d6.3 business plan task 6.3 task 6.3 ericsson. purpose purpose: demonstrate the adamantium system...

D6.3 Business PlanD6.3 Business PlanTask 6.3Task 6.3

Ericsson

Purpose

PURPOSE: Demonstrate the ADAMANTIUM system capabilities for project’s results commercial exploitation.

AUDIENCE: This deliverable is addressed to people involved in commercialization of ADAMANTIUM results, especially financial staff that will use this document as a reference source for describing exploitation and financial scenarios.

SCOPE: This document develops, proposes and presents the business plan aspects of ADAMANTIUM project, considering the results of the project as well as the market evolution.

Content

Introduction ADAMANTIUM Market Value Chain Possible Business Models SWOT STOF Financial Analysis Exploitation Plans

From IMS… to ADAMANTIUM

IMS entails novel business opportunities… IPTV VoIP video call

... But it fails due to the lack of user-centric management mechanisms

ADAMANTIUM creates enhanced business models

ADAMANTIUM proposes an IMS-compatible Multimedia Content Management System (MCMS) focused on performing dynamic cross layer adaptations for optimization of the user

experience in terms of perceptual quality for media services

VoIP – Market DescriptionVoIP Revenues

Forecast by user type

VoIP Revenues Forecast by region

Mobile VoIP – Market Description

Total VoIP 3G active users base, 2006-2012

Consumers statements on mobile VoIP

IPTV – Market Description

IPTV Spend in Western Europe by subscription type

Global IPTV Subscribers per region (Yankee)

Value Chain

VoIP

IPTV

Application Service Provider

Network Provider

EndUser

Content Provider

Service Provider

Network Operator

EndUser

User-Centric and Network effects BM

QoE (Perceived QoS)

Network QoS

NetworkManagement

Network Effects Business Model

The network effects business model involves selling a product or service and the respective profit increases when other customers also use the same product or service.

Typical examples are ADAMANTIUM services (i.e. VoIP, at least, 2 people required)

Network Effects BMin ADAMANTIUM

The main role affected by ADAMATIUM is the mobile network operator

With improved PQoS VoIP/IPTV service, more users will access the Network operator’s mobile network

The Network Operator will get more profit

… BUT ADAMANTIUM model goes beyond the typical Network Effects model…

The subscription business model Customer pays a subscription to have access to the

product / service ADAMANTIUM: increase of operator’s subscribers’

figures by offering innovative and quality aware services

The loyalty business model Used in strategic management to increase the

customer retention) ADAMANTIUM: quality of offered services lead to

customer satisfaction, customer retention, and profitability

Proposed enhanced BMby ADAMANTIUM

ADAMANTIUM BM proposed for mobile operators exhibits dominant enhancements and characteristics of

The razor and blades business model Offering a product at a low price to generate a continual market for

another, complementary, item or service The operator can decide not to charge for ADAMANTIUM improved quality if

their offered services (VoIP and IPTV) generate a market for complementary related services (e.g., advertising, live events broadcasting, VoD)

ADAMANTIUM BMAnalysis and Impact

The newly formed ADAMANTIUM business model also creates a new Marketing Mix for the mobile operators

Product

An intelligent and PQoS-aware service Place/Distribution

Mobile network operators have already a well-established sales network. No additional changes are required in the existing distribution network and used techniques

Price

Pricing models to be adopted by the market exploitation of ADAMANTIUM proposal should contribute towards balancing prices and demand

Promotion

Additional ways of promotion might be chosen and participation in several events of commercial interest as conferences, meetings, exhibitions

Mobile VoIP SWOTSTRENGTHS

Mobile VoIP provides the advantage of portabilityMobile communication at lower costs New business models are developed, where communication is the core element of every business activity and functionNew market opportunities facilitated and reinforced by a continuous stream of accurate and valuable information at lower cost and at a mobile formatMobile VoIP comes with a host of advanced communication features at no extra costMobile internet is speeding up and consumption of content along with VoIP services is growing due to enhanced technologyFlat-rate pricing packages are attractive in an increasingly complex multimedia environment combined with the possibility of a single and/or fixed bill per month for telecommunicationsMobile VoIP helps service providers achieve economies of scale by reducing their investment, capital and operating costs

WEAKNESSESMobile Internet along with services such as VoIP is not yet mass marketLack of integrated services and policiesTime lag due to standardization processes and continuous evolution of IMS platformsInteroperability issues between Internet services and PSTN/cellular networks Internet mobile marketing is not developed in a degree that will boost a usage need for the provided servicesHigh cost of mobile devices capable of offering mobile internet and VoIPIssues of QoS and ReliabilityMobile VoIP services provided by operators without their own network/infrastructure are provided on a best effort basis onlyDependence of Mobile VoIP availability of service upon factors such as strength of mobile signal reception, roaming policies, mobile internet services and third party service providers

OPPORTUNITIESNew revenue opportunities and greater choice of service and communication featuresAdvancing the already developed Internet Model and Mobile VoIP communication by establishing new standardsInteroperability and combination of cellular and WLANIntegration of various other value added services offered by upcoming technological advances in the Mobile Internet and VoIP frameworkEnhanced innovative potential through convergence of mobile services, internet, VoIP and technology

THREATSResistance by incumbents and established operators, which see Mobile VoIP as a threat to their established PSTN/Mobile revenuesRegulatory uncertainty and lack of commonly accepted legislative frameworkVoIP spam or SPIT (Spam over Internet Telephony)Mobile Phone fraud known as VishingChallenger actors such as virtual VoIP operators and third party client providersLack of a consistent experience of service and quality across different providersConsumers’ lack of trust mainly because of insufficient protection of their communication content

ADAMANTIUM on Mobile VoIP SWOT

Adamantium add-ons to STRENGTHSExisting business models add quality aspects in their value chain and become QoS and PQoS aware Higher consumer satisfaction as a result of improved quality of services Innovative services (in which higher quality is achieved) attract new consumers and increase levels of loyalty among existing onesAchieved economies of scale for mobile operators are reinforced by innovative technologiesNew services and pricing packages are offered by mobile operators and market competition becomes healthierOptimized quality of experience and service

Adamantium improvements to WEAKNESSESMajor issues of QoS and Reliability are overcomeImproved QoS form a new basis for Internet Mobile marketing developmentWell established mobile operators are becoming interested in offering quality improved and reliable mobile VoIP services Improved mobile VoIP services offered by more operators will increase demand for VoIP-enabled mobile devices leading the high cost of these devices to fall

Adamantium add-ons to OPPORTUNITIESNew revenue opportunities and greater choice of service based on quality and reliabilityNew QoS standards are setNew market dynamics and potential for the creation of new marketing processesOpportunities for increased market penetration and new market targets/segmentsModification of the 4Ps (Product, Price, Promotion, Place) of the offered services leads to new market opportunitiesFlexibility of pricing packages leads to increased competition which benefits the end consumer

ADAMANTIUM improvements to THREATSEstablished operators will view Mobile VoIP as an opportunity to satisfy market demand for a new, reliable and lower cost voice communication serviceNew improved quality standards will create a consistent base for experience of service and quality across different mobile operators Increase in consumers trust related to quality and reliability of VoIP service over mobile

Mobile IPTV SWOTSTRENGTHS

Innovative mobile service that reinforces mobile operator market positionConvenience of live streaming and/or VoD when on the moveProvision of a service even at places where landlines (communication, power) do not existKey Market Players involved are ready to exploit new mobile services / productsMobile users are becoming more and more familiar with audio visual services and ready to pay for content and QoSMarket Players in the mobile business framework are willing to provide value to services and customersNew services lead to the creation of new pricing models which drive the content consumption increaseIncrease in the sales of mobile devices with Internet/3G capabilityMobile IPTV attracts new consumers and increase levels of loyaltyFilling idle time while on move

WEAKNESSESService too complex for some mobile users to use or configureCost for using services such as mobile IPTV is still highHigh cost of mobile devices supporting mobile IPTVNot satisfactory QoS for mobile IPTVMobile device characteristics (size, screen, analysis, keypad) and drawbacksHigh dependence on quality of mobile network and reception conditions per locationRecession/debt has slowed investment and has influenced consumers spending and habitsThe fragmented market of mobile services, devices and accessoriesQuality of delivery often gets squeezed by Content and Service prioritiesNon concrete and standardized mobile IPTV business modelsUsability of services, content and applications still an issueStandards issues still not fully addressedLimited access to investment funds for such innovative services

OPPORTUNITIESNew business models will drive growth in mobile communication and IPTV marketsInvestments to new innovative services (eg mobile IPTV)Open market for new entries and players willing to use edge techMobile multimedia content (Live, VoD) becomes a demand from consumersTechnology/industry/quality push in placeMore sophisticated mobile devices enabling content playingDiversification opportunity for device manufacturersStandardization activities and security issues are promotedMobile entertainment features are becoming the future of communicationsFacilitating customers access to contentConsumption of content is growing

THREATSNew business roles and models may restrict some actors or affect existing market dynamicsContent owners (records / media firms) are skeptical in adopting new business modelsAbuse of service and contentSecurity and protection issues are slowing market exploitationConsumers’ actual needs which narrow down the type/variety of the content actually demanded (eg high interest only for live sport events, news) drives down operators’ interest for further investment in such technologiesHigh dependence on mobile operators’ services/technology/ infrastructure and features of mobile devicesUniversal Service is still not a reality for a majority of consumers

ADAMANTIUM on Mobile IPTV SWOT

Adamantium add-ons to STRENGTHSExisting mobile IPTV business models add quality aspects in their value chain and offered service becoming QoS and PQoS awareQoS and PQoS aware mobile IPTV service helps mobile operators to achieve economies of scaleHigher consumer satisfaction as a result of improved QoSOptimized quality of experience and serviceMore marketers, retailers and publishers are recognizing need for mobile presence and more sophisticated mobile devicesPromoting the increase in sales of mobile devices with IPTV enabled featuresImproving financial ratios like ROI for mobile operatorsEnhanced personal viewing experience

Adamantium improvements to WEAKNESSESMajor issues of QoS for mobile IPTV are overcomeImproved QoS form a new basis for Mobile multimedia marketingImproved mobile IPTV services offered by more operators will increase demand for IPTV-enabled mobile devices leading the high cost of these devices to fallMobile IPTV service demand increases and existing business models are becoming more concrete and standardized

Adamantium add-ons to OPPORTUNITIESNew rich content along with QoS will increase consumer’s trust-satisfaction their mobile operatorsImproved entertainment methods lead to new business models and revenuesMobile operators become interested in offering quality improved mobile IPTV services leading to investment increasesNew revenue opportunities and greater choice of service based on qualityIncreased customer recognition of valueFlexibility of pricing packages leads to increased competition which is in favor to the end consumerImproved financial indicators/ratios will lead to more investment initiativesReliability and QoS standards are setNew potential for mobile marketing and advertising with high and reliable QoS

ADAMANTIUM improvements to THREATSIncrease in consumers trust related to quality and reliability of IPTV service over mobile will raise demand for such services and the need for convergence of services, technology, infrastructure and products among mobile operators, content providers and mobile devices manufactures will be achievedEstablished mobile operators will view Mobile IPTV as an opportunity to invest and satisfy market demand for a new, reliable and lower cost type of multimedia entertainment while user being on moveImproved standards and services will create a consistent base for experience of service and quality across different mobile operators.

ADAMANTIUM BM Evaluation

Evaluation of proposed Business Model STOF framework with four domains

Service Technology Organizational Financial

Each domain Interacts with others Is affected by external factors

market dynamics, technological advancements, regulatory framework

STOF Analysis

Analysis of ADAMANTIUM Business Model based on STOF model and dynamics

Externally (influences by external forces) Internally (four domains analysis) Spotting

profitable parameters in each internal domain under positive external conditions, then the evaluation is proved to be successful, since all the parties will benefit from the specific business model

STOF: External Analysis

Technological drivers for ADAMANTIUM VoIP and IPTV Innovative mobile communication advances and technologically

enhanced mobile devices (Positive) An optimization in network resources allocation. (Positive) An increased ability to process user feedback via ADAMANTIUM

developed. (Positive) Market-related drivers and conditions

Growing usage of mobile services (Positive) Growing market demand for mobile VoIP and IPTV (Positive) Convergence of voice, internet, mobile services, information and TV

industry leads to lower prices and joint-ventures, reassuring viability of various players (Positive)

Regulatory conditions Regulatory climate in telecom sector has changed. Distinctive

regulations between different services platforms are gradually being removed, helping the creation of synergies. (Positive)

STOF: Internal Analysis

Service Domain Many mobile operators position VoIP & IPTV as services to be highly

profitable in next years Mobile operators expect to take advantage of their expertise and of

consumer loyalty in mobile market Bundling these services with other already widely used mobile

services Portfolio focusing on exclusivity or on a wide range of niche

markets Offering more value added services with higher QoS as proposed

by ADAMANTIUM Technology Domain

ADAMANTIUM results provide necessary supporting technological aspects for the success of the new PQoS-aware services

IMS signaling and registration capabilities

STOF: Internal Analysis

Organization Domain Key actors in the value network chain of mobile VoIP and IPTV services

are considered telecom/mobile operators content providers telecom equipment middleware providers Advertisers consumers

Each player can identify profitable actions within the proposed ADAMANTIUM business model

Financial Domain See next slides

Financial Analysis

Assumptions Charge of VoIP/IPTV mobile services on duration of usage (not per data

volume) Well established operator (Greek Mobile Operator, GMO) IMS and VoIP and IPTV Services infrastructure available Mobile subscribers with enabled 3G+ services taken into account for

financial analysis ADAMANTIUM functionality will be considered as a feature that is

included in the already installed policy node of the mobile operator

Initial cost of investment: 200 K€ License: 50 K€ (CAPEX) Integration and training services: 150 K€ (CAPEX) Hardware: 0 € (feature included in existing policy node)

Financial Figures

Financial figures of Greek Data Mobile Market

2007 2008 2009 2010 2011 2012 2013

Data Revenues (M€) in Greek Mobile Operators 48 116 198 319 431 545 625

GMO Data Revenue Share 45%

GMO Data Revenue (M€) 21,6 52,2 89,1 143,6 194 245,3 281,3

GMO IPTV and VoIp Services Revenue Share 20% (3)

GMO IPTV and VoIp Services Revenue (M€) 4,3 10,4 17,8 28,7 38,8 49,1 56,3

Analysis of different cases

Two cases of different strategies dealing with aspects of ADAMANTIUM to be offered by the mobile operator

Case 1 Offered to all the VoIP and IPTV service users Without any extra cost Combined with the already existing subscription packages for 3G+

services Case 2

Offered as a new separate package (premium package of ADAMANTIUM VoIP and IPTV services)

Following a different pricing strategy compared to the normal packages of VoIP and IPTV services

Financial efficiency (revenues and profitability) of these cases are evaluated in three scenarios

Optimistic / Normal / Pessimistic

Case 1. Optimistic Scenario4 Year period

Y1 Y2 Y3 Y4

Initial Investment Cost (CAPEX) 200,000 € - - -

Marketing/ Promotion Cost 100,000 € 90,000 € 80,000 € 70,000 €

Maintenance Cost (OPEX) 25,000 € 15,000 € 15,000 € 15,000 €

ADAMANTIUM DEVELOPMENT TOTAL COST 325,000 € 105,000 € 95,000 € 85,000 €

Forecasted Average Annual Revenue (Optimistic) 28,710,000 € 38,790,000 € 49,050,000 € 56,250,000 €

Annual ADAMANTIUM Revenues additional Increase in % 0.5 % 1% 1.5% 2%

Annual ADAMANTIUM additional Revenues (in Euro) 143,550 € 387,900 € 735,750 € 1,125,000€

Annual ADAMANTIUM Outflows 325,000 € 105,000 € 95,000 € 85,000 €

Annual ADAMANTIUM Inflows 143,550 € 387,900 € 735,750 € 1,125,000 €

Annual ADAMANTIUM CASH FLOW -181,450 € 282,900 € 640,750 € 1,040,000 €

Cumulative Annual Cash Flows -181,450 € 101,450 € 742,200 € 1,782,200 €

NPV= 1,119,127.82 € IRR= 90% Pay Back Time = 1.64 Years

Very promising

and

Profitable

investment

Case 1. Normal Scenario4 Year period

Y1 Y2 Y3 Y4





Forecasted Average Annual Revenue (Normal) 28,710,000 € 32,500,000 € 37,500,000 € 42,480,000 €

Annual ADAMANTIUM Revenues additional Increase in % 0.5 % 0.5% 1.0% 1.0%

Annual ADAMANTIUM additional Revenues (in Euro) 143,550 € 162,500 € 375,000 € 428,800€


Annual ADAMANTIUM Inflows 143,550 € 162,500 € 375,000 € 424,800 €

Annual ADAMANTIUM CASH FLOW -181,450 € 57,500 € 280,000 € 339,800 €

Cumulative Annual Cash Flows -181,450 € -123,950 € 156,050 € 495,850 €

NPV= 268,615.25 € IRR= 40% Pay Back Time = 2.44 Years

Attractiv

eness of

ADAMANTIUM investment

Case 1. Pessimistic Scenario4 Year period 5th year

Y1 Y2 Y3 Y4 Y5

Initial Investment Cost (CAPEX) 200,000 € - - - -

Marketing/ Promotion Cost 100,000 € 90,000 € 80,000 € 70,000 € 50,000 €

Maintenance Cost (OPEX) 25,000 € 15,000 € 15,000 € 15,000 € 15,000 €

ADAMANTIUM DEVELOP. TOTAL COST 325,000 € 105,000 € 95,000 € 85,000 € 65,000 €

Forecasted Average Annual Revenue (Pessimistic) 28,710 K€ 28,710 K€ 28,710 K€ 28,710 K€ 28,710 K€

Annual ADAMANTIUM Revenues additional Increase in % 0,5 % 0,5 % 0,5 % 0,5 % 0,5 %

Annual ADAMANTIUM additional Revenues (in Euro) 143.550 € 143.550 € 143.550 € 143.550 € 143.550 €

Annual ADAMANTIUM Outflows 325,000 € 105,000 € 95,000 € 85,000 € 65,000 €

Annual ADAMANTIUM Inflows 143,550 € 143,550 € 143,550 € 143,550 € 143,550 €

Annual ADAM. CASH FLOW -181,450 € 38,000 € 48,550 € 58,550 € 78,550 €

Cumulative Annual Cash Flows -181,450 € -143,450 € -94,900 € -36,350 € 42,200 €

For the 4-year period NPV= -78,752.97 € IRR= - 5% Pay Back Time = on 5th Y

For the 5-year period NPV= -34,413.55 € IRR= 5% Pay Back Time = 4.46 Y

Investment a

ttractiv

e in a

5-year perio

d even under

most pessimistic conditio

ns

Case 2. Optimistic Scenario4 Year period

Y1 Y2 Y3 Y4





Forecasted Annual ADAMANTIUM Revenues (in Euro) from the Premium

package 150,000 € 250,000 € 450,000 € 700,000 €




Cumulative Annual Cash Flows -175,000 € -30,000 € 325,000 € 940,000 €


Attractiv

eness of


Case 2. Normal Scenario4 Year period

Y1 Y2 Y3 Y4






package 100,000 € 150,000 € 250,000 € 400,000 €




Cumulative Annual Cash Flows -225,000 € -180,000 € -25,000 € 290,000 €


Attractiv

eness of


Case 2. Pessimistic Scenario4 Year period 5th year

Y1 Y2 Y3 Y4 Y5

Initial Investment Cost (CAPEX) 200,000 € - - - -

Marketing/ Promotion Cost 100,000 € 90,000 € 80,000 € 70,000 € 50,000 €

Maintenance Cost (OPEX) 25,000 € 15,000 € 15,000 € 15,000 € 15,000 €

ADAMANTIUM DEVELOP. TOTAL COST 325,000 € 105,000 € 95,000 € 85,000 € 65,000 €


package (Pessimistic) 50,000 € 100,000 € 150,000 € 250,000 € 300,000 €

Annual ADAMANTIUM Outflows 325,000 € 105,000 € 95,000 € 85,000 € 65,000 €

Annual ADAMANTIUM Inflows 50,000 € 100,000 € 150,000 € 250,000 € 300,000 €

Annual ADAM. CASH FLOW -275,000 € -5,000 € 55,000 € 165,000 € 235,000 €

Cumulative Annual Cash Flows -275,000 € -280,000 € -225,000 € -60,000 € 175,000 €

For the 4-year period NPV= -117,871.05 € IRR= - 6% Pay Back Time = on 5th Y

For the 5-year period NPV= 14,780.33 € IRR= 11% Pay Back Time = 4.26 Y

Investment a

ttractiv

e in a

5-year perio

d even under

most pessimistic conditio

ns

Exploitation Plans

Rohde & Schwarz (RS) New functionalities of the DVM protocol analyzer platform

Extended SNMP MIB containing all parameters related to qPSNR measurement procedure including setting of independent thresholds for the qPSNR-over-time measurement and for qPSNR histogram

New software module that allows a detailed analysis of received IPTV-over-DVB-H services

Alarm Filter for user-defined combination of QoS parameters to monitor the related thresholds

Expected results Enhancement of usability of DVM protocol analyzer family (and

future successors) Estimated additional sales of 4 to 7 M€ Dependent on date of introduction of mobile IPTV services in major

European countries and the US

Exploitation Plans

Thomson Grass Valley/Thomson Telecom (TGV and TT) Enhance of the PQoS of IPTV service is a key issue for Thomson Grass

Valley Acquired knowledge and know-how to improve IPTV and MRF servers by

interfacing them to the future new IMS components (MCMS) in charge of PQoS

Positioning: Improve Thomson IPTV solution, used by telecom operators to improve IPTV QoS offer

Vodafone (VOD) Actual adoption depends on vendors’ technology roadmap Interested in offering optimized services and addressing the challenge of

enhancing user perception, especially in the view of network evolution towards LTE

Exploitation of possibilities offered by the MCMS could be adapted according to specific user categories/profiles and offered subscription packages

Exploitation Plans

Ericsson (ERC) Need related to provide adequate PQoS in VoIP and IPTV services in

order to Retain customers and increase number of users Add value to already offered services

Ericsson portfolio include the SAPC (Service-Aware Policy Controller) A telecom grade policy manager, based on 3GPP standards Full interoperability with GGSNs, Packet Inspection or Application Functions

(AF) Part of the Service Aware Charging & Control solution

ADAMANTIUM results would be integrated with the SAPC module Exploitation activities planned

Project presentations to Packet Core Units, SAPC and GGSN Product Lines, working on activities related to QoS and Packet core

Study, analyze and define a Business Solution based on the ADAMANTIUM result

Explain customers how ADAMANTIUM can be integrated in Ericsson solutions

Exploitation Plans

Viotech (VIO) ADAMANTIUM streaming technology represents an important asset to

VIOTECH’s exploitation strategy The V-HOME product range

End-Users to access audio-visual content from different terminals (PCs, TV sets, etc.)

Commercialized through Triple-Play or genuine operators, and directly to End-Users

ADAMANTIUM results can enhance the IPTV solution capabilities through a dynamic adaptation of multimedia content

The resulting Exploitation Plan will be brought forward Packaging of configured offers: V-HOME with Multi-Play functionalities for

services provision within home platform, and the V-HOME Away solution for both residential and moving platforms, with dedicated market pricing strategies

Targeted communication and promotion campaigns to foster buzz and notoriety throughout 2011 and 2012

Manufacturing in hardware series, primarily in commercial territories without major Triple-Play-similar offerings

Overall Conclusions

The document includes for VoIP and IPTV services Market description and foreseen evolution Business idea and business models Possible business models SWOT and STOF analysis

“Delivering value is vital for success”: End users of converged digital services will only use, and pay for services which they perceive deliver value to them

Business and market analysis pinpointed different future possibilities and market conditions for market and business exploitation of ADAMANTIUM results

Two cases have been analyzed In the optimistic and normal cases in both of them, investments for

ADAMANTIUM are attractive in a 4-year period In the pessimistic scenario, investments are attractive in a 5-year period

Thank you very much!

d6.3 business plan task 6.3 task 6.3 ericsson. purpose purpose: demonstrate the adamantium system...

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