the new oem relationship - · pdf filethe new oem relationship web seminar ... ! ~500...

The New OEM Relationship

Web Seminar

The New OEM Relationship:Winning Business and Technology Strategies

for Equipment Providers

Mark Winther

Group Vice President

Worldwide Telecommunications

IDC

Brough Turner

Senior Vice President Technology

NMS Communications

www.nmscommunications.com

The New OEM Relationship

Web SeminarAbout NMS Communications! Leading provider of systems, system building blocks, and

services for next-generation communications solutions" With a focus on wireless, voice-driven applications, and

packet infrastructure markets

! With a history of creating value for communications solution innovators: equipment suppliers, application developers and service providers based on" NMS-built technologies and services" Strategic relationships with technology partners" Industry-leading supply chain and integration partnerships

www.nmscommunications.com

The New OEM Relationship

Web Seminar

NMS at a Glance

! 20+ years in telecom! Products deployed in 90 countries! 24/7 worldwide technical support

! Solid financial position! ~500 employees

0 210+ in product development0 ~150 in field, support

Product DevelopmentSales & SE supportChannel Partners’ Headquarters

www.idc.com

Bright Spots in a Challenging Communications Market

Mark WintherGroup Vice President

Worldwide Telecommunications

Opportunities for Telecom Industry Suppliers

AgendaAgenda

#Overall carrier spending climate– Declining & changing

#Carrier capex growth sectors– Growth — value-added services revenue– Defense — customer retention– Productivity — operating efficiency

#Value-added Services#Opportunities for industry suppliers

The Current ClimateThe Current Climate

Carrier StrategyAbsolute priority on free cash flow generation– Staff reductions– Asset disposals– Cut capital spending– Cost transformations

Market Factors# Weak economy# Sluggish demand# Competitive pressures# Decelerating mobile

growth# Regulatory standoff in

North America# 3G delays in Europe

Worldwide Carrier Capital Spending Is Down and DecliningWorldwide Carrier Capital Spending Is Down and Declining

#Deferred investments#Portfolio planning,

cross-company investment review

#Getting better value from suppliers

# Improved asset and network utilization

# Improved project management

$157

$195$187

$137$127 $121

23%

26%24%

16%15%

14%

1999 2000 2001 2002 2003 2004

Capex ($B)Capex as % Sales

Carriers are learning to do more with less

Source: IDC Carrier Capital Expenditures Special Report, 2003

Capital Efficiency Trend by RegionCapital Efficiency Trend by Region

0%

5%

10%

15%

20%

25%

30%

1999 2000 2001 2002 2003 2004

U.S. Europe AP Latin

Equal Opportunity Downturn

Source: IDC Carrier Capital Expenditures Special Report, 2003

Carrier Capex BreakdownCarrier Capex Breakdown

Traditional# Legal & regulatory compliance # Meet current business demand# Maintain current operational performance

Transformation# Value-added services revenues — IP, broadband, mobile data# Profit defense — customer retention and churn# Low-cost business processes — operating efficiency/productivity

60% 40%

30% 70%2005

2001

Traditional Transformation

Wireless Carrier Capex by Investment CategoryWireless Carrier Capex by Investment CategoryIn 2005, non-network spending reaches 27% of total capex, compared to 11% in 2002

Non-network

11%

Switching22%

RF Network67%

Non-network27%

Switching23%

RF Network50%

2002 2005

Sophisticated new terminalsAffordable transaction chargingNew applications and services

Simple user interfaces

Sophisticated new terminalsAffordable transaction chargingNew applications and services

Simple user interfaces

Transformation — Value-Added Services Transformation — Value-Added Services

$14$20

$31

$47

$59

2002 2003 2004 2005 2006

Worldwide Broadband Connections (M)Worldwide Broadband Connections (M)European & U.S. Mobile Data Revenues ($B)European & U.S. Mobile Data Revenues ($B)

1 million new broadband connections

every 15 days in 2003

1 million new broadband connections

every 15 days in 2003

#Broadband is booming worldwide#Mobile data is on its way

Source: IDC, 2003

5985

116

151184

2002 2003 2004 2005 2006

Extending the Carrier Value PropositionExtending the Carrier Value Proposition

Telecom Operators Need Applications to Protect and Extend Their Position in the Value Chain

NetworkApplicationApplication

ApplicationApplication

ApplicationApplication

Content Providers Telecom EquipmentSuppliers

Terminal Vendors

Leverage Operator’s central position in communication

> To be the multimedia service aggregator> To offer key multimedia services

Transformation — Mobile DataTransformation — Mobile Data

Sprint PCS Vision# Introduced August 2002# Data speeds and device capabilities are highly differentiated# A source for sustaining revenue growth:

– Digital pictures– Multimedia messaging– PCS Vision service is attracting high usage, high value customers– Estimated 750,000 Vision customers, adding 125,000 per month

# To date, voice MRC is well above overall average– All but low-end handsets will be Vision capable in 2003

J-Phone —Total ARPU and Data ARPU RatioJ-Phone —Total ARPU and Data ARPU Ratio

6.8%9.9%

14.6% 15.5%

19.5%

0

2000

4000

6000

8000

FY 001H

FY 002H

FY 011H

FY 012H

FY 021H

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

ARPU

Data as % ofRevenue

Expected Decline in Voice Revenue Partially Offset by Growth of Data

Source: Japan Telecom, 2002

Yen

# 2 Operator in Japan13 million subscribers7 million Sha-Mail subs

TIM —Value-added Services & ARPUTIM —Value-added Services & ARPU

1.82.1 2.1

2.3 2.3

2.72.5

16

2328

31

2529

35

Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02

VAS ARPUSMS Per Line

•SMS growth is the driver•MMS user cases evolving — P2P, A2P

# 1 operator in Italy25 million subscribers2.1 bil SMS in Q3 0235% Y-O-Y SMS increase

Source: TIM, 2002

7.1%8.5% 8.7% 9.1%

FY 01 H1 02 9 M 02 FY 02

VAS as % ARPU

# 6.2 million M-services enabled TIM customers

# 4 million MMS on TIM in 2002

# 10 content agreements# Dec 2002

– 500,000 MMS charged– 75,000 active users– Usage

• 5 P2P MMS• 10 A2P MMS

Opportunities in a Changing MarketOpportunities in a Changing Market

Solution Power# Revenue-ready solutions build success now# Establish the value of integrated solutions # Prove that products are not solutions

Commercial Flexibility# Outsourcing — launch new services on an

infrastructure that doesn’t cost capital# Shared revenue/shared risk service# Small scale R&D trials — proof-of-concept

What and How Do You Sell to Carriers?

Modular Building Blocks# Support a wider range of integration

possibilities# Enable supplier choices# Quick deployment of new services

SummarySummary

#Carriers continue to reduce spending, but are re-allocating capital toward– Growth– Retention– Productivity

#To do this, carriers need:– Pre-integrated end-to-end solutions– Tools for customization and rapid innovation– Suppliers who support revenue growth,

not just technology

The New OEM RelationshipSM

Winning Strategies for Equipment ProvidersBrough TurnerSenior VP & CTO

Value Added ServicesThe Future for Wireless Operators

! Wireless operators must provide new, advanced services to stay ahead of the curve0Voice, data, video, and multimodal services such as:

! Mobile instant messaging, FriendsFinder! Mobile chat, enterprise field staff services! MyCaller custom ringback tones! SportsMania, photos and rich video

! Equipment suppliers must provide! Pre-integrated end-to-end solutions! Tools for customization and rapid innovation! Support for revenue growth, not just technology

www.nmscommunications.com

Time-to-Market & FlexibilityKey to Competitive Advantage

! Leverage IT and Internet technologies0Large markets with rapidly evolving technology

! Volumes drive cost! Diverse applications drive flexibility

0 IETF decomposed architectures! Standard protocols connect platform elements

(e.g. XML, SIP, RTP on redundant Ethernet)

! Build scalable, highly available telecom services0New flexibility reduces time-to-market for diverse

wireless applications

www.nmscommunications.com

Equipment Perspective Reduced Platform Cost

! Basic components0 PCs, servers and web farm components0 Ethernet and IP components, switches and routers,0 Wide area IP network elements0 Firewall and NAT technology

! Software infrastructure0 Standard operating systems, databases, and tools0 Rich set of open Internet protocols0 Scalable web architectures0 Security and authentication technology

! Responsive working communities! IETF, W3C, …

www.nmscommunications.com

Application Perspective Reduced Development Cost

! Next-generation service creation! User interaction via scripting environments

(VoiceXML, SALT, X+V)! Parley/OSA interfaces for access to Intelligent

Network (IN) services! Web paradigm for distributed applications,

based on HTTP and XML derivatives! Web services allow sharing of distributed

resources

www.nmscommunications.com

Technologies of TomorrowNext Generation Service Creation

! Multimodal applications0Mobile users get the access they want, when they

want it: voice, data, graphics, messaging, video, …

! Presence and location-based services0Key to a wide variety of new value-added services

! Web services for mobile users0Convergence of voice and data compelling for

today’s subscriber landscape

! Wireless video0Advanced messaging, viewing, calling and

conferencing with news and entertainment

www.nmscommunications.com

Application Landscape

www.nmscommunications.com

Location-Based Services# Location & availability alerts

# Cell Broadcast# Directory services# Community LBS

Multimodal Voice and Data Services

# Directory Services# Map Finder

VOICEVOICE DATADATALBSLBS

Voice Services# Voice mail# UM# UC

Data Services# Mobile IM

# SMS, EMS, MMS # Chat, email

# PIM

Web Services for Mobile Users From The Web To Mobile

www.nmscommunications.com

VoiceXML

SOAP

UDDI

SALT

X+V

Web Approach: Content Access

!Access to information!Games, voting!Personal communications

0Presence: IM0Managed communications:

Email, UM

!E-commerce!Configurable interface!Notifications: IM & email

Mobile Approach: Content Access & Delivery!Delivery of information

via text or voice!SMS, MMS alerts!Chat!Presence services:

Mobile IM, Cell Broadcast!Unified messaging!PIM!M-commerce!Multimodal services

Wireless Video

! 3G324M video deployed in Japan today0DoCoMo FOMA service; early handsets; ...

! Viewing video0News, sports, weather, movie clips0Broadcast TV, webcams

! Live handset to handset calls0Video conferencing

! Messaging applications0Video mail, instant messaging, camcorder

www.nmscommunications.com

3G324M Gatewaysand Servers

www.nmscommunications.com

Video mailsystem Desktop

video

Videostreaming

mediaserver

Website

Broadcastvideofeed

H.320 videoconferencing

system

Videophone

3G & partial

legacy 2G

PSTNor

PLMN

PSTN

IP

3G324Mhandsets(64kbps)

PSTN-PSTNvideo

gateway

PSTN-IPvideo

gateway

Videoconferencing

server

PCPC

cPC

IcP

CI

II

Partnering to Deliver Value

! Operators need end-to-end service solutions! Equipment providers have downsized

0Focused on core businesses0Using integration skills to deliver complete service

solutions

! OEM partnerships are key0Leading technology0Broad network experience0Strong supply chain capabilities

www.nmscommunications.com

Doing More with LessConcurrent Collaboration

! The New OEM Relationship0Focus on core competencies; partner in other areas 0Faster time-to-market and lower lifecycle costs

! Separate design teams work on the same project simultaneously0Trusted OEM partner handling outsourced design

and engineering work

! Systems integration model applied to telecom0Concurrent collaboration leads to greater innovation

and more efficient business models for equipment suppliers of all sizes

www.nmscommunications.com

Supply Chain Partnershipsfor Competitive Advantage! Dell & Walmart are touted in business press

0Telecom industry remains relatively backward

! Immense opportunity for equipment vendors0Reduce cash conversion cycles0 Increase profitability0 Improve customer satisfaction0Gain market share

! Requires substantial reengineering0Global partnerships from the components supplier to

the customer’s customer0 Integrated IT systems across vendor partners

www.nmscommunications.com

New Telecom Supply Chain

! Compress cycle times, everywhere! Plan to forecasts — but execute to orders! Optimize information flow through multiple

echelons of supply! Select partners for supply chain capability! Design for supply chain performance! Product quality critical to performance! Measure performance from customers’

perspective

www.nmscommunications.com

Summary

! Keys to competitive advantage0Time-to-market and flexibility0Reducing platform and development costs0Technologies of tomorrow drive next generation

service creation

! The New OEM RelationshipSM

0Partnering delivers value0Concurrent collaboration0Telecom supply chain

www.nmscommunications.com

www.nmscommunications.com

The New OEM Relationship

Web SeminarTo Learn More… Request The OEM Resource Book

! Valuable market strategy and technology resource for equipment providers and telecom operators with featured industry insight by IDC

! Provides critical information on making the best decisions in key strategic areas such as product design, market and business development, outsourcing, alliances and partnerships

! Request your complimentary copy at www.nmscommunications.com

www.nmscommunications.com

The New OEM Relationship

Web Seminar

Please take a moment now to complete our short survey,

while we start the Q & A

www.nmscommunications.com

The New OEM Relationship

Web Seminar

Q&A

www.nmscommunications.com

The New OEM Relationship

Web SeminarFor more information……

! Contact" NMS – Norman Tyrrell norman_tyrrell@nmss.com" NMS – Brough Turner brough_turner@nmss.com" IDC – Mark Winther mwinther@idc.com

! Request a copy of The OEM Resource Book" From concept to deployment…a complete roadmap for

communications equipment providers" Available at www.nmscommunications.com