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TMCNET eNEWSLETTER SIGNUP Mobile Device Strategies of ATandT, MTS, Telefónica, China Unicom and Orange Examined
[March 05, 2014] Mobile Device Strategies of ATandT, MTS, Telefónica, China Unicom and Orange Examined

(M2 PressWIRE Via Acquire Media NewsEdge) offers "Smartphone Strategies: How Devices Can Revitalize the Role of Operators in the Mobile Ecosystem" market research report in its store. Revolution has been sweeping the mobile telecom world for years by the rise of a new ruler - the smartphone. This report presents strategies for mobile operators to use in response to the challenges brought by the new situation. It examines strategies such as device portfolios, smartphone distribution, subsidies, buy-backs, trade-ins, reverse subsidies, own-branded devices, handset financing, data-sharing, tablets, OTT services. This report examines the device strategies of five mobile operators in depth: ATandT, MTS, Telefnica, China Unicom and Orange. Complete report is available at .

Introduction and Landscape of Smartphone Strategies: How Devices Can Revitalize the Role of Operators in the Mobile Ecosystem Report: Revolution has been sweeping the mobile telecom world for the past few years. Despite being characterized by fast-paced change from its infancy, the industry has been shaken to its foundations by the rise of a new ruler: the smartphone. Under its reign, traffic has moved from voice to data, and power has shifted from the mobile operators to application developers, OTT service providers and most of all the leading OS providers. In the report Smartphone Strategies: How Devices Can Revitalize the Role of Operators in the Mobile Ecosystem, Pyramid Research presents strategies for mobile operators to use in response to the challenges brought by the new situation. The report shows how a mobile operator can use its device strategy to reposition its business in order to both defend itself against damage from the smartphone revolution and to make the most of the many opportunities the revolution has ushered in. It examines strategies such as device portfolios, smartphone distribution, subsidies, buy-backs, trade-ins, reverse subsidies, own-branded devices, handset financing, data-sharing, tablets, OTT services. This report examines the device strategies of five mobile operators in depth. In terms of their business environment and device strategy, each of the five has specific experience that we believe provides valuable insights from which providers from around the globe can learn when drawing up their own strategies: ATandT, MTS, Telefnica, China Unicom and Orange.

Table of Contents for Smartphone Strategies: How Devices Can Revitalize the Role of Operators in the Mobile Ecosystem Research Report: Table of exhibits 5 Executive summary 7 Section 1: Introduction 10 1.1 Business context: In the land of the smartphone revolution 10 Smartphones are rapidly turning the mobile industry software-centric, with the rise of app stores having adverse effects on mobile operators" business 12 Power and revenue shifts prompt mobile operators to take action 14 1.2 Report objective, structure and definitions 16 Definitions 16 Section 2: Device strategies - key to reinventing mobile operators in an industry transfigured by smartphones 18 2.1 How the rise of OS ecosystems changed mobile operators" position in the industry and what they can rely on to fight back 18 Despite the changes, mobile operators still have strengths they can draw on to reinvent their device strategies and regain lost market relevance 23 2.2 Device strategies: realigning mobile operators" business and redefining their role in the disrupted mobile industry 28 Distribution strategy: mobile operators" role in device retail 28 An experiential sales approach is vital to deepening operators" involvement in device retail and contributes to smartphone penetration growth 31 Smartphones are leading many emerging-market operators to increase their involvement in handset distribution and expand their retail chains 32 Using device partnerships can help mobile operators influence the existing OS ecosystem duopoly that comfortably rules the industry. 33 Profit pressures stemming from smartphone subsidies suggest that mobile operators should consider alternative business models 34 Telefnica in Spain shows unsubsidized handsets combined with device financing is a viable business model 37 Some emerging market operators combine subsidies with more affordable smartphones to improve penetration and profitability 38 Mobile operators increasingly use alternative business models such as reverse subsidies, "buy-back and trade-in" and handset leasing 38 Other players can offer handset financing in place of the mobile operator 42 Own-brand device strategies help strengthen operator market influence 43 Device customization can raise the profile of operator data services, giving them an edge over OTT players 46 New devices, such as tablets, open new business opportunities for operators 47 Data sharing plans are proving effective at attracting new devices 49 To fight the threat from OS ecosystems and OTTs, operators must adopt strategies where software is vital and where devices are an important tool 50 The acquisition of software skills is important to the future of mobile operators, affecting in particular their device strategy 52 Rich communications fully integrated with devices and networks may be key in mobile operators" battle against OTT communication providers 52 Multiscreen: mobile operators" advantage over OTT service providers 55 Partnering with OTTs may also be an option when fighting the impending OTT menace, using models such as toll-free data access to apps 56 2.3 Conclusions, recommendations and emerging trends 58 Section 3: Operator case studies 62 3.1 ATandT: The first iPhone supporter rethinks its smartphone subsidy as competition weighs on revenue and profits 63 ATandT embraced iPhone exclusivity in order to become more competitive, attract new customers and create new revenue opportunities 64 The iPhone strategy had benefits but also caveats, revealed by the loss of exclusivity, which eventually prompted ATandT to take action to curb mounting profitability pressures 66 ATandT"s strategy readjustments are starting to show results, but more change is to come as the market evolves toward lower subsidies - or none 69 3.2 MTS: boosts smartphone penetration without subsidies 73 A ban on device subsidies challenges MTS as it seeks to expand smartphone uptake across its footprint 74 MTS drew up a new strategy to face challenges and pursue the data opportunity 75 Increased retail presence, vendor partnerships, own-brand devices and financing options such as reverse subsidies were decisive in strategy rollout 76 New device strategy is producing good results, contributing decisively for increased smartphone uptake and revenue growth 78 3.3 Telefnica: Discontinuing subsidies in Spain and supporting Mozilla"s Firefox OS to pursue data opportunity in Latin America 81 Discontinuing subsidies as a part of its New Commercial Model in Spain 83 The no-subsidy strategy has had mixed results 87 Supporting Mozilla to pursue data opportunity in Latin America 93 3.4 China Unicom: expanding value chain presence while using affordable smartphones to drive 3G and gain market share 99 Using smartphones and data services to boost its competitiveness in the market 100 Affordable handsets proved key to boosting 3G uptake in a strategy based on crucial retail and vendor partnerships 101 Strategic results for China Unicom 104 3.5 Orange: Using scale to build partnerships and develop an own-brand device ecosystem, reinforcing its value chain position 108 Orange"s device strategy uses scale to build beneficial partnerships 109 A global unit coordinates handset procurement and related partnerships, supporting local operations in delivering attractive devices that drive demand 110 Valuable vendor partnerships and an own-brand device ecosystem has strengthened Orange"s position in the value chain 111 Own-brand devices and customization also support the growth of Orange"s data services offering, beefed up by content partnerships 114 Companies mentioned 116 Acronyms and abbreviations 117 Related resources 118 List Of Exhibits Exhibit 1: Smartphone share of total handset sales - global and by region 11 Exhibit 2: Data as a share of total mobile ARPS, globally and by region 12 Exhibit 3: Comparison of EBITDA evolution among selected global mobile operators and Apple 15 Exhibit 4: Central role of mobile operators in pre-iPhone mobile services value chain 19 Exhibit 5: Partial marginalization of mobile operators in today"s post-iPhone mobile services value chain 20 Exhibit 6: iOS and Android devices and app stores 21 Exhibit 7: SWOT analysis of mobile operator device strategies in developed markets 24 Exhibit 8: SWOT analysis of mobile operator device strategies in emerging markets 25 Exhibit 9: High-involvement and low-involvement distribution strategies and their pros and cons 30 Exhibit 10: Mobile churn levels in developed and emerging markets, 2012 31 Exhibit 11: Vodafone India store revamped under "Retail of Tomorrow" initiative 32 Exhibit 12: "Windows Demo Zones" in MTS retail shops, promoting experimentation with devices 33 Exhibit 13: Evolution of average handset and smartphone prices globally, 2008-2012 35 Exhibit 14: Vodafone Red offerings allowing greater customization - UK 37 Exhibit 15: Aircel iPhone 4 reverse subsidies offered in May 2011 40 Exhibit 16: Vodafone UK handset lease "Red Hot" offering - August 2013 42 Exhibit 17: Samsung Galaxy S4 trade-in discounts and financing in India 43 Exhibit 18: Example of ODMs working with mobile operators 44 Exhibit 19: Comparison of Vodafone own-brand smartphones with similar branded devices in the UK 45 Exhibit 20: T-Mobile Germany mobile video service, including access to football TV channels and exclusive content 47 Exhibit 21: Amazon Kindle Fire HD and promotional price comparison 48 Exhibit 22: Verizon Wireless Share Everything data sharing plans, offering a common data allowance and unlimited voice and texting across devices 50 Exhibit 23: Firefox OS, Mozilla"s new mobile OS 51 Exhibit 24: Telefnica Digital, Telefnica"s innovation-focused business unit, supporting the development of Firefox OS devices 52 Exhibit 25: Standard services and potential service extensions of RCS-e communications 54 Exhibit 26: ATandT"s U-verse multiscreen converged offering, including pay-TV 55 Exhibit 27: Customized smartphones with specific Facebook access 56 Exhibit 28: China Unicom"s SIM-only offering, which includes a data allowance for Tencent"s WeChat OTT messaging app 58 Exhibit 29: Global smartphone and feature phone sell-through projections, 2012-2018 61 Exhibit 30: Smartphone unit sell-through shares of emerging and developed markets, 2012-2018 61 Exhibit 31: Mobile operator included in the case studies, with geographic footprints, subscriber bases and device strategy experience 62 Exhibit 32: ATandT"s current smartphone portfolio by vendor - August 2013 63 Exhibit 33: Total subscribers and churn evolution of ATandT, 2005-2012 65 Exhibit 34: ATandT Mobility"s total ARPS, data ARPS and year-on-year change, 2005-2012 66 Exhibit 35: ATandT Mobility"s total equipment revenue, and year-on-year change in equipment revenue and cost of equipment sales 68 Exhibit 36: ATandT Mobility"s EBITDA margin and service revenue evolution 69 Exhibit 37: ATandT trade-in program providing cash for purchases or donations 70 Exhibit 38: ATandT Mobile Share - a bucket of data shared among multiple devices and account members 71 Exhibit 39: MTS Russia"s smartphone portfolio by vendor, August 2013 73 Exhibit 40: MTS 3i strategy launched in 2009 75 Exhibit 41: MTS"s flagship retail store 76 Exhibit 42: MTS own-brand devices - MTS S7 Tablet, MTS 960 and the most recent MTS 970 smartphone 78 Exhibit 43: MTS"s non-messaging data ARPS and mobile Internet penetration 79 Exhibit 44: MTS"s OIBDA margin evolution from 2006 to 2012 80 Exhibit 45: Telefnica Spain smartphone portfolio by vendor, August 2013 82 Exhibit 46: Telefnica Spain"s New Commercial Model 84 Exhibit 47: Telefnica Spain"s total ARPS, data ARPS and adjusted OIBDA margin, 2008-2011 85 Exhibit 48: Example of an online product offer by Telefnica Spain stressing the monthly installment cost of the new Samsung Galaxy 4 87 Exhibit 49: Quarterly market shares of mobile operators in Spain 88 Exhibit 50: Cost of subsidized and unsubsidized 16GB iPhone 5s with mobile services at equivalent voice and data service levels over 24 months, May 2013 88 Exhibit 51: Cost of 16GB iPhone 5 and 24 months of mobile service, subsidized and unsubsidized at cheapest available service level, May 2013 89 Exhibit 52: Telefnica Spain"s quarterly mobile service and handset revenue, and mobile subscriber trends 91 Exhibit 53: Telefnica Spain"s quarterly OIBDA margin evolution 92 Exhibit 54: Mozilla partner support: mobile operators and vendors 95 Exhibit 55: Mozilla partner support: content providers 96 Exhibit 56: First Firefox OS devices: ZTE Open and Alcatel One Touch Fire 97 Exhibit 57: China Unicom smartphone portfolio by vendor, August 2013 99 Exhibit 58: China Unicom launched 3G in October 2009 under the Wo brand 100 Exhibit 59: China Unicom"s subsidy costs and 3G net additions, Q4 2009 to Q1 2013 102 Exhibit 60: China Unicom"s customized low-cost (1,000 yuan) smartphones 103 Exhibit 61: China Unicom"s 3G ARPS, total ARPS, 3G subscriptions and total subscriptions, 2009-2012 105 Exhibit 62: China Unicom"s subsidy costs and EBTDA margins, 2009-2012 106 Exhibit 63: Orange"s smartphone portfolios in France and Spain combined, by vendor, August 2013 108 Exhibit 64: Orange"s global operational footprint 109 Exhibit 65: Examples of Orange own-brand entry-level smartphones 113 Exhibit 66: Examples of Orange own-brand advanced smartphones 113 Exhibit 67: MyOrange app, providing smartphone customization 115 Explore more reports on the smartphone market .

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