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State of Mobile 2018

Executive Summary 1/3


Massive Consolidation in Industry
● India has gone from 14 to 5 operators
● ~220 M broadband subscribers added since Jio Launch in Sep 16.
● Jio added 177M subscribers

Access and Affordability no longer a challenge


● Blended ARPU declined by 21% nationally, ~43% in metros circles;
○ Searches for Recharges declined by 4x times in Metro circles vs other circles coupled with the fact that
Jio’s penetration in these circles was nearly 2x of their national share
● India leapfrogged from 2G to 4G: 3G base decreased by ~20%, 4G increased by 173%;
Ecosystem ○ As a result, over 60% of video consumption now happens on 4G
○ Users from Tier 2 cities are over indexed on 4G for video consumption by 1.5x
● Wifi takes a back seat : Wifi accounts for 10% of mobile internet usage. In UK mobile internet usage on wifi is ~ 75%.
○ Until 2016 video traffic on Wifi was 70-80% but trend reversed completely in 2017

However network speed remains a challenge


● Speed remains a challenge, India ranked even lower than Algeria
● Speed Test queries on Mobile Devices have gone up by 42%; 46% of these searches are from non-Top 8 cities
● In a survey conducted by Google 57% respondents indicated network speed & availability can be improved, while
only 14% expected that pricing can be improved
● Customer Care searches grew 69% during 2017 with highest query growth in Tier 2 towns
Executive Summary 2/3
Devices become affordable. Feature Phones are Back. Brand Overtakes a Category.
● Growth of smartphone device base dropped as Jio feature phones shipped over 15 million 4G feature phones
● ~80% of devices shipped in last quarter were below $200
● Xiaomi was the most shipped phone last quarter & also the top searched smartphone brand while top searched model
Access was Redmi Note 4 followed by Samsung J7 & Nokia 6
● 15% of all searches are around prices (+41% YoY). While searching for specific price points 5k-10k segment dominates.
● In a Google consumer survey, 73% indicated they would be willing to shift operators while buying a new device if other
operators were to provide benefits such as discounting & free data. This was also supported by a 60% growth in search
volume for offers on top handsets bundled with telecom services.

Internet Frontier changes from Male, Metro & Millenial to Vernacular, Video & Voice
● India is moving from 3M ( Male, Metro, Millenial) to 3V ( Vernacular, Video, Voice)
○ Hindi growing nearly 4.5x faster than English searches while other Indian languages are growing 1.8x times
faster.
○ 171% growth in watchtime for content related to TV on Youtube; 148% Growth in Searches for Video
streaming apps in 2017 vs 2016
Consumption ○ ~49% Video Consumption happening from non-Top 8 cities with Cities like Lucknow, Patna, Jaipur & Indore
○ Voice search queries contributing 28% to overall queries on Google App
○ 100% growth in watchtime for local language content. This was validated by a Consumer Survey where local
content emerged as one of the top feature on video consumption sought by 31% of respondents
● Penetration of internet highest amongst SEC A and lowest in SEC D/E
● Non users of internet predominantly female, SEC C/D/E, most < 15 or > 45 in age
● In rural areas 15-24 Years have highest penetration
Executive Summary 3/3
IOT set for massive growth
● IOT market in India to be $15 Bn by 2020, 5% of Global market;~200 Firms in India active in IOT space
● 1 Bn USD investment by GOI to build smart cities; Healthcare and Manufacturing leading IOT verticals
5G is shaping up
● India 5G launch by ~’20, ​South Korea is initiating its first 5G spectrum auction
● Many developing countries in Asia & Africa likely to skip 4G LTE deployments and focus on 5G
● 5G will enable use cases that require lower latency like VR/AR, cloud streaming, self driving cars etc.
4 frontiers of disruption for telcos to save cost and be agile
New &
● Managing networks with next-generation technologies like small cell deployment of street poles
Upcoming
● Using Analytics to Plan and Prioritize capital expenditures
● Use ML to adjust wireless networks automatically as demand changes
● Software defined networks to administer changes and upgrades remotely rather than in the field
Telcos beginning to diversify portfolio
● Indian Telcos taking cue from global telcos and taking 3 pronged approach to diversifying:
○ 1) OTT investments ( e.g Wynk, Jio Music)
○ 2) Investments in AdTech ( e.g Verizon - Yahoo)
○ 3) Tech/Content Investments ( For building content and creating loyalty e.g Singtel hungrygowhere acquisition)
Internet Penetration is highest for SEC A 15-24 across Rural & Urban users while lack of awareness is key reason for non-usage.
Claimed Internet User – By Education
Growth in variety of content is fuelling differentiated consumption

Movies Politics Sports Male viewers are 3x more


Male viewers are 1.2x Male viewers are 2.1x
more likely to be watching more likely to be watching likely to be watching
movie related content Political content Sports content

TV Food Health
Female viewers are 1.4x Female viewers are 2.4x Female viewers are 1.6x
more likely to be watching more likely to be watching more likely to be watching
TV related content Food related content Health & Wellness
content
Online channels now make 30% of total shipments
India smartphone shipments by channel Q4 2017
• Flipkart and Amazon account for most of the
online shipment sales in the country and drive
Vendor 50% of sales for Xiaomi.

5.7% 23.3% 70.7% 0.4% • 20% of sales for Xiaomi driven by their direct
online sales portal, Mi.com. Online retail
strategies (direct or indirect) of Samsung, Oppo
Distributor Service provider and Vivo remain underdeveloped in India.

Direct
• Mi.com accounts for about 20% of Xiaomi’s
total shipments to India and accounts for 98%
Retailer Reseller Service provider of all direct online sales in India. As a
comparison, Xiaomi’s online partners, such as
Flipkart and Amazon, make up close to 50% of
5.7% 93.6% 0.8% 0% its total shipments.

End user (offline: 70%, online: 30%) • Online retail strategies (direct or indirect) of
Samsung, Oppo and Vivo remain
underdeveloped in India.
Source: Canalys estimates, Smartphone Analysis, February 2018
As Telcos prepare for 5G, it’s use case will be bucketed under three categories.

• Enhanced mobile broadband (eMBB):


Products/services requiring multi-Gbps
data rates, like: VR/AR, cloud
streaming

• Ultra-reliable and low-latency


communications (URLLC):
Products/services requiring low
latency and very high availability, like
autonomous vehicles, natural disaster
relief, and mobile healthcare

• Massive machine-type
communications (mMTC):
Products/services requiring the ability
to support a massive number of low-
cost IoT connections with very long
battery

Source: International Telecommunication Union


Graphical representation of bandwidth/latency requirements of various major
5G use cases

Source: International Telecommunication Union


Expected Timing of 5G Commercial Deployments Around the Globe

Emerging Markets Likely to skip 4G


deployment in favour of 5G

● Opportunity for some countries to


skip 4G LTE deployments and focus
on 5G

● For example, in Asia, certain


countries have a very low have very
low fixed broadband penetration
rates of less than 10% relative to
more developed countries, such as
Australia, Japan, and Singapore.

Source: Citi Research, Timing based on commercial network deployments,


not testing or demonstrations
4 frontiers of disruption for telcos

Managing networks with


Analytics for smarter Machine learning for Software for better
next-generation
capital spending increased efficiency performance
technologies

● Shift to small-cell ● Through Advanced ● Use ML to adjust ● (SDN) and (NFV).


networks to patch analytics Plan and wireless networks can allow wireless
coverage holes Prioritize capital automatically as operators to
expenditures demand changes centralize the
functions for
● Operate high- ● Pinpoint where and ● Predict when usage controlling networks
capacity cells on red when network might rise or fall and to administer
lights, street poles overloads happen across a network changes and
etc upgrades remotely

Source: Web Search


Transformation journey of telcos

• Telcos in order to make their


base sticky are trying
different routes

• Singtel has forayed in AdTech


Business and now content:
insing, hungrygowhere

• Verizon acquired Oath Inc.


that serves as the umbrella
company of its digital content
including AOL and Yahoo!

• Indian Telcos has seen a mix


of organic and inorganic :
Airtel ( Wynk, Airtel TV), Jio (
suite of Apps plus Saavan,
AltBalaji deals)

Ad Tech Content Provider


Network Provider

Source: Web Search


How Telcos are likely to change the game

Description Telco Opportunity Description Telco Opportunity

Health Monitoring Trusted 3rd party for providing Secure Data Offers operators an opportunity to
services via mobile apps, or saving, position themselves as a secure
storing and forwarding personal and trusted data-broker for data
health data to health companies stored on their cloud

Smart Cars Telematics is fastest growing Smart Meters Telcos have expertise in complex
segments of the cellular M2M. billing while utilities are challenged
Could be a valuable source of on same. Position as service
information and collaboration for providers or even compete with
telcos with car manufactures utilities and metering service
providers

Smart House Offer interoperable solutions based


on open models that allows Authentication Offer successful identification with
heterogeneous Smart Home Provider smartphone and fingerprint,
solutions to interconnect and play relevant data about the owner can be
central role in customer relationship shared across a secure channel

Source: Web Search


State of Mobile 2018

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