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The total cost of ownership for embedded mobile devices

The total cost of ownership for embedded mobile devices . Ian Streule. 8 December 2010. Embedded mobile applications are forecast to grow significantly. Diagnostic and control systems. Traditional telemetry and M2M systems. New connected consumer devices.

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The total cost of ownership for embedded mobile devices

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  1. The total cost of ownership for embedded mobile devices Ian Streule 8 December 2010

  2. Embedded mobile applications are forecast to grow significantly Diagnostic and control systems Traditional telemetry and M2M systems New connected consumer devices Connected enterprise and business equipment Health monitoring …and many, many more applications Source: cepro.com, cambridgeconsultants.com

  3. Today’s deployment decisions could create long-term problems • Around 90% of the devices currently being deployed are 2G* • 2G module prices are lower • Many devices have long lifespans (up to 20 years) • A base of 2G devices could constrain the way that operators use their spectrum • especially their ability to re-farm 2G spectrum • decommissioning 2G networks may trigger large costs to replace 2G devices We’ve calculated the total cost of ownership (TCO) for both 2G and 3G devices We’ve assessed the impact of deploying 2G devices on mobile operators’ network strategies * Source: Stakeholder interviews

  4. Our approach was twofold Interviews with 24 stakeholders • 6 mobile operators • 5 module designers/developers • 4 solution/platform providers • 7 suppliers specific to certain vertical sectors • 2 retail/consumer players Detailed modelling of TCO and replacement costs • TCO: • we modelled the costs by year over the lifetime of the device • Replacement costs: • we calculated the costs to replace legacy 2G modules if operators wish to decommission 2G networks

  5. We have defined a ‘cost stack’ for embedded mobile devices Cost stack Summary Network usage Network Service connection Design and provisioning Systems and platforms Distribution and installation Aggregated Approvals Integration manufacturing Design Components Comms module

  6. The comms module contributes only a small proportion of the TCO 20 23 21 20 25 20 26 USD 6% 5% 12% 2% 6% 6% 13% as % of TCO 1000 800 Average TCOs for 2G and 3G devices deployed in 2011 (USD) 600 Network traffic Design and 400 provisioning Comms module 200 0 Consumer/h-hold Source: Analysys Mason, 2010

  7. The TCO of 3G modules is almost always lower than for 2G modules 3,000 2G 2,500 3G 2,000 Average TCOs for 2G and 3G devices deployed in 2011 in the transport sector (USD) 1,500 1,000 2G 3G 500 Fleet vehicle Private vehicle management theft/ecall 0 systems systems Enforced replacement Network traffic Design and provisioning Comms module Source: Analysys Mason, 2010

  8. Today’s device choices could limit mobile operators’ flexibility • Replacing legacy 2G modules in order to decommission 2G networks and re-farm 2G spectrum is likely to be costly • The opportunity cost of retaining a 2G network and acquiring additional spectrum for 3G or 4G is even higher Cost of replacing 2G modules for typical W. European operator* decommissioning 2G network in 2020 300 250 Industry continues to use 2G modules 200 USD millions 150 Industry adopts 3G modules for long-service devices 100 50 0 * Defined as having 10 million traditional subscribers Source: Analysys Mason, 2010

  9. Our conclusion … • In almost all scenarios 3G embedded mobile devices have a lower TCO than 2G • They are also a more future-proofed solution, as: • they lead to mobile operators having more flexibility regarding their network strategies • they are better equipped to meet future demand for embedded mobile applications (e.g. higher throughput, lower latency)

  10. Ian Streule Ian.Streule@analysysmason.com Analysys Mason Limited St Giles Court, 24 Castle Street Cambridge CB3 0AJ, UK Tel: +44 (0)1223 460600 Fax: +44 (0)1223 460866 www.analysysmason.com Registered in England No. 5177472

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