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Embrace new revenue sources Living in an apps driven world

Implications for communications service providers April 2011

Contents
Innovation in mobile devices and the rapid growth of mobile applications is driving the communications market toward a new and exciting era. HP and PwC examine the challenges and opportunities for today’s Communications Service Providers (CSPs).Executive summary The changing landscape for consumers and CSPs Apps everywhere An apps ecosystem in transition Device: innovation accelerated by mobility Computing: processing power enabling apps capabilities Connectivity: dealing with a bottleneck Strategic implications for CSPs Creating innovative pricing strategies Leveraging apps across platforms Upgrading the user experience: power,reliability and security Redefining the value chain to deliver the “connected home” Conclusion About the authors 1 2 2 3 3 4 4 5 5 5 6 7 7 viii

PwC • Contents

Executive summary
The emergence of apps has triggered a mobility revolution in IT. The promise of internet via the mobile phone has finally started to become a reality as a result of innovation and the emergence of a new ecosystem to createand support apps. Consumers are increasingly influencing innovation through open minds and rapid adoption. Consumer demand is being stimulated by an ever growing range of providers from large new entrants to “garage” type start ups. Established players in key sectors such as media and mobile devices are being forced to rethink their entire product strategy and business model in response to theseshifts. What if apps is not just a fad and precipitates a fundamental change to not only mobile, but to all laptops and PCs, offering opportunities to communications service providers (CSPs) to confidently enter new markets and access new streams of income? The apps ecosystem where users rely on devices, computing and connectivity for their apps requirements is in transition and rapidly evolving:consumers are increasingly influencing innovation in a dynamic provider landscape. Device and bandwidth requirements were previously driven by browsing and email access, now apps appear to be the new driver of innovation, requiring increased device processing power, improved displays and reliable bandwidth. Each element of this ecosystem offers not only challenges but distinct and relatedopportunities for IT companies and CSPs to carve out differentiating value propositions in a highly competitive marketplace. Established players in key sectors such as media and mobile devices are being forced to rethink their strategy and business model in response to these shifts. To address these challenges and harness the opportunities in this apps-driven world, CSPs may want to consider severalstrategic implications to support their growth plans. We have seen the first tentative signs of leveraging apps from smartphones, through tablet devices onto laptops and PCs,

The continued proliferation of mobile applications will open vital new revenue opportunities for Communications Service Providers (CSPs).1

liberalising new ongoing revenue streams from traditionally low yield assets withinthe enterprise or family wallet. Further, as the majority of homes are now packed with various mobile and fixed computing devices, media players and even smart TV’s, it may allow the CSP to become the technology partner of choice. Some CSPs are better positioned to address these markets, the mobile CSPs typically have a high street presence and some fixed network operators have major online retailpresences. Apps are creating new revenue opportunities and in some cases entire new value chains. Technology companies are supporting this explosive growth through investments in virtualisation and cloud technologies. In turn, this is fuelling further consumer and enterprise demand as users increasingly expect to be able to access apps and supporting data from the “cloud” wherever and whenever....