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EDGE - Days

Market Business Drivers


towards 3G

Martin Kinne
Senior Vice President Sales Europe
Siemens mobile Networks
Siemens provides the broadest portfolio
of mobile network products and services

Siemens mobile Networks


3G GSM Applications Microwave Network Mobile
Mobile
Networks Networks and Management Services
Solutions
W-CDMA
TD-SCDMA
EDGE

End-to-end solutions

Siemens EDGE Days, 24 September 2003 Page 2 Siemens , 2003


On the way to the top
Siemens mobile Networks worldwide performance

Mobile Networks:
July 2003 We expect Siemens to continue to gain market share

CY 2000 CY 2001 CY 2002

Siemens 11%

Siemens 10%

Siemens 8%

Note: Based on ICM N total market


Source: ICM N M MA

Siemens EDGE Days, 24 September 2003 Page 3 Siemens , 2003


The competitive Edge
Siemens also shows a leading position in the EDGE market

Siemens was the first vendor to show live EDGE calls


with data rates up to 400kbps

To date Siemens mobile has 8 EDGE contracts in total:

TIM (Italy)

+ 2 contracts
Cingular (USA) in Europe/Mea

+ 1 contract
Americas Digi (Malaysia)
Colombia
Mvil (COL)

Telecom Americas (BRA)

Status: August 25, 2003

Siemens EDGE Days, 24 September 2003 Page 4 Siemens , 2003


EDGE provides a boost to data speeds
using the existing GSM / GPRS networks

Demand for mobile data services will further increase

In 2010 approx. 30% of revenues will be data applications

Growing ARPUs and attractive data services are major drivers for
operator revenues

900

800

700
Billion Euro per Year

600

500

400

300

200

100

0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: ICM N M Market Assessment
Siemens EDGE Days, 24 September 2003 Page 5 Siemens , 2003
EDGE enables new mobile services
Making the most out of GSM/GPRS networks
INTERACT

Video telephony
Video conferencing

Advanced mobile services


Video messaging & streaming
Interactive multimedia
Multimedia conferencing
Personalized mobile services
VIEW

MMS
Entertainment / infotainment
Location based services
Mobile browsing
Internet
HEAR & SEE

Corporate Intranet
Basic mobile messaging
Text messaging (SMS)
Internet browsing (WAP)

GSM GPRS EDGE W-CDMA

Siemens EDGE Days, 24 September 2003 Page 6 Siemens , 2003


Safe and cost-effective
EDGE provides a smooth migration to 3G

EDGE exploits the existing infrastructure and spectrum resources

EDGE is the easiest path from GSM/GPRS to 3G high-speed data


services: on its own or in combination with UMTS

Example: Download of an image or a Java game


EDGE UMTS 2 Mbps

EDGE 473 kbps

GPRS
GPRS 115 kbps

GSM 9.6 kbps

Siemens EDGE Days, 24 September 2003 Page 7 Siemens , 2003


How EDGE will be deployed
Scenarios and Strategies

EDGE Development Operator Licenses Strategy

Offer full service portfolio,


Parallel deployment avoid churn but react to
UMTS & EDGE UMTS license
market segmentation

Offer full service


UMTS and EDGE portfolio; avoid churn and
for rural areas UMTS license
react cost sensitive on area

Offer full service portfolio,


EDGE Only No UMTS license avoid churn, create
synergies with 2G

Siemens EDGE Days, 24 September 2003 Page 8 Siemens , 2003


Scenario 1: Go for EDGE without UMTS (I)
Operators/markets without an UMTS license

Operator Situation Strategic Goals

Deploying GSM/GPRS network Offer high speed services


Not owning an UMTS license Be innovator
Data market with high potential Increase market share
CDMA 2000 competitors Develop existing subscriber base

Operator Benefits Business Goals

Build on GSM/GPRS network Additional data revenue


(cost advantage) Relatively low investment
Ability to offer mobile for high speed mobile data
data services

Siemens EDGE Days, 24 September 2003 Page 9 Siemens , 2003


Scenario 1: Go for EDGE without UMTS (II)
End user segmentation

High End - Users


Early adopters, status seekers
Post paid users EDGE
High End EDGE handsets
High speed data applications

Medium End Users


Cool followers, balanced enjoyers
Prepaid/post paid users GPRS
Medium level handsets
Using mobile data applications sometimes

Low End - Users


Social nesters, family oriented
Prepaid users GSM
Low end handsets
Mainly SMS oriented

Siemens EDGE Days, 24 September 2003 Page 10 Siemens , 2003


Scenario 2: Combine EDGE with UMTS (I)
Operators/markets with an UMTS license

Operator Situation Strategic Goals


Owning an UMTS license with Offer full service portfolio
high GSM market share Reduce churn (defensive strategy)
Fulfill License coverage Create synergies between 2G/3G
requirements Prepare UMTS business (migration)
Insecure uptake of UMTS

Operator Benefits Business Goals


Offer full data services Optimize mobile data revenue
Cost savings by rural Optimize UMTS roll out CAPEX
deployment or Short pay back period for
Market segmentation due to investments
different user groups Reduce SACs

Siemens EDGE Days, 24 September 2003 Page 11 Siemens , 2003


Scenario 2: Combine EDGE with UMTS (II)
End user segmentation

High End - Users


Early adopters, status seekers
UMTS
Post paid users
High End UMTS handsets
High speed data applications

Medium End Users


Cool followers, balanced enjoyers
Prepaid/post paid users EDGE
Medium level handsets
Using mobile data applications sometimes

Low End - Users


Social nesters, family oriented
Prepaid users GSM/GPRS
Low end handsets
Mainly voice + SMS oriented

Siemens EDGE Days, 24 September 2003 Page 12 Siemens , 2003


Scenario 2: Combine EDGE with UMTS (III)
Detailed end user segmentation

Premium budget Users


High price UMTS Handsets using
UMTS GPRS UMTS Overlay NW GPRS
Premium services
Highest ARPU (>100EUR)

Mid budget Users GSM / GPRS Network


Medium / low price handsets using
EDGE GPRS EDGE Upgrade GPRS
Medium / low end services
Medium ARPU (>25EUR)

Rural Urban Rural


Business Case Levers :
Additional revenue by large number mid-budget users (EDGE)
Churn reduction by offering a complete service portfolio
Prepare mobile data mass market for UMTS

Siemens EDGE Days, 24 September 2003 Page 13 Siemens , 2003


EDGE - a promising future !

Siemens EDGE Days, 24 September 2003 Page 15 Siemens , 2003


Back up

Siemens EDGE Days, 24 September 2003 Page 16 Siemens , 2003


Siemens mobile has learned to best meet customers
requirements

Global Mobile Network Market Shares

CY2000 CY2001 CY2002

Competitor A 30% Competitor A 27% Competitor A 27%

Competitor B 13% Competitor C 12% Competitor B 13%

Competitor C 12% Competitor B 11% Siemens 11%

Competitor D 9% Competitor D 10% Competitor C 10%

Competitor E 9% Siemens 10% Competitor D 9%

Siemens 8% Competitor E 9% Competitor E 9%

#6 #5 #3

Sources: Company reports, Siemens estimates


Siemens EDGE Days, 24 September 2003 Page 17 Siemens , 2003
Mobile Networks by Siemens
Today and tomorrow

Position
No. 3 worldwide across all standards,
no. 1 in prepaid and GSM-R
25 UMTS contracts

Objectives

Expand footprint in the Americas, China and Eastern Europe


Leading provider of end-to-end solutions
Aggressive product cost roadmap

Differantior

Global reach, proven reliability

Siemens EDGE Days, 24 September 2003 Page 18 Siemens , 2003