Scenarios for Enterprise Mobile Data Services 2006–11 Margaret Hopkins.

Scenarios for Enterprise Mobile Data Services 2006–11 Margaret Hopkins

2 © Analysys Research Limited 2006 Contents [1] 6.Document map: Executive summary 7.Executive summary [1] 8.Executive summary [2] 9.Document map: Introduction 10.Enterprise mobile data services are now coming to the fore 11.Work-control applications are already established in some sectors, while collaborative applications need 3G bandwidth 12.Work-control applications need tight integration into company data systems, while collaborative applications can be more flexible 13.Customer demand, new technology and future regulation will all influence market development over the next five years 14.Document map: The benefits of scenario planning 15.Players need to think about what the future will hold, but even the near term contains a wide range of possible outcomes 16.Forecasting has been the most popular way of anticipating future outcomes, leading to relatively rigid planning processes and linear plans 17.Forecasting has some significant limitations, however, and can compromise a company’s ability to respond to a changing environment 18.Scenarios are much more suitable than forecasts for thinking about the complexity of the longer-term future 19.Scenarios offer an alternative approach to forecasting by accepting uncertainties and trying to understand their potential impact 20.The market drivers should be external to the company, not the company’s own strengths, weaknesses or potential strategies 21.Using scenarios enables more flexible planning, based on creating alternative options that can be implemented in response to changing conditions 22.Once created, scenarios can be used over time to track the external environment 23.Document map: Uncertainties and scenario structure 24.Creating scenarios involves a range of planning concepts and analytical tools 25.We have used the scenario planning process to define three scenarios for the future of the enterprise mobile data services market 26.Document map: Scenario planning: mapping drivers of change 27.Drivers of the enterprise mobile data services market [1] 28.Drivers of the enterprise mobile data services market [2] 29.Drivers of the enterprise mobile data services market [3] 30.Drivers of the enterprise mobile data services market [4] Slide no. ContentsScenarios for Enterprise Mobile Data Services 2006–11

3 © Analysys Research Limited 2006 Contents [2] 31.Critical drivers of the enterprise mobile data services market are identified by plotting their uncertainty against their impact 32.Document map: Scenario planning: defining the scenarios 33.The critical uncertainties already identified have been used to define three scenarios for the enterprise mobile data market 34.Customers’ willingness to adopt new services, applications and devices is greatest in the Revolution scenario 35.Concerns about network security are most pronounced in the Evolution scenario 36.Innovation in service propositions and marketing is greatest in the Revolution scenario 37.The capabilities of the 3G family are only fully developed in the Exploitation scenario 38.Interaction of wireline and wireless centres is facilitated by fixed wireless technologies 39.The extent of regulatory intervention is greatest in the Revolution scenario 40.The structure of the industry is radically altered by consolidation in the Evolution and Exploitation scenarios 41.The key features of the scenarios for the enterprise mobile data services market can be summarised in a diagram Slide no. ContentsScenarios for Enterprise Mobile Data Services 2006–11 42.Document map: Scenario planning: creating the scenario scripts 43.The roles of the players vary greatly between the scenarios 44.The enterprise mobile data world in the Evolution scenario 45.A working day (2011): Jane, Sales Manager for a multinational corporation 46.A working day (2011): David, Delivery Driver 47.The enterprise mobile data world in the Exploitation scenario 48.A working day (2011): Eric, Management Consultant, working for a global company 49.A working day (2011): Robert, Retail Buyer 50.The enterprise mobile data world in the Innovation scenario 51.A working day (2011): Helene, Customer Support Technician 52.A working day (2011): Paul, Gas Pipeline Technician, working for a contractor 53.Document map: Scenario planning: specifying the event timeline 54.Event timeline for the Evolution scenario 55.Event timeline for the Exploitation scenario 56.Event timeline for the Revolution scenario Slide no.

4 © Analysys Research Limited 2006 Contents [3] 57.Document map: Scenario planning: modelling the market value by scenario 58.Penetration of applications will be highest in the Revolution scenario 59.Push email is widely adopted in all scenarios 60.Service spend is highest in the Revolution scenario, but support spend is highest in the Exploitation scenario 61.Retail service spend on push email has most potential for future growth in the Revolution scenario 62.Retail service spend on applications will be greatest in the Revolution scenario, despite a lag period while trials are undertaken 63.Retail spend on mobile data services will be very low in Sweden 64.Total spend on enterprise mobile data, including equipment and support, could reach EUR1.6 billion in 2011 in the UK under the Exploitation scenario 65.Penetration of enterprise mobile data services in 2011will be highest in Spain in all scenarios 66.Raw ARPU values for applications, email and browsing will be similar in all three scenarios 67.Enterprise data makes a significant addition to overall ARPUs Slide no. Contents 68.The Revolution scenario shows the highest service spend in 2011, but the Exploitation scenario has the highest overall spend 69.Document map: Scenario implications for players 70.The scenarios can now be used to identify the dominant strategic themes, short-term plans and longer-term options 71.Although the players are different, all will have to overcome difficulties … 72.… and, inevitably, there will be variations in the strategies adopted by different players 73.Market structure, investment, operator’s focus and operator’s scale must all be addressed within strategic options 74.Innovation, pricing and partnering must also be considered 75.Players need to watch for signals that indicate which scenario is developing 76.Document map: Actions 77.All players can take actions now to position themselves much more effectively for the future evolution of the market 78.Regardless of which scenario develops, companies must incorporate actions that address inevitable change into their short-term plans Slide no. Scenarios for Enterprise Mobile Data Services 2006–11

5 © Analysys Research Limited 2006 Contents [4] 79.Actions for MNOs in the Evolution scenario 80.Actions for MNOs in the Exploitation scenario 81.Actions for MNOs in the Revolution scenario 82.Actions for other players in the three scenarios 83.Document map: Author, copyright and glossary 84.Author and acknowledgements 85.Copyright and disclaimer 86.Glossary of terms [1] 87.Glossary of terms [2] 88.Document map: List of figures and tables 89.List of figures and tables [1] 90.List of figures and tables [2] 91.Document map: About Analysys reports and services 92.Reports from Analysys Research 93.Market intelligence services from Analysys Research 94.Custom Research from Analysys Research 95.Analysys Consulting Slide no. ContentsScenarios for Enterprise Mobile Data Services 2006–11

6 © Analysys Research Limited 2006 Document map Document map: Executive summaryScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

7 © Analysys Research Limited 2006 Executive summary [1] Executive summary Scenarios for Enterprise Mobile Data Services 2006–11 Mobile data services add complexity and cost for the user organisation, but most professionals instinctively feel that they enable a valuable increase in responsiveness to customers. Management fashion and the willingness of businesses to innovate will determine how widely new services are adopted, and there is limited scope for MNOs to shape this outcome. Ease of use of mobile data services is absolutely critical and will determine which are dominant. This report considers three scenarios for the development of enterprise mobile data services in Western Europe over the period 2006 to 2011. The scenarios are based around a number of market uncertainties relating to user preferences, technology and regulation. Mobile data services are most beneficial to the users when responsiveness to customers is the key consideration and solutions are implemented with a thoughtful approach to business processes and a company-wide strategy, as in the Revolution scenario. Operator revenues from mobile data services are greatest when customers, without carefully considering their purchases, buy fashionable, branded services with overlapping functionality, as in the Exploitation scenario.

8 © Analysys Research Limited 2006 Executive summary [2] If integrators and software developers produce effective solutions for their customers, the Revolution scenario is likely to come about. Effective mobile data solutions are more common in the SME sector than in large companies, where integration projects are often deliberately made obscure in order to justify large bills. There is a lot of room for growth in spend on enterprise mobile data – the Western European market is forecast to grow from EUR5 billion to EUR9 billion over the next five years, possibly reaching EUR12 billion in ten years in the Revolution scenario. Mobile data service spend will account for 4% of the total mobile service market in 2011. The form of terminal chosen will vary tremendously with the type of application and the personal preferences of the users. Professionals will mainly use collaborative applications based on email with attachments, together with access to CRM systems, accessed from both PDAs and laptops. Because they are always on and can be used to update schedules and other information in real time, PDAs are the terminal of choice for field service applications and logistics. WiFi will be an integral part of the picture, although it is very uncertain how much WiMAX will be rolled out. 3G will always fill the hotspot gaps and most MNOs will offer all possible wireless access technologies on multi-mode devices. Scenarios for Enterprise Mobile Data Services 2006–11Executive summary

9 © Analysys Research Limited 2006 Document map Document map: IntroductionScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

10 © Analysys Research Limited 2006 Enterprise mobile data services are now coming to the fore Enterprise mobile data services are coming to the fore as MNOs start to focus on expanding 3G data usage. Push email is the application that is currently being rolled out most rapidly, but others are also in use: w field service applications for managing appointments and linking to central data and CRM systems w CRM access for sales teams w logistics systems for shipping and delivery networks w remote access to other enterprise data systems, such as ERP or police computers. The mobile data applications currently being rolled out fall into two broad groups: w work-control applications w collaborative applications. Scenarios for Enterprise Mobile Data Services 2006–11 Introduction

11 © Analysys Research Limited 2006 Work-control applications are already established in some sectors, while collaborative applications need 3G bandwidth Work-control applications use minimal bandwidth to exchange data about customers, appointments and sales. They are well supported by current technology but generally need a company-wide commitment to use them; their introduction may be resisted by the workforce because of the control aspect. They are currently more widely deployed in the UK than elsewhere in Europe. Cognito says, “We have only had one or two specific applications that needed 3G. GPRS is more than adequate in the market space that we are in at the moment. It is hard to see what you would do with 3G. It is all about transactional messages, quite small and bursty, and not streaming megabytes and megabytes of data. No PowerPoints. [Customers] do use it for image transfer – photos taken on site – that’s the biggest data volume that we have come across.” Collaborative applications are based around email and require the exchange of Microsoft Office files. This is still cumbersome on most mobile terminals and even laptop users can lack the bandwidth needed to transfer large files. Deployment of collaborative applications is currently limited and is based on BlackBerries and laptop datacards. T-mobile says, “We are still in the infancy of the mobile data market and it’s important to move beyond the nomadic use of laptops in coffee shops and offices. At the moment, we lack highly mobile devices that put reasonable processing power in the hands of customers in a form suitable for use on the move.” Scenarios for Enterprise Mobile Data Services 2006–11Introduction

12 © Analysys Research Limited 2006 Work-control applications need tight integration into company data systems, while collaborative applications can be more flexible Work-control applications must be integrated into company IT systems and are usually based on forms pushed out to PDAs. They can be used to schedule appointments, collect signatures and provide access to centrally stored data. It is often easier for these applications to be deployed in SMEs that can commission a simple integration project from an application-hosting company or software provider. Large IT departments working with big SIs may well find that there are too many obstacles to be overcome. Collaboration applications are easier for companies, and even employees, to adopt in a more ad hoc manner. Once push email is in place, attachments can form the basis of this collaboration. There is still much to be gained from an overall company strategy for the adoption of collaboration applications but there is less requirement for major IT projects to integrate them into company systems. Microsoft says, “An IT manager can download the push email service pack for free. It would take 45 minutes to an hour – install software, set up firewall, get devices in right domains – with a contract for air time and data usage and a device you are up and running.” RIM says, “Application support on the BlackBerry is easy. Web-enabled applications just work. You can push data with an HTTP port in just three lines of code. Developers can use tools for drag-and- drop Java enabling of applications and can use either Java or Web-services approaches.” Scenarios for Enterprise Mobile Data Services 2006–11Introduction

13 © Analysys Research Limited 2006 Customer demand, new technology and future regulation will all influence market development over the next five years The enterprise mobile data services market is still very fluid and could develop in a number of different ways, making planning difficult for all the players. One successful approach to managing uncertainty is the use of scenarios. By building a number of possible pictures of the future, companies can develop flexible strategies that are capable of responding to different market outcomes. Scenarios should not look too far ahead – three to five years is usually sufficient – and should represent credible but contrasting descriptions of how the market might look. This report considers three scenarios for the development of enterprise mobile data services in Western Europe over the period 2006 to 2011. The scenarios are based around a number of market uncertainties relating to user preferences, technology and regulation. We show how each scenario would lead to a different retail spend outcome for services, equipment, integration and hosting. Particular impacts are highlighted, including the effect of the failure of the 3GPP to standardise the right technologies at the right time and of integrators to deliver value for their customers. Based on the scenarios, we also provide retail spend and ARPU outcomes for France, Germany, Italy, Spain, Sweden, the UK and the whole of Western Europe, in terms of spend by end users on mobile email, applications and browsing. Scenarios for Enterprise Mobile Data Services 2006–11 Introduction

14 © Analysys Research Limited 2006 Document map Document map: The benefits of scenario planningScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

15 © Analysys Research Limited 2006 Players need to think about what the future will hold, but even the near term contains a wide range of possible outcomes Thinking about the future is an important part of business life, but companies are faced with the problem that so much of what lies ahead is difficult to foresee and represents a maze of possible outcomes. Attempting to predict exactly what the mobile data market will be like five or ten years from now is an impossible (and possibly dangerous) exercise. The challenge of anticipating what is coming is not greatly simplified by taking a shorter-term view. Every day, questions are being raised about what the future holds for telecoms. Some of these questions are quite specific, relating to: w demand for different types of service w the functionality of new technology … … while others are more general in trying to understand: w how regulators will approach the new telecoms landscape w who the successful players will be. Scenarios for Enterprise Mobile Data Services 2006–11The benefits of scenario planning

16 © Analysys Research Limited 2006 Forecasting has been the most popular way of anticipating future outcomes, leading to relatively rigid planning processes and linear plans Many players develop their plans using a single forecast, based on one view of how the market will evolve. This leaves a company locked into a single strategic path, with one phase of development followed, linearly, by the next (Figure 1). Such plans often commit a company to a significant investment in capex and other resources, without preparing it for the possibility that the forecast may be wrong. Figure 1: Forecast-based planning process [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning A single ‘forecast’ view of the future Fore- cast Phase 1 Phase 2 … leads to a linear planning process

17 © Analysys Research Limited 2006 Forecasting has some significant limitations, however, and can compromise a company’s ability to respond to a changing environment Forecasts suffer from uncertainty related to changes in: w technology w regulation w competitor response w macro-economics w social/political factors w customer demand. Forecasts are also frequently made with incomplete data, even in relation to the current time or recent past. Even where good data is available for a historical trends analysis, it does not necessarily provide a good indication of what the future outcome will be, as indicated in Figure 2. Figure 2: Past trends can be poor indicators of future outcomes [Source: Analysys Research, 2006] “Too many forces work against the possibility of getting the right forecast... accept uncertainty, try to understand it, and make it part of our reasoning.” Pierre Wack – Harvard Business Review, 1985 Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning FuturePast

18 © Analysys Research Limited 2006 Scenarios are much more suitable than forecasts for thinking about the complexity of the longer-term future As Figure 3 suggests, compared with the forecasting involved in the one- or two-year budgeting process, scenario planning aims to enable a company to think effectively across the broad scope of its future marketplace so as to: w identify early warning of threats w evaluate the balance of risk and reward w create innovative business ideas w develop options to respond to change. The planning period that scenarios cover can vary, depending on the aim of the planning exercise: w trying to identify the winning new technologies of the future may justify scenarios that consider development over the next five to ten years w identifying strategic options for general operational planning should use scenarios that look ahead three to five years. Figure 3: Scope and timescale for scenario planning compared with forecasting [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning Timescale Scope Forecasting Scenario planning

19 © Analysys Research Limited 2006 Scenarios offer an alternative approach to forecasting by accepting uncertainties and trying to understand their potential impact Rather than trying to generate the best possible view of the future or make estimates based on the ‘middle ground’ of expectations, scenarios accept that there are many uncertainties about the future and use this to force thinking to become wider and more innovative. The starting point is to consider what are the critical uncertainties in the market. Different market drivers (such as demand, regulation, etc.) are evaluated against: w impact – will this have a major impact on the future of the market? w uncertainty – how uncertain is this driver? (e.g. at what rate will demand for a particular service grow?). By plotting factors as in Figure 4, they can be grouped as: w insignificant – do not drive the future of the market w inevitable – important drivers whose outcome is highly probable w critically uncertain – the drivers that will shape the scenarios. Impact Uncertainty Inevitable Critically uncertain Insignificant Figure 4: Assessing the impact and uncertainty of market drivers [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning

20 © Analysys Research Limited 2006 The market drivers should be external to the company, not the company’s own strengths, weaknesses or potential strategies In creating scenarios, one error to avoid is the inclusion of factors which are internal to the business, such as: w weaknesses – for example, high staff costs, poor brand or high customer-acquisition costs w strengths – for example, successful use of new technology, effective sales channels and low-cost suppliers w potential strategies – perhaps moving up the value chain, acquisition or merger, or withdrawal from particular geographical markets. Although these factors can be viewed as uncertain, they should not form part of the scenarios, which are intended to describe the external context within which the business will have to operate. By concentrating on market drivers that are external to the company, the scenarios force managers to think outside their own operations to identify the trends and uncertainties to which they will have to respond. This understanding of the possible market environment then enables the business to create a number of strategic options that it could follow. Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning

21 © Analysys Research Limited 2006 Using scenarios enables more flexible planning, based on creating alternative options that can be implemented in response to changing conditions Following assessment of the critical uncertainties in the market, scenarios can be developed to accommodate: w inevitable change – shifts in the market that are highly likely to occur under any scenario w uncertain change – possible developments that could take the market in quite different directions. Armed with this thinking, planning can accommodate a much wider range of possible market outcomes compared with the use of a single forecast, as illustrated in Figure 5. Instead of a single plan, this enables a number of options to be generated, each of which can be implemented depending on how the market develops, usually based on previously identified triggers, such as adoption rates or ARPUs reaching a given level, technology being introduced or regulations changing. Figure 5: Scenario-based planning process [Source: Analysys Research, 2006] … leads to a more flexible planning process … Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning Uncertain change Inevitable change Scenario 1 Scenario 2 Scenario 3 Scenario 1 Scenario 2 Scenario 3 Present Option B Option A Option C Option E Option D

22 © Analysys Research Limited 2006 Once created, scenarios can be used over time to track the external environment Scenario planning should not be a static, one-off exercise, the outputs of which are quickly forgotten or set to one side. Rather, if properly created, scenarios should provide a robust and highly effective framework for planning. For this to happen, there is a need for: w widespread communication – across the company, staff should appreciate the key messages of the scenarios and look out for the developments that will signal the need to trigger one strategic option over another w regular updating – the scenarios should be dynamic and modified periodically to reflect the changes in market drivers, where uncertainty increases or decreases w continual market scanning – high-quality data and feedback from the market is needed to track how the market is developing in relation to the scenarios. Scenarios for Enterprise Mobile Data Services 2006–11 The benefits of scenario planning

23 © Analysys Research Limited 2006 Document map Document map: Uncertainties and scenario structureScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

24 © Analysys Research Limited 2006 Creating scenarios involves a range of planning concepts and analytical tools There is no one standard approach to carrying out scenario planning within an organisation. Scenario creation and development of the accompanying strategic plans can take anything from a few days to a few months, depending on the complexity of the business, its market and the timeframe considered. The nature of the process is also heavily dependent on the number of people who are involved and how scenarios are communicated to achieve widespread internal acceptance and use. However, a range of concepts and analytical tools exist that should usually be used to arrive at the scenarios and turn these into strategic options, the principal of which are: w mapping drivers of change w defining the scenarios by their key parameters w creating scenario scripts w developing a timeline for market change w modelling the market value. Scenarios for Enterprise Mobile Data Services 2006–11 Uncertainties and scenario structure

25 © Analysys Research Limited 2006 We have used the scenario planning process to define three scenarios for the future of the enterprise mobile data services market TimelinesMarket by scenario Time Revenues Identify a range of market drivers. Map each in terms of the scale of its impact and the degree of uncertainty of its outcome. Determine the most critically uncertain drivers to use as a basis for creating scenarios. Identify potential outcomes for each critical uncertainty. Group the different outcomes of each uncertainty to define credible scenarios. Give each scenario a memorable name and short description. Consider inter-linkages between different trends. Define the timelines for market change. Develop market models to assess the impact of different scenarios on service revenues. Identify key assumptions that change under each scenario. Compare revenue outcomes, highlighting the main differences. Scenario definitions __________ Scenario scripts _____ Define the key areas in which the market will look different under each scenario. Write narratives that describe the differences and provide examples to illustrate key variations. Map drivers of change Define scenarios Create scenario scripts Develop timelines Model market value by scenario Scenarios for Enterprise Mobile Data Services 2006–11 Uncertainties and scenario structure Drivers of change Uncertainty Impact

26 © Analysys Research Limited 2006 Document map Document map: Scenario planning: mapping drivers of changeScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

27 © Analysys Research Limited 2006 Drivers of the enterprise mobile data services market [1] Driver for mobile enterprise data services Comment Need to increase responsiveness to customers There has been a tendency to try to justify the introduction of mobile data services in terms of productivity gains. These are easy to calculate and to find but may not present a compelling business case. The key advantage of using these services is improved responsiveness to customers, which is much more important to businesses as they seek to differentiate themselves from their rivals. This will allow companies to justify spend on mobile data services and will increasingly lead to their deployment. O2 says, “The value that customers can get from these applications is huge so, as they get to realise that, the investment in the network starts to seem very small. People will say ‘it costs me GBP5 to go roaming for a day with my BlackBerry’ but they’ll probably spend a lot more than that on parking and coffee and cake, so in the scheme of things it’s tiny.” Economic growth Faster economic growth is likely to lead to higher spend on mobile data services. However, growth has been, and is likely to remain, fairly stable in Western Europe. Nevertheless, spend on applications that are critical to responsiveness to customers can always be justified. Table 1: Market drivers with predictable outcomes [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: mapping drivers of change

28 © Analysys Research Limited 2006 Drivers of the enterprise mobile data services market [2] Driver for mobile enterprise data services Comment Customers’ willingness to adopt new services, applications and devices It is still not clear how far companies are willing to trial services – to invest time and thought in working with software developers, applications-hosting companies and SIs to analyse business processes and identify how mobile applications can benefit their organisations. Cognito says, “The most beneficial process for both customer and supplier is when you work hand in hand with the customer. We are working on a pilot process with a customer now. They are learning and proving for themselves about the solution that has been promised to them. We can demonstrate capability and develop a closer working relationship.” Similarly, it is unclear whether companies are prepared to pay more for new services – to increase overall spend on mobile data services, equipment and software. This is not necessarily the same as asking if they are willing to pay higher prices. Finally, it is not clear how well users will accept complexity – be willing to cope with complex user interfaces, terminals and services, to learn how to use new tools and to provide training for users. Microsoft says, “TBS do field mobility and they have a product called TaskMaster – a SQL Server- based package solution. They have won a lot of business because they have a simple package solution that does forms really easily on a device. Companies have used this for field service, utilities, anywhere where you send forms back to head office. KONE lifts reduced their field engineer administration costs by 62% using it.” Table 2a: Market drivers with unpredictable outcomes [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: mapping drivers of change

29 © Analysys Research Limited 2006 Drivers of the enterprise mobile data services market [3] Driver for mobile enterprise data services Comment Network security Network managers continue to be very concerned about network security and the introduction of mobile terminals incorporating a connection inside the company firewall that can be lost or stolen. Vendors offer a number of security management options, such as remote locking or wiping of devices. The key uncertainty is whether the benefits of mobile data services are seen to outweigh the additional security risks. Vodafone says, “We have launched a security-management service to remotely lock devices if they are lost or stolen and we can wipe all the user data from them remotely as long as the original SIM card is in there.” Innovation in service propositions and marketing It is hard to predict how well MNOs and others will match their offers to the needs of customers. How many new services and pricing structures will be made available in the marketplace, how varied will they be and will they truly meet the identified needs of customers? Vodafone says, “The people who really succeed think carefully about the business processes and it can be very unfriendly to the user if you get this wrong.” Capabilities of the 3G family It is uncertain how well the 3G standardisation process will deliver the technology needed to support enterprise mobile data services and will incorporate emerging new technologies. Instead, operators might find that their technology needs are better met by new and cheaper solutions that have developed outside this framework. Table 2b: Market drivers with unpredictable outcomes [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: mapping drivers of change

30 © Analysys Research Limited 2006 Drivers of the enterprise mobile data services market [4] Driver for mobile enterprise data services Comment Interaction of wireline and wireless It is not certain how quickly it will become easy for data users to move seamlessly and transparently from wireline to wireless networks. The dominance of MNOs would tend to encourage consumers to use only mobile networks but other outcomes may lead to closer integration with WiFi and fixed wireless technologies. 3G Americas says, “In the future, laptops are likely to have HSDPA capability built in. Lenova has said it will support this and there are already cards for both EDGE and WiFi.” Extent of regulatory intervention The regulatory position on competition is unpredictable. It is not known how proactive the regulators will be in ensuring that new players have access to the market, for example as MVNOs, and in restricting the dominance of existing MNOs. Another uncertainty is whether spectrum constraints will mean that MNOs must act to limit use of, and access to, bandwidth (for example, by charging high per-megabyte prices). A smaller amount of spectrum will be required if there is little demand than if there are many mobile broadband users. Structure of the industry The extent to which consolidation will take place in the mobile data sector is unknown and it is unclear whether this will be driven by the acquisition of smaller players by powerful and successful MNOs or by ‘fire sales’ (sales of assets at very low prices, typically when the seller faces bankruptcy) by struggling companies, due to by lack of demand. Table 2c: Market drivers with unpredictable outcomes [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: mapping drivers of change

31 © Analysys Research Limited 2006 Critical drivers of the enterprise mobile data services market are identified by plotting their uncertainty against their impact Scenarios for Enterprise Mobile Data Services 2006–11 Scenario planning: mapping drivers of change Figure 6: Impact versus uncertainty for critical drivers [Source: Analysys Research, 2006] DriverImpactUncertainty Need to increase responsiveness to customers         Economic growth       Customers’ willingness to trial services              Customers’ willingness to pay more for new services                  Customers’ acceptance of complexity            Network security          Innovation in service propositions and marketing          Capabilities of the 3G family        Interaction of wireline and wireless              Extent of regulatory intervention – competition          Extent of regulatory intervention – spectrum constraints      Structure of the industry          Table 3: Summary of impact versus uncertainty for market drivers of enterprise mobile data services [Source: Analysys Research, 2006] Impact Pay more for new services Acceptance of complexity Competition Spectrum constraints Economic growth Structure of the industry Network security Uncertainty Innovation Responsiveness to customers Trial services Critical drivers Interaction Capabilities of the 3G family

32 © Analysys Research Limited 2006 Document map Document map: Scenario planning: defining the scenariosScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

33 © Analysys Research Limited 2006 The critical uncertainties already identified have been used to define three scenarios for the enterprise mobile data market Companies are cautious about the enterprise mobile data area, which is perceived to be expensive and difficult to use. The Evolution scenario represents the expected outcome if this view persists and companies continue to do the bare minimum with mobile data. The current trend towards services tailored to specific customers continues, and these fail to drive mass-market take-up. Two other scenarios could emerge in which the perceptions of high cost and poor usability are overcome: w in the Exploitation scenario, mobile operators develop compelling services under their own brands by buying up small innovative players who are struggling to get established in a sluggish market w in the Revolution scenario, lateral thinking about the use of existing technology allows small innovative players to themselves bring to market new solutions that are low cost, widely applicable and readily deployed. These could be new types of hosted application or middleware, such as a thin client for mobile devices that is equivalent to Citrix in the fixed environment. The rest of this section spells out the different ways in which these scenarios develop with respect to the critical uncertainties already identified. Scenario planning: defining the scenarios Scenarios for Enterprise Mobile Data Services 2006–11

34 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Customers’ willingness to adopt new services, applications and devices is greatest in the Revolution scenario Revolution Organisations show a rapidly increasing willingness to trial new wireless devices, applications and services that aim to increase responsiveness to customers and improve productivity. Management teams have a clear vision of the value that good, integrated fixed and mobile data services can add to the business and are willing to spend time and money to get this right. This very rational approach reduces cost and complexity in the long term by expending effort at the start on finding the right devices and developing software that integrates with existing applications. Evolution Organisations are most concerned with controlling mobile spend and are unwilling to invest time or money in trialling new services. There is little willingness to learn to use new devices, interfaces or applications. There is a scepticism about the benefits of IT in general, leading to minimal investment in the sort of enterprise applications that benefit from mobile access. Where mobile data applications exist, they are based on simple Internet access to Web sites and must be implemented with little support from MNOs. Exploitation Organisations show little willingness to trial new services and a tendency to just accept what the MNO offers, leading some users to end up with multiple terminals with overlapping functionality that is not used. Organisations see the benefits of their BlackBerries and are happy to provide these to more of their staff and to subscribe to other applications, such as appointment management and sales-lead tracking, offered by the MNOs. Mobile applications are not integrated with those of the core enterprise, so many of the potential productivity gains are not realised and take-up slows. Scenario planning: defining the scenarios Vodafone says, “With SMEs it is about trying to understand what they do and what their pain points are and where are the blocks to their productivity and then package applications that are easy for them. We are just kicking off some work to have a look at this.”

35 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Concerns about network security are most pronounced in the Evolution scenario Revolution Security is recognised as important but good standards and established practices for implementation mean that it is not seen as a major problem. The benefits, in terms of improved responsiveness to customers and increased productivity, are understood and are seen to outweigh the risks. Providers of security services for mobile networks emerge as they have for fixed networks, updating anti-virus software and offering device-management services. Evolution Organisations are slow to trust wireless services, having concerns about hacking and viruses, intruders gaining access via lost or stolen terminals, company data on mobile devices falling into hostile hands and the reliability of mobile devices. BlackBerry’s dominance of email continues due to its reputation for having thoroughly considered the security issues and to its government backing. ASPs are obliged to provide security- management services because MNOs do not. The lack of widely respected security mechanisms limits users’ trust in these systems. Exploitation Users are quite concerned about the security of mobile devices so, although they use them, they take steps to ensure that their networks are protected against rogue use of mobile networks and terminals. The standards for secure systems are perceived to be insufficiently developed and reliable for secure systems to be set up easily by in-house staff or system developers. As a result, users tend to rely on big brands that are seen to have a reputation for security and reliability. They turn to services offered by MNOs, such as remote locking and wiping of devices. Scenario planning: defining the scenarios Vodafone says, “End-to-end encryption can be built into the applications … with email and BlackBerry. Customers are going to want to have this under their own control and SSL VPN is definitely the way forward there. We don’t have a Vodafone-branded IPsec solution in our portfolio.”

36 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Innovation in service propositions and marketing is greatest in the Revolution scenario Revolution New mobile devices are multi-purpose and easy to use, are based on standards and are available from many vendors. Data charges are transparent and easy to understand. Roaming charges cease to be a worry. The application provider is often the primary service provider, with MVNOs providing the data-networking support, and the price is based on the application rather than on data usage. Terminals do not necessarily have to be supported by MNOs, allowing the use of a wider range of devices and the development of innovative features. There is a strong focus on QoS and investment in fault tolerance and self- fixing devices. Evolution Customers demand simplicity, reliability and cost-effectiveness and are put off using mobile data services by per-minute and per-megabyte charges. MNOs fail to provide simple services for their customers and bundles are large and too expensive for infrequent users. MNOs deploy push-email services but do not promote them aggressively. Innovation in applications comes from software developers rather than from the mobile industry; Web access to applications allows mobile use of CRM and field-force management applications without the involvement of MNOs. High service charges mean that these applications are only used to meet very pressing needs. Exploitation New mobile devices are supplied pre- configured and ready to use. Initially, operators provide heavy subsidies to stimulate take-up. Data charges are transparent and easy to understand; users no longer fear bill shock. Development of specialised products for different vertical segments is limited by a reliance on standard applications branded by the service providers. Small players must sell through the big brands to reach their customers. Lack of integration between company applications limits the usefulness of services and the scope for innovative, holistic solutions for enterprise communications. Scenario planning: defining the scenarios Cisco says, “We have a project with Vodafone called Littlebox – a Linksys router with a 3G data card instead of DSL – designed for mobile workgroups to share a datacard. For the MNO, it also builds a pipeline of customers who will want to upgrade to their own datacard.”

37 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 The capabilities of the 3G family are only fully developed in the Exploitation scenario Revolution Problems with 3G standards and the tight control attempted by MNOs cause users to be frustrated by an inability to deploy the applications they need using the MNOs’ networks. Internet-based applications predominate, accessed from multi-purpose terminals on which software is easily installed. Data MVNOs get support from the regulator, enabling them to buy network capacity to sell to application developers. This demand for wholesale capacity drives very-low-cost network roll-outs with extensive use of WiMAX and non- 3G wireless standards. This necessitates the development of software-defined radio. Evolution Low demand for extra bandwidth means network roll-outs are slow and costs are high. High bandwidth emerges only in pockets, so MNOs charge more for 3G data services and deploy WiFi and WiMAX to fill gaps in the network. As mobile substitution of fixed telephony takes off, more capacity is needed; this is partly achieved by increasing the capacity of GPRS base stations using EDGE technology. UMA standardisation of seamless WiFi– 3G interworking is not transparent for end users, leaving concerns about lack of control of charging. MNOs use their mobile networks to offer in-building voice services, and WiFi and WiMAX function largely as data technologies. Exploitation Strong demand for mobile data means MNOs are quick to roll out 3G networks and the services to go with them. HSPA and subsequent enhancements all follow the recommendations of the 3GPP. Technology easily supports advertised services, fulfilling users’ needs. User tolerance of any technical problems is reasonably high and there is relatively low churn from the new services. MNOs retain control of terminals and applications and can determine charging regimes to maximise profitability. UMA delivers seamless integration with MNO-owned wireless hotspots so network operators can use the form of access most convenient for them. Scenario planning: defining the scenarios O2 says, “3G is not a driver for data usage because most field-service applications are PDA driven and highly optimised so GPRS is a perfect delivery mechanism for them; they aren’t hugely data intensive. If you are recording time or capturing a job, it doesn’t need much bandwidth.”

38 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Interaction of wireline and wireless centres is facilitated by fixed wireless technologies Revolution Most terminals support both 3G and WiFi. WLAN/WiMAX providers are independent of MNOs and compete with them, bringing cheaper access and more flexible tariff packages. Customers use fixed wireless access whenever possible to keep bills down. Use of WiFi voice becomes common. Evolution Data customers typically buy bundled WiFi and 3G data, minimising 3G data bills by using WiFi and iPass, Inc.’s services wherever possible. Most WiFi networks are owned by MNOs. Big reductions in mobile voice prices result in extensive substitution of wireline telephony, particularly in businesses. This uses the MNO network in building and reduces demand for WiFi voice and VoIP. Exploitation Incorporation of WiFi support into data terminals becomes standard. Intel processors for laptops are supplied with 3G and WiFi support, and WiFi access is included in MNOs’ bundles. However, mobile data is perceived as a separate service from fixed broadband, and MNOs do not target the home and office markets for Internet access. Scenario planning: defining the scenarios O2 says, “3G, even for a datacard user, is not the first choice. The power of a laptop ideally goes with broadband, WiFi is second choice and 3G is ‘if I must do it then I’ll do it over that’.” T-Mobile says, “Wireless has got customers hooked on being able to work wherever they are but they don't like having to think about where to find a hotspot. This provides a great environment for up-selling T-Mobile HotSpot users to HSDPA services, with which we can offer better coverage and an almost equal user experience." Orange says, “We are working on WiMAX. Up to now it is still more hype than technical solution, since it is more point to point at the moment. Once the equipment is available, if it makes sense, we will see how we include this in our global proposition; if it brings more comfort to our users we will add it.”

39 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 The extent of regulatory intervention is greatest in the Revolution scenario Revolution Regulators take a proactive approach to ensuring a competitive marketplace. MNOs are forced to open their networks to MVNOs on regulated terms. Spectrum is made available both for 3G networks and, in other bands, for WiFi and WiMAX. Spectrum trading is allowed. Handset subsidies are controlled and operators are not allowed to restrict handset functionality by blocking VoIP or limiting WiFi to their own hotspots, for example. Evolution Given low customer demand and failing operators, regulators take a hands-off approach. Roll-out conditions for 3G licences are not strictly enforced. Spectrum trading is allowed to alleviate some companies’ problems. MVNOs are allowed and are welcomed by cash-strapped MNOs as a source of wholesale revenue. No extra spectrum is made available but, as there is little demand for data, spectrum does not become a constraint. Networks have capacity constraints due to limited roll-out of high-bandwidth technologies, rather than because of shortage of spectrum. Exploitation Regulators are relieved to see 3G taking off and do not impose much regulation on the market. MNOs are not forced to open their networks to MVNOs. Some extra spectrum is made available to accommodate the growing demand for data services. Spectrum trading is allowed. There are no restrictions on how much MNOs can limit the capability of their handsets. Scenario planning: defining the scenarios A communications manager says, “What we would like is free roaming between networks within a country, which the MNOs won’t do at all at the moment. We have lots of instances where our sites are on one network and not another. The regulators might push [operators] that way.”

40 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 The structure of the industry is radically altered by consolidation in the Evolution and Exploitation scenarios Revolution Many small players compete to provide applications and services. Lead partners in enterprise application projects are often software developers or SIs, and many low-cost application services are available from small players. MVNOs provide network facilities for niche markets, such as vertical sectors. Terminals are sourced from low-cost suppliers in Asia and can support application software from many vendors. MNOs have to be nimble and must meet customers’ needs if they are not to be reduced to bit carriers. Evolution Failure to generate significant revenue from 3G services leads to extensive industry consolidation. The market is populated by a few very large mobile specialists. Even with the benefits of scale, these companies struggle to survive. Consolidation of operators is accompanied by a focus on ‘sweating’ their assets and avoiding investment in future higher-speed technologies. Smaller application and equipment suppliers struggle and many fail. Larger hosting providers and applications developers have to provide additional services to help their users mobilise their data applications. Exploitation Customers rely on big brands, and MNOs pursue market share aggressively in a growing market, leading to considerable consolidation as the top players aim to provide pan-European and multinational services. MNOs also buy up specialist WLAN providers to ensure their customers have seamless access from any location. A few large international players emerge to dominate the enterprise mobile data market. Scenario planning: defining the scenarios T-Mobile says, “We don't think it is our role to provide hosted application seats for the business market. There are quite aggressive providers of applications as a service so it is better to form partnerships with them.”

41 © Analysys Research Limited 2006 The key features of the scenarios for the enterprise mobile data services market can be summarised in a diagram Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: defining the scenarios Customer willingness to adopt new devices, applications and services Increased willingness to trial No increase in willingness to trial No willingness to pay more Increasingly willing to pay more Strong dislike of complexity Acceptance of complexity Network security Perceived as a major problemNot perceived to be a problem Innovation in service propositions and marketing Limited innovationExtensive innovation Capabilities of 3G family Slower developmentFaster development Considerable convergence of wireline and wireless data Interaction of wireless and wireline Little convergence of wireline and wireless data Extent of regulatory intervention Light regulation on competition, especially MVNOs Heavy regulation on competition, especially MVNOs Spectrum is a constraintSpectrum is not a constraint Structure of the industry Little consolidationExtensive consolidation Evolution scenario Exploitation scenario Revolution scenario Figure 7: Scenarios for the enterprise mobile data services market are defined by the outcomes of critical uncertainties [Source: Analysys Research, 2006]

42 © Analysys Research Limited 2006 Document map Document map: Scenario planning: creating the scenario scriptsScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

43 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 The roles of the players vary greatly between the scenarios Revolution Software developers and SIs are often the lead partners in trials and deployment of customised services. MNOs must respond quickly to customer needs in order to avoid becoming bitpipe providers. MVNOs flourish, providing services to niche markets. WLAN and WiMAX networks are deployed by specialist service providers and challenge the MNOs’ 3G networks. New handset vendors enter the market with a wide variety of terminals that run different operating systems for different combinations of applications. Dual-mode 3G/WiFi is common and VoIP use is widespread. Regulators make plenty of spectrum available and support MVNOs. Evolution MNOs respond to the low growth in mobile revenues by aggressively targeting the fixed market. There is a great deal of consolidation as less profitable operators fail. MVNOs are encouraged by MNOs who are having difficulty filling their networks. This helps to keep prices down. Integrators and hosting companies fill the gap left by the lack of MNO applications. Handset vendors focus on voice and text, and handsets are designed to be the users’ sole voice terminal but have limited data capability. Laptop datacards are widely used for applications. WLAN networks are owned by MNOs. There is little intervention from regulators. Exploitation Large MNOs dominate with a range of standard data products that are heavily branded. Smaller players are bought up. No 3G MVNOs are set up. Integrators have a small overall market share but take on a few large projects for organisations that buck the general trend by deploying systems that are carefully tailored for them. The current top equipment vendors produce a range of specialised terminals with operator branding. WLAN networks are owned by MNOs. Regulators make more spectrum available but do little to promote MVNO development. Scenario planning: creating the scenario scripts

44 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Scenario planning: creating the scenario scripts The enterprise mobile data world in the Evolution scenario The communications manager has finally got control of mobile spend. Push email needs his co-operation and he keeps tight control over the purchase of terminals and the volume of PowerPoint files sent as mobile data. At the same time, there is little investment in or roll-out of centralised company applications and hence no reason to extend them for mobile access. The sales force continues to use datacards for laptops to access the CRM and very senior executives still have BlackBerries but mobile email does not extend across the whole organisation and few companies have centralised ERP systems to which the workforce needs mobile access. Where there are such systems, they are not used to their full capacity as staff continue to exchange information by telephone or email, rather than accessing the ERP system directly. In the absence of a booming data market, mobile operators aggressively target fixed voice. MNOs focus on core services and on keeping costs down. Smaller operators are bought up by bigger ones in order to boost revenues and improve economies of scale. Push email becomes part of the standard service menu but hosted applications like MNO-branded ERP systems, such as SAP.com, do not develop. MNO partnerships with the leading Web-based CRM supplier, Salesforce.com, involve provision of the bare minimum of Web access to a Salesforce.com venture. Investment in networks is kept to a minimum: WiFi hotspots are used to increase data capacity in major centres; 3G roll-out is the minimum permitted by the regulators; EDGE is used to boost GPRS capacity; and HSDPA coverage is minimal because there is little demand for mobile data. Smaller operators, in order to keep unprofitable 3G networks afloat, are keen to host MVNOs, leading to some competition in data bundles and email support, which keeps prices of these services down. This scenario represents a vicious circle for mobile data services: slower networks and inadequate terminals dampen users’ enthusiasm for them, so users do not lobby for the services to be extended. Email volumes stay low and are limited to messaging rather than exchange of files and collaborative work on the move.

45 © Analysys Research Limited 2006 A working day (2011): Jane, Sales Manager for a multinational corporation 07.00Jane gets up and checks her diary on her laptop. She has to attend a series of meetings in a nearby city. She checks train times by text message. 08.20As she waits for the train, Jane checks her BlackBerry for urgent messages and finds that her boss wants to add an unscheduled meeting today. She replies, suggesting that they have a conference call at lunchtime as she has client meetings scheduled all day. 08.45On the train, Jane uses her PC datacard to get Web-browser access to Salesforce.com in order to check the name, address and sales history of the first client she is to visit. She finds that there has been a long history of failed sales visits to this potential client and checks what colleagues have said about previous visits. 09.30In Jane’s first meeting, she is asked to match a very low quote from a rival company. Using her BlackBerry, she emails her boss for authorisation to beat the quote. Receiving no reply before the end of the meeting, she promises to get back to the client. 13.00Jane has lunch in a coffee shop with a WiFi hotspot. This allows her to download some PowerPoint slides for her afternoon meeting. She calls her boss on his mobile phone to discuss urgent issues, asking him to get back to her about the authorisation. 13.45She checks Salesforce.com, updates the records for her morning visit and looks up the history of her afternoon client. 16.00On the train home, Jane updates the records of her second client visit. The authorisation email she needed for her first client has arrived and she calls them. Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

46 © Analysys Research Limited 2006 A working day (2011): David, Delivery Driver 07.45Before leaving the house, David turns on his BlackBerry to download the day’s schedule. 08.15Arriving at the depot, he loads up the items he has to deliver today, selecting them by their RFID tags, which correspond to the data in his schedule. 08.45David sets off on his rounds, which go very quickly today as someone is at home to receive the delivery at every drop. He collects signatures using the stylus on his BlackBerry screen and they are sent back to the central database. 12.00Because his round is going so well, an alert is sent to David’s BlackBerry, telling him that his schedule has been updated with two additional deliveries. David decides to have lunch at the works canteen so that he can pick up the additional parcels at the same time. 15.30David finds that he has lost his way. The satellite navigation system in his van has not been updated with information on a new housing estate. He checks the GPS location against the map in his system and phones the office to ask where the parcel has to go. 17.00David goes straight home from his last delivery. He has no need to return to the depot because the company’s system already has all the information he has logged. Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

47 © Analysys Research Limited 2006 The enterprise mobile data world in the Exploitation scenario In the Exploitation scenario, users control their own mobile communications budgets but there is no central push for a coherent fixed and mobile communications strategy within the organisation. Individual users and departments take up specialised application services offered by the MNOs. This results in ‘one size fits all’ deployments of strongly branded and widely used services for sales-lead management, field-service applications, delivery scheduling, email and PIM. Integration with other company systems is lacking, so the productivity gains are not as great as they could have been. Bundled with the application subscriptions, users are given specialised pre-configured terminals so that they carry multiple devices with overlapping functionality – every handset can send text messages and synchronise PIM, for example. WLAN support is not critical for these services, although many devices incorporate it, and the primary modes of access are 3G and HSDPA networks. MNOs try to increase their market share by offering heavy subsidies on handsets and big data bundles, intended to overcome users’ fear of bill shock. Smaller players and WLAN providers are acquired by the big MNOs attempting to put together pan-European and global offerings. Regulators ensure that sufficient spectrum is available but do not force operators to provide access for MVNOs. Regulators allow a small number of strong, multinational mobile operators to emerge. Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

48 © Analysys Research Limited 2006 06.00Eric wakes up in his hotel and checks his mobile email terminal for emails received overnight. 06.30During breakfast, Eric scans the financial headlines on his personal PDA to see if there are any big stories he should know about. 08.00Eric has time to put the final touches to his presentation before his client meeting at 10.00. He downloads some new slides emailed by a colleague to his mobile email terminal and transfers them to his laptop. 12.00The client has been impressed by the presentation and asks for more input. Using his laptop videoconferencing system, Eric brings his boss in to discuss a new project. 13.00Eric goes to a café for lunch during which he updates the account-management system from his laptop. He needs to put together a team to write the new proposal, so he sends out a group message on his push-to-talk mobile asking who has time to help. 13.20He receives several calls from junior staff keen to help. Eric emails his ideas to them from his BlackBerry and arranges to have a conference call from the airport. 14.45Eric is in the airport lounge. For the sake of privacy, he reserves a booth and sets up a videoconference from his laptop using the WiFi hotspot. Everyone has received his notes by email and he compiles a list of ideas that he circulates after the meeting. A working day (2011): Eric, Management Consultant, working for a global company Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

49 © Analysys Research Limited 2006 06.00Robert turns on his PDA and checks his travel plans for the day: he must be at the airport by 07.00 for a flight to Italy. 06.30In the taxi on the way to the airport, he checks his emails on his BlackBerry and receives the latest price targets for tomatoes, olive oil and mozzarella on his PDA. 07.45On the flight, he uses instant messaging to discuss with his boss the strategy for the later negotiations. 09.15Robert finds a taxi at the airport. The farm he is going to is not known to the driver, so Robert hands over his PDA with a map and GPS to help find the way. 11.00After touring the farm, Robert is sitting in the farmer’s office discussing a deal. The farmer thinks the prices offered are too low. To show that his are competitive, Robert uses his laptop to get the latest prices from the local market. 13.10Over lunch at a local trattoria, as he and the farmer sit in the sun and discuss their future co-operation over a drink, Robert surreptitiously uses his BlackBerry to check his email for anything urgent. 15.00Arriving at his second appointment a little early, Robert emails a colleague to ask him to update the purchasing database with details of the deal he struck before lunch. 17.30Robert’s negotiations are dragging on and he is worried about his flight home. Using his PDA to check on the details of the flight, which show a one-hour delay, Robert finds he can relax a little. 19.30Robert has caught his flight. Using the on- board WiFi and his laptop, he emails details of the second deal and settles down to deal with the rest of his email inbox. A working day (2011): Robert, Retail Buyer Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

50 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Scenario planning: creating the scenario scripts The enterprise mobile data world in the Innovation scenario Organisations are finally using IT to improve responsiveness to customers and to maximise productivity benefits. Enterprise applications to manage all aspects of a company’s business are widely deployed. Communications managers take a holistic view of their communications needs, eliminating waste and deploying integrated fixed and mobile solutions. Companies are willing to test solutions that are tailored to the needs of their business and to take some time to find the solution that brings the most benefit to the organisation. SIs specialising in vertical sectors and in geographical areas are helping to deploy applications that make use of standard elements to put together a customised application. Widespread use of Web-based access to applications makes this relatively straightforward. In order to meet the specialised requirements of informed consumers, MNOs have to focus on understanding customers’ needs and on providing new features. Regulators have created a regime that is favourable to MVNOs, and a number of specialised service providers have emerged that work with the SIs to host applications and provide access over their own networks. These integrators use customised software on open-standards terminals to support their applications. Users may download several application environments to the same terminal. Investment in networks is required to keep up with demand. With the use of true broadband using HSUPA, WiFi hotspots are often operated independently, although affiliated to intermediary networks to ensure ease of access for users. Regulators are proactive in ensuring access to networks and roll-out of high bandwidth. Integrated systems bring additional benefits to users, such as the ability to access more relevant information about the work in hand and the use of video and still pictures as part of an application.

51 © Analysys Research Limited 2006 A working day (2011): Helene, Customer Support Technician 07.00Helene checks her PDA to see her appointments for the day and check her emails. 07.30She logs on with her laptop to download the latest updates to her diagnostic software. 09.00At her first client visit, she is asked to find out why the WiMAX link is not working. She runs the diagnostics on her laptop and uses her PDA to send some instant message queries to her team leader using the 3G network. 09.45Having solved her first problem, Helene stops at the local coffee shop and uses her laptop and WiFi to update the central database and check the details of her next appointment. She sees a request from her boss for a videoconference. 12.30Helene returns home at lunch-time to make the videoconference using her laptop and fixed wireless broadband. Her boss presents some performance statistics from the appointment tracking system and congratulates everyone on a job well done. 15.30At another client site, Helene is having difficulty finding the problem, so she runs a screen-sharing application via her PDA so that her team leader can see the problem with the WiMAX log-on. Even with two of them, they are having difficulty with the problem so they conference in an expert at the vendor’s helpdesk. 16.00The problem is solved and Helene has time for one more client. She enters her report of the visit using her laptop over 3G and logs in to the satellite navigation system to find her way to the final location. 17.30After work, Helene heads home to file her final reports. Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

52 © Analysys Research Limited 2006 07.30Paul turns on his PDA, connecting to a Web- based field-service application using his home WiFi broadband to find out what appointments he has for the day. He sees what systems he will be working on and checks that he has the relevant technical data on his laptop. 10.00Paul arrives at his first job of the day on a remote pipeline. He checks the instruments and finds that the data does not match the information he was given. He uses his PDA phone to call the central monitoring station to find out what is going on. 12.00The first job is completed, Paul checks his PDA for the details of his next job and sets off hoping to find lunch en route. As he drives, an alarm goes off on his PDA – he has an urgent request to go to a different job. He pulls over and finds that the system is automatically sending new network diagrams to his laptop. 12.30Paul arrives at the urgent job. Fortunately, this time his information is correct and he has everything he needs in the van. 13.30Paul returns to the motorway service station for lunch and uses WiFi to update the system with information about his jobs so far today. He notices that his next appointment has been re-allocated because of the urgent job he fitted in. This means that he can move straight on to the one after. 15.00Paul meets a situation he has not seen before. He uses his camera PDA to send a picture of the problem to the central system, to see if he can find information about similar problems. The image-recognition software finds a match and sends him the relevant instructions. 17.10Paul is at home and uses his WiFi broadband connection to update the system with details of the final job of the day. A working day (2011): Paul, Gas Pipeline Technician, working for a contractor Scenario planning: creating the scenario scripts Scenarios for Enterprise Mobile Data Services 2006–11

53 © Analysys Research Limited 2006 Document map Document map: Scenario planning: specifying the event timelineScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

54 © Analysys Research Limited 2006 Event timeline for the Evolution scenario Scenario planning: specifying the event timeline Scenarios for Enterprise Mobile Data Services 2006–11 2006–72010–112014–15 Voice services dominate revenue 3G/WiFi datacards take off Rapid migration of voice from fixed to mobile Shocking stories of data roaming charges inhibit growth Consolidation gains momentum WiMAX networks owned by MNOs BlackBerry clone services launched WiFi roaming offers easy broadband access Mobile data services remain at low bitrates 3G coverage grows slowly Email is the only significant MNO application Regulators reduce 3G roaming charges WSaaS services promoted Growing demand for spectrum trading WSaaSs set up MVNOs to undercut data prices Business dominated by few players Web access to limited CRM and field-service applications from WSaaS providers Fixed-price bundles for data usage

55 © Analysys Research Limited 2006 Event timeline for the Exploitation scenario 2006–72010–112014–15 HSDPA datacards are standard in laptops WLAN roaming agreements introduced No independent hotspot operators remain MNO-branded email services take off MNOs go on an acquisition spree to get international reach Application functionality remains limited Few dual-mode terminals Specialised CRM- access terminals are introduced MNOs buy up WLAN hotspots Handsets standardise on Symbian OS BlackBerries are widely adopted in organisations CRM and appointment- management services take off A few international operators dominate mobile data MNO appointment- management services are launched MNO-branded terminals dominate Little use of VoIP, as operators block it or charge voice rates Scenario planning: specifying the event timeline Scenarios for Enterprise Mobile Data Services 2006–11

56 © Analysys Research Limited 2006 Event timeline for the Revolution scenario Scenario planning: specifying the event timeline Scenarios for Enterprise Mobile Data Services 2006–11 3GPP multimedia standards start to be implemented SIs develop mobile- access offers Most ISPs start to provide mobile email interfaces Regulators free up more spectrum Growing demand for data services PCs with built-in 3G and WiMAX are the norm Standards-based PDAs are being made by Asian vendors Early deployment of enterprise applications with Web interfaces Specialist MVNOs start to emerge Early WiMAX roll- outs are successful Enterprises buy applications from SIs on a per-user basis, including mobile access 3G and WLAN systems are fully integrated Multimedia applications with Web access are widely used Small integrators offer Web applications to SMEs 2006–72010–112014–15 HSUPA allows uploading of large video and PowerPoint files Enterprises trial customised applications Regulators mandate data MVNOs Handsets are varied and inexpensive and support multiple applications

57 © Analysys Research Limited 2006 Document map Document map: Scenario planning: modelling the market value by scenario Scenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

58 © Analysys Research Limited 2006 Penetration of applications will be highest in the Revolution scenario Revolution More thoughtful and innovative deployment results in lower medium-term penetration although higher levels are evident by 2011. When deployments happen, they are company wide, resulting in more corporate users. Exploitation Companies easily adopt branded application services, leading to early growth in penetration, although this slows down before 2011. In this scenario, the market for applications has approached saturation while it is still growing fast in the Revolution scenario. Figure 8: Penetration* of applications in Western Europe by segment, 2011 [Source: Analysys Research, 2006] Evolution Companies stick with basic applications, such as appointment management and signature collection. These tend to be used only by front-line staff and top management. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 3G Americas says, “If you’re an insurance adjuster and you look at a car or a home, use your laptop and camera phone to fill out all the paperwork and take a picture, then send it back to the office, you’ve just saved yourself a lot of time and can go on to your next appointment.” * Penetration is of employees, not SIMs.

59 © Analysys Research Limited 2006 Push email is widely adopted in all scenarios Revolution Email is widely used throughout organisations and is often integrated with application deployment. By 2011, 4.3% of SME employees use email. Small companies use email systems to improve their responsiveness. Exploitation Email is widely used as a standalone service but is less likely to be rolled out to users of field-force and similar applications. Higher penetration of push email among SMEs stems from their heavier use of mobiles in general. Figure 9: Penetration of push email in Western Europe by segment, 2011 [Source: Analysys Research, 2006] Evolution Email is widely adopted in all scenarios, but in the Evolution scenario it is more likely to remain an executive tool. Penetration is still over 3.5% of SME employees and 2.1% of corporate employees. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 RIM says, “For us, email is just one application. It’s not the case that BlackBerry equals email. We see the BlackBerry as the pocket Internet terminal – and email is just the obvious first application to go for because it’s the most widely and frequently used.”

60 © Analysys Research Limited 2006 Service spend is highest in the Revolution scenario, but support spend is highest in the Exploitation scenario Revolution Has the highest spend on services but lower spend on support (hosting and integration), as companies are able to use standard building blocks to assemble services that meet their needs. Spend on equipment is dominated by that on terminals in all scenarios and comes to EUR1.5 billion in this scenario. Total spend is over EUR9 billion. Exploitation Overall spend is slightly higher than in other scenarios, but spend on services is only EUR5.1 billion. Fewer integration projects are undertaken than in the Revolution scenario but these are much more bespoke and expensive. Support spend reaches EUR3.5 billion. Figure 10: Breakdown of customer spend in Western Europe, 2011 [Source: Analysys Research, 2006] Evolution Overall spend is a little lower than in the Exploitation scenario, but support spend is nearly as high, as companies that need mobile data have to look to hosted-application providers and integrators to provide the services. Service spend is only EUR4.5 billion. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 Vodafone says, “We are not talking about spending millions of euros on integration work. It’s more like fifteen to twenty thousand to mobilise your Siebel – and that can be done by your existing SI or by one that Vodafone recommends.”

61 © Analysys Research Limited 2006 Retail service spend on push email has most potential for future growth in the Revolution scenario Revolution In this scenario, growth in spend is steady and accelerating as companies roll out email to most of the staff who can benefit from it. Spend overtakes that of the Exploitation scenario in 2010 and reaches EUR3.05 billion by 2011. Exploitation Email takes off rapidly with the use of BlackBerries and cheaper clones launched by the MNOs but is rolled out to fewer staff than in the Revolution scenario. Spend reaches EUR2.79 billion by 2011. Figure 11: Retail service spend on push email in Western Europe, 2005–11 [Source: Analysys Research, 2006] Evolution Email continues to be used as a basic application in many organisations but is rolled out to fewer employees than in the Revolution scenario. Spend reaches EUR2.48 billion by 2011. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 T-Mobile says, “Today, BlackBerry is a great tool that a manager can use to be kept in the loop and to steer the workforce... It is primarily targeted at executives so they can delegate tasks and make sure that the company is working properly. However, we are planning to bring email as a default to our entire mobile workforce.”

62 © Analysys Research Limited 2006 Retail service spend on applications will be greatest in the Revolution scenario, despite a lag period while trials are undertaken Revolution Applications get off to a slow start in the Revolution scenario, as companies take time to run pilots and evaluate them, but growth is accelerating by the end of the period. Spend reaches EUR2.3 billion in 2011. Exploitation Organisations adopt applications, such as appointment tracking and sales-lead management, hosted and branded by the MNOs. These take off faster than in the other scenarios but growth is starting to slow by the end of the period. Spend is EUR2.1 billion in 2011. Figure 12: Retail service spend on mobile applications in Western Europe, 2005–11 [Source: Analysys Research, 2006] Evolution Organisations deploy either applications based on Web access to services they host themselves or managed services from specialist application providers. Revenues for the MNOs are therefore lower than in the other scenarios. By 2011, spend reaches EUR1.8 billion. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 Cognito says, “You can’t push data to a laptop because it is only ready to receive when switched on. If you lose push, you lose a significant ability to control the workforce – most customers go for an always-on PDA.” 0.0 0.5 1.0 1.5 2.0 2.5 2005200620072008200920102011 Application retail service spend (EUR billion) Evolution Exploitation Revolution

63 © Analysys Research Limited 2006 Retail spend on mobile data services will be very low in Sweden Revolution France and Italy show the biggest gains in the Revolution scenario. Exploitation In Germany, Sweden and the UK, spend in the Exploitation scenario is almost as high as in the Revolution scenario. Figure 13: Retail spend on mobile data services, 2011 [Source: Analysys Research, 2006] Evolution Sweden and the UK show the least variation in spend between scenarios. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 iPass says, “The pricing mechanisms will continue to evolve and change. Enterprises like a flat rate per month per user so the CFO knows his total cost of ownership and we try to provide that by aggregating usage. Today, the majority of 3G providers charge a basic fee that includes a defined amount of data download. Any excess usage is then incrementally charged.” 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 France Germany Italy Spain Sweden UK Retail spend on mobile data services (EUR billion) Evolution Exploitation Revolution

64 © Analysys Research Limited 2006 Total spend on enterprise mobile data, including equipment and support, could reach EUR1.6 billion in 2011 in the UK under the Exploitation scenario Revolution Although levels of adoption of enterprise mobile data services are high, equipment and services are cheaper, and integration spend per project is lower, than in the Exploitation scenario, so spend is not always highest in this scenario. Exploitation This scenario sees the highest overall spend in 2011 in Germany, Italy and the UK due to higher service prices and more spend on integration. Figure 14: Total spend on enterprise mobile data, 2011 [Source: Analysys Research, 2006] Evolution In Germany, Spain and Sweden, spend in this scenario is close to that in the Exploitation scenario. Users do not spend their money with the MNOs. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11

65 © Analysys Research Limited 2006 Penetration of enterprise mobile data services in 2011 will be highest in Spain in all scenarios Revolution All countries show much higher penetrations in the Revolution scenario than in the others. This is particularly marked in Spain and Italy. Low penetration in Sweden reflects low non- messaging ARPUs there. Exploitation Italy and Spain have particularly high penetrations of enterprise mobile data services in the Exploitation scenario. Figure 15: Penetration of enterprise mobile data services, 2011 [Source: Analysys Research, 2006] Evolution Sweden and Germany lag behind other countries in the Evolution scenario. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 0% 2% 4% 6% 8% 10% 12% 14% Penetration of enterprise mobile data among users Evolution Exploitation Revolution France Germany Italy Spain Sweden UK

66 © Analysys Research Limited 2006 Raw ARPU values for applications, email and browsing will be similar in all three scenarios Revolution Differences in raw ARPU are not very great between scenarios. In the Revolution scenario, spend is higher on applications but lower on email due to competition. Exploitation ARPUs are relatively high for both email and applications, reflecting the strong position of the MNOs and hence their ability to charge more. Figure 16: Raw ARPU by service, 2011 [Source: Analysys Research, 2006] Evolution Although there are fewer users in this scenario, they each spend more on email because prices are higher. Spend is less than in other scenarios on applications, although these are more basic. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11 A UK communications manager says, “Roaming charges are the worst thing – you get really stung.”

67 © Analysys Research Limited 2006 Enterprise data makes a significant addition to overall ARPUs Revolution Blended ARPU in 2011 is highest in this scenario, which has the largest total service revenues. Blended ARPU for applications reaches EUR26, that for email reaches EUR35 and that for browsing achieves EUR3. Exploitation By this measure, the Exploitation scenario comes second. Blended ARPU for applications reaches EUR24, that for email reaches EUR32 and that for browsing achieves EUR3. Figure 17: Blended annual ARPU by service, 2011 [Source: Analysys Research, 2006] Evolution Blended ARPU for applications reaches EUR20, that for email reaches almost EUR29 and that for browsing achieves EUR2. The overall ARPU of business users is approximately EUR830, so data services contribute 6%. Scenario planning: modelling the market value by scenarioScenarios for Enterprise Mobile Data Services 2006–11

68 © Analysys Research Limited 2006 The Revolution scenario shows the highest service spend in 2011, but the Exploitation scenario has the highest overall spend EvolutionExploitationRevolution Application service EUR1.91 billionEUR2.24 billionEUR2.63 billion Browsing service EUR0.22 billionEUR0.24 billionEUR0.28 billion Email service EUR2.58 billion EUR2.91 billionEUR3.35 billion EquipmentEUR0.17 billion EUR0.20 billion SupportEUR3.15 billion EUR3.49 billionEUR2.37 billion Total enterprise mobile data market EUR8.03 billion EUR9.08 billionEUR8.83 billion Total as a proportion of the retail spend in the Revolution scenario 90%101%100% Table 4: Summary of market outcomes – total retail spend, 2011 [Source: Analysys Research, 2006] Scenarios for Enterprise Mobile Data Services 2006–11Scenario planning: modelling the market value by scenario

69 © Analysys Research Limited 2006 Document map Document map: Scenario implications for playersScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

70 © Analysys Research Limited 2006 The scenarios can now be used to identify the dominant strategic themes, short-term plans and longer-term options Once developed, the scenarios can be used to create a set of plans and strategic options, both at a group level and also for individual business units. The inevitable changes that were identified in mapping the key market drivers should be taken into account in all short-term planning, as these changes are expected to happen and also to have a major impact on the market. Over the longer term (beyond the typical budgeting horizon of 12–18 months), the different scenarios should be used to prepare strategic options that would be implemented under each one, depending on how the market evolves. Figure 18: Using scenarios to create strategic options for enterprise mobile data services [Source: Analysys Research, 2006] Short-term plans that address inevitable change (~12–18 months) Strategic options ready for implementation under different scenarios (~12–60 months) Scenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertain change Inevitable change Scenario 1 Scenario 2 Scenario 3 Strategic option if market goes towards Revolution Strategic option if market goes towards Exploitation Strategic option if market goes towards Evolution

71 © Analysys Research Limited 2006 Although the players are different, all will have to overcome difficulties … It is obvious that some players have far greater resources than others but all players will have to contend with some difficulties. For example: w incumbent MNOs dominate the mobile data market’s subscriber base but face a big challenge in translating this into dominance of enterprise mobile data, as this means developing a range of new skills w smaller MNOs and MVNOs tend to have targeted niche residential markets and lack credibility in the enterprise sector w large software developers, like SAP and Siebel, have applications that can be mobilised and the power to reach the market and form partnerships, but have a reputation for being complicated and expensive w small software developers often have excellent niche applications for a market they understand but lack marketing capability w SIs have strong relationships with customers and can form partnerships with MNOs but, like the large software firms, have to overcome a reputation for being costly and slow w new-entrant data MVNOs may be able to introduce new data-networking deals and to support VoIP without cannibalising existing revenues, but this depends on the support of the regulator and the terms of business they agree with the MNOs. Scenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players

72 © Analysys Research Limited 2006 … and, inevitably, there will be variations in the strategies adopted by different players In practice, the players with the best chance of shaping the market are likely to be incumbent MNOs and large software developers with significant networks and market reach, as well as new well-funded MVNOs that can adopt daring pricing strategies. For most smaller MNOs and MVNOs, software developers and SIs, a strategy of adapting to market developments is almost certainly the only possibility, with their hopes pinned on performing more effectively and efficiently than their larger competitors. Dominant themes that must be addressed within strategic options are listed in Tables 5a and b. Scenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players

73 © Analysys Research Limited 2006 Market structure, investment, operator’s focus and operator’s scale must all be addressed within strategic options Strategic theme Main questions Market structure Should merger with other players be considered to enable an integrated offering (of, for example, fixed and mobile), to create market-leading horizontal players (such as in wholesale email hosting) or to extend geographical coverage (to all of northern Europe, for instance)? Investment How much should be invested in 3G and in application-hosting platforms? What investment is appropriate in OSS, billing and CRM systems? Should acquisitions be made to gain specialist expertise or to enlarge the scale of operations, especially in terms of customer base? Operator’s focus On what customer segments should the operator focus? What is the optimum portfolio of services for those customer segments? What geographical coverage should services provide and where should operations be maintained? Cisco says, “In Europe, the sweet spot is an SME with between four and ten laptops. It’s relatively easy to roll out mobile email for them.” Operator’s scale What market share should be targeted? What is the minimum scale of operation to generate economies that offer a sustainable cost base for the future? What level of infrastructure is needed to support this scale? Table 5a: Dominant themes to be addressed within strategic options [Source: Analysys Research, 2006] Scenario implications for playersScenarios for Enterprise Mobile Data Services 2006–11

74 © Analysys Research Limited 2006 Innovation, pricing and partnering must also be considered Strategic theme Main questions Innovation How much innovation is appropriate given the demand from customers for new services? Should the emphasis of innovation be on new technology, design of service propositions, marketing, pricing or channels? Pricing Should price be used to build market share or margins? How should pricing be used against other players? Partnering Which are the most appropriate companies to partner with? Vodafone says, “We are going to have Vodafone-branded applications that we take to market completely as Vodafone and we support them. Then we have two levels of partner applications: […] preferred applications [that] we have tested and have done due diligence on, but [where] the customer has the billing and support relationship with the third party; and […] certified applications, where we have tested the application to make sure it works but don’t necessarily recommend it.” iPass says, “We have been successful in driving the adoption of dial-up in the past and now we are driving usage of WiFi and also of 3G. Operators are realising that we are an active channel that will bring them fee-paying users.” Table 5b: Dominant themes to be addressed within strategic options [Source: Analysys Research, 2006] Scenario implications for playersScenarios for Enterprise Mobile Data Services 2006–11

75 © Analysys Research Limited 2006 Scenarios for Enterprise Mobile Data Services 2006–11 Players need to watch for signals that indicate which scenario is developing Revolution WiMAX is rolled out and PCs include WiMAX interfaces. Regulators promote data MVNOs. ISPs offer mobile email services. Enterprises Web enable their applications. Rental of software from WSaaS providers starts and mobile access is the norm. Cheap PDA brands gain market share. New mass-market solutions emerge that have the characteristics of SMS, BlackBerry and fixed email. Evolution MNOs respond to the low growth in mobile revenues by aggressively targeting the fixed voice market. 3G roll-out is slow and regulators start to question this. Shocking stories of data roaming charges occur regularly in the media. WiFi, rather than 3G, is widely regarded as the wireless broadband technology. Handsets tend to be designed primarily for voice. Small mobile operators get into difficulties and there are forced sales of hotspot operators. Exploitation HSPA datacards become standard in laptops and PDAs. MNOs successfully launch branded PIM services and specialist CRM terminals. MNO-branded email takes significant market share from BlackBerry. MNOs acquire hotspot operators for high prices. Handsets are mainly MNO branded and are locked in to MNO data services. VoIP is little used. Regulators start to make additional spectrum available. Scenario implications for players

76 © Analysys Research Limited 2006 Document map Document map: ActionsScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

77 © Analysys Research Limited 2006 All players can take actions now to position themselves much more effectively for the future evolution of the market Create two or three scenarios for how the enterprise mobile data market will develop. Develop models to assess the implications for the size of the market. Play out how competitors would react under each scenario. Prepare strategic options suitable for each of the scenarios. Identify metrics to trigger the implementation of each option. Communicate the scenarios internally and use them in all business unit planning. Disseminate guidelines widely for how plans will change under different market conditions. Refresh scenarios regularly to take into account developments in the market. Scenarios for Enterprise Mobile Data Services 2006–11Actions

78 © Analysys Research Limited 2006 Regardless of which scenario develops, companies must incorporate actions that address inevitable change into their short-term plans MNOs must decide how much effort they want to put into the enterprise market and whether they want to bring their own branded applications to market or to work with a range of best-of-breed partners. MNOs must ensure that the enterprise data terminals they offer support basic security features, such as VPN software and remote wiping. MNOs must support a carefully selected range of terminals so that all users’ preferences are supported. Software developers must communicate the ease with which applications can be used on mobile devices. SIs must encourage customers to Web enable their applications as a first step. Handset vendors must improve the ease of use of their terminals and offer security features for corporate systems. WiFi network operators must provide seamless access for corporate users through roaming and access agreements. Scenarios for Enterprise Mobile Data Services 2006–11 Actions

79 © Analysys Research Limited 2006 Actions for MNOs in the Evolution scenario MNOs should create a wholesale division that works with MVNOs to ensure that network costs are recovered. MNO’s retail arms should focus on the most profitable segments. MNOs should consider mergers and acquisitions where they provide access to profitable customer bases. MNOs should invest in keeping costs down, in good contact centres and in low-cost technology. MNOs should invest in basic services that are delivered efficiently and branded clearly. MNOs should invest in advanced OSS to sweat assets and improve network yield. MNOs should focus on providing good-quality Internet access for all customers. MNOs should aim to provide basic low-cost services that reach a broad market – especially VPN support. MNOs should bear in mind that scale is essential to keep costs down and is likely to be achieved through mergers and acquisitions. MNOs should aim to find the cheapest terminals with easy-to-understand core features. MNOs should use pricing to manage customers’ expectations in the face of limited performance of mobile data services. MNOs should recognise that software developers and SIs are key channels for corporate sales. ActionsScenarios for Enterprise Mobile Data Services 2006–11

80 © Analysys Research Limited 2006 Actions for MNOs in the Exploitation scenario MNOs should opt for vertical integration, create an applications-hosting division to run data centres and provide integration, and organise business by type of customer. MNOs should roll out HSPA and faster technologies to cater for large demand for data services. MNOs should invest in acquiring customers to build market share. MNOs should build dominant brands that resonate in the marketplace. MNOs should have a range of horizontal applications that meet most companies’ needs. MNOs should increase their scale in service-provider businesses at a European level to allow transparent coverage for roaming users. MNOs should resist pressure from regulators to increase competition by using market power to deliver high- quality and innovative services at a competitive price. MNOs should be innovative in service packaging and pricing but stick to developing a small set of key enterprise applications that can reach a mass market. MNOs should make efficient use of spectrum. MNOs should price to build market share, with subsidised terminals and generous data bundles. Prices can increase once dominance is established. MNOs should emphasise quality and value and start to price on application value rather than data usage. MNOs should form partnerships with best-of-breed brands to develop compelling horizontal applications. ActionsScenarios for Enterprise Mobile Data Services 2006–11

81 © Analysys Research Limited 2006 Actions for MNOs in the Revolution scenario MNOs risk becoming bit carriers and need to maintain their role in delivering services to end users – possibly by acquiring companies with expertise in application deployment. MNOs should upgrade their networks to HSPA and integrate WiFi and/or WiMAX to provide transparent broadband coverage. MNOs should invest in building reputations for being customer oriented and reliable as partners. MNOs should aim to be seen as innovative, by creating partnerships with best-of-breed service and application providers. They should offer pan-European and global services based on merging or partnering with large players in other markets. They should also build reputations for quality of service. MNOs should increase their scale through broad customer bases and geographical presence. MNOs’ major focus should be on developing leading-edge equipment with the biggest equipment brands as part of effective service propositions, using devices to encourage take-up through design and functionality. MNOs should reduce data pricing and roaming charges by using large bundles to maintain market share. MNOs should integrate fixed and mobile and WiFi offerings to offset the impact of substitution. MNOs should prepare wholesale offers for niche data MVNOs. MNOs should collaborate with effective software developers and integrators who are developing products for niche markets in order to solve problems of responsiveness to customers. ActionsScenarios for Enterprise Mobile Data Services 2006–11

82 © Analysys Research Limited 2006 Actions for other players in the three scenarios Software developers need to be prepared to work with little MNO support if the Evolution scenario develops. If the Exploitation scenario develops, they need partnerships with MNOs as this will be their main route to market. However, in the Revolution scenario they are likely to do better if they can deal directly with customers, a course they can help to promote by using standardised software and terminals. These players also need to be prepared to work independently of the MNOs if the Evolution scenario develops. If the Exploitation scenario develops, they need to focus on working with the MNOs to give themselves a route to market and, if the Revolution scenario develops, have standardised software that will work with a variety of terminals. Potential data MVNOs who see the Revolution scenario developing need to build their business cases, lobby regulators for support, and understand the needs of the hosted-service providers and software developers. Handset vendors need to work with the MNOs in the Exploitation scenario and the software providers in the Revolution scenario to ensure that they have routes to market and the right features in their terminals. SIs must be ready to stand alone if the Evolution scenario comes about, developing applications that do not need too much support from the network. They need to form partnerships with MNOs if they think the Exploitation scenario is developing, and with the data MVNOs if they think the Revolution scenario is developing. ActionsScenarios for Enterprise Mobile Data Services 2006–11

83 © Analysys Research Limited 2006 Document map Document map: Author, copyright and glossaryScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

84 © Analysys Research Limited 2006 Author Margaret Hopkins (Analysys Associate) is Principal Analyst with Exegesys. She started her career in the Post Office Telecommunications Long Range Planning Department. During her 18 years working with Analysys, she has been lead author on many reports, including VoIP versus Mobile: forecasts for the future of enterprise voice; The Business Case for Carrier Migration to VoIP; The Business Case for Broadband Entertainment; Delivering the Broadband Home; New Fixed and Mobile Services and Devices: forecasts 2003–2008; Broadband Value- Added Services for SMEs: market strategy and forecasts 2003–2008; Next-Generation Networks: integrated IP architectures; and IP Voice Services: the return on investment for European service providers. She holds a degree in Engineering from the University of Cambridge and a Master’s in Telecommunications and Information Systems from the University of Essex. Acknowledgements The author would like to thank all those who assisted in the preparation of this report, particularly: Chris Pearson and Jeff Howe of 3G Americas, Ian Phillips of Cisco Systems, Steve Alderson of Cognito, Colin Yarker of Inclarity, Doug Loewe of iPass, David Hooper of Microsoft, Jo Moore of Motorola, Mike Short and Phil Ledward of O2, Jean Marc Lafond of Orange, Valerie Wang of RIM, Ulrich Pilger of T-Systems and John Lillistone and Charlotte Jewsbury of Vodafone who gave their time for interviews; Windsor Holden, Ross Pow and Alex Zadvorny of Analysys Research and Simon Staines of Analysys Mason Group for their valuable comments and assistance; Andrea Smith and Claire Varley of Analysys Research for editorial support. Author, copyright and glossaryScenarios for Enterprise Mobile Data Services 2006–11

85 © Analysys Research Limited 2006 Copyright Published by Analysys Research Limited, St Giles Court, 24 Castle Street, Cambridge, CB3 0AJ, UK Tel: +44 (0)1223 460600; Fax: +44 (0)1223 452800; Email: research@analysys.com; Web: http://research.analysys.com © Analysys Research Limited 2006 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior written permission of the publisher. ISBN 1 905495 13 7 Disclaimer Analysys Research Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Research Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Research Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. The opinions expressed are those of the stated author only. Author, copyright and glossaryScenarios for Enterprise Mobile Data Services 2006–11

86 © Analysys Research Limited 2006 Author, copyright and glossary 3GThird Generation 3GPPThird Generation Partnership Project ARPUAverage Revenue Per User ASPApplication Service Provider CFOChief Financial Officer CRMCustomer Relationship Management DSLDigital Subscriber Line EDGEEnhanced Data for GSM Evolution ERPEnterprise Resource Planning GPRSGeneral Packet Radio Service GPSGlobal Positioning System HSPAHigh-Speed Packet Access HSDPAHigh-Speed Downlink Packet Access HSUPAHigh-Speed Uplink Packet Access IPInternet Protocol IPsecA secure version of the IP that provides optional authentication and encryption at the packet level ISPInternet Service Provider ITInformation Technology MNOMobile Network Operator MVNOMobile Virtual Network Operator OSOperating System OSSOperations Support System PCPersonal Computer PDAPersonal Digital Assistant PIMPersonal Information Management QoSQuality of Service RFIDRadio Frequency Identification SISystems Integrator SIM Subscriber Interface Module (GSM term) Glossary of terms [1] Scenarios for Enterprise Mobile Data Services 2006–11

87 © Analysys Research Limited 2006 Author, copyright and glossary SMESmall or Medium-sized Enterprise SSLSecure Socket Layer (link encryption) UMAUnlicensed Mobile Access VoIPVoice over IP VPNVirtual Private Network WiFiWireless fidelity WiMAXWorldwide Interoperability for Microwave Access WLANWireless Local Area Network WSaaSWireless Software as a Service Glossary of terms [2] Scenarios for Enterprise Mobile Data Services 2006–11

88 © Analysys Research Limited 2006 Document map Document map: List of figures and tablesScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

89 © Analysys Research Limited 2006 List of figures and tables List of figures and tables [1] Figure 1:Forecast-based planning process Figure 2:Past trends can be poor indicators of future outcomes Figure 3:Scope and timescale for scenario planning compared with forecasting Figure 4:Assessing the impact and uncertainty of market drivers Figure 5:Scenario-based planning process Figure 6: Impact versus uncertainty for critical drivers Figure 7:Scenarios for the enterprise mobile data services market are defined by the outcomes of critical uncertainties Figure 8:Penetration of applications in Western Europe by segment, 2011 Figure 9:Penetration of push email in Western Europe by segment, 2011 Figure 10:Breakdown of customer spend in Western Europe, 2011 Figure 11:Retail service spend on push email in Western Europe, 2005–11 Figure 12:Retail service spend on mobile applications in Western Europe, 2005–11 Figure 13:Retail spend on mobile data services, 2011 Figure 14: Total spend on enterprise mobile data, 2011 Figure 15: Penetration of enterprise mobile data services, 2011 Figure 16: Raw ARPU by service, 2011 Figure 17: Blended annual ARPU by service, 2011 Figure 18:Using scenarios to create strategic options for enterprise mobile data services Scenarios for Enterprise Mobile Data Services 2006–11

90 © Analysys Research Limited 2006 List of figures and tables List of figures and tables [2] Table 1: Market drivers with predictable outcomes Table 2a: Market drivers with unpredictable outcomes Table 2b: Market drivers with unpredictable outcomes Table 2c: Market drivers with unpredictable outcomes Table 3: Summary of impact versus uncertainty for market drivers of enterprise mobile data services Table 4:Summary of market outcomes – total retail spend, 2011 Table 5a:Dominant themes to be addressed within strategic options Table 5b:Dominant themes to be addressed within strategic options Scenarios for Enterprise Mobile Data Services 2006–11

91 © Analysys Research Limited 2006 Document map Document map: About Analysys reports and servicesScenarios for Enterprise Mobile Data Services 2006–11 Scenario implications for players Uncertainties and scenario structure About Analysys reports and services Actions List of figures and tables Executive summary Introduction Scenario planning: creating the scenario scripts Scenario planning: modelling the market value by scenario The benefits of scenario planning Author, copyright and glossary Scenario planning: mapping drivers of change Scenario planning: defining the scenarios Scenario planning: specifying the event timeline

92 © Analysys Research Limited 2006 Reports from Analysys Research About Analysys reports and services Analysys Research’s reports are designed to keep you up to date with industry developments and how they affect players in the telecoms value chain – from fixed and mobile network operators, to software and equipment vendors, and content providers and distributors. Our reports will help you: explore the factors that are driving market evolution understand how industry trends will affect your business define and evaluate your strategic options using decision frameworks and scenarios identify where opportunities lie for future growth find out which players are being successful and why. Scenarios for Enterprise Mobile Data Services 2006–11 Our publication programme offers over 20 reports a year, covering all the key issues affecting the telecoms industry and the latest hot topics. Recent reports have provided expert analysis of topics such as fixed–mobile substitution and convergence, voice over IP, enterprise voice, carrier migration to VoIP, broadband home entertainment, telco product portfolios, emerging wireless technologies, IMS, MVNOs and mobile content services. Each report is accompanied by an Excel spreadsheet containing forecasts and other key data discussed in the report, presented in an easy-to-use format. All reports are offered with Analyst Support, allowing you direct consultation with the author. Shop online at http://research.analysys.com/store or, for information about our report subscription packages, contact our Sales and Customer Service team on +44 (0)1223 460600 or email research@analysys.com.

93 © Analysys Research Limited 2006 Analysys Research’s online market intelligence services help you keep track of the latest developments in major telecoms markets worldwide. All our services are regularly updated and include a sophisticated range of interactive search, benchmarking and download tools. Analysys Research Billing and OSS Markets includes a searchable contracts database, trends papers providing insight into the latest issues in billing and OSS, profiles of both leading and up-and-coming vendors worldwide, and forecasts for the billing and OSS market in Western Europe. World Telecoms Marketplace is a leading source of company and contact information, covering all major sectors of the telecoms industry worldwide. Its thousands of records show data on company activities and products, key financial and operating data, and contact details for senior staff. Market intelligence services from Analysys Research About Analysys reports and services Analysys Research Fixed Networks and Services provides detailed analysis of all the major fixed network operators and ISPs in Europe, country reports for 30 European markets, detailed forecasts for key country markets, expert commentary on industry trends, and a dedicated broadband area covering penetration and market share of operators and technologies and broadband pricing. Analysys Research Mobile Networks and Services provides insight into the strategies and activities of key players worldwide, detailed country reports for leading mobile markets, 3G status reports, country market forecasts and analysis of industry trends. Our Analyst Support package, which allows you direct consultation with our telecoms experts, is an ideal complement to your chosen market intelligence service. For more information on our services or a guided demonstration, please contact our Sales and Customer Service team on +44 (0)1223 460600, email us on research@analysys.com or visit our Web site at http://research.analysys.com. Scenarios for Enterprise Mobile Data Services 2006–11

94 © Analysys Research Limited 2006 Custom Research from Analysys Research When you cannot track down the specific information you need, a call to Analysys’s Custom Research team should be your next step. We provide research and analysis to expand on our published reports or database services and conduct customised projects tailored to your needs covering the entire information value chain. For further information about Analysys Research’s Custom Research services, call +44 (0)1223 460600, email research@analysys.com or visit the Analysys Research Web site at http://research.analysys.com. Bespoke country profiling Expert survey and interview work Market sizing and forecasting Structured analysis of service markets Analyst support News and event analysis Bespoke company profiling Large-scale primary researchData and information collection Deeper, broader analysis; increased distillation Data Structured information Analysis Insight About Analysys reports and servicesScenarios for Enterprise Mobile Data Services 2006–11

95 © Analysys Research Limited 2006 About Analysys reports and servicesScenarios for Enterprise Mobile Data Services 2006–11 Analysys Consulting is a leading international telecoms and digital media consultancy. We draw on our unparalleled industry experience to deliver results that enable our clients to compete and grow in these markets, as well as exploit new opportunities. Our experience, influence and unrivalled knowledge base are recognised globally – which is why we have been involved in some of the world’s largest telecoms projects and in transactions worth billions of dollars. For more than 20 years, we have helped shape the telecoms industry through our extensive work on policy, regulation and finance. We have worked with most of the sector’s leading players, often at board level, to: w determine strategy w advise on M&A activity w optimise tariffing of new and existing services w identify and launch new business ventures w improve profitability and cashflow through streamlining key operational processes. Analysys Consulting services include: w strategy and marketing w scenario planning and economic modelling w due diligence w licence awards w mergers and acquisitions w regulation w interconnect w spectrum pricing w STEM (Strategic Telecoms Evaluation Model). For more information please contact: Europe/Middle East/Africa (head office): +44 (0)1223 460600; enquiries@analysys.com. The Americas (regional headquarters): +1 202 331 3080, enquiriesamerica@analysys.com. Asia–Pacific (regional headquarters): +65 6866 3203, enquiriesasia@analysys.com. Analysys Consulting

Scenarios for Enterprise Mobile Data Services 2006–11 Margaret Hopkins.

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Scenarios for Enterprise Mobile Data Services 2006–11 Margaret Hopkins.

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