Global Gadget Industry Overview: Current and Future Trends

1. GLOBAL GADGETS Jerry Lai Larry Wang Mike Chow MasoudTashorofi Jinglong Zhang

2. Agenda • Industry Overview • Current & future trends • Apple • Google • RIM

3. IndustryOverview

4. Global Gadget History

5. The Computer • 1936: first freely programmable computer • 1951: first commercial computer released • 1974: first consumer computers (IBM) • 1976: Apple I,II • 1984: Apple Macintosh • 1985: Microsoft Windows

6. Internet • 1969: the original internet • 1971: first email sent • 1990: Archie, the first search engine • 1991: Internet available for commercial use • 1996: more email than post mail in the USA : BackRub search engine (Stanford) • 1997: Google (googol)

7. Mobile Phones • 1973: Motorola cell phone created • April 3, 1973: first cell phone call made by Martin Cooper • 1983: first cell phone available to consumers • 2009: 600 million mobile phone subscribers • 2010: 5 billion subscriptions UN said

8. What is a Smartphone?? • All in one device that can be used as a cell phone and has computing, PDA functions • Variety of applications available

9. Evolution of the Smartphone? • 1992: Simon • Created by IBM • Touch screen, fax, email, predictive keyboard • 1996: Nokia 9000 • 2002: Handspring Treo 180 (Palm OS) • 2002: Blackberry • 2007: iPhone • 2008: First Android OS phones

11. Smartphone Operating Systems • Symbian Ltd.: Symbian • Popular outside of the United States • Acquired by Nokia in 2008 • Palm, Inc.: Palm • Initially designed for PDA’s • Microsoft: Windows Phone 7 • Replacing Windows Mobile

12. Smartphone Operating Systems Apple, Inc. - iPhone OS • Mobile version of Mac OSX • Multi-TouchTM user interface • Third-party developed applications

13. Apple iPods • Media player iTouch • portable media player, personal digital assistant, and Wi-Fi mobile platform iPhone • iTouch with cell phone function

14. Apple iPad • tablet computer iTunes • Pricing model, media player and online store Apple TV • Digital media receiver, play IPTV

15. Smartphone Operating Systems Google Android OS • Based on Linux Kernel • Created by Android Corporation; purchased in July 2005 by Google • Multi-touch and media feature

16. Google Android phone • Android mobile OS Android Marketplace • online software store Google TV

17. Smartphone Operating Systems RIM: Blackberry • Popular among business professionals • Unique push-email feature • Traditionally secure network • Third party applications

18. Rim Blackberry phones • Blackberry OS Blackberry Playbook • Tablet computer (blackpad)

19. Mobile OS in US share

20. Worldwide Smartphone Market Shares Worldwide Smartphone Market share, Q1 & Q4 2010 (Source: Gartner)

21. Current & Future Trends

22. Mobile and Smartphone usage: • Growth of mobile phone and Smartphone usage in developing countries • The Smartphone was originally for the business user • Sept 2010: 58.7 million Americans own Smartphones (up 15% since March)

23. Digital Revolution 1990: • Cell phone users: 12.4 million (0.25% of world population) • Internet users: 2.8 million (0.05% of world population) 2002: • Cell phone users: 1.174 billion (19% of world population) • Internet users: 631 million (11% of world population) 2010: • Cell phone users: 4 billion (67% of world population) • Internet users: 1.8 billion (26.6% of world population)

24. Digital Music • Broadly spread in mobile devices • iTunes Store provides revenue stream for digital content: • Music • Podcasts • Books • Apps

25. Social Media • Facebook, Twitter, YouTube, Myspace, etc

26. Social Media Goes Mobile • More than 200 million active users currently accessing Facebook through their mobile devices, which are twice as active on Facebook than non-mobile users in 2010. • Social media will focus more on mobile devices in the next five years, including smartphones and tablet PCs.

27. Advertising… • Google; Sponsored links • Smartphone advertising in applications • Application advertising • Build an application under the company name • Social media advertising • Facebook, twitter, myspace

28. Trends in Mobile Phone

31. Hardware Trends to Watch • Dual-core processors • 3D displays • NFC (Near-Field Communications) • Dual SIM cards • HD Video • LTE (aka. 4G)

32. Tablet PC: Combines the Smartphone, laptop and PDA • iPad 1 & 2 • Motorola Xoom • Hp Touch Pad • Blackberry Playbook • Samsung Tab 1 & 2

33. The mobile trend doesn’t just bring joy to mobile ad companies, it also boosts the adoption rate of social sites likeTwitterandfacebook. Mainstream Tablets Comparison

34. Battle on Apps • Increased market growth • Apple’s competitors increased their market share

35. Battle on Apps (Cont’d) • Omnipresence of Android • Companies are getting in on the act

36. Application Store Comparison

37. What We Can Predict

38. What We Can Predict (Cont’d) • The Dominance of Android • New Apple iPhone models • Symbian won't go away • BlackBerry needs change

39. Apple Inc.

40. Financial Snapshot

41. 5-Year Stock Performance

42. 1-Year Performance

43. 5-Yr Cumulative Return

44. Company Profile • Apple Inc. (formerly known as Apple Computer, Inc.) was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne • Main business segment involves developing consumer electronics • Main Headquarter located in Cupertino, California

45. Company Successes • 1977: Apple II meets success • 1991: Powerbook 100, Apple’s portable computer • 2001: iPod introduced ( 220 Million sold as of 2009) • 2003: iTunes opens; first successful revenue stream for digital music. • 2007: iPhone “reinvents the mobile phone” • 2010: iPadintroduced. Since then, more than 14 million sold.

46. Mission Statement Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWorks, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.

47. Product Revenue - 2010 Total Revenue: $65.225 Billion

48. Recent Developments • iPhone4 CDMA released – Verizon • iPad 2 launched – Launched in U.S on March 11th, over 300,000 sold within 24 hrs. • Product sales growth (over 2009)- iPhone: 93%- iMac (desktop): 43% • Success in Asia-Pacific- Net Sales increase of 160% ($5.1 Billion)

49. Acquisitions - 2010 • Intrinsity ($121 Million) • Produces high performance microprocessors, likely to be used in the iPhone and iPod • Quattro Wireless ($275 Million) • Software contributing to the development of iAd mobile advertising Note: Little spent on acquisitions compared to R&D spending ($1.78 Billion).

50. Threats to Profitability • Reliance on third-party patents and intellectual property • Rapid patent and product development leads to infringement and litigation (eight ongoing cases). • Competitive technological industry • Continual innovation, product introduction and transitions • Reliance on third-party developers • Digital content and application software