Intel confidential — Do Not Forward

Mobility Ecosystem business models and ecosystem in change

Oliver Buschmann

October 22, 2013

Intel confidential

Key ecosystem & business model changes Android

rising

China low-cost

Verticali-zation &UX race

‘Subsidizers’emerging

Device composition

Intel confidential

History of Smartphone ecosystem disruption

3

Disruption Wave 1

Integration

Symbian

Palm Blackberry

Windows

iOS

Android

Disruption Wave 2

Low Cost Modular

Disruption Wave 3?

Intel confidential

Ecosytems verticalize with different Business Monetization

4

SW & Services

OS

Device

Si & Mfg

Devices$145 B

Si Revenue$14 B Revenue

Transaction Revenue

Apps :$ND Revenue

Observed/Company reportedLegend: Supposition Core monetization area

Advertizing~$44B

Apps :~$1B

Apps & Content:

$12B

Applicat.:$27 B

Adv / Search:

$3 B

Hardware

OS$30 B

Consoles, Tablets$13 B

Devices$104B

SP, Tb, Wb:$5B

Media, eCom.~$20 B

Ads, Web Svc:$3 B

Data & Transaction Revenue

Intel confidential

The race for best User Experience

Capability Intel Apple Google Microsoft Samsung Qualcomm

Person

al

Assis

tan

t

Personal Assistant

Nuance GenieIntel PA

SiriNotifications

Google NowWallet

N/A – Bing S-Voice Platform focus

Speech / NLUNuance

HW accel, LPALSiri / Nuance Google Voice

BingTell Me

S-Voice / NuanceHW accel

LPAL

Location Intel LBS, Chipset Maps Maps Maps CSR / Android iZat

Context CSP, Sensor Hub Siri Google Now Context Health sensors Gimbal

Data

Ban

k

Identity FedID, IPT AppleID Google+ ID Microsoft IDSamsung ID,

KNOXSecureMSM

Personal Data DataBankiTunes, iCloud

Passbook

Dashboard, DrivePlay

SkyDrive, BingXbox Gold

AllShare, Content Gimbal

Advertising / Personalization

PersonalizedServices

iAdiTunes

AdSense/Words

PlayBing Ads Gimbal

No P

assw

ord

s Identity FedID, IPT AppleIDGoogle/Google

+ IDMicrosoft ID

Samsung ID, KNOX BYOD

SecureMSM

Password VaultSafeKey

YAPAppleID

iCloud KeychainChromeOpenID

BingWindows Vault

None SecureMSM

Biometrics YAPFP + OTP &

facial expectedAndroid Facial

Picture, SmartCardOTP, AD

FacialSecureMSM,

OTP, NFC

No W

ires

Multi-screenWiDiCCF

AirPlayAirDrop

Miracast, Dial, Chromecast

SmartglassMiracast

AllShareAllJoyn, Skifta

Miracast

Wireless Charging

A4WPExpected

ProprietaryPMA None A4WP, Qi, PMA A4WP

Wireless Docking

Wireless DockWiGig

ThunderboldPC: (Wilocity)Mobile: ~’15

Leadership capable todaySolution in market, not currently leadershipNo solution in market or limited traction/capability2013 UX Ecosystem Landscape

Intel confidential

NDK app share doubled since 2011

KEY DRIVERSNDK APPS ARE GAINING SHARE

100%

0%

Top 100 apps

2014E

100

2013

100

2011

100 • Increasing need for performance e.g. gaming

•Keep up with (vertically optimized) iOS

•Availability of 3rd

party libraries and engines to use with NDK

Source: AppAnnie; LitSearch

NDK

Non NDK

Intel confidential

Multiple ecosystem ingredients required –Example location based services for indoor

Exemplary

11/8/2013

Data

Service/ Application/ SDK/ API

Location stack Ecosystem players

OS platform OSV

SW algorithms for location Si vendors, OSV, others

Si components Si vendors

Maps & PoI Ecosystem players

Map & Point of Interest data OSVs, others

Devices Ecosystem players

•Integration of all HW &SW

•Cal. of device location

Device OEMs

Services, Apps, SDK, API Ecosystem players

• Provision of apps, services

• Creation of context

OSVs, App developers

Calc. of device

location

Context generation & service provision

EnterpriseConsumer

Indoor location value chain:1

5

2

Infrastructure Ecosystem players

Infrastructure element

(e.g. WiFi AP, Cellular BTS)

Infrastructure vendors,

others

Infrastructure location data OSVs, infra, others

3

Location

data

Infrastructure

element

Infrastructure:

Location stack

6

532

1

Wireless Network

Ingredient Value contribution Value flow

SW algorithm

Si component

OS platform

= cloud database

Wireless network Ecosystem players

Mobile network connection Operators

4

6

4

Device

Client

Cloud

Map & PoI

Intel confidential

China Tech Ecosystem Explosion

CTE ENABLER & INHIBITORS

• ~30% lower prices

• Local supply chain

• Domestic test bed & int’l distribution channel esp. Emerging markets

• Local engineering pool

• Turnkey solutions enable short TTM

• Not prioritized for WindowsRT

• Limited sophisticated R&D and innovation power

• Limited IP assets (except Huawei, ZTE)

• No ARM license fee for leading edge

ACCELERATED RAMP

0%

10%

20%

30%

40%

50%

60%

0 1 2 3 4 5 6 7

Share of ww consumption (%)

Smartphone

Feature Phone

Tablet ww TAM

Tablet Android

TAM

Intel confidential

Content service providers Emerging

9

Content Service Providers

with >50% share of tables <250$

Source: eMarketeer, IDC, Intel IMR

Intel confidential

0%

25%

50%

75%

100%

Avg. % purchased through Amazon

Incremental value via Kindle Fire vs. OTT app

INTEL CONFIDENTIAL10

•~2-5x transactional service revenue share

•~3X ‘Prime’ subscription adoption rate

•>$151 more revenue per device within first year

Source: Intel Survey results based on 500 screened respondents

Key economic driver: Own Devices Can Generate 2-5x Incremental Revenue

Amazon service rev. from Kindle Fire

Amazon service rev. from OTT app

Intel confidential

From single devices to device ensembles ecosystem

11

PebbleWatch

BTLE

Recon Jet

Glasses

ICEdotCrash

Detector

WahooHR

Monitor

NikeFuelband

Intel confidential

“Enable mobile ecosystemon Intel Platforms …

Vision

…and provide better experiences”

KNOW ME

FREE ME

LINK ME

EXPRESS ME

IA

ContentISVsChannelsODMs/IDHsOSVsOEMsHW IP

Intel confidential — Do Not Forward

Intel confidential

Abstract

14

The mobile ecosystem has gone through substantial disruptions in the past few years and continues to evolve rapidly.

Starting from Symbian, going to iOS and the fast ramp of Android has created 3 large ecosystems around Google/Android, Microsoft/Windows and Apple/iOS. Triggered by the vast success of the vertical model of combined HW and SW, most players try to verticalize, e.g. Microsoft offering surface or Google buying Motorola and offering Nexus or Google Glass.

Especially with the rise of low-end tablets, we are part of the next disruption, triggered by China Tech players, which create a new ecosystem around low-end products and eventually disrupt also higher tier market segments.

Looking into the future, we will see growth in a new class of business models, where phone, tablet and wearable hardware is no longer seen as a source of profits, but is treated as a distribution channel for digital products and services. Amazon has started a new class of service business model, which is likely to create the 4th large ecosystem.

In this talk, I will walk through those key ecosystem changes and new emerging business models and their implications for the industry and Intel.

Key trends: China CTE, Content subsidies, Android, Verticalization, much morecomplex interaction (function integration); Across OSs (Dual-OS, HTML5, Productivity on Android, …); system/ecosystem thinking (e.g. virtual shopping)

Add Sources: IMR research, Andy, David Crawford,