DiamondCluster Study Results on Future of Fixed Network Devices Market

DiamondCluster Study The future of the fixed net end device market Survey results Munich, July 2006

Introduction Objectives of the DiamondCluster survey “The future of the fixed net end device market” ,[object Object],[object Object],[object Object],[object Object],[object Object]

Introduction DiamondCluster invited numerous players from Europe, Middle East & North America to participate in the international survey in March and April 2006 Players invited Focus regions

Introduction 35 CXOs in EMEA and North America across the entire telecommunications industry participated in the study Europe 24 Middle East 4 Interview sample Chipset producers 4 Other 1) 9 Fixed Net operators 11 COO 8 CMO 12 1) Note: Executives for Strategy, Sales, Product Management. Source: DiamondCluster International. North America 7 ISPs 8 Vendors 7 Retailer 5 CTO 6 Key questions Convergence trends Technology trends Device trends Implications for device market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],35 35 35

Introduction Executive Summary ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Technology Implications on device market Convergence Devices ,[object Object],[object Object],Key findings

Agenda Introduction Key developments in the telecommunications market Implications for the device market DiamondCluster Credentials

Key developments in the telecommunications market In the short term VoIP and triple play developments will have the strong impact on the telecommunications market ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Findings Evaluation of convergence trends Fixed Net/ISP/Vendor/Chipset manufacturers Retailers 2006 2012 2020 Time frame Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. VoIP (Dual Play) Triple Play Quadruple Play In-home convergence Fully networked home

Key developments in the telecommunications market Majority of respondents agree that intelligence will reside in network and not in end device – placing operators in a key position Where will intelligence be located? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Findings Selected quotes Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. “ By shifting intelligence from the device to the network, prices of triple play end devices can significantly be reduced“ - Vendor, Europe “ The device at the customer premises will synchronize with the information provided by network“ - Operator, Europe “ By offering triple play services to our customers we can escape from the pipeline role that we were shifting into“ - Operator, Europe

Key developments in the telecommunications market WLAN is expected to become the dominant standard technology for inhouse communication ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Findings Evaluation of in-house technologies - + + WLAN Ultra Wide Band Wireless USB DECT Bluetooth Coax Cable Ethernet Current importance Future prospects Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Powerline

Key developments in the telecommunications market Mainly due to installed base, convergence of network termination, router and triple play device is seen as unlikely in short term ,[object Object],[object Object],[object Object],[object Object],Findings Selected quotes Source: DiamondCluster International. “ Network access and triple play device should be separate devices in order to be able to upgrade existing customers without replacing existing infrastructure” Cable Operator, Europe “ Due to the number of competing standards for access and in-house communication, network termination and triple play devices should stay separate to allow customers a maximum of flexibility” Operator, Europe “ Operators, representing our most important customers, prefer to have modem and triple play device separate, mainly to remain flexible in selection of vendors” Vendor, North America

Key developments in the telecommunications market Mainly due to installed base, convergence of network termination, router and triple play device is seen as unlikely in short term Findings Evolution to device convergence Source: DiamondCluster International. 2005…. ... 2011 VoIP Telephony Connection to telecommunication network Gateway (Modem / Wlan router) Set Top box IPTV Services VoIP Tele- phony Connection to telecommunication network Set Top Box (incl. gateway) IPTV Services PC Internet Access Home Audio System PC Internet Access alternative slide ,[object Object],[object Object],[object Object],[object Object]

Key developments in the telecommunications market Offering the highest flexibility and requiring only little technological affinity, set-top boxes are likely to become the central device Devices likely to serve as central controller ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Findings Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Selected quotes Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. “ In the future, end users don‘t want to configure the end device – plug & play and good usability is key“ Operator, Europe “ Market is turning to lifestyle products. Especially big consumer electronic brands are set to dominate the market with their devices" Retailer , USA

Implications for device market Today, broadband modems and gateways are the most important devices for operators - while retailers focus on DECT phones and broadband gateways Importance of devices ,[object Object],[object Object],[object Object],[object Object],[object Object],Findings not important important 1 5 Cordless DECT phone ISDN phones VoIP phones Broadband modems Broadband gateways IPTV set-top boxes Home entertain- ment devices 2 3 4 Fixed Net Operators/ ISPs Retailers Note: n=24, multiple answers possible. Source: DiamondCluster International survey, 2006.

Implications for device market Variety of devices and network infrastructure let compatibility emerge as most important criteria when choosing a vendor Ranking of decision criteria for selecting a vendor ,[object Object],[object Object],[object Object],[object Object],[object Object],Findings - + Note: n=35, multiple answers possible. Source: DiamondCluster International survey, 2006. Importance

Implications for device market Richness of portfolio is not expected to become a major decision criteria, nevertheless premium will be paid if single vendor is best of all classes Findings Selected quotes Source: DiamondCluster International. ,[object Object],[object Object],[object Object],[object Object],[object Object],“ For vendors „umbrella management“ will be key for success in device market, rather than covering all products by themselves they should partner with different specialists and ensure compatibility“ Operator, Europe “ It will take quite some time until standardization will take place in triple play market, today operators are willing to pay for solutions delivered by single source“, Operator, USA “ Vendors don’t need to offer all devices out of one hand. What is more important to me is device compatibility to the network and other devices as well as the reliability of the vendor” Operator, Europe

Implications for device market Consequently two different concepts compete in the end device market Convergence player ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Pure Player Player Ascalade Panasonic SunCorp Uniden D-Link AVM Westell Netgear Zyxel Linksys Scientific Atlanta Humax Thomson Siemens HNW Cisco Convergence player Pure player Home Media Broadband Voice

Implications for device market Key learnings from different players in end device market Retailers ,[object Object],[object Object],[object Object],Operators ,[object Object],[object Object],[object Object],[object Object],[object Object],Vendors ,[object Object],[object Object],[object Object],[object Object],[object Object]

DiamondCluster International is a premier top-management consulting firm with a strong focus on Telecommunication & Technology ,[object Object],[object Object],[object Object],[object Object],[object Object],Premier international management consulting firm… … with a strong global presence (1) Global Market Analysis – Telecom Consulting, Hot Telecom/Total Telecom, 2004. LONDON PARIS MUNICH SÃO PAULO MADRID CHICAGO Clients served DiamondCluster offices BARCELONA DUBAI MUMBAI WASHINGTON D.C.

We serve the leading IT, CE & Telco vendors, operators, and media firms IT/CE Vendors Media Mobile Devices Mobile Networks Mobile Carriers Fixed Networks Fixed Carriers Fixed Devices Not exhaustive

Our expertise comprises strategy, technology and execution – a clear differentiator for the way we add value to our clients Definition of a technology vision that is aligned with business goals and development of an actionable plan Conceptualization and design of technology platforms Identification and build-up of core business capabilities required to launch or run a business Accomplishment of projects to operationally improve the customer and business value Temporary allocation of executive positions on CXO level to excellent managers Technology architecture design Interim management Business start-ups/ operations Value management Innovation based strategies Successful implementation with targeted actions STRATEGY EXECUTION Technology as a means to generate value TECHNOLOGY Development of growth strategies to capitalize on technology related acquisitions and post merger integrations M&A advisory Differentiator Technology strategy Designing strategies that work and help our clients materialize the benefits Strategy & execution Help CEOs master and capitalize on technology Strategy & technology Rigorous analysis and creative strategies about mobile landscape shifts, new competitors, unique market opportunities & emerging technologies Definition of sustainable sales and marketing strategies integrating channels, products, pricing and GTM in a unique market value proposition Sales & Marketing Strategy Strategy

Based on our comprehensive team experience, we provide support for the leading IT HW, SW and Service vendors Client examples Project description ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Not exhaustive Strategy Exe- cution Tech- nology Strategy Tech- nology Exe- cution Exe- cution Tech- nology Strategy

Your contact at DiamondCluster Peter Wimmer Partner Telecommunication Tel: +49 89 24242 122 Fax: +49 89 24242 105 Mobile: +49 175 29050 22 [email_address] Leomax, Rosental 3-4 D-80331 München Germany

DiamondCluster Study Results on Future of Fixed Network Devices Market

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DiamondCluster Study Results on Future of Fixed Network Devices Market