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4G Mobile Ventures
Panel Discussion
Moderator:
Scott A. Snyder, PhD
[email protected]
610-256-0662
©Scott A. Snyder 2010
Panel Introductions:
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Scott Snyder (moderator), DSI/Wharton School
Dan Deeney, New Venture Partners
Anton Wahlman, Industry Analyst
Macy Summers, Lockheed Martin
Andreas Koch, Juniper Networks
©Scott A. Snyder 2010
Is Wireless Ready to Take-off?
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4B+ wireless users
WiMax and LTE being widely deployed
300M wireless sensors shipped to date (ABI Research)
App store model has demolished entry barriers
Immersive applications beginning to appear
Convergence of ICT trends towards a ubiquitous “Cloud”
Cuts across all major verticals and intersections
Government investing $7.2B into broadband initiatives via ARRA
Is Wireless the Internet of the Coming Decade?
Breakthru LLC Confidential Information
Strong Signals…
Google has just announced that it has acquired AdMob, the mobile ad platform that
has been especially popular on the iPhone, for $750 million. This is a big win for the
company’s early investors, which include Sequoia Capital and Accel Partners (this is
a huge day for Accel — they were also investors in Playfish, which was just acquired
by EA). More recent investors include DFJ and Northgate Capital.
Mobile advertising company Quattro Wireless confirmed Tuesday that it's been
acquired by Apple, in a blog post by Quattro CEO Andy Miller, who's identifying
himself now as Apple vice president of mobile advertising. A price wasn't named, but
AllThingsD reported that it's $275 million when it broke the news on Monday.
“This year's International Consumer Electronics Show (CES) was all about wireless.
In fact, wireless was probably the most pervasive of all technologies at this year's
show, extending its reach to every sector of technology, from Ford's Sync system to
set-top boxes, home entertainment systems, healthcare, e-readers, tablets and
M2M.”
- Blog Post by Andrew Berg Monday, January 11, 2010
Breakthru LLC Confidential Information
But the trends are not great…
• $3.3 billion invested in 252 mobile companies in 2006
(Thomson Reuters)
• $2.5 billion invested in 237 mobile companies in 2007
• U.S. VCs put just over $2 billion into 204 mobile companies in
2008
• $1 billion invested in 66 mobile companies through Q3 2009
• Many venture capitalists believe that the Wireless sector will
experience declines with 37 percent predicting lower levels
for next year as well (NVCA 2010 Predictions)
Mobile Investment/M&A Profile
Innovation Opportunities Exist at the
Intersections
Transportation
Health
Monitoring
Pervasive
Entertainment
Remote
Diagnostics Nav/Traffic
Management
Remote Healthcare
Portable
Personal Diagnostics
Health Records
Remote monitoring
Patient Compliance
Fitness
BioSensors
Monitoring
Biometrics
Distributed
Gaming
Surveillance
Location-based
Sensor
Advertising
Nets
eWallet
Demand Management
SmartHome
Grid Monitoring
Pervasive
Metering
Retail
Building Control
Generation Monitoring
Wireless
Security/
Defense
Retail/
Financial
Energy/
Environment
©Scott A. Snyder 2010
4G Investment Landscape
Wireless Infrastructure
Semiconductor / RF Components
• Innovative backhaul solutions
• Small base stations
• Enterprise networking
• Baseband chips (3G / 4G)
• Power amplifiers, RF filters
• MIMO antennae configurations (4x4)
Mobile Applications
General Interest
• Enterprise applications
• Embedded software
• Carrier grade BSS/OSS software
• Security – network, devices
• Mobile analytics / subscriber usage
• Real-time optimization of IP traffic
RAN
Packet Core
SGSN
IP Core
IuPS
GGSN
Gn, APN
MSS
Voice Core
GMSC
MGW
VoIP
Transmission
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Network Capacity Continues to be a
Challenge
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Capacity problems experienced today in 3G networks will exist in 4G world
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While 4G capacity gains may initially be in 5-10x range, ‘effective’ capacity gains in urban
areas will be incremental
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New devices, services and applications will contribute to complex capacity planning and
network management
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Underlay network of small, dense sites needed to support umbrella of marcocells
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Investments that provide operators with increases in network capacity will gain traction
in the market
– Small base stations with innovative backhaul
– Real-time optimization of traffic in meshed 4G IP networks
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Improved network intelligence on capacity drivers will be key
– Mobile network analytics, subscriber profiles and usage patterns
– Improved service delivery based on device and service requirements
The Acute Need For 4G
• 3G in 2003: Solution in search of a
problem
• 4G in 2010: Fire hose applied to a fire
– LTE around the world…eventually
– WiMax early lead, but struggling with
phones
– WiFi: augments everything
4G Megatrends
• VoIP replaces GSM/CDMA2000
– But which kind of VoIP?
• Carrier-based managed VoIP
• …or over-the-top providers?
• Security, Security, Security
– Hacking VoIP becomes #1 trend by 2011-12
– VoIP encryption to become #1 most desired
app
– …extending to IP-based videoconferencing
Consolidation: Too much already!
• Infrastructure systems
– Ericsson, Huawei, Cisco, Alcatel, Motorola,
Samsung, Alvarion
• Operating systems – and handsets
– RIM, Apple, Google, Microsoft, Nokia, Palm
– Dell, Samsung, LG, HTC, HP
Mobile Ventures
Where Capital is to be Deployed?
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Capital Markets are still investing in Mobile businesses. New trends in technology,
unattended sensors, enterprise integration and security will drive significant growth in
mobile telecommunications capital deployment.
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Deal Flow candidates: Mid-stage, recession resistant, capital efficient companies with
attractive exit pathways and an experienced management team have the best profile
for many Technology Funds.
1. NEW APPLICATIONS & TECHNOLOGIES
2. THE “SEA OF LTE” (AND WiMAX too)
3. NEW BUSINESS MODELS
4. CYBER & SECURITY
UNIQUE NEEDS
GOVERNMENT & MILITARY Mission Markets
Security, Governance, Enterprise Integration, Data Exposure, Mobility, RF Challenges,
Tactical Quality of Service are some of the Government challenges using 3/4G wireless
for Mission Operations.
SECURITY
MOBILITY
GOVERNANCE
TACTICAL QoS
The New Services Ecosystem
Future Services Revenue
Current Services
($2.5Trillion)
($1.8Trillion Revenue WW)
Managed
Telepresenc e
CDN
Cloud Computing,
PaaS and SaaS
Digital
TV
Online Video
Mobile Advertising
Mobile
Data
Busines
s Data
Loc ation Based
Servic es
W ireline
Voice
Business Model
Transformation
Fixed
BB
Home Networking
Network
Outsourc ing
Mobile
BB
Ac c ess
Mobile Voic e
Digital TV
Business
Data
Network Features Dedicated to NSP
Walled Garden Specific Services
Fixed BB
Services Ecosystem
Mobile Data Services
Digital TV (IPTV)
Business Data
Fixed BB
Mobil Voice
Today’s SP Network
Fixed Line Voice
Wireline
Voic e
Mobile Data
Mobile
Voice
Video
Targeted Online
Advertising
Developer Community
OTT App/Content
Providers
Network
Transformation
Device OEMs
NSPs
The New SP Network
Service Elements in Cloud Computing Layer
Policy & Identity Management
Access and Transport Fabric
The Open Mobile BB Challenge
True mobile broadband data speeds
 3.5/4G Network Buildouts
– HSPA, Wimax, LTE
 Adoption of 3G/4G handsets
 Elimination of bandwidth bottleneck
 Opens mobile to web applications
Advertising driven revenue models
 Emergence of mobile advertising models
– Search advertising (incl. local)
– Targeted ad insertion
 Growing role of search, portal and web
services players
 Subsidization of “free” mobile apps
Affordable consumer smart phones
 iPhone is changing the game
– User friendly: easy access to web
– ~50X BW usage of other smartphones
– Millions sold even without subsidy – now
subsidized at prices $200
 Elimination of handset/deck bottleneck
 Easier for content providers to go direct
 Massive increase of mobile IP traffic
Open handset operating systems
 Open Handset Alliance Android
– First open, free mobile platform
– Google open OS with developer kit
 Growing share of Linux operating systems
 Carrier no longer controls OS and apps
 Proliferation of optimized mobile apps
Implications
 NSPs will have less bargaining power with content and device partners
 NSPs will need to find new ways of adding value to participate in content revenues!
 Mobile devices and network will become vulnerable to security threats
SP Network and Cloud Based App Access
Clients
(billions)
Global High-Performance Network
Workforce Globalization
Mobile
Home
Branch
Data/App Consolidation
Campus
Mega Data Centers
(thousands)
The Value of the Service Provider Network
L7 VPN
L3 VPN
L2 VPN
Web
Services
Routing/Switching
Virtualization
Video
Business
Gaming
Identity
Residential
Experience
Mobile
Home
Telemetry
Security
Assured
L7 Application
Enhanced
L7 Signature
Best Effort
L3/L4 Stateful
L3/L4 Stateless
Internet
Applications
Network Monetization
Operator Controlled
Voice/SMS centric Devices
Operator Controlled
Multimedia Devices
2G
3G with IMS
• Primarily voice
• Inefficient resource utilization
• Limited service differentiation
Telco
Apps &
Services
SS7 based
Apps &
Services
• Improved service-specific control
• Policy specific to services/applications
Open Devices
and Applications
4G Approach
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Service velocity
Revenue sharing models
Flexible service delivery platform
Operational Efficiency
Applications & Services
Apps &
Services
On-net
applications
IMS
IMS
Off-net On-net
Abstraction of
Application Resources
Unaware of Each Other
Packet Handling
Policy
Agg.
Policy
Core
Edge
OTT
Web2.0
Requests
Open Platform for
Policy Based App Development
Agg
Edge
Core
Controlled User Experience
Operator Driven
User and Device Driven
Hot areas for 4G network investments
Context aware mobile multimedia applications
The Network Infrastructure Enabling Their Delivery
• Context aware policy engines driving QoE and security
• End to end mobile security – app to device to datacenter to network
• Open service delivery platforms – enabling integrated OSS/BSS,
including clearinghouse DRM functions
• Virtualization across wireless broadband networks
• Thin client, cloud-based application delivery architectures
• Advanced content distribution architectures optimizing trade offs
between CDN, P2P and
Context Intelligent Mobile Networking –
Application Assured Cloud Infrastructure
Questions?
• Will investments in this space require a high degree of
collaboration to succeed (operators, device vendors,
app/content players, end-users, etc.)?
• What are the biggest lessons learned in making
investments in emerging technologies like 4G?
• When will the enterprise application space become
exciting as a 4G investment?
• Do you have any advice to start-ups with a 4G
innovation looking for capital?