19Jul/160

Mobile payment: M-commerce market revenue will likely grow from 2015 to 2019 at a CAGR of 26.5%

Hao_Yi

Hao Yi Emerging technologies expert, IDATE DigiWorld

The development of the mobile payment market was still heterogeneous in 2015.

 

 

The m-commerce payment market grew steadily, whereas the in-store mobile payment market remained nascent given the transaction volume, although the release of Apple Pay one year earlier had seemingly put an end to the doubts about near field communication (NFC) being the right technology for in-store proximity payment.

MCommerce_revenues_annual_growth_rate_eCommerce_v2

IDATE DigiWorld estimates that the worldwide m-commerce market revenue will likely grow from 2015 to 2019 at a CAGR of 26.5%, growing its share 26% of the overall value of the e-commerce market to 44.2%. As regards the arrival of in-store mobile payments with NFC technology, QR code, mobile wallets, mobile point-of-sale (mPOS) solutions and other mobile payment methods, IDATE DigiWorld values their transaction volume to grow at a CAGR of 74% between 2015 and 2019. The volume of in-store mobile payments is tiny compared to the trillions of USD of all point-of-sale (POS) transactions.

On the in-store payment market, no one has really ‘wined out’ as yet, although Internet giants (Apple, Google and Samsung) as well as card networks (Visa and MasterCard) are very active, and numerous new entrants are flooding in.

In addition, NFC payment working with mobile wallets did not see the expected explosion in volume. Even though the technology and NFC-enabled POS terminals have been progressively in place for many years, the perceived value of such services is low for consumers.

From the perspective of merchants, mobile payment alone is not enough to bring about mass adoption.

Find out more about this market in our dedicated report

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27Jun/160

Industrial Internet: towards the 4th industrial revolution

ROPERT_Samuel

Samuel Ropert
Lead IoT expert at IDATE DigiWorld

We can already observe the integration of IoT technologies in industry assets – which is commonly called smart factory – and emerging use cases, reducing costs and increasing productivity strikingly.

In our latest study we propose an analysis of the heterogeneous industrial landscape on three major axes: Infrastructure (Industry assets), Offering (innovative products accompanied by related services) and Relation with customers.

Industrial Internet is gaining momentum, but still needs several years for larger adoption and especially for an establishment of common standards – today several technologies and concepts coexist and only the fittest will survive when market maturity is reached.

The industrial infrastructure of industrial assets will be optimised through the development of the smart factory concept by implementing new manufacturing practices that take advantage of ICT innovations. This aims to go beyond the introduction of new technologies in the production process. The core principle is the increase in connections and integration of the different ICT-enabled components in a single networked system. The developments of the smart factory result in gains in production costs as defects are eliminated and automation reduces the intensity of human resources in production tasks. Value thus shifts to research and development and design tasks on the one hand, and to after-sales services on the other hand. These shifts impact players, enabling the development of smaller-scale units focusing on the design and engineering of products on the one hand, and the emergence of platforms and ecosystems on the other. Adoption is still limited as we are but in the early years of the smart factory. Major industries now adopting the smart factory encompass aeronautics, automotive and consumer electronics. Energy and transportation are also deploying IoT solutions along their distribution network architecture.

The Industrial Internet (IIoT) is also considered as a way to improve the appeal of core products by providing more services associated with machines rather than expecting new revenues. As a consequence, vertical players are tending to lower their expectations for data monetisation, focusing essentially on using data for process optimisation mainly, bringing more value to their core products. This is even more true for very expensive machines (aircraft, heavy equipment). However, some industries like automotive still aim to generate additional recurring service-based revenues over time through additional interactions (rather than standalone product sales with renewal several years later). They are pushing their subscription-based services, even though the real adoption is still under interrogation (even for premium manufacturers).

In addition, servicisation is also used to increase customer loyalty, where the traditional product purchase (transaction relationship) is being transformed into a recurrent relationship between suppliers and clients. Moreover, new innovative and disruptive pricing models will be introduced, with the example of tyre manufacturers which sell services (on a per-km basis through Tyre-As-A-Service) for professional fleet managers.

Data will play an important and central role in the future as many players aim to leverage the data collected from the connected objects, chiefly for business reasons. There are still questions around the real monetisation of the data as it is based on the ownership of the data itself and its related control. Early initiatives show data use for internal use, circumventing data privacy issues. To build data-managing platforms, the biggest industry players are tending to develop their own digital solutions. For smaller players, data will likely be exploited by third parties, as they lack the appropriate technical expertise and capacity to combine with other data.

The market of the Industrial Internet will be driven by the enabling technologies (LPWA and big data chiefly) which provide disruptive features. Moreover, different national and international initiatives such as Industry 4.0 or the Industrial Internet Consortium (IIC) support the development of these new technologies led by the automation and engineering industry giants.

schema_Industrial_internet

However, in addition to doubts around data monetisation, the market is also facing such barriers as security and reliability concerns, interoperability issues and potential societal impact on workforce training and employment. Furthermore, this is leading industrial giants to have their own data-oriented department and they are required to acquire new skills and expertise around data – a process which also takes time.

 

Get more insights on infrastructure, products and services, customer relationship related to Industrial Internet as well as an analysis of the value chain, possible monetization of data and general drivers and hurdles.

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13Jun/160

Smart home : a promising market in the long term

RAMAHANDRY_Tiana

Tiana Ramahandry
Senior Consultant, IDATE DigiWorld

This market is considered one of the most promising in the Internet of Things sector with a number of connected things could climb from 200 to 900 million between 2015 and 2025.

 

The concept of the smart home can be understood as home automation for the Internet era, but it is a concept that has not yet really caught on.

It encompasses all of the machines in the home that could potentially be connected to the Web. It also includes a wide array of applications, from consumer electronics to home appliances, by way of light bulbs and presence sensors. Today’s market is focused mainly on selling hardware with a built-in connectivity module and which can be controlled remotely using a mobile app. But it now also includes hubs, i.e. central systems that allow the different devices to talk to each other.

Many of the currently available products are connected to managing energy consumption and personal security, as consumers are more inclined to invest in solutions that allow them to lower their electrical bill and/or feel safer in their own home.

A large and heavily populated ecosystem

The digital home ecosystem is vast, populated by a multitude of players from a wide range of industries, including veteran CE and appliance manufacturers, along with power companies and players from the lighting and security industries. Samsung is particularly active in this market, especially since it acquired the start-up SmartThings in 2004. The South Korean giant is selling a complete smart home solution, including a hub to which both the manufacturers’ and its competitors’ equipment can be connected. Philips also has a solid presence in the smart home market thanks to its Hue line of smart bulbs.

The marketplace is also populated by newcomers such as pure players specialised in connected devices – marketing smart thermostats, light bulbs and security cameras. Telcos too have joined the fray, taking advantage
of their modems already deployed in customers’ homes to roll out new initiatives. The Internet giants are also on hand: Google through its acquisition of Nest, a start-up that specialises in smart thermostats, and Apple with its HomeKit smart home development platform.

An ecosystem awash with solution providers means that there are multiple communication protocols at work. The current battle for supremacy between standards is pitting a number of initiatives backed by industry giants against one another.

Adoption of the smart home raises severalquestions

This market, fl edgling as it is, is considered one of the most promising in the Internet of Things sector. IDATE estimates that the number of connected things could climb from 200 to 900 million between 2015 and 2025. Most of the market’s revenue today comes from hardware sales, whose prices are still too high compared to virtually identical products without smart capabilities. Several issues, then, need to be resolved before the market can really take off: the price of connected devices and appliances, privacy concerns raised by the use of personal data, a business model that needs clarifying (including monetising data) and the fragmentation of core technologies.

 

Discover the perspectives,  key trends, and scenarios about the Internet and Smart Living market  for the next decade through our dedicated report.

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24May/160

Video On Demand: Europe’s main markets in the aftermath of Netflix world conquest

LEBORGNE-Florence_NB

Florence Le Borgne
Head of the TV & Digital Content Practice, IDATE DigiWorld

Generally speaking, the arrival of Netflix in a new market results in increased programming costs for its competitors.

 

Using North America as an example, this trend is expected to continue and grow in the coming years, which will question the profitability of such investments.

TVOD_value_sharing

 

Service typology

There are generally three types of pay video-on-demand (VOD) services:

TVOD (Transactional Video-On-Demand) services, which include:

EST (Electronic Sell-Through), also known as DTO or 'Download To Own', is like the traditional sale of physical videograms, but in digital form.

DTR (Download To Rent) is like the traditional rental of videograms, but in digital form.

SVOD (Subscription Video-On-Demand) services, which are based on the dominant pricing model used for linear pay-TV: subscriptions

It is common for the same service to offer several pricing models.

Business models and service positioning

The transactional video-on-demand model is based on revenue sharing between the service provider and the rights holders. Contracts between these two parties can be exclusive, but rarely so. The catalogues of transactional video-on-demand services are usually very large (from 10,000 to hundreds of thousands). Although most TVOD services are non-specialised, consumption is mainly focused on movies.

The business model of SVOD is similar to that of pay-TV. Content rights are purchased at fixed price, regardless of actual consumption. The rights may be exclusive for a given period of time and territory. SVOD catalogues have tended to be available for unlimited consumption so far, including many non-exclusive and older titles (over 5 years old). Although most SVOD offerings are non-specialised, fiction series tend to be promoted and consumed the most. Original and exclusive new content is increasingly used for differentiation. There are currently two contrasting marketing strategies used: strategies based on a volume/cost ratio; and differentiation strategies based on premium or special interest positioning.

Competitive environment

The VOD sector as a whole is witnessing strong growth in Europe, driven by a large increase in the number of services emerging in most countries. Between February 2012 and December 2015, the number of services available in the EU increased by a factor of 5.7 on average.

Although the market share in value terms is still dominated by DTR in Europe (56.5% of the total VOD market), this market segment has been the slowest growing segment over the last five years (+215% on average in EU countries between 2010 and 2015). Revenues from subscription services are experiencing stronger growth: a growth rate of 1,824% over the same period. They generated nearly one-third of VOD revenues in Europe in 2015, whereas they only accounted for 7.6% in 2010.

The true start of the SVOD market in a particular country is often whenever Netflix launches there. Note that Netflix is often the main beneficiary of the rapid growth in subscribers that its launch creates. The arrival of the North American giant does, however, trigger a response from the main players in FTA television and pay-TV. It is the combination of all these elements that contributes to better awareness of these services among the general public and facilitates their adoption.

Competitive environment

The growth and success of video-on-demand services can be very different depending on the market. There are various internal factors:

the propensity for local consumers to pay for access to content;

the price differential with local pay-TV offerings;

the prevalence of piracy of audiovisual and cinematic content;

...

Find out more about the various internal factors

Various issues specific to the structure of on-demand services and players' strategies also play a role:

the relevance of the marketing positioning of the services;

the existence of partnerships with distributors who already have a subscriber/equipment base;

the effectiveness of recommendation systems, which help increase consumption and provide a better user experience;

...

More information about these issues

Profitability conditions and the challenge facing Europe

The issue of achieving profitability with transactional services is not as critical as for subscription services. Because most transactional service costs are variable costs, proportional to consumption, these services are not expensive to create and only become so when the content is actually consumed.

Therefore, there are no real obstacles to creating new services and the costs of entry into the market are low. This explains the abundance of existing services and the great diversity of players in this segment.

The economy for SVOD services is more delicate: as well as technical and marketing costs, content acquisition costs can be regarded as fixed costs because the content is purchased at a fixed price, regardless of consumption. To that can be added costs related to development or acquisition of a recommendation tool. Subscription services therefore have significant costs even before they have started to recruit subscribers.

If the European industry cannot create some European champions of their own to compete with the US giants, many European players may disappear as the market rationalises.

Discover the perspectives,  key trends, and scenarios about the TV market for the next decade through our dedicated report and register to DigiWorld Future 2016 

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24May/160

Telco’s Connected Objects Strategies : how to compete with OTT players

ROPERT_Samuel

Samuel Ropert
Director of Studies, IDATE DigiWorld

The connected object market today shows a real complementarity between the major players in terms of their current positionings, aligned with their core business.

In the longer term, however, IDATE DigiWorld anticipates that competition will grow in ferocity, around the platforms and services which are set to be the next source of revenues.

worldM2M_market_Telcos_connected_objects_strategies

The automotive market

Around the connected car business, is key for Internet giants and telcos. Competition today is, in the main, on the platform side as both telcos and Internet giants are aiming to position themselves here today. Indeed, it is the platform that is the cornerstone of the next connected car strategy. Looking further ahead, the main competitors will most likely be OTT service providers, as they will offer services by exploiting the data generated by sensors in the vehicle – Uber-like companies are one example. Some industry incumbents are already engaged in the battle: earlier in 2016, GM invested half a billion USD in Lyft, the main competitor to Uber. The major involved players are AT&T and Verizon on the side of the telcos and Google (and Apple to a lesser extent) for Internet players.

The wellness market

This market is very recent. Telcos are absent from its value chain, with the exception of very limited volumes of cellular objects. They only focus on the distribution side, where the reselling business can grab them a sale commission on wearable objects, linked to smartphones. OTT Internet players are eying this promising consumer market for the opportunities it will offer in the near future to manipulate and monetise masses of personal data.

The healthcare market :

A specific market for a long time, its very promising market has been in the growing numbers of potential ‘clients’ as their age increases. The key objectives of healthcare applications are to optimise the treatment of disease and to save costs for national healthcare services. Even though solutions will be provided in partnership with experts, both telcos and Internet players will be push platforms and services.

The smart home market

It will be the arena for immense competition in the next few years. It is considered as a growth area for fixed telcos which are already facing competition from cablecos. On the side of the OTT Internet player, smart home applications are seen as a complementary way to follow their consumers/audience, even though they have different approaches. Competition – again, it will be heavy – will on the platform and services side as all players will be wanting to manage the data.

Today, the industrial Internet market is considered as an extension of the Industrial M2M business for telcos. The Internet giants are notable by their absence, even though some could provide cloud-based tool: Google, and Amazon with its specific IoT AWS offering, are prime examples. Analogous with traditional online services, the main threat for telcos is that they yet again become the pipe, and only the pipe. They have, however, anticipated the connectivity commodity trend by offering data platform solutions and related services. The ARPU from connectivity is very limited and the telcos expect only a small share of connected devices will be equipped with a SIM card. Before services, telcos have backed their core business, by setting their eyes on LPWA technologies (SIGFOX or LoRa) or collaborating on LPWA-like cellular ones such as the NB-IoT ahead. They are also backing the next 5G technologies, which aim to empower various verticals, including healthcare, manufacturing, smart cities and the automotive. It will be a tough battle, given that Internet giants are global by definition. Moreover, compared with traditional Web services, the main difference is that Internet giants manufacture their own objects, providing almost an end-to-end solution of product, platform and services on top. Faced with this kind of solution, traditional players in the industry will also suffer from the invasive nature of the OTT Internet players and their fierce competition.

Find out more information on "Telco's Connected Objects Strategies" in our dedicated market report

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27Apr/160

Connected TV: Accelerating OTT video development

BAJON_Jacques

Jacques Bajon
Director of Media & Digital Content Business Unit, IDATE DigiWorld

The development of connected TV is inextricably bound up with the widespread availability of high-speed Internet access, a shift to more and more individual viewing and the proliferation of smart devices in the home.

 

Together, these three elements are steadily revolutionising how viewers access their TV programmes, and providing them with an array of new functions and features. TV sets can be connected to the Internet in several ways. Using:
a smart or connected TV (direct connection, via Ethernet or Wi-Fi),
a connected set-top box,
a streaming box or stick,a connected game console,
or a smart Blu-ray player.

In 2015, almost three-quarters of the televisions being shipped are Smart TVs, even if their owners may not systematically take advantage of the Internet connection. At the same time, the market for streaming devices – whose main purpose is to play online videos – is progressing rapidly. Within this market that is still populated by a great many solutions and services, several trends are taking shape:
the way users access and employ connected TV services has become more simple, and shifted from Internet-centric to video-centric;
managing connectivity with users’ personal devices has become a key issue, with app systems playing an increasingly central role;
OTT services are moving to the TV and making real strides;
...

More information about main trends

Technological progress in a variety of areas is helping to bolster the market’s development, be it the growing ubiquity of broadband and superfast broadband access in the consumer market, major improvements in video optimisation and compression (HEVC), or the advent of innovative features such as casting which allows users to send video content from a personal device to the television. The main stakeholders in the connected TV ecosystem can be broken down into three categories, based on their original sector of activity: consumer electronics (CE) companies, TV market players and the Internet’s leaders.
CE industry players are working to improve their software interfaces, either through dedicated developments such as Samsung has done with Tizen, or by acquiring another company, as LG has done with WebOS. The aim is to capture the added-value in the marketplace, whether in the arena of services and/or by selling high-end devices.
Players from the TV universe are developing their OTT products, and working to bolster their position on the software side of the equation with more open and hybrid platforms. The connected TV could enable them to renew ties with consumers, and better monetise their plans. Broadcasters and pay-TV providers, especially in the United States, are therefore starting to roll out complete OTT plans which include a live component
Lastly, companies such as Google, Amazon, Facebook and Microsoft that dominate the Internet, are very knowledgeable about software, and changing consumer habits. So they are in the best position to deliver a top-notch user experience, whether in terms of smooth and intuitive interfaces, or providing recommendations based on user data. Their increasingly vertical positioning – covering everything from the content to the device – is also bolstering their potential to capture a growing portion of the video entertainment market.

In this way, many scenarios are emerging for Connected TV to 2025, and will determine which industries are likely to increase their control over this environment:

Impact_scenarios_TV_connectee_2025_IDATE_DigiWorld_OTT_VA

The size of the OTT video market will vary considerably under these scenarios, depending on how the environment evolves and so which industries prevail, and The popularity of the different devices will also evolve along the same lines.

Discover the perspectives,  key trends, and scenarios about the TV market for the next decade through our dedicated report and register to DigiWorld Future 2016 

DWF15 video report v3For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.

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7Apr/160

Wearables: new connected devices

ROPERT_Samuel

Samuel Ropert
Director of studies, DigiWorld IDATE

In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.

 

Wearable objects refer to daily consumer objects like wristband, watches, glasses, headsets or activity trackers with embedded sensors and connected mainly indirectly to the internet though a device/hub (through short range technology mainly). Wearable products are used in different applications, even though fitness, wellness and lifestyle are obviously the major segments, in volume notably.  Some opportunities could be seen at the entreprise level which aims to integrate into their premises wearable solutions to improve process and productivity.

The wearable ecosystem is mainly dominated by object manufacturers which are very numerous. Some of them are pure players like Fitbit or Jawbone, others are traditional consumer electronics manufacturers (Sony, Samsung, etc).
Other manufacturers come from the sports world like specialized sport accessory players (Garmin, Suunto or Polar) or sportswear brands with Nike and Adidas chiefly.  On the connectivity side, very few M2M mobile carriers are involved in the wearables market, only AT&T has a real involvement in this segment.  Data-centric players are positioned on the platform business. Most of the pure players like Runtastic, Runkeeper benefit from the product makers allowing them to collect information from their different objects.
The platform is actually the enabler to build services on the top of devices. On the top of the wearable devices, new services should emerge thanks to data exploitation/exchange. In terms of market adoption, surveys show that it is still very limited for now. They illustrate that watches are the most excited wearable devices, but a majority of the consumers seems not to be so enthusiastic to buy one of them. On the market side, according to IDATE, in 2018, 123 million wearable devices should be sold representing a 70% CAGR from the 10 million sold in 2013. Nevertheless, this growth is not homogeneous for each category of wearables. The smart watches will lead the market with 80 million units by 2018 mainly because of the Apple Watch sales starting from 2015. In 2018, the wearables market in value should exceed 22.5 billion EUR. Again, the growth will differ from object to object mainly because of the different price per object.

Wearables_vertical_markets_Samuel_Ropert

Related DigiWorld Research Reports
Internet of Things
Wearables and its verticals
Data Monetization
World Consumer Electronics Markets

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7Apr/160

Internet of Things

ROPERT_Samuel

Samuel Ropert
Director of studies, IDATE DigiWorld

A fast-growing market with 42 billion connected objects in 2015 and the promise of +14% annual growth up to 2025

 

IDATE has published its analysis of and forecasts for the global Internet of Things (IoT) market. An opportunity to deliver a synthesis of the Institute’s many reports on the matter (smart cars, M2M, smart grids, smart cities, smart toys…) to examine a market which, although developing rapidly, still raises a host of questions: is it really taking off, and how fast? Which business models seem the most reliable? Which market players and countries are in the best position to benefit from this new stage in the Internet’s evolution?

Although the Internet of Things is a powerful concept, it is not necessarily a market in and of itself. IoT encompasses a very disparate array of fields that need to be examined separately, to obtain an accurate understanding of their particular features, and their true growth potential.

IDATE forecasts that the global IoT market will grow from a base of 42 billion objects in 2015 to 155 billion in 2025, which translates into an average annual increase of 14%.
Unsurprisingly, the Internet of Objects (IoO) represents the bulk of the IoT market (80%), thanks to its widespread adoption by a number of sectors, and to the very low cost of tags.
The Connected information devices segment is the second largest in terms of volume, representing 13% of connected things, and set to grow by an average 13% a year up to 2025.
M2M (machine to machine) represents only 6% of connected things today.
And the smallest market in terms of volume is also the newest: Wearables & connected objects with 1% in 2015. But it is also the market that will grow the fastest over the next 10 years: by an average 30% per annum up to 2025.

World Internet of Things market, 2013-2025

schema_Internetofthings

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Compared to the size of the Internet of Objects and Connected information devices segments, the rest of the market is splintered between a host of vertical markets:
the utilities market is reporting rapid growth, stimulated by regulations and public policies;
the electronic equipment and automotive markets are also among the largest today, while the consumer electronics industry is incorporating connectivity into more and more traditional products, such as cameras.

The different sectors’ contribution to the global Internet of Things market, in 2015

schema_Internetofthings2

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Is the IoT market changing shape?
To provide a clearer strategic analysis of this disparate set, IDATE has chosen to break down the Internet of Things market into four key areas. A distinction can be drawn between consumer and business products, on the one hand, and between the different types of connectivity, on the other:
silo connectivity: a close loop of dedicated links between objects and servers, using direct connectivity or a hub, e.g. a smart meter or a payment terminal;
interconnected connectivity: different types of communication between the objects themselves, mainly through the same hub, e.g. appliances in the home such as a washing machine that signals the end of the cycle on the TV screen.

The report provides a detailed analysis of the resulting, four key IoT markets:
M2M, which covers production loops and closed loops based on applications;
Wearables and connected objects which, by definition, do not talk to each other;
Industrial Internet, which refers to the smart factory concept, with interactions between multiple applications that need to optimise their internal processes;
The smart home, a concept under which applications can communication with one another without having to go through the Internet.

The Internet of Things market

schema_internetofthings3

Source: IDATE DigiWorld, “The Internet of Things”, October 2015

Discover the perspectives,  key trends, and scenarios about the Internet market for the next decade through our dedicated report and register to DigiWorld Future 2016 

DWF15 video report v3For the publication of the 16th edition of the DigiWorld Yearbook (pre-order now), IDATE is organizing a conference based on the detailed analysis of the current situations and some forecasts by IDATE experts on the major digital sectors, the discussion will deal with the great trends and challenges that will disrupt the digital markets by 2025.

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10Mar/160

A strong potential for FTTH/B development in LATAM…

CHAILLOU_Valerie84x126

Valérie Chaillou
Director of Studies, Strategy Business Unit, IDATE

but facing important heterogeneity from one country to another in terms of demographics, economics and players’ involvement.

 

The FTTH/B market remains at an early stage in the LATAM region: at end 2015, there were 3.65 million subscribers and 20.1 million Homes Passed in the 16 countries analysed in the panorama. Most countries are still focusing on the expansion and availability of traditional Broadband throughout their whole territory. The region is also facing economic difficulties: the disparity is not only between countries, but also inside countries, which can explain why Superfast Broadband is not a priority yet.

One of the main characteristics of the region is its heterogeneity: the involvement of national authorities differs a lot from one country to another as they include or not the telecommunications infrastructures in their overall development strategy. On the regulatory side, there are no specific rules devoted to the enhancement of superfast Broadband in general and FTTH/B in particular.

At end 2015, the largest FTTH/B market in LATAM is Mexico, which now slightly overpasses Brazil with 1.29 million subs (vs 1.25 million subs in Brazil). Both countries represent more than 69% of the regional number of subscribers, which is representative of the demographics. Another country showed a very interesting growth, Colombia, which now counts more than 1.3 million Homes Passed and 150,000 subscribers.

On the largest markets, competition seems to have had a positive impact and really enhanced FTTH players to enlarge and/or accelerate their rollouts. This is for instance the case in Brazil, Argentina, Mexico, and Chile. The kind of players involved in FTTH can also be quite different when comparing the countries. In some cases (Argentina, Mexico, Chile, Uruguay…), the incumbents play a key role and are really active in this new market. But in most cases, the first rollouts have been initiated by small private players, focused on limited areas, at least in the short/medium term. As an example, the Mexican market grew significantly during 2015, with +46% subscribers: the competition between two leading players, Telmex on one side and TotalPlay on the other side, seems to positively drive the market. On its side, the Brazilian market grew a little bit less (+ 32% subs) and is also driven by the strong involvement of national players, but also of small players rolling out in very located areas.

Since 2013, we have seen the emergence of pan-regional players, in particular when coming to the Caribbean islands. Cable & Wireless Communications, through its brand name LIME, is a leading player in Barbados and Jamaica, where it is involved in FTTH rollouts. Another player was cable operator Columbus Communications, which operated under the brand name Flow in Barbados and Jamaica but also in Grenada ad Trinidad & Tobago. At beginning 2015, Cable & Wireless acquired Columbus Communications and decided to provide its Superfast Broadband services under the Flow brand in most markets. Even if Docsis 3.0 is the main infrastructure, the cableco also rolled out some FTTH networks in small areas.

In larger countries, we can of course mention Telefonica Group, which applies a strategy dedicated to each market where it is present. Then, America Movil is another important LATAM player through its brand Claro. America Movil is also deploying both FTTLA+Docsis 3.0 and FTTH networks, depending on the concerned country.

The involvement of such kind of pan-regional players could represent a great opportunity for the enhancement of FTTH/B in the region as, even if not obvious for the moment, they could decide to adopt a common strategy on the different market, one supporting another…

Generally speaking, the LATAM region has a strong potential for FTTH, because of its demography and the dynamism of its real estate market. But it also encounters difficulties due to the fact that the international interconnectivity is not always efficient. For instance, in Bolivia, the international interconnectivity is undersized, which has an impact on the real capacities that ISPs are able to provide to their customers.

However, we have seen very positive signs for FTTH since 2013: the growths in terms of both coverage (Homes Passed) and take up rate (subscribers) are impressive (respectively +46 and +57% in 2014, then +27% and +39% in 2015).The FTTH offering seems to have encountered a great success towards end users. Most players provide Triple Play services that include TV services. And several players have launched 1 Gbps solutions few months ago now.

Number of FTTH/B Homes Passed in LATAM countries

schema_FTTH-B

Source: IDATE, on behalf of the FTTH Council LATAM Chapter

When comparing the LATAM region with other ore mature ones in the world, it is obvious that the potential is very high because the market is at its very early stage. But it is also noteworthy to mention that, in terms of penetration rates (number of subscribers on total numbers of households in a country), 9 LATAM countries have entered the global ranking as of September 2015, with rates from 1.76% (Brazil) to more than 47% (Uruguay, where the penetration rate is even higher than in the leading European countries in the ranking!).

IDATE publishes a half-yearly updated FTTx observatory, gathering qualitative and quantitative data of 70 countries and +150 players – see details online

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1Mar/160

420 million connected cars generating a €9 billion connectivity market in 2020

ROPERT_Samuel

Samuel Ropert
Director of Studies, IDATE DigiWorld

 

 

 

IDATE has just released its latest market report on connected cars, which is part of its ongoing series on the Internet of Things and M2M. The report provides an opportunity to take stock of a major market whose rate of development appears to be accelerating, with a series of announcements, veteran industry leaders such as Mercedes talking about driverless cars, the rise of newcomers such as Tesla, and connected car projects coming out of China, as foreshadowed by the new joint-venture between Internet giant, Alibaba and one of China’s first car-makers, SAIC Motors.

This is a market that every stakeholder along the value chain is gearing up for.

The strategy of most manufacturers is to make their cars connected. The main driver here is based on the regulation related to safety issues in Europe and the underlying revenue opportunity for them. In the USA, the recent GM announcement to embed 4G modules in all new cars is seen as a key trigger for market take-off. For telcos, the revenue opportunity could be interesting as the connected car will generate traffic that telcos will charge for indirectly (through the automobile manufacturer).

All main M2M mobile carriers are involved in the connected car space, as the connected car represents one of the major markets in volume. In a context where their traditional mobile revenues are flat and even declining in some regions, providing mobile connectivity in cars is a key business opportunity for telcos. Beyond car-related applications in driver assistance, from the perspective of a telco, the car can be seen as an additional cellular device, with a potential high-consumption service profile with such usage as the mobile Internet, entertainment on demand and mobile hotspot features. The prime business model remains the traditional wholesale relationship (B2B2C), even though some telcos like AT&T try to address end users directly through B2C models (through a retail data plan) and the integration of an automotive into the mobile share plan.

For Internet players, the strategy here is clear: the automobile is an additional connected device just as smartphones, tablets and laptops and needs to be addressed. However, Apple and Google do not have really the same approach. Indeed, whereas Apple aims to introduce its technology to interface with its products, Google is promoting the embedment of its technology into the car as a regular device. Google also wants to collect data to provide the most accurate advertising as possible, such as a related point-of-interest, based mainly on location.

A market that is starting to take off

On the market side, according to IDATE, in 2020, 420 million automobiles will be connected, representing a 34% CAGR on the 74 million connected vehicles in 2014. Nevertheless, this growth is not homogeneous for each category of connected cars. The embedded systems will lead the market by 2020.

Asia will lead the connected car market in 2020. Europe benefits from a 39% CAGR by 2020, mainly thanks to eCall regulation, entering onto market by end-2018.

In 2020, connectivity revenue for connected cars will exceed 9 billion EUR. In value, North America will be the leading zone, mainly due to higher ARPU than anywhere else in the world both for telematics and infotainment offerings. This encompasses direct connectivity through embedded systems but also indirect revenue related to smartphone usage. The major issues to be raised here are on the real willingness of the user to pay for such services. To encourage users to subscribe, telcos and manufacturers are already contemplating different revenue models including share plans. All the same, adoption is likely to remain limited over the next five years.

Forecast for connected car evolution, by implementation technique
worldwide, 2020 (%, Million units)

Schema_cars

The headlines are full of the self-driving vehicle, which is on everyone’s lips in the industry. Automation could be framed at six levels, ranging from zero autonomy to fully automated. The leading manufacturers are, at the first steps, mainly luxury car providers. The traditional car manufacturers are focused on the semi-autonomous route, but the ‘upstarts’ from the realm of the Internet, such as Google and Apple, are straightaway testing the waters of the fully autonomous car. Nevertheless, many issues need to be removed to see the self-driving car market take off. Currently, they are legal (on how to handle accident responsibility), cultural (seeing no real demand from end users) and economical (on who will fund the infrastructure).

 Find out more information on "Content economics market" in our dedicated market report

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