telecom_Market Assessment by Sutherland Global Services

Market Assessment Market Assessment

www.sutherlandglobal.com 5 November 2010

Forecast Modelfor for APAC Shipments Forecast Model APACSmartphone Smartphone Shipments Client • The client is a leading Smartphone & Tablet Device Manufacturer

Client Ask • Client commissioned SGS to understand the smartphone shipment volumes and install base in APEJ countries (Asia Pacific counties excluding Japan) • Client’s end objective was to arrive at smartphone market share, and forecasted growth of its device in leading Asian countries

Sutherland’s Solution • SGS obtained Q-o-Q shipments of smartphones in nearly 10 APEJ countries • Extensive secondary research was performed to understand historical change in smartphone subscriber base and its growth rate in each country of Asia Pacific

• SGS estimated the client’s share in the overall install base on by considering the overall subscriber base, new sales and replacement sales • Research on smartphone subscriber base of the entire country is performed to support the accuracy of the model and to predict the future market share of the client in the country. • SGS Forecasted client’s future market share for 2011 and onwards based on its 2009 and 2010 shipment market share and clients' product performance in the country

Benefits to the Client • Helped the client to better analyze the market share, handset replacement benchmarks, and install base benchmarks in major countries of Asia Pacific • Helped the client forecast the shipment and install base in the select countries in order to take strategic decisions on product developments, country specific launches, retail and enterprise strategies etc.

www.sutherlandglobal.com 5 November 2010

Asia Pacific (Ex- Japan) is set to become the global hotbed for Smartphone sales Shipment CAGR (2009-2013) 656.4

Smartphone Market (mn units) North America Asia Pacific Middle East / Africa Latin America

Western Europe Eastern Europe Japan

28.7% 490.4

28.6% 351.2

43.1%

255.8 152.1

122.4

46.0%

67.3%

187

19.5% 39.2%

2007A

2008A

2009A

2010A

2011E

2012E

2013E

Source : Morgan Stanley

 The Smartphone market is quickly shifting East. According to Morgan Stanley, APEJ (Asia Pacific Ex Japan) overtook North America, in 2010, to emerge as the largest market for Smartphones  According to Canalysis Research, global shipments of Smartphones hit 101 million at the end of Q1 2011, Asia Pacific was the largest market with a 37% share  Outlook for Smartphone sales in the region remains positive – IDC expects sales to cross the 100 million mark in 2011. According to Frost & Sullivan 54% of mobile devices sold in the region would be a Smartphone in 2015. According to Ovum, the Asia Pacific smartphone market is set to double to 200 million units by 2016, making it one of the most attractive regions for Smartphone manufacturers

www.sutherlandglobal.com 5 November 2010

Client appears well positioned against North American and European counterparts on a key ‘lever’ of success in i.e. PRICING

Pricing

The house is divided on whether the iPhone and similar high-end Smartphones or entry-level Smartphones will drive industry growth as 3G roll-out happens across the region. In our opinion affordability is an extremely important issue in APAC and with mobile ARPUs ranging between $4 and $30, across countries, as compared to $50 in the US. Therefore there is a compelling case for Smartphones below $200. Client’s aggressive product pricing in India and other APAC countries appears appropriate for success

www.sutherlandglobal.com 5 November 2010

India

 World’s 2nd most populous country with 1.1 billion people  2nd largest telecom market with 812 million wireless subscribers representing a wireless penetration of 68%  Smartphone subscriber base is estimated at ~ 11 million users representing 1.3% of mobile subscriber-base  XXX has made significant in-roads and is estimated to have ~10.9% of the Smartphone subscriber base at ~1.2 million users  English remains the dominant business language in India Source : SGS Estimates

Source : SGS Estimates

Source : IDC & Provisional Estimates-SGS

www.sutherlandglobal.com 5 November 2010

South Korea  At the end of 2010, South Korea had 50.7 million mobile subscribers with a penetration of 104%  Had 39.4 million internet users (81% penetration) and 3.9 million Facebook users (8% penetration)  Smartphone subscriber base is estimated at ~ 4 million users representing 7.8% of mobile subscriber-base  XXX is estimated to have 3% of the Smartphone subscriber base at ~0.12 million users  There were a total of 42 million 3G subscribers at the end of 2010 and accounted for 83% of the total mobile population  3G will continue to increase and it is expected that there would be about 60 million subscribers at the end of 2015 (having an approximate penetration of 121%)

Source : SGS Estimates

Source : IDC and SGS Estimates

www.sutherlandglobal.com 5 November 2010

APEJ Smartphone market is dominated by China, South Korea; India to emerge as the fastest growing market APAC Smartphone Unit Sales â&#x20AC;&#x201C; Regional Segmentation

Market Share of APAC Shipment China

India

Thailand Singapore Malaysia Indonesia Australia

Taiwan

Hong Kong

South Korea

2010

30%

11%

13%

2014

37%

20%

www.sutherlandglobal.com 5 November 2010

Sample Snapshots of the forecast model of shipments