ST Presentation v2

Slide1 : Mark Hopkins TPA Business Develop, America BWRC 2002 Winter Retreat 07 – January - 2002


STMicroelectronics : STMicroelectronics World’s 3rd largest independent semiconductor company, 6th overall. Top-ranked IC supplier for STBs, Smartcards, HDDs, xDSL, Printers, Handsets, Automotive. Distinguishing strategic alliance customers. Solid balance sheet and sustained profitability. Broadest portfolio of IP and process technology. Strongly positioned to address wireless data.


Slide3 : What 3G will look like.


Slide4 : All new technologies go through three stages: MANIA, COLLAPSE, REBIRTH


A Wireless Future : A Wireless Future Mobile users are the world’s largest consumer market. Wireless industry has predicted a mobile data revolution evolution that will transform the mobile phone into the Internet’s ubiquitous node. Society is moving to a new age of “persistent communications”? The speed of data evolution will depend on carrier revenue, compelling services, user privacy, and content protection. This evolution will be defined by social changes in life style and behavior. “Society, not marketing, will determine how the wireless world unfolds.” Robert Blinkoff (Anthropologist, Newsweek 10-Dec-01)


Audience Poll : Audience Poll Q: How many have used a cellphone (or wireless PDA) to do the following? read email? text messaging? buy something? listen to music? play games? visit an Internet site?


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Mobile Multimedia 3G Perspective


Wireless Standards : Wireless Standards Digital Voice Text Messaging Circuit-switched data 9.6-14.4 kbps AMPS TACS NMT RTMS 1G ANALOG GSM IS-54/136 TDMA IS-95/cdmaOne PDC 2G DIGITAL CDPD, HSCSD, RICOCHET GPRS, GAIT cdma2000 (1xRTT) 2.5G or 2G+ WCDMA (UTRA) CDMA 1xEV, 3XRTT 3G (IMT2000) Analog Voice No Data Capability Nat'l Roaming MMedia Download Voice + Pkt Data Always – On Internet <100kbps / user MMedia Streaming >100kbps / user Voice + Pkt Data Always – On Internet 802.11b, and HyperLAN2 WLAN UMTS (ETSI)


Upgrade Paths to 3G : Upgrade Paths to 3G


3G Auctions : 3G Auctions $129 billion has been spend on 3G licenses as of September 2001. Source: 3GNewsroom.com


Wireless Data Rates : Wireless Data Rates Theoretical Data Rates Best case aggregate raw bit rate (L1) per cell/sector. Practical Data Rates Average data speeds for individual users is much slower. Actual Video Performance radio link conditions, motion content, frame rate (temporal redundancy)


Wired vs Wireless : Wired vs Wireless The Wireless Internet is different than the Wired (PC) Internet. Maturity, complexity, no free content, user experience, … Wired Internet Personal computing and information access. Standard device (PC), UI (Windows), transport (HTTP/TCP/IP). This platform uniformity and a strong economy facilitated innovation. Wireless Internet Personalized communications anytime/anywhere. Conflicting standards, devices, operating systems and protocols. This complexity and our economic uncertainty are slowing wls innovation.


Wireless Internet Complexity : Wireless Internet Complexity


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Mobile Multimedia 3G Perspective


2001 Downturn : 2001 Downturn The first down year for handset shipments. Significant wireless market capitalization was lost. Voice revenue (ARPU) declined in many countries. Network spending decreased (% of carrier revenue) while traffic congestion increased. Mobile carriers pushed out their 3G launch plans.


2002 Turn-Around : 2002 Turn-Around Analysts are predicting wireless market growth by mid-2002. 2.5G handset sales will reach 50-80Mu. Growth (CAGR) projections through 2005. Subscriber Growth: +17% CapEx and Equipment Growth: +0-30% Handset Unit Sales Growth: +16% Handset demand is driven by market penetration and replacement. Worldwide subscriber population will grow by 200M annually. Replacement purchases will surpass new handset purchases. Replacement purchases are due in part to churn. Source: Robertson Stephens International Ltd.


Japan : Japan Pace setter for mobile data technology and services. 70% of mobile users (2G) are data subscribers. 3G beauty contests instead of auctions. Shortest handset replacement cycle (12-18 months). NTT DoKoMo I-Mode (2G/PDC) data service introduced in 1998. 29M subscribers, ARPU of $12, wildly successful with kids. FOMA (3G/W-CDMA) data service introduced in Tokyo last October. Service Package Fees: $17 (pack20), $33 (pack40), $67 (pack80) Goals: break even, national coverage, 6M subscribers by 2004. 64Kbps video service is circuit-switched.


Europe : Europe Major markets are approaching saturation. UTMS operators are committed to building 3G networks. Mobile micropayment for parking, vending and retail. SMS messaging has demonstrated a “data-ready” consumer base.


SMS Applications : SMS Applications Bank account information. Stock price alerts. Encrypted doctor perscriptions and patent remainers. Weather or traffic reports. Airline flight status information. Safety & Convenience (family and friends)


North American : North American PC and Automobile–centric culture. 50% of households have a PC. 50% of mobile calls are made from a car. Mobile solutions try to deliver a subset of PC functionality. The focus of mobile data in America is on Enterprise. 60% of businesses worldwide are Internet connected. Business professionals are the heaviest users of mobile data. Standards fragmentation and lower population density make horizontal deployment more challenging and costly. “Walled garden” psychology works best for deploying vertical services. Financial markets want an enterprise story after the consumer Internet meltdown. Source: Gartner DataQuest Survey


Market Penetration : Market Penetration Source: Robertson Stephens Internetational, Ltd.


Handset Forecast (Million Units) : Handset Forecast (Million Units) Source: Robertson Stephens International, Ltd.


Handset Shipments by Generation(Percentage of Total Market) : Handset Shipments by Generation (Percentage of Total Market) Source: CIBC World Markets, Global Mobile, Gartner Group Estimates


Worldwide PDA Forecast (Mu) : Worldwide PDA Forecast (Mu) Sources: Gartner Dataquest (Q3/01)


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Mobile Multimedia 3G Perspective


2.5/3G Handsets : 2.5/3G Handsets New data services will encourage users to upgrade phones often. 209% CAGR for data handset shipments from 2001 to 2004. Next-generation mobile phones will feature the following capabilities: Full Color Display Voice Activation Multimedia Messaging FM Radio MP3 Player PDA Capability Embedded Digital Camera GPS Location Internet Web Access Video (download, streaming) Java Support WLAN Connectivity Bluetooth Connectivity 2D Graphics & Action Buttons Smartcard Interface Memory Cards and Sticks Source: CIBC World Markets Corp.


“Remote Control for Life.” – Jorma Ollila, Chairman & CEO Nokia Corp. : “Remote Control for Life.” – Jorma Ollila, Chairman & CEO Nokia Corp. User Location User Calendar User Contacts Email Inbox eWallet Music Notifications User Docs User Address User Appl. Settings Favorite WebSites


Mobile Phones : Mobile Phones People will have a mix of mobile phones for the home, office and car. Mobile phones will target specific applications and markets. Consumers prefer ease-of-use, elegance and low cost over complexity. Smartphones, Music Phones, Game Phones, Video Phones, Java Phones 3G Nokia Categories: Imaging, Multimedia, Entertainment, Communicator Java Phone Video Phone Wls PDA Communicator PDA Phones


Mobile Convergence : Mobile Convergence MP3 Player Notebook PDA Game Console Voice-Centric Multimedia Convergence Communicator Data-Centric Smart Phone Web Pad Video Phone Voice Phone VOICE + DATA Smartphones Phone/PDA combo productivity tool for business professionals. VOICE + DATA + MULTIMEDIA Hybrid Phones Personal Accessory Phones used for productivity, fun, and safety. Handset Evolution


Service Sectors : Service Sectors Custom enterprise services. Provided by operators to small businesses Provided by companies to mobile employees Remote access to time-critical and image-based information. Consumer life-style services. Media-enhanced messaging and email. Video information (news, sports, weather, financial). Video monitors (traffic, home, classroom, nightclubs) Mobile commerce (payment, ticketing, trading, banking, shopping). Location and travel assistance (E911, guides, schedules, maps, directories) Entertainment (music, games and video downloads).


Mobile Multimedia : Mobile Multimedia Multimedia is essential for compelling “sticky” services. Fun applications that engage users in long air-time sessions. Vendors are racing to deliver full color displays and multimedia capabilities. Handset form factor and battery life are major challenges. MPEG-4 Video Standard Selected by 3GPP for use in 3G phones. Open standard lets carriers to distribute the same content across all OSes. User Interactivity, High Compression, Error Resilience and Scalability.


Multimedia Applications : Multimedia Applications Download & Playback Ring Tones & Picture Icons MMS (cartoons, animations, still images) MP3 Music Files Video Clips (news/sports highlights, promotions, TV previews, home clips, movie trailers). Video Monitoring Slow 1-way streaming video (surveillance, traffic, child care). Video Phone Full-duplex, live A/V/D communications. Gaming and Java with A/V sequences.


PDA/Phone Combos : PDA/Phone Combos Handspring Treo180 ($399): GSM phone, Palm OS organizer, PC sync, eMail, SMS text messaging, keyboard for thumb typing, and wireless Web. Samsung's SPH-I300 ($499.99): cdma PCS phone, PalmOS organizer, PC sync, 256-color display, writing recognition, SMS, eMail, wireless Web, golf game, and easy to hold. Note: Both phones let you dial directly from an address book using the touch screen.


Hybrid Phones : Hybrid Phones Nokia 7650: GPRS phone, integrated digital camera, MMS, photo album for picture storage, joystick, and and color display; VGA (640x480 pixels) imaging res., and graphical color display (176x208 pixels, 35x41mm). Nokia 6510: GPRS phone, HSCSD, electronic wallet, FM radio, wireless Web (WAP 1.2.1), and week view calendar.


Instant Messengers : Instant Messengers AOL Mobile Communicator ($99.95 + $29.95 monthly): A 2-way messaging device with roller and keyboard that gives AOL members another way to access instant messaging and e-mail. Automatically syncs with your AOL buddy list. Nokia 5510: Music player & recorder, FM radio, game console (5 games), multiple chat, multiple SMS sending, WAP, 64MB memory, split keyboard for fast text input, and Nokia PC software for copying CD's, organizing and downloading AAC music files.


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Mobile Multimedia 3G Perspective


Who Owns the Data Customer? : Who Owns the Data Customer? Retail Device OEMs Operating System Carrier Infrast. & Technology Content PocketPC Nokia Verizon eBooks PacketVideo CNN Network Operators (Vodafone/Vizzavi, NTT/I-Mode) Control wireless access, roaming, billing systems, and GPS data. Content Providers & Retailers (AOL Anywhere, Yahoo Mobile) Control consumer brand and awareness. OS & Technology Providers, OEMs (ClubNokia.com, Palm.net) Control what devices can do.


Carrier Revenue : Carrier Revenue Most operator balance sheets are not spectacular. 3G will require massive capital expenditure. Worldwide voice revenues will grow 15% annually. Daily minutes keep increasing, while per-minute rates keep decrease. Carriers in mature markets must and generate new revenue with data. Est. 2005 ARPU will $45.50; 75% for VOICE and 25% for DATA. Source: Robertson Stephens International, Ltd.


Billing Scenarios : Billing Scenarios Multimedia services must be fixed rate or one-time fee. Carrier / Provider billing scenarios. Airtime (voice service) Flat Rate (basic services & information) Per-MByte (messaging, eMail, corp. data transfers) Subscriptions (premium services & Internet sites) Pay-per-View (multimedia content, live CAMs) Pay-per-Play (interactive games) Pay-per-Transaction (micro-payment, reservations, ticketing) Advertising (e-coupons and marketing alerts) Projected Data Revenue Mix per Mobile User in 2005. Flat Rate ($5.0) + Bytes ($5.0) + Advertising ($.50) + Other ($1.0) = $11.50 Source: Robertson Stephens International, Ltd.


Monetize the Wireless Internet? : Monetize the Wireless Internet? Data Services must be location-sensitive, timely, and personalized. Subscribers will be offered various Premium Data Services. Digital Music (jukebox and radio) Secure email (with encryption) Calendaring (with instant messaging & notifications) Financial Management (with online payment) Personal Locators (friends and family members) Multimedia Content (downloads and streaming) Digital Storage (subscriber material) Internet Telephony


Mobile Entertainment Companies : Mobile Entertainment Companies Airborne Entertainment AOL Time Warner CinemaElectric Inc. Digital Bridges Ltd. Digital Hollywood LAMDAT Mobile Kanakaris Wireless Mforma Corp. Mobile Entertainment Forum Mobilocity Inc. New Line Cinema nGame Ltd PacketVideo Corp. PlanetHopper Inc. Premium Wireless Services Inc. Riot Entertainment Sony Pictures Digital Entertainment Unplugged Games Inc. Upoc Inc. Versaly Games Inc. VPStar Inc. Walt Disney Internet Group Wireless Intertainment Service Zingy Source: Wireless Week


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Mobile Multimedia 3G Perspective


ST Perspective : ST Perspective Demand for wireless multimedia information will take off with affordable bandwidth, whether by 2.5/3G or WLAN. The embryonic Wireless Internet is best served with an OPEN application platform that permits unlimited IP diversity for product differentiation. A winning wireless application platform requires a comprehensive energy management strategy. Baseband chipsets and application coprocessors should be optimally partitioned to allow independent evolution at their own maximum rates. Real-time client encode is too MIPS-intensive for software implementation if video quality, meaningful frame rates, and low power are desired.


ST Multimedia Coprocessor : ST Multimedia Coprocessor Silicon-to-software application platform for mobile multimedia devices. Incorporates five essential elements. ST portfolio of multimedia and convergence technology IP. Open hardware and software architectures. Comprehensive energy management. Leading OS and tier-1 middleware ports to silicon. Modeling, verification, and software development tools.


ST Multimedia Portfolio : ST Multimedia Portfolio IMAGE SENSOR Repartition for lower system cost & power Alternative sensor I/F for power VGA o CIF IMAGING Integration allows multiple video <> Optimized for local feedback from MPEG4 JPEG Codec GRAPHICS 2D: PIM/PDA, basic action games 3D: fully texture games VIDEO COMPRESSION MPEG4: QCIF to PAL resolution H.263 ACOUSTIC TECHNOLOGY (MMDSP) Quite zone microphone Noise/Echo cancellation Enhancement to speech recognition Voice Intelligibility (Noise Dependent Eq.) SECURITY SUPPORT (Optional) Watermarking, secure content, DRM, … DISPLAY Video response STN with advanced low power drive Multimode power/quality Optimum refresh partitioning for sub-mW power VOICE TECHNOLOGY (ARM9) Speech Recognition (3rd party) Text to Speech (3rd party) Biometric Verification (3rd party) GPS (ARM9) ST two-chip solution 3rd party IP BLUETOOTH (ARM9) ST single-chip solution DIGITAL AUDIO (MMDSP) Decoder (MP3, MPEG1,2 L1&2) DTS, DOLBY DIGITAL,AAC,PAC) Encoder (MP3, MPEG L1&2,AAC) 3D Surround (SRS, …) Audio pre/post processing Secure Digital Music ST Coprocessor


ST Platform Openness : ST Platform Openness Defacto-standard processor and OS for mobile multimedia? The “monopoly processor model” does not fit the Wireless Internet. A true “Open Platform” is needed to protect investment in sw and tools. Open SOC architecture, standards-based codec and file formats, hardware/software partitioning flexibility. Real platform openness will be a fundamental ST distinction. Widely licensed embedded CPUs from ARM Ltd. Multi-layer AHB system with provisions for expansion. Open software structure with API mapping that allows transparent hw/sw partitioning of tasks on DSPs or in silicon.


SOC Architectures : SOC Architectures LCD LCD LCD Unified Baseband Solution Standalone Decoder HW-Codec Coprocessor SW-Codec Coprocessors


ST Energy Management : ST Energy Management Power reduction over the entire multimedia chip. CPU efficiency (mW/MIPS) is one aspect of the challenge. Comprehensive power reduction and control mechanisms. Low-leakage cell libraries to improve standby time. Dedicated codec peripherals that offload the CPU. Cache/memory hierarchy design for low power, including eDRAM. Power driven RTL synthesis. Intelligent frequency and voltage scaling. Selective power down of idle components and subsystems. ISA coprocessors for process-intensive functions. Intelligent OS application multi-threading.


ST System Solution Model : ST System Solution Model WCE JAVA ST ARM SYMBIAN 3GPP 3GPP2 API COMMON TO DSP AND HW ACCELERATION SW DEVELOPERS SW DEVELOPERS


AGENDA: What 3G will look like. : AGENDA: What 3G will look like. Wireless Evolution Market Outlook Handsets & Applications Carriers & Providers ST Position 3G Perspective


3G Perspective : 3G Perspective The wireless industry has gone from over optimism to over pessimism. Technolgy cannot be introduced to consumers in a “Big Bang” fashion. Consumers want technology that makes life simpler and less mundane. Every consumer measures value differently. AOL and Yahoo were successful before broadband. Consumers will drive the market as they become experienced users.


General Trends : General Trends 2.5G networks will prove or disprove the future of mobile data, not 3G. Compression and acceleration technologies are essential for meeting consumer performance expectations. 3G will be an incremental five- to ten-year network upgrade cycle. 70% of worldwide mobile subscribers will end up on WCDMA networks. 3G will share the stage with WLAN technologies like 802.11.


Mobile Data Progression : Mobile Data Progression


Behavior Trends : Behavior Trends Consumers will want 2.5G phones, even if they aren’t data users. Teens and young adults will be early adopters of data. Web browsing will be unnecessary once mobile users preset phones to frequently checked sites. Driver (or Walker) Mode Passive Applications: Voice, Messaging, Music, Pictures, Mobile Payments Moving Passenger Mode Active Applications: eMail, Games, Video Monitoring, Video Playback. Stationary Traveler Mode LAN (indoor) Applications: eBooks, Movies, Video Phone, Graphics


Short-Term (2002) : Short-Term (2002) Large and mid-sized companies will start to take the wireless data plunge. Carrier focus in mature markets will shift from market share to ARPU with data. Location-based services will finally be introduced. Data phone users will have to carry spare batteries because of rapid drain. Carrier consolidations and network sharing deals will continue. Introduction of data will further crowd America’s radio spectrum.


Mid-Term (2003-2005) : Mid-Term (2003-2005) 2.5G handset shipments will surpass voice handset shipments. Mobile commerce and multimedia services will generate fastest revenue growth, but voice minutes will still lead. Successful multimedia applications will be non-realtime (send & retrieve) and demand less bandwidth. WLANs may provide mobile device users with QoS bandwidth for full video indoors. Significant deployment of 3G in Japan by 2003, in Europe by 2004, and in North America by 2005.


Long-Term (beyond 2005) : Long-Term (beyond 2005) The boom is mobile phones is only the beginning! Consumer mobile revenues will eclipse the enterprise market. Content providers will challenge carriers for dominance of mobile portals. 4G will be a hybrid system providing seamless access to ubiquitous services across different IP networks.


Slide58 : Futurists always over-estimate short-term impact, but under-estimate long term impact.


Thank you. : Thank you. Mark Hopkins STMicroelectonics 4690 Executive Drive, Suite 200 San Diego, CA 92131 (mark.hopking@st.com)