© GSM Association 2010 Strictly Confidential © GSM Association 2010 Embedded Mobile Programme Ton Brand, Programme Manager Embedded Mobile The GSMA Embedded Mobile Programme Working towards a Connected Life

© GSM Association 2010 Strictly Confidential Mobile Beyond Voice A WORLD OF CONNECTIONS…HealthcareUtilitiesGovernment Consumer Electronics Automotive 2

© GSM Association 2010 Strictly Confidential Embedded Mobile is gaining momentum… 3 For years the promise of M2M had been held back by : The fragmented nature of both, the technology vendors and the solutions they provide. Network Operator fears of low ARPU (Average Cost per Unit) Lack of any single killer application The complex nature of M2M solutions An inability to express the benefits of M2M in anything other than cost savings, rather than exploiting the service enablement capabilities of M2M. Now momentum is being generated by legislation in segments such as energy and automotive as well as mobile operators taking a more serious look at this potentially huge opportunity

© GSM Association 2010 Strictly Confidential Scenario Comparison (by 2020) 4

© GSM Association 2010 Strictly Confidential GSMA Strategy The Embedded Mobile Programme has a three year outlook into the market. Strategic objectives to be achieved by 2013: – Enable the market expansion to reach 500 million connected devices Create the conditions for the reduction of module costs and the total cost of ownership Reduce barriers associated with Test & Certification, Provisioning, Wholesale and Roaming and Regulatory – Stimulate and accelerate innovation in the verticals of Health, Transport, Utilities and Consumer Electronics

© GSM Association 2010 Strictly Confidential Modules was the first step Cost of modules can represent a considerable share of the total cost of device (e.g. 21% of Kindle); 2G module price previously declined by 10-15% year on year; Scale and production efficiency (e.g. Volume increase from 500,000 to 20mn units) brings down module prices on average by ~ 15%; GSMA objective: facilitate module price decline to its long-term target by enabling scale. Source: GSMA 4% Battery 5% Multimedia App Processor 5% Printed Circuit Board 21% Wireless BB module 32% Display module 17% Other Costs 15% Other Components

© GSM Association 2010 Strictly Confidential Total Cost of Ownership is the next step Device hardware costs are only a small portion of the total costs of ownership for embedded mobile service. While the cost breakdown will vary depending on a use case, the following ranges, calculated based on several specific cases, provide an indication of the cost drivers (as a percentage of the total cost of ownership (TCO)) TOTAL COST OF OWNERSHIP% of TCO Module Hardware3%-7% Certification – device level versus platform approach4%-5% Device Hardware and Non-recurring Engineering Costs (NRE, e.g. device development and integration) 20%-40% Support – provisioning, activation, ongoing support and upgrades 9-25% Connectivity and Value-Added Service costs– based on average revenue per user (ARPU) vs connections -oriented business models 30%-57% Source: GSMA EM Guidelines release 1