1. Ref: 18721-486 The total cost of ownership for embedded mobile devices Ian Streule 8 December 2010

2. 2 18721-486 Embedded mobile applications are forecast to grow significantly Diagnostic and control systems Traditional telemetry and M2M systems Connected enterprise and business equipment New connected consumer devices Health monitoring Source: cepro.com, cambridgeconsultants.com …and many, many more applications

3. 3 18721-486 Today’s deployment decisions could create long-term problems Around 90% of the devices currently being deployed are 2G* w 2G module prices are lower Many devices have long lifespans (up to 20 years) A base of 2G devices could constrain the way that operators use their spectrum w especially their ability to re-farm 2G spectrum w decommissioning 2G networks may trigger large costs to replace 2G devices We’ve calculated the total cost of ownership (TCO) for both 2G and 3G devices We’ve assessed the impact of deploying 2G devices on mobile operators’ network strategies * Source: Stakeholder interviews

4. 4 18721-486 Our approach was twofold Interviews with 24 stakeholders 6 mobile operators 5 module designers/developers 4 solution/platform providers 7 suppliers specific to certain vertical sectors 2 retail/consumer players Detailed modelling of TCO and replacement costs TCO: w we modelled the costs by year over the lifetime of the device Replacement costs: w we calculated the costs to replace legacy 2G modules if operators wish to decommission 2G networks

5. 5 18721-486 We have defined a ‘cost stack’ for embedded mobile devices Approvals Components Design Integration manufacturing Distribution and installation Systems and platforms Service connection Network usage Comms module Design and provisioning Network Cost stackSummary Aggregated

6. 6 18721-486 Source: Analysys Mason, 2010 The comms module contributes only a small proportion of the TCO 0 200 400 600 800 1000 Network traffic Design and provisioning Consumer/h-hold Average TCOs for 2G and 3G devices deployed in 2011 (USD) USD as % of TCO 20 6% 23 5% 21 12% 20 2% 25 6% 20 6% 26 13% Comms module

7. 7 18721-486 Average TCOs for 2G and 3G devices deployed in 2011 in the transport sector (USD) Source: Analysys Mason, 2010 Fleet vehicle management systems Private vehicle theft/ecall systems Enforced replacementNetwork traffic Design and provisioningComms module The TCO of 3G modules is almost always lower than for 2G modules 2G 3G 2G 3G 0 500 1,000 1,500 2,000 2,500 3,000

8. 8 18721-486 Today’s device choices could limit mobile operators’ flexibility Replacing legacy 2G modules in order to decommission 2G networks and re-farm 2G spectrum is likely to be costly The opportunity cost of retaining a 2G network and acquiring additional spectrum for 3G or 4G is even higher Cost of replacing 2G modules for typical W. European operator* decommissioning 2G network in 2020 0 50 100 150 200 250 300 USD millions Industry continues to use 2G modules Industry adopts 3G modules for long- service devices * Defined as having 10 million traditional subscribers Source: Analysys Mason, 2010

9. 9 18721-486 Our conclusion … In almost all scenarios 3G embedded mobile devices have a lower TCO than 2G They are also a more future-proofed solution, as: w they lead to mobile operators having more flexibility regarding their network strategies w they are better equipped to meet future demand for embedded mobile applications (e.g. higher throughput, lower latency)

10. 10 18721-486 Ian Streule Ian. Streule@analysysmason.com Analysys Mason Limited St Giles Court, 24 Castle Street Cambridge CB3 0AJ, UK Tel: +44 (0)1223 460600 Fax: +44 (0)1223 460866 www.analysysmason.com Registered in England No. 5177472