telecom_Channel Brand Perception by Sutherland Global Services

Channel Brand Perception Channel Brand Perception

www.sutherlandglobal.com January 11, 2013

Project Background – Smartphones Market Client •• Our client, the telecommunications research desk of of aa leading leading Canada-based Canada-based sell sell side side brokerage, brokerage, sought sought to to introduce introduce differentiation differentiation in its annual annual research research of of the the mobile-handset coverage universe

Client Ask • The The client client wanted to supplement its traditional “management-forecast” “management-forecast” based based research, with live, on-the-ground intelligence and hence sought to commission commission aa global global Smartphone Smartphone channel-check channel-check survey survey

• The The client client was was looking looking for for aa partner partner who who understood understood the the sector sector well well and and could could transcend transcend the the barriers barriers of of language language and and time, time, to to reach reach out out to to carriers carriers across across the the globe, globe, and and generate generate the the intelligence in short-turnaround time

• The The survey survey entailed entailed identifying identifying and and connecting connecting with with key key Smartphone Smartphone stakeholders, stakeholders, within within carriers, carriers, across across the the globe globe and and administering administering aa semi-structured semi-structured questionnaire questionnaire and and analysing analysing results results

• The The client client mandated mandated SGS SGS to to survey survey the the leading leading mobile mobile telecom telecom operators operators across across the the globe globe in in order order to to assess assess the the smartphone smartphone market market on on the the following following issues: issues: • Current Current and and likely likely future trends in the smartphone smartphone market market • Key Key drivers drivers & & inhibitors for adopting adopting particular particular smartphone smartphone • Share Share of of Smartphone Smartphone brands, brands, brands brands seeing seeing high high uptake uptake vs. vs. brands brands witnessing witnessing declining declining sales sales • Operators Operators related related initiatives initiatives to to increase smartphone sales, sales, data data usage, usage, etc. etc.

Sutherland’s Solution •• 50 50 telephonic telephonic surveys surveys were conducted with top level marketing/ sales executives in order to assess the smartphone market. After every interview, the survey data was was collated collated and and compiled compiled to to facilitate facilitate data analysis. analysis. The The data data was was analyzed analyzed using using plain plain cross cross tabulations tabulations to to derive derive graphs/statistical graphs/statistical analysis. analysis. •• The The data data was was analyzed analyzed using plain cross tabulations to derive graphs/statistical analysis. Importantly, the survey unearthed, heaps heaps of of qualitative qualitative insights, insights, which which served served as crucial pointers in assessing Smartphone Smartphone outlook outlook and and forecasting market-share by region •• The The depth depth of of B-2-B B-2-B survey findings has wooed the client’s investor community as this gives the investor community access to on-the-ground intelligence and hence, hence, serves as a pre-cursor to to potential potential stock stock upsides upsides or or downsides downsides

Benefits to the Client • The The complete complete smartphone smartphone dynamics dynamics both both current current and and past past was was available available to to the the client. client. ItIt helped helped the the client client form form an an opinion opinion on on the the leading leading smartphone smartphone brands, brands, how how is is each each of of them them perceived perceived across across different regions & countries, the brands that have increased/ decreased along with reasons, etc.

• Further, Further, the the client client could could forecast forecast smartphone smartphone trends trends across across regions regions based based on on the the supply supply and and demand demand dynamics dynamics inferred inferred from from the the leading leading operators. operators. Finally, Finally, the the analysis analysis was was useful useful to to the the client client to to come come up up with with an an extensive extensive report report with with coverage on leading smartphone brands for each major country

www.sutherlandglobal.com 5 November 2010

Executive Summary Smartphone brands: popularity and growth across geographies Blackberry, followed by Symbian, emerged as the most popular smartphone brands in most of the countries surveyed Blackberry leads with over 30% share in Asia Pac, Africa and Middle East markets with its nearest competitor Symbian lagging by almost 7% to 8% Symbian leads in European and Latin America garnering approximately 30% market share and ahead of Blackberry by approximately 1% and 5%, respectively Overall, Blackberry is distinctly popular for its enterprise offerings while Symbian and Apple lead in residential segment due to their aesthetic appeal and media/entertainment based applications

In terms of Q-o-Q growth, Blackberry is witnessing maximum growth in Asia, Africa and a few Middle East countries while it is facing stiff competition in Europe Blackberry doing exceptionally well in most of the developing countries in Asia; Push Email, Blackberry Messenger features most preferred among the Enterprise users However, as per the European operators, Blackberry customers could easily shift to an I-phone due to its attractive design, touch screen and user-friendly social networking applications

Despite growing at a slow rate, Symbian maintains its global market share due to its huge installed base & high brand awareness; it holds the maximum share in the European smartphone market Few positives for Symbian enabled Nokia phones are its ability to retain one model for a very long time (thereby ensuring good availability of spare parts and after-sales service), variety of models, recent improvement on their operating systems and variety of media, music & gaming applications at OVI store

Given its current medium-to-low base in most markets, I-phone is experiencing high growth rate across two major regions: Asia Pac and Europe Growing significantly in most of the developed countries in Asia Pac but behind Blackberry in terms of market share; the high price of I-Phone is not finding favor in few price sensitive markets from Asia and Latin America Preferred by most of the European countries, I phone is gaining significant QoQ market share in this region

Motorola emerged as the slowest performer; Samsung phones are also not doing well, except their android offerings Motorola and Samsung phones (non Android) have seen a decline in every continent except Europe Other phones facing a decline in sales are LG (Europe) and Sony Ericson (Middle East, Europe)

www.sutherlandglobal.com 5 November 2010

Blackberry leads across Asia Pac, Africa and ME while Symbian has maximum share in Europe and Latin America World Windows 7%

Middle East (N=3)

Blackberry 34%

32% 24%

Africa 31%

Others 9%

24%

21%

20% Android 9%

11% 6%

10%

6% Apple 14%

N=3

Latin America

Symbian 27%

N=6

Asia Pacific

N=47

36%

31% 26%

27%

Europe

16% 10%

30%

16% 29% 7% 16%

N=3

N=18

N=17 Figures are specific to the Telecom Service Providers from the sample and it may not necessarily apply to the overall global share

www.sutherlandglobal.com 5 November 2010

Countries like Hong-Kong and Japan utilizing their 3G network to the fullest 100%

Lusacell Mex Softbank Jpn

3G Network as % of overall network

90%

Docomo

BT UK

CSL Hong Kong

Vodafone Egypt

80%

Vodafone France

EFFICIENT NETWORK UTILIZATION

Mobitel Cmb

70% Movistar Blg 60%

China Telecom

Etisalat UAE Maxis Mal

OI Brazil 50% Euskaltel Spain 40%

Celcom Mal

Globe Ppns

30%

Meditel Morocco Vodacom SA

Orange Israel

Asia Pac

Vodafone Portugal

Europe

Beeline Russia

DiGi Mal

Vodafone Spain 20%

Middle East Africa Latin America

Turkcell 10%

Indosat

Airtel India 0% 0%

10%

20%

30%

2 40%

50%

60%

70%

80%

No 3G Network

Data Subscriber base as % of overall subscriber base  Circled area represents operators that have the potential to increase the network utilization (move towards Quadrant 1) to increase the data

subscriber base and eventually increase Data ARPU

 Similarly, operators in quadrant 2 who already have a significant % of data subscribers would need to upgrade their 3G network to enhance

their revenue potential

 Operators in Quadrant 3 (primarily Asia Pac and some European operators) have typically low data usage and would need to see an increased

uptake of data subscribers to encourage further investments in their 3G networks

 Red dotted cluster represents the countries yet to implement 3G network in their respective countries

www.sutherlandglobal.com 5 November 2010

Blackberry, followed by Symbian, emerged as the most popular smartphones in maximum countries surveyed Smart Phones Market Share

# Respondents indicating preference (from 1 to 5)

Blackberry

34%

Symbian

27%

Apple

14%

Android

Windows

1 indicates the most preferred smart phone and so on..

Countries indicating rank 1 Argentina, Bangladesh, Belgium, Brazil, India, Indonesia, Israel, Netherlands, Nigeria, Pakistan, Portugal, Spain, Sri Lanka & UAE

1 3 1

Algeria, Australia, Belgium, Cambodia, Egypt, France, Malaysia, Mexico, Netherlands, Portugal, Russia, S. Africa, Sweden, Turkey & Ukraine

Belgium, Hong Philippines & UK

Kong,

Italy,

Germany & Netherlands

Pakistan, Portugal & Ukraine

Japan,

Malaysia,

Primarily Asia-Pac operators have indicated Blackberry as their preferred choice of smart phones Symbian has been rated as the preferred smart phone brand by many European operators

N=50

www.sutherlandglobal.com 5 November 2010

Blackberry more popular for its enterprise offerings while Apple leads in residential segment due to its aesthetic appeal Platform

Regions and countries where doing well

 Asia Pac (India, Pak, Indonesia, Bangladesh, SL)

Blackberry

 Africa (Nigeria)  Europe (Spain, Portugal, Belgium, Netherlands)

 Driven by enterprise customers, Blackberry is popular in Latin America because of its fixed price plans with unlimited data usage

 Latin America (Brazil, Argentina)

 Middle East Corporate segment prefers Blackberry due to its Push Email and business travel application features

 Middle East (Israel, UAE)

 Launch of a comprehensive smartphone model, Gemini 8520 at a comparatively low price point has made Blackberry more affordable and hence, resulted in increased smartphone uptake in most of the countries mentioned alongside

 Africa (S. Africa)  Europe (Italy, UK, Turkey)  Latin America (Brazil)  Middle East (Israel, UAE)

Popular brands

Likely future scenario

 Asia Pac market for Blackberry is dominated by enterprise customers and hence, Push e-mail and office applications are more popular  In Europe and Africa apart from e-mail and business communications (BES/ BIS), Blackberry is widely used for social networking and browser based applications

 Asia Pac (Japan, Malaysia, Hong Kong, Philippines)

Apple

What makes these platforms popular?

 Bold 9700  Gemini 8520  Bold 9000  Javelin 8900  Storm 9520

 Driven by brand name, excellent user interface and strong application (particularly multimedia from an entertainment perspective) Apple has been popular across many countries in Asia Pac and Europe  Early launch of advanced features, touch screen, ITunes and safari mail makes i-Phone the most preferred Smartphone in Japan  Attractive graphics and easy to handle OS makes Apple the preferred smart phone after Symbian’s Nokia phone in S. Africa  User friendly browsing as well as preference as fancy product/ status symbol makes it the second most preferred choice in Middle East (first being Blackberry)

 i-Phone

 Blackberry will continue to do well in the business segment and enterprise customer segment primarily because of its unique mailing features

 A perceived status symbol and strong applications coupled with excellent user interface shall ensure Apple’s continued growth within the “high end” consumer segment

www.sutherlandglobal.com 5 November 2010

Operators are willing to promote unlimited data plans followed by value added services

ype of plans operators are looking to promote? Nomenclature: Other Value added services

11 1

Mailing Plans

Social Netowrking

Unlimited Data plans

Denotes number of respondents from Asia Pac Region indicating relevant preference

Denotes number of respondents from Europe Region indicating relevant preference

Denotes number of respondents from Africa Region indicating relevant preference

Denotes number of respondents from Middle East Region indicating relevant preference

Denotes number of respondents from Latin America Region indicating relevant preference

Denotes total respondents (out of 50) indicating particular preference

 Operators believe the preferred usage of the internet over phone is the mainstay of the smartphone market; they give priority to flexible data

services than any other application specific plans 

65% of the total global responses have indicated their willingness to promote unlimited data plans



Most of the operators have different and exclusive data plans for residential and enterprise customers



Consumers are downloading more applications, media and games; unlimited downloading preferred across regions



Major chunk of the operators are offering “Bundling Packages” (Handsets at reduced rates but for a minimum contract duration & monthly rental)

 Unlimited mailing plans are offered more by operators having large enterprise subscriber base ratio 

Few plans include- Unlimited e-mail and instant messaging features

 Other value added services include Internet TV, navigation plans, discounted application download  Social networking plans are getting common across geographies and being promoted by operators in these regions 

Few operators are providing exclusive plans such as “pay per site” (unlimited access to a particular social networking website)

www.sutherlandglobal.com 5 November 2010

Country Snapshot- Smartphones

Country

Subscribers Companies mn (Data covered Subscribers)

Fast moving Smartphones (Descending Order) Popular OS

Fastest growing OS (%age)

Fast moving Brands/models

Country specific observations

Philippines

 Globe Telecom

 25 (1)

 Apple  Blackberry (200%)  Blackberry  Apple (30%)  Android

 i-Phone  Curve 8520, Bold 9700  Samsung

 Driven by popular multimedia applications, Apple is the most preferred smart phone; Blackberry is rapidly gaining market share and operators are keen to offer Blackberry as pre paid product  Blackberry could appeal to business consumers by adding more dashboard solutions such as content delivery solution and data back up solution

Sri Lanka

 Dialog Telecom

 7 (0.08)

 Blackberry  Blackberry  Apple  Windows

 Gemini 8520, Bold 9000  i-Phone

 Blackberry remains the dominant player with approx. 98% of Smartphone market share  The market is dominated (90%) by corporate segment who prefer Blackberry as it gives them flexibility to work from home or the field  i-Phone has niche market (high-end), typically for people who travel abroad a lot (using i-Phone as a status symbol)

Egypt

 Vodafone  26 (4.5) Egypt

 Symbian  Blackberry (20%)  Blackberry

 Nokia E Series  Bold 9700, Bold 9000

 Blackberry has been gaining market share (unlike Nokia which penetrated the market before 11 years) primarily due to increasing demand particularly from MNC and entrepreneurs  Apart from PUSH Email and Blackberry messenger, travel applications such as Flight time indicators and fare list are also attracting the corporate segment in Egypt

South Africa

 Cell C  6.9 (0.2)  MTN  17.5  Vodacom  26.5 (6.7)

 Symbian  Blackberry (60%)  Blackberry  Apple (16%)  Apple  Android (10%)

 Nokia  Bold 9700, 8520  i-Phone

 Nokia Smartphones are the most popular and perceived as “tried and tested” phone in SA  However, Blackberry has been gaining acceptance very quickly within the corporate segment who use it for Email and internet  Operators across the country are looking to promote Blackberry phones bundled with unlimited data plans

Algeria

 Djezzy

 Symbian  Windows

 Nokia  Samsung

 15 (0.10)

 Symbian  Windows

 Nokia is very strong in Algeria and has the maximum share in both the installed base as well as new sales  Blackberry is very segmented, only business customers use it; Sales of iPhone is low in the country with no official launch of i-Phone in the country  Carriers feel that there is a need to launch some industry specific exclusive applications Figures and Details are specific to the Telecom Service Providers from the sample and it may not necessarily apply to the overall picture of the country

www.sutherlandglobal.com 5 November 2010

Country wise popularity of the platforms Region

Africa

Country

Company

Algeria

Orascom telecom (Djezzy)

Egypt

Vodafone Egypt

Nigeria

Globacom

South Africa

Apple

Blackberry

Android

Symbian

Windows

Others

Cell C MTN Vodacom

Australia

Optus

Bangladesh

Grameenphone

Cambodia

Mobitel

China

China Telecom

Hong Kong

CSL Hong Kong Aircel India

India

Idea Cellular Tata Teleservices

Indonesia Asia Pac

Japan

Indosat NTT DoCoMo Softbank Mobile Celcom

Malaysia

DiGi Maxis Telenor Pakistan

Pakistan

Ufone Warid Telecom

Middle East

Philippines

Globe Telecom

SriLanka

Dialog Telekom

Israel

Orange - Partner

Morocco

Meditel

UAE

Etisalat

Popularity Rank 1 Popularity Rank 2 Popularity Rank 3

Blackberry and Symbian emerged as the leading smartphone platforms across Asia, Africa and Middle East primarily due to wider variety of handsets, easy availability in the open market and the lower starting price range of handsets Android is still maintaining its market in these regions and its being given priority in a couple of developed markets like Japan and Hong Kong