IndustriAll project "Strategic study on anticipation of changes in the European ICT sector. Phase 2 : Sub-sectoral analysis

Transcription

1 IndustriAll project "Strategic study on anticipation of changes in the European ICT sector Phase 2 : Sub-sectoral analysis 1st October 2015

2 Telecom Mobile Handsets STB & gateways Networks

3 Mobile handsets

4 Smarphones are still rising in the forthcoming years 2015: +/- 75% phones sold are smartphones (vs. 30% in 2011). Basic features phones are disappearing. More than 2 billion smartphones will be sold in 2018 ASP has been increasing since 2011 due to smartphones. From 121$ in 2011 to 206$ in Peaking in Global suscription penetration rate was 100% in Will reach 102% in Growth in second/third/fourth subscriptions. Industri ALL TimiSoara Phase 1 4

5 Mobile handsets sectoral trends M&A less intense than in networks or STB Recent moves: Google/Motorola & Lenovo/Motorola Microsoft s takeover of Nokia mobile handsets division did not improve its market share. Google has become a major player through Android the dominant mobile operating system Many new comers in China and in India. Some European SME s can be found: Jolla, former Nokia s employees Wiko (design only), a French-Chinese company or Archos a French firm (smartphones & tablets). Smartphones are cannibalizing other markets: cameras/pc watches? Industri ALL TimiSoara Phase 1 5

6 Nokia decline/samsung market share leadership Decline and fall happen quickly: Motorola, Blackberry, Nokia vs. Apple/Samsung/Xiami Industri ALL TimiSoara Phase 1 6

7 Winner-takes-all: this is Apple Apple: Got 93% of mobile phone profits Q ASP much higher than competitors Ecosystem is huge Appstore is making more profit than Google play. Samsung: N 1 in terms of shipment. N 2 in terms of profits. Facing huge competition, especially in China. Might have reached its peak. LG is also facing troubles. Chinese players: Huawei, Lenovo, ZTE and now Xiami are among the biggest world players. Local Chinese competitors are numerous. Taiwanese competitors are struggling (HTC) or given up (ASUS, ACER ). A dozen of new Indian players are coming. Design in India. Made in China. New factories are launched in India. Few European SME s: Archos/Doro/Jolla/Fairphone/Tiptel/ Vertu/Wiko Industri ALL TimiSoara Phase 1 7

8 Employment and manufacturing in Europe and elsewhere Since the mid-2000 s, mobile phone are not produced anymore in Europe except in a Czech Foxconn factory R&D also amost disappeared. Almost no European players anymore. Most of the remaining Nokia s jobs have been restructured by Microsoft. Only a handful of SME s remain. Few jobs in Europe except sales/retails (not under the umbrella of IndustriALL ) Major part of the manufacturing is done by Foxconn. A huge part of the world production in mainland China. Others in Vietnam (Samsung), Indonesia (Samsung), Malaysia (Foxconn) New plants in India recently (tariff advantage) : Foxconn/Micromax/Lava Local law lead to Foxconn plants in Brazil. Industri ALL TimiSoara Phase 1 8

9 Situation could hardly be worse. Business as usual scenario : 2020 A handful of employees in Europe Local employment in Europe mostly dedicated to retails/sales & marketing One factory left in the Czech republic Few R&D employees (Nokia, Huawei ) Desired state scenario in 2020 Rise of European start-ups (Jolla etc.) Rise of R&D located in Europe New manufacturing units Development of a mobile European Operating System (OS) Development of an ecosystem with production/supply chain/r&d/app development Industri ALL TimiSoara Phase 1 9

10 STB & gateways

11 Major features Rarely considered as a single market. Pure players such as Arris/Pace/ADB Other telco players such as Huawei/ZTE Electronics players such as Humax/Samsung A highly fragmented market with dozens of players. An ongoing consolidation with 2 major M&A: Arris s takeover of Pace Technicolor buyout of Cisco Connected Devices business Still some European players! Industri ALL TimiSoara Phase 1 11

12 STB s decline and CPEs on the rise Infonetics. 1Q15 STB. June 2015 Infonetics. 1Q15 BB CPE. June 2015 Industri ALL TimiSoara Phase 1 12

13 Market outlook for STB and CPE STB: Outlook reserved. STB market in NAM and Europe impacted by operators struggling to add new TV subscribers. Transition to new and more powerful devices. STB market in the ROW with more simple STB. Satellite STB on the rise. Growth for OTT media servers and dongles (Apple TV, Google Chromecast, Amazon Fire TV, Roku ). Arris is the leader followed by Pace, Cisco, Samsung and Humax. CPE: A market on the rise. Volume will incrase but revenue are declining and might only rebound in Technological trends: MSOs going to DOCSIS 3.0 NSP s pushing their customers to VDSL2, G.Fast, FTTx. Technological changes along with slower but still rising subscriber groth will fuel the market. Industri ALL TimiSoara Phase 1 13

14 Issues at stake Connected home could be a major evolution for the sector. Many players are trying to get into this market OTT: Roku. Apple TV. Google stick And many other players (NSPs, console manufacturers ) want to control the connected home. Virtualization is coming for CPE s. vcpe. Many functions migrated into the network Allows easier upgrade/faster new services/easier CPE management/lower OPEX? Industri ALL TimiSoara Phase 1 14

15 Some European players are still there! Pace is a British firm, one of the major player being currently acquired by Arris. French Technicolor still hosts R&D in France and in Belgium. Manufacturing has been outsourced mostly. Buyout of Cisco business will lead to a higher part of US R&D Nbr 2 in terms of market share/revenues after the deal completion. ADB is Swiss player. With R&D in Poland (and Switzeland). Sagemcom owned by a private equity fund is a French firm. R&D is partly located in France. Some other players in the middleware business such as Kudelski group or NDS/Cisco do have some employees in Europe. Industri ALL TimiSoara Phase 1 15

16 Networks

17 Telecom market outlook Industri ALL TimiSoara Phase 1 17

18 Does the telecom forecast sounds good? The telco equipemnt market is facing price pressure from NSP s Price competition due to Chinese players. Traditional markets might not grow. Some other sub-segments are growing (IP routers, OSS/BSS ). Services are also growing. Many IT players (Accenture, IBM, HP, Oracle ) are competing with telco players. Industri ALL TimiSoara Phase 1 18

19 Industrial features De-integation. Most European, American and even Asian players did become fabless. Almost no factory do remain in Europe and in the US. Restructuring plans have been massive. And are still going on (Ericsson, Alcatel-Lucent ). Offshoring to China and to a lesser extent India. First manufacturing in the 2000 s. Then shared services and R&D. Rise of Chinese players. Huawei is to become the world telecom leader. Industri ALL TimiSoara Phase 1 19

20 M&A in the telco market Takeover/Withdrawal Motorola (dismantled) ; Marconi (Ericsson); Lucent (Alcatel) Siemens (JV with Nokia) Nortel (bankrupcy); ; Panasonic (Nokia), Alcatel-Lucent (Nokia) Concentration is important in most sub-segment with only a handful of major players - 4 or 5 - left. Only 2 global players remaining: Nokia (after Alcatel-Lucent acquisition) and Huawei. Ericsson is a major player but with a strong focus on mobile. Cisco is a high tech giant partly dedicated to telecom. ZTE s got a wide portfolio but is much smaller. Other players such as Juniper, Ciena, Amdocs, Infinera, Calix, Samsung are much smaller and focused on 1 or 2 sub-segments. Industri ALL TimiSoara Phase 1 20

21 Technology departments are pulling the marketing departments! Technological changes are coming at a high speed. From 3G to 4G/LTE and soon to 5G. LTE-A/VoLTE are already there. Discussions about 5G normalization are going on. ADSLis being repleced by VDSL/VDSL2/G.Fast/FTTx. SDN/NFV are coming. Networks virtualization Move to the cloud. More software. Industri ALL TimiSoara Phase 1 21

22 Employment is mainly located in Asia Europe lost a lot of jobs and most of its manufacturing jobs. As regards to manufacturing, the US faced the same situation. Europe still keeps R&D even though competition with Asian countries and the US is hard. An assessment through the main telecom companies lead to a worldwide figure of more than a million jobs. Adding Foxconn headcount would double the figure! Europe s still hosting part of R&D capabilities jobs in Europe only? Industri ALL TimiSoara Phase 1 22

23 Europe struggling to keep its employees and skills Business as usual scenario : 2020 New restructuring Nokia & Ericsson Decline of R&D Almost no factory left. Small European EMS continue to close down factories. Few Investments in Europe except Huawei Desired state scenario in 2020 Rise of European start-ups (SDN/NFV/SON, IoTetc.) Europe ready for 5G with some Networks already rolled out. Rise of R&D located in Europe New manufacturing units Procurement policy from European NSP s. Increased attention to security/sovereignty issues. Industri ALL TimiSoara Phase 1 23