1. Bakelit Presentation at Kista 010530 Bakelit Forecast & Analysis

2. Bakelit The object of the project is to increase Europolitan’s knowledge about the strategies of terminal suppliers and to suggest strategies for Europolitan that could secure the company’s need for 3G terminals to complete its own market offering. The project Constraints: The time scope has been set to the early 3G market ending in 2003-2004. Terminals that are being studied are volume products marketed to broad customer segments, not terminals for special professions etc.

3. Agenda Overview of 3G services and applications What services are customers interested in? How can the operator supply the services? What components comprises a terminal? How much will the 3G terminal cost? What types of 3G terminals will there be? Who will supply the terminals? What strategies are the suppliers following? What should the 3G terminal look like – Bakelit dreams! Bakelit

4. Source: BCG proprietary consumer database. E-mail & SMS News, weather & sport Ring tunes & display icons Surfning Financial information Travel information Personalized services Regional information Chat & news groups Games Price comparisons Location based services USA Japan Germany France Sweden 11211 23112 122883 49544 812355 36656 68787 55438 9410129 117121110 71191011 101011512 Service Preferences

5. !! Services and applications must correspond to their promises Success is depending on a numerous of factors, e.g. Geographical market and the nature of the terminals Conclusions

6. Service Ranking Bakelit Source: Bakelit SMS Bank account E-mail Electronic calendar Guidance News & weather Surfing Download/send pictures Music Stock trading Friends position Phtographing Pay-in-store M-shopping Electronic visiting card Text editing File download/upload Ringing tunes Sport Chat Advertising Video Computer games Network gaming Gambling 12345Average

7. Connection time Service Characteristics Bakelit Källa: Bakelit Security No requirementsShort time required Low requirements High requirements Stocks Bank account Positioning Download/send pictures Listen to music Surfing the Internet Unified Messaging Guidance News/weather/sport Ringing tuned

8. Bakelit Service Characteristic 3 2,5 2 1,5 1 0,5 0 NavigationScreenInputMemoryProcessor Most popular Least popular Source: Bakelit

9. ! Bakelit Limited demands on the technical performance of the terminals. Secure the supply of terminals with focus on user’s interface. The services can be launched early. The most popular services require good input/output solutions. The least popular services demands more memory and processor capacity Conclusions of Market Research The most popular services have relative low demands on bandwidth !

10. Bakelit 3.Price discrimination 1.Demographical groups Preferences similar despite different sex or employment. Small differences due to age. 2.Services connected to types of terminals Grouping services after their way of usage has not given any useful information. Segment customers after their ability and willingness to pay Business Class Economy Class Some age segmentation Customer Segments

11. Bakelit Service UM News/weather/sport Bank account Guidance Stock trading Surfing YachtPosition Pollenrapporten DeveloperWay of cooperation Europolitan Europolitan-TT Europolitan-banks Europolitan-Gula sidorna Europolitan-Reuters Europolitan-ISP mobilePosition Palynologiska lab. Inhouse development Needs content provider Must work with Swedish banks Needs content provider Agreement Certificate, no mass market Guaranteed services Internet connectivity Specialized services Service Development

12. Accept Categories Specialized services Friends position in ages 15-20 Guidance in ages 51- Early acceptors Inventors Early majority Late majority Late comers Scepticals Guaranteed services All demographic groups are interested of these services Internet connectivity Surfing in ages 21-30 Sending pictures in ages 51-60 Music and ringing tunes in ages 15-20 Bakelit Target market: Excisting segment of mobile service users Source: Bakelit (2001)

13. Bakelit -create a need the user wasn’t aware of SMS lunched quietly, but grew to a huge ”need” Alcatel: step-by-step development to accustom users to new services Case study: 1800 1600 1400 1200 1000 800 600 400 200 0 94 95 96 97 98 99 00 01 Real expense Will to pay Behavioural Patterns must be Changed

14. Components Processor –Risc CPU –DSP Memory –SRAM –DRAM –Flash Battery Radio interface –WCDMA –CDMA2000 –Bluetooth –GSM –WLAN Operating system –Pocket PC –Epoc –Palm OS Bakelit

15. Components continued Display –TFT LCD –Microdisplays I/O interface –Serial –Irda –Pc card –Docking stations User interface –Touch screen –Voice commands, text to speech –Keyboard –Writing recognition –Audio in/out –Video, static pictures Bakelit

16. ! Technical capabilities not a bottleneck! Problems: - user experience - mass production - software Bakelit Conclusions – Technology Inside the Terminals

17. Bakelit Mid-segment with app. 32MB RAM, 32MB ROM, color display 240x320. Lowest prices 6000 kr. Smartphones with small memory. Lowest prices just below 6000 kr. Small overlap = price slightly below sum of both products PDA, kr Smartphone, kr Sum Excl VAT 25 % All-in-one discount Bluetooth premium Index price Price fall / quarter Lowest consumer price, feb. 2001 Lowest margin Supplier price 5400 5310 10710 8568 10 % 500 8211 5 % 10 % 6000 5900 Display Radio RAM, MB ROM, MB Card slot Ports 240 x 320 UMTS, GSM 900/1800, Bluetooth 32 CF USB Example configuration integrated PDA/telephone Assumption for Price Estimate

18. Bakelit - Supplier’s price for small volumes excl.VAT - 1, Estimates: 1, Lars Lundberg, TietoEnator 2, Ovum (Maj 1999) – here: Smartphone= telephone with microbrowser. 3, Trium Mondo 4, Sagem WA3050 5, Motorola Accompli08 (Price information in Connect magazine) 2, Smartphone 2, PDA3, 4, 5, Price Estimate

19. Bakelit FashionSimplicitySave timeEntertainment Sources :Finanstidningen 20010327 www.motorola.com Vision 20010222 Bakelit article search. Motorola – Need Segments

20. Communicator - Business segment - Office applications Media phone - Mobile Internet - Third party applications Imaging phone - Person-to-person - Inspiring user interface Bakelit Sources.:Calling the Next Generation, White Paper from Nokia www.nokia.com Bakelit article search Nokia - Function Segments

21. Bakelit Sources.:www.siemens.be/umts/press1.htm www.siemens.com/umts Bakelit article search Interviews at CeBit, Hannover 2001 ProfessionalAwareActive Siemens - Person Segments

22. Bakelit Alcatel Ericsson Kyocera Matsushita Mitsubishi Motorola NEC Nokia Philips Sagem Samsung Sharp Siemens Sony Toshiba 1 Office 2 Image 3 Fun 4 Compact 5 Fashion 6 Internet 7 Simplicity 8 Robustness 9 Entertainment Sources: Official home pages, Bakelit article search, Interviews at CeBit, Hannover 2001 Focus Interest shown through prototypes or existing terminals Suppliers’ Segments

23. Bakelit 3G GPRS Samsung Mitsubishi Matsushita NEC Toshiba Motorola Ericsson Siemens Alcatel Sagem Nokia Philips Sharp Kyocera Sony Fujitsu Market launch 2001200220042003 Market Launch Sources: Official home pages, Bakelit article search, Interviews at CeBit, Hannover 2001

24. Bakelit * M = Microsoft, P = Palm, S = Symbian Bakelit Ranking

25. Bakelit Bakelit Top 5 Källa: Bakelit (2001)

26. Hardware Marketing MotorolaAlcatelEricssonNECNokiaNortelPanasonicSONYSAGEMSamsungSharpSONYTelitalUbineticsLucentOmnitelCasioVeriSignMannesmannC TechTivoliCOM OneHPIntelAT&TSymbianMcHughPhilipsMICPsionDialogic Caldera sys.Kerridge TT SoftSAPSilicon Grap.CognicaseSecurity dyn.TalityMarubeniPicturetelMitsubishiPioneerTiVoToshibaMcHughLogility Natural Microsystem AvantGoOrange RF Microdevices SolectronDigital ViewSymbol Tech. Companycare Telstra France Telecom Sprint PCS Operators Software & applications Content & services AFPEMI MusicUIEvolutionMasterCardSegaAccentureYahoo!NuvomediaCervervisionORBCOMMRealNetworksMacroMediaNOBIBMSUNiPlanetSybase ConversayORACLE Anite Telecoms Interstar Tech. LutrisTeamMicrosoftHPAppleCorelWebmethodsMicrocellTIM British Telecom M1 Source: Bakelit (2001) Bakelit Manufacturing FlextronicsSolectronNippon Suppliers’ Alliances Terminal suppliers

27. Terminal suppliers Bakelit Hardware Marketing Operators Software & applications Content & services Manufacturing

28. Bakelit Strategies – a Few Conclusions Asian and European suppliers cooperating Established suppliers are most important in early 3G market Established suppliers create alliances mostly within software & applications Waiting for working infrastructure Sources: Bakelit (2001)

29. Bakelit Europolitan – Opportunities to Cooperate with Terminal Suppliers Bakelit ideas Act early and tell suppliers what types of terminals will be subsidized Support open platforms and traffic drivers, for example cameras Avoid the risk of being locked to certain suppliers. Don’t order specified terminals. Supplier Early supply Volumes Open platforms Traffic drivers Support for services Operator Customer information Guaranteed subsidizing Network orders Support for functionality

30. Bakelit Suppliers Motorola Mitsubishi Ericsson Nokia Services – service suppliers VoiceEuropolitan UMEuropolitan Bank servicesEurop/banks SurfingEuropolitan ISP NewsEurop/TT GuidanceEurop/Gula Sidorna Office extensionIndependent Prices and subscriptions Business Don’t subsidize the price but offer office extension services. Economy Prize subsidize and long subscription lock-in. Description B/W display Touch-screen Pen-input Turn display Bluetooth Dual band Software Open platform E-mail Microbrowser Calendar Writing recognition Vision Terminal - Mainopolitan

31. Bakelit Suppliers Motorola Samsung Services – service suppliers VoiceEuropolitan UMEuropolitan Bank servicesEurop/banks InternetEuropolitan ISP NewsEurop/TT GuidanceEurop/Gula Sidorna ”Photoloft”Europolitan Office extensionIndependent Prices and subscription Extensive price subsidizes to make users use electronic postcard services and other imaging services. Drives traffic with camera and color display. Description Color display Touch-screen Pen-input Camera Memory card MP3 Turn display Bluetooth Dual band Software Open platform E-mail Microbrowser Calendar Writing recognition MP3-player Image editing Vision Terminal- Pictopolitan

32. Bakelit Suppliers Ericsson Motorola Services – service suppliers VoiceEuropolitan UMEuropolitan Prices and subscription Could be interesting to subsidize since accessories will drive traffic. Description B/W display Bluetooth Digit buttons Software Accessories handling E-mail Telephone book Voice commands Vision Terminal- Connectopolitan

33. Bakelit Suppliers Nokia Mitsubishi Samsung Services – service suppliers VoiceEuropolitan UMEuropolitan Prices and subscriptions Not a traffic driver – no subsidizing. Description B/W display Digit buttons FM-radio MP3 Software E-mail Telephone book Voice commands MP3-player Vision Terminal- Trendopolitan