UMTS Report an Investment Perspective
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UMTS Report An Investment Perspective [ RESEARCHING THE FUTURE / / INVESTING TODAY ] www.durlacher.com Durlacher UMTS Report An Investment Perspective Contents 1 Introduction 5 1.1 Highlights 5 1.2 Investment Hypothesis 7 1.3 Methodology 8 1.4 Scope 9 2 Current Mobile Market Overview 10 2.1 The UMTS Dream 10 2.2 Market Drivers 11 2.2.1 Mobility in Europe is booming 11 2.2.2 2001: Crossroads in the European Market 11 2.2.3 Will the mobile data market fly? 13 2.2.4 The mobile data crunch 13 2.3 UMTS Investment 14 2.3.1 Investment Drivers for UMTS 14 2.3.2 UMTS License Fees Will Total €120 billion in Europe 15 2.3.3 Infrastructure Costs Will Top €140 billion 16 2.3.4 Handset Subsidies Are Here to Stay 16 2.3.5 UMTS Will Accelerate Market Consolidation 17 2.4 Market Forecasts 19 2.5 Dynamics of the Mobile Data Value Web 23 2.5.1 Network Equipment 24 2.5.2 Devices 24 2.5.3 Enabling Technologies 25 2.5.4 Application Developers 26 2.5.5 Application Providers 27 2.5.6 Content Providers 27 2.5.7 Mobile network operators 28 2.5.8 Virtual Operators 29 2.5.9 Mobile Portals 29 2.6 Benchmarking Europe with Japan and the US 30 2.6.1 Europe 31 2.6.2 Japan 31 2.6.3 United States 34 3 New Mobile Business Models 35 3.1 Mobile Networks Will Open Up 35 3.2 WASP (Wireless ASP) 37 3.2.1 Drivers 37 3.2.2 Players 37 3.2.3 Revenue Models 38 3.2.4 WASPs: Success Factors 39 3.2.5 Market Outlook 39 3.3 Virtual Operators 40 3.3.1 Definition 40 3.3.2 VOs: A Varied Breed 41 3.3.3 Drivers 42 3.3.4 New VOs 43 3.3.5 Revenue Models 44 3.3.6 Key Success Factors 45 3.3.7 Implementation Strategies 45 3.4 Multi-Access Portals 46 3.4.1 Definition 46 3.4.2 Point Solutions Dominate Today ’s Market 46 3.4.3 Players 47 3.4.4 Key Success Factors 48 3.4.5 Market Entry Strategies 49 3.4.6 Revenue Models 49 COPYRIGHT, DURLACHER RESEARCH LTD., EQVITEC PARTNERS OY 1 Durlacher UMTS REPORT 4 Impact of Technology 51 Contents (continued) 4.1 Network and Coverage Evolution 52 4.1.1 2G Technologies 53 4.1.2 2.5G Network Technologies 53 4.1.3 3G Network Technologies 54 4.1.4 Bandwidth – Hype vs. Reality 54 4.1.5 Network Roll-Out Schedules and Cost Implications 55 4.1.6 Road to 4G 56 4.1.7 Alternative Wireless Network Technologies 57 4.1.8 Multi-Network Environment 60 4.2 Positioning Technologies 61 4.3 Devices 63 4.3.1 Device Functions 63 4.3.2 Device Types 64 4.3.3 Device Technology Limitations 66 4.3.4 Device Operating Systems 67 4.3.5 Microbrowser 68 4.3.6 Data Compression 69 4.4 Middleware 69 4.5 Pricing and Billing 71 4.5.1 Pricing 71 4.5.2 Billing 73 4.6 Roaming 74 4.7 Security 75 4.7.1 Device Security 76 4.7.2 Mobile Network Security 76 4.7.3 Gateway Security 77 4.7.4 IP and Server Security 77 4.7.5 Security Summary 77 4.8 Channel Convergence 78 5 Mobile Applications and Services 79 5.1 Services Overview 80 5.2 Key improvements 81 5.3 Consumer Services 82 5.3.1 Mobile Information 84 5.3.2 Mobile Communication 87 5.3.3 Mobile Entertainment 96 5.3.4 Mobile Transactions 101 5.4 Business Services 106 5.4.1 Mobile Customer Relationship Management (M-CRM) 107 5.4.2 Mobile Supply Chain Management (M-SCM) 110 5.4.3 Mobile Workforce Applications 112 6 Investment Opportunities 113 7 Appendix 117 7.1 Company Profiles 117 7.2 Market Forecast 129 8 Glossary 138 2 COPYRIGHT, DURLACHER RESEARCH LTD., EQVITEC PARTNERS OY UMTS REPORT List of Figures List of Figures Figure 1: Distribution of license cost burden 13 Figure 2: Mobile connections in Europe 16 Figure 3: Mobile data users in Europe split by technology 17 Figure 4: ARPU development in Europe 18 Figure 5: Mobile service revenues in Europe split by revenue source 19 Figure 6: Mobile data service revenues in Europe 20 Figure 7: Mobile internet revenues in Europe 21 Figure 8: Mobile data value web 21 Figure 9: Mobile data value web: network equipment 22 Figure 10: Mobile data value web: mobile devices 23 Figure 11: Mobile data value web: enabling technologies 24 Figure 12: Mobile data value web: application developers 24 Figure 13: Mobile data value web: application providers 25 Figure 14: Mobile data value web: content providers 26 Figure 15: Mobile data value web: mobile network operators 26 Figure 16: Mobile data value web: virtual operators 27 Figure 17: Mobile data value web: mobile portals 28 Figure 18: Japan mobile market – players 30 Figure 19: Japan mobile data market – players 32 Figure 20: WASP – segmentation 36 Figure 21: Integrated ASP model 38 Figure 22: VO integration options 39 Figure 23: Potential VO players 41 Figure 24: Multi-access portal – modes of access 44 Figure 25: Multi-access portal – potential players 47 Figure 26: Network technology evolution 50 Figure 27: Real world data speeds 53 Figure 28: Multi-network environment usage scenarios 58 Figure 29: Location-based service value chain 59 Figure 30: Device functionality 61 Figure 31: Future device design strategies 62 Figure 32: Mobile middleware 68 Figure 33: Roaming data exchange 73 Figure 34: End-to-end mobile security 74 Figure 35: Content convergence 76 Figure 36: Mobile services overview 78 Figure 37: Mobile consumer services revenues in Europe 80 Figure 38: Assessment of consumer services 81 Figure 39: Mobile information revenues in Europe 82 Figure 40: Mobile content types 83 Figure 41: Mobile communication revenues in Europe split by revenue source 85 Figure 42: Mobile messaging revenues in Europe split by revenue source 86 Figure 43: Messaging convergence 87 Figure 44: Worldwide SMS traffic 88 Figure 45: Download time in different technologies 90 Figure 46: Mobile entertainment revenues in Europe split by revenue source 95 Figure 47: Mobile transaction revenues split by revenue source 99 Figure 48: M-tailing success factors 100 Figure 49: Comparison of mobile payment solutions 103 Figure 50: Business applications overview 105 Figure 51: Mobile CRM – key functions and definitions 106 Figure 52: Explanation of the model 127 Figure 53: Explanation of the model continued 127 Figure 54: Geographical scope of the model 128 COPYRIGHT, DURLACHER RESEARCH LTD., EQVITEC PARTNERS OY 3 Durlacher UMTS REPORT List of Tables List of Tables Table 1: Global market summary 29 Table 2: Comparison of Japan’s mobile data services 31 Table 3: Wireless technology coverage area 50 Table 4: Alternative wireless network technologies 55 Table 5: Positioning technologies overview 60 Table 6: Pricing schemes 70 Table 7: Application characteristics 78 Table 8: Mobile information content providers 84 Table 9: Mobile connections in Europe (in 000s) 128 Table 10: Mobile Data Users in Europe (in 000s) – split by by bearer 128 Table 11: SMS Users (in 000s) 128 Table 12: Mobile connections in Europe (in 000s) – split by of MNOs / others 128 Table 13: Mobile service revenues (in € million) – split by direct / indirect revenues 129 Table 14: Mobile service revenues (in € million) – split by revenue source 129 Table 15: Mobile service revenues (in € million) – split by MNOs / others 129 Table 16: ARPU (in € per month) – split by direct / indirect revenues 129 Table 17: Total ARPU (in € per month) – split by revenue source 129 Table 18: Access/subscription revenues (in € million) – split by MNOs / others 130 Table 19: Voice traffic revenues (in € million) – split by MNOs / others 130 Table 20: Data traffic revenues (in € million) – split by MNOs / others 130 Table 21: Content and service revenues (in € million) – split by MNO / others 130 Table 22: Transaction revenues (in € million) – split by MNOs / others 130 Table 23: Referral revenues (in € million) – split by MNOs / others 130 Table 24: Advertising revenues (in € million) – split by MNOs / others 131 Table 25: Payment revenues (in € million) – split by MNOs / others 131 Table 26: Model summary split by country – Austria 131 Table 27: Model summary split by country – Belgium 131 Table 28: Model summary split by country – Denmark 132 Table 29: Model summary split by country – Finland 132 Table 30: Model summary split by country – France 132 Table 31: Model summary split by country – Germany 132 Table 32: Model summary split by country – Greece 133 Table 33: Model summary split by country – Ireland 133 Table 34: Model summary split by country – Italy 133 Table 35: Model summary split by country – Netherlands 133 Table 36: Model summary split by country – Norway 134 Table 37: Model summary split by country – Portugal 134 Table 38: Model summary split by country – Spain 134 Table 39: Model summary split by country – Sweden 134 Table 40: Model summary split by country – Switzerland 135 Table 41: Model summary split by country – UK 135 Table 42: Model summary split by country – other countries 135 4 COPYRIGHT, DURLACHER RESEARCH LTD., EQVITEC PARTNERS OY UMTS REPORT 1 INTRODUCTION 1.1 HIGHLIGHTS • M-commerce is dead, long live m-commerce. We believe that m-commerce in the closed sense will not survive as a stand-alone business model. Instead, we expect to see the rise of multi-channel commerce (i.e.