi
service shopping spree
 Vertical propositions today
OEMs are at different stages towards verticalisation

Horizontal player structure Vertical player structure

2004
2009 tier-2/3 decline of walled
MNOs open to social networks operators gardens
open network APIs

tier-1 2008 2005

MNO service MNO
operators delivery opens basestation
2005 up to s/w sharing
manufacturing developers
for 1 in 3 phones
outsourced 1980s
the mobile industry
2007 was born here
open source
OEM browsers and
operating systems

chipset OEMs 1999 1990-8

first MVNOs standardisation of radio
and ODMs and SIM interfaces
T1 handset appear
OEMs
Lead, innovate or assemble
The three role models for OEMs

Leaders: new product experiences

(touch phone, touch tablet, car displays)

Assemblers
(supply chain
efficiency)

Wannabees
Wannabees

Innovators
(industrial design, sensors, shelf-space)
The evolution of handset strategies
and the four segments of value circa 2015

New product experiences

Role model: Apple
€37.5B
5% @ €500
Innovators
Role model: HTC
€90B
20% @ €300

Assemblers
Role model: Dell
€56B
25% @ €150
es
vic

Mass producers
de

Role model: Nokia & Mediatek

B

€37.5B 50% @ €50

1.5

€220B
 The evolution of value
across the software+services stack

Value Description Value Boundaries Boundaries Value

1990 2010 in 2015

Services e.g. voice, messaging, IM, Facebook, Zyb, 3rd party apps .. network as a platform

MNOs

MNOs
70% of
Service delivery e.g. voice, text, web, WAP, software, on-device integration industry on-device services
revenues
Service distribution which device and where on the device service inventory

Device design

OEMs
industrial design, packaging design

new product
UI design design of the entire user interface
experiences

Core apps core apps (dialler, call logs, menus, idle screen, inbox)

OEMs
15% of
Operating system industry

chipsets
software middleware and hardware interfaces
revenues out-of-the-box
Hardware platform integrated hardware reference designs
solutions

Chipset IP for apps processors, radio processors, graphics, etc

Manufacturing component sourcing and assembly supply chain mngmt

The evolution of revenue models
for software vendors
Value Revenue models Revenue models Value

cloud
- content dev. tools - per developer seat - per user, CPC/CPM - VAS and SDPs
- service design tools - per module - revenue share - advertising
- developer tools - per site - per segment/reach - content & app stores
- OEM production tools - per follower - network capabilities

from pre-load
from pre-load royalties
to certification revenues
to post-load revenues

pre-load post-sales

from horizontal royalties from pre-load royalties to

to vertical productisation post-sales activation

Value Revenue models Revenue models Value

- software IP & services - per unit - per activation - service distribution

- hardware IP - per platform - per update - inventory leasing
- systemware - per model/design - per inventory/day - on-device analytics
- industrial design - per site - per user segment - service management
device
Strategies for mobile software vendors
in the pre-load business

1 Move up the stack

revenue cost to Apps,

build themes/UIs,
services
$2 $1m
per user
Market for UI middleware

bottom-up top-down
$0.5 $5m Front-end apps
per unit € 0.25 * 5% + 10 T1 OEMs
€ 0.10 * 45% + Ceiling of
Middleware € 0.05 * 50% €10M from each
$0.2 $20m
per unit €100M market per component

$3 $100m Operating System value line

per unit
 Strategies for mobile software vendors
in the pre-load business

2 Move upstream or 3 From point solution

downstream to enabler

point 3rd party

System
integrators solution point solutions

Chipset Mobile
ODMs OEMs Distributors
vendors Operators
platform

(solves particular problem) (facilitates 3rd party solutions)

upstream downstream
 Strategies for mobile software vendors
in the pre-load business

4 From pre-load to 5 Same product, new markets

post-sales revenue

mobile auto- home

handset
handsets motive entert/nt
software
lifecycle pre-load post-sales

-18 -12 -6 (months)

high-pressure

revenue
model Red ocean Blue ocean

NRE per-use
per-unit per-active-user
revenue share
Thanks for listening!

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