1. Will Cellular beat the Internet? David Lisbona ISOC_IL 5th Annual Conference4/3/01

2. Who’s winning the race? Internet and Cellular rapid rise from 1995/6 Today 350M PC Internet users 700M Mobile phone users 25M Mobile Internet users Of which 20M in Japan

3. How the Japs won with I- mode Content…content…content Flat rate + premium service pricing for end-users Billing via Mobile Operator Low equipment costs also for data Lightweight handsets with larger screens, color, packet data,Java, MP3 cameras

5. Mobile Internet in the West WAP disappoints Few handsets, poor content, mismarketing, slow, poor user experience Waiting for GPRS Another disappointment? Max 20kbps Netheads vs. Bellheads 3G will take longer and be slower– 40/64kbps SMS messaging huge success But starting to flatten out

6. Mobile Trends Java starting to enter phones PDA-phone convergence As PDA’s go down market Location Infrastructure and Servers Bluetooth Machine-to-Machine (M2M) Handset add-ons Radios, MP3 players, Cameras, GPS

7. The Mobile Market Everyone’s got a (first) phone New user market saturation approaching Handsets become replacement market Need new features, benefits Mobile operators fight for users/revenue Need differentiated services Prices for voice calls drop Need new sources of revenue

8. The Marketer’s dream Wireless will follow Wireline pattern Voice Data

9. Rollout Timelines Now – limited HSCSD (28.8 kbps) deployment 2001 First W-CDMA network in Japan 2002 – widespread GPRS (needs handsets and backbone IP network 2003 EDGE, EGPRS 2004-2007 3G launch in Europe, USA

10. PC Internet vs. Cellular Large color screen, Full keyboard Small mono screen, numeric keypad Services are freeYou pay for services Bandwidth is cheaperGreater, variable, opportunity cost You’ve got location Sometimes onAlways on…you

11. M-Internet: The Challenges How to maintain growth What services will subscribers pay for? Can handset manufacturers keep up? Can mobile operators package and market data services? Can “walled gardens” succeed? What’s in it for content providers?

12. Thank you for your attention David Lisbona david@lisbona.com 054-991891