Evolution of Mobile Handsets and

the Impact of Smartphones

February 2012
Yoko Miyashita
InfoCom Research, Inc.
Lecture Document
Todays Lecture Outline
Mobile handset history outlook:
Handsets have changing dramatically especially in this decade.
What are the future phones like???
Industry structure is changing after the growing smartphone
populality
Handset development trend is also changing with the smartphone
2
Feature Phone vs. Smartphone
Smartphone? OR Feature phone?
3
Mobile Handset Market Overview
4
Global Mobile Subscriber Number & Penetration History
0
1,000
2,000
3,000
4,000
5,000
6,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
in million
Subscriber Number
Net increase
Penetration Rate
S
u
b
s
c
r
i
b
e
r
s
P
e
n
e
t
r
a
t
i
o
n
12/2005 12/2000
12/1995
Source: US Census Bureau, Informa and 4G Americas. As of September, 2011
12/2010
5.4 billion mobile phone subscribers and 77% of mobile penetration, globally
5
2,624
859
121
328
569
531
511
538
287
69.6%
64.4%
95.2% 95.3%
96.1%
129.3%
127.0%
53.1%
89.8%
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
0%
20%
40%
60%
80%
100%
120%
140%

MILLION

Mobile Subscriber and Penetration Rate by Region

Source: Informa and US Cencer Bureau
As of December2010
Asia
Pacific
China Japan North
America
South
America
West
Europe
East
Europe
Africa Middle
East
S
u
b
s
c
r
i
b
e
r
P
e
n
e
t
r
a
t
i
o
n
Subscriber
Penetration
6
GSM
77.0%
UMTS
12.6%
CDMA
9.5%

0.9%
Subscriber Number by Technology
Data: As of March 2011
Technology based subscriber share: Global
Source: 4G Americas
Technology
Subscriber
Market
share
GSM 4,300 77.0%
UMTS(W-CDMA)-HSPA 692 12.6%
CDMA 521 9.5%
Others
AnalogiDENPDCTD-
SCDMATDMA
46 0.9%
Unit: Million
Others
7
Handset Market Structure
High-end/
Smartphone
Middle range
Low End
including ultra low end
One of the best selling phone in history Market Structure
Price range and its volume
Price
$ 800
Price
$ 20-50
Low end
Black-white display
86 gram
SMS
Color variation
Target: emerging
market
NO Internet
NO Camera
Nokia 1100
Price
$ 300
8
ZTE
5.5%
RI M
3.5%
Huawei
3.9%
Apple
5.7%
LG
6.9%
Samsung
20.7%
HTC
3.3%
Motorola
3.0%
Noki a
24.7%
Others
22.9%
Mobile Handset Share by Vendor
Source: Strategy Analytics
Vendor
Shipment
(Million)
Market
Share
Nokia 88.5 24.7%
Samsung 74.0 20.7%
LG 24.8 6.9%
Apple 20.3 5.7%
ZTE 19.6 5.5%
Huawei 13.9 3.9%
RIM 12.5 3.5%
HTC 11.9 3.3%
Motorola 10.6 3.0%
Others 81.9 22.8%
Total 358.0 100.0%
Mobile Handset Shipment Based Vender Share 2011.2Q(April to June)
9
Evolution of Mobile Handset
10
Evolution of the Cell Phone
Miniaturize Functionalize, Thin/High Speed
mail, camera, data internet cloud
Motorola
DynaTAC
Approx. 1kg
Nokia 1011
495g
Motorola
StarTAC
88g
Sony Ericsson
P800
smartphone
158g
RIM
BlackBerry Quark 6210
smartphone
136g
Apple
iPhone 3G
smartphone
140g
1983 1990 2000 2007
1
st
generation 2
nd
generation 3
rd
generation
11
Characteristic of the 1
st
Generation
Period: From 1980s to 2000
Analog based mobile network
No data communication, only SMS
Heavy and bulky handset
Extremely expensive, starting from $1,000
Miniaturize is the most important for
development
Targeted only for the business and for
special segment
12
Mobile Handset History: 1
st
Generation
1983 1993 1996 1999
Handset Trend Transition
Source: GigaOM and Newgrounds.com
13
Characteristic of the 2
nd
Generation
Period: From appx. 2000 to 2007
Mobile phone for the mass people
Relatively slow data connection/ Internet
usage by phone
Golden time for handset vendors:
handset vendors were the most influential and powerful
Various kinds of handsets
Handset development environment is
relatively closed
14
Mobile Handset History: 2
nd
Generation
H
i
g
h

E
n
d
L
o
w

E
n
d
Handset Design Trend Transition
2000 2001 2002 2003 2004 2005 2006 2007
Nokia 3310:
133g Nokia 1100:
86g
Nokia 6310:
111g
*with
Ultra Slim
battery
Nokia 3410:
114g
NEC L1:
11.9mm *
Motorola V60:
109g
Motorola
V70:83g
Motorola
V600:
115g*
*Camera

Touch display
Panasonic A100:
66g:
Samsung
SPH-V9900:
6.9mm *
Smaller Multimedia
Design/ Thinner
VK Mobile:
48g:
Samsung
U100:
5.9mm *
LG
Chocolate:
15.2 mm*
Motorola
RAZR v3:
13.9mm*
LG
PRADA phone:
12mm*

Samsung
P520 :
8.9mm *

Sharp
GX10:
110g*
2
nd
Generation: Handset vendors have the strongest power
15
Unique Feature phones
Xelibri
74 gram
139Euro
Xelibri 7
83
179
23,800
Xelibri 8
Neck less Type
NO button
(Voice Recognition)
179Euro
Xelibri by Simens, was one of the most unique series of handset
Commercial Image
Xelibri 6
Compact type
90 gram
179 Euro
16
LG F7100 Qiblah
Phone for Muslim Community
Unique Feature phones
Qiblah by LG Electronics, was one of the best selling feature phones by LG for Islamic people
Points the direction of MECCA
(With the Compass function)
Make alerts 5 times a day to pray
Arabic language
SMS/MMS capability
LGs best selling feature phone
* LGs s strategy to carter for the
specific needs of the Muslim people
Weight
Display
Talking
time
Waiting
hour
Technology
Release dateJuly, 2004
89g
LCD65K Color
GSM900/1800/
GPRS
210 mim
200 hour
17
Characteristic of the 3
rd
Generation
Period: appx. 2007 ~
Smartphone era
Higher speed network
More internet connection
Many new entrants to mobile handset
industry, such as Google and Apple
Industry structure revolution
18
Sony Ericsson
XPERIA X1
Nokia
N96
LG
KF-700
Almost all the high-end handset look alike after iPhone
Year 2007: iPhone released
Mobile Handset History: 23
rd
Generation
Beginning of Smartphone Era with iPhone
19
Industry Definition of Smartphone
Open Operation System(OS)
Specification is disclosed to the third party
Broad application development environment
Mobile network capability
e.g. Not Wi-Fi only handset
Apple: iOSGoogle; AndroidRIM: BlackBerryNokia: Symbian
Microsoft: Windows Phone(Windows Mobile)and Linux
What is Smartphone?
Smartphone?
20
Smartphone Market Projection
0
100
200
300
400
500
600
700
800
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
21.4%
78.6%
41.0%
59.0%
0
2
4
6
8
10
12
14
16
18
20
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2015
2010
11.1%
88.9%
49.7%
50.3%
Global
Japan
Unit: Million
100
Data: Strategy Analytics, MCPC
Smartphone Not Smartphone

21
Smartphone Industry Structure
Smartphone has its own ecosystem
Smartphone OS providers have strong power.
Vertical integration structure: Smartphone OS provider controls the service,
application and even handsets.
Service
Network
Application
OS/
Platform
Handset
Smartphone
Market share
(Email, Search,
Maps)
*Smartphone market share: Top line: 2011.2Q, bottom: 20102Q
22
Smartphone OS based handset market share
2010.2Q to 2011.2Q 2011.2Q
Android and iPhone OS are becoming two most powerful players
Nokias Symbian losing much market share
SourceStrategy Analytics
23
Data Traffic Explosion caused by Smartphone
SourceAT&T + T-Mobile: A World-Class Platform for the Future of Mobile Broadband, AT&T, March 21, 2011.
http://www.att.com/Common/about_us/pdf/INV_PRES_3-21-11_FINAL.pdf
AT&Ts iPhone brought huge revenue with the dramatically growing traffic
However, the carriers worry to become Dumb Pipe only providing the network.
24
Global Mobile Data Traffic Forecast
SauceCisco
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.pdf
CAGR (Compound Annual Growth Rate)
Global Mobile Data Traffic Forecast
25
Smartphone Application Store
Application Store is the place to provides third party developed
application and contents
It makes the mobile industry even much more global
App Store by App;e Android Market by Google
26
Variation of Android Smartphone
27
Mobile Handset Vendor Profit
501
2,286
11,381
754
971
820
-1,091
2,225
-
1
0
0
0
4
0
0
0
9
0
0
0
Appl e
Samsung
Noki a
HTC
RIM
LG
Motorol a
Sony
Eri csson
Year 2007
In million US dollars
9,356
3,779
4,710
1,446
2,718
-607
-198
227
-
1
, 0
0
0
4
, 0
0
0
9
, 0
0
0
Appl e
Samsung
Noki a
HTC
RIM
LG
Motorol a
Sony
Eri csson
Year 2010
In million US dollars
SourceStrategy Analytics. Exchange rate as of August 2011 for both charts
28
Analysis of the Mobile Phone Evolution
What are the futures phone like?
29
Smartphones
Feature Phones Basic Phones
What the Future Mobile Handset Be Like?
Analog
1
st
Generation
Voice, SMS only
Network
Handset
Category
Function
Handset itself getting more intelligent
Digital
2
nd
Generation
Multimedia
capability
W-CDMA
(UMTS)
3
rd
Generation
Application, PC
like function
Cloud computing,
handset commoditization

?
4G/ LTE
Cloud computing
Next Generation
Extremely
limited
Data/
Internet
Limited
More internet
use,
congested
Getting huge
No device
intelligence
Low device
intelligence
High device
intelligence
What do you
think???
30
Half of the mobile handset will be smartphone in 2015
Mobile handsets will be more commoditized and hard to
differentiate the terminal itself
Mobile network will be getting much faster
More players flooding into mobile industry, such as
internet company, SNS, and so on
The 4
th
Generation Handset Factor
31
What are the future mobile phones and
services be like???
InfoCom Research, Inc.
Yoko Miyashita
Chief Consultant
www.icr.co.jp
Email: miyashita-y@icr.co.jp