Transcript ISPs and The New Paths to Profit

ISPs and
The New Paths
to Profit
ISP Market
 State
of the Industry
- Growth
- New Business Models
- Challenges
 Focus
on Services
- Access
- Network Hosted Applications
 Lucent
Support Programs/Contacts
Lucent Technologies Proprietary
ISP State of the Industry
14,000 ISPs Worldwide
________________
Worldwide ISP
Services Revenue
$25.5B 1998 $154.5B 2003
Source: Datamonitor, August 1999
______________
Wireless Broadband Edges Into Europe -Broadband Networking News 4/27/99
Web Won’t Remain English
Centric --dot.COM, June 1999.
America Online to Spend $10 Billion
on Cable Access -- internet.com, 9/23/99
Growth and Competition
Lucent Technologies Proprietary
Growth Patterns Shift Dramatically
Users by Region
Leading Countries - By Users
Year End 1999
COUNTRY
US
Japan
UK
Canada
Germany
Top Five
Australia
Brazil
China
France
South Korea
Taiwan
Italy
Sweden
Netherlands
Spain
Top 15
MILLIONS
ONLINE
110.8
18.2
13.9
13.3
12.3
168.5
6.8
6.8
6.3
5.7
5.6
4.8
4.7
3.9
2.9
2.9
218.9
% OF
WORLD
42.8
7.0
5.4
5.1
4.7
65
2.6
2.6
2.4
2.2
2.2
1.9
1.8
1.5
1.1
1.1
84.5
Rest of World
40.1
15.5
Worldwide
259.0
100%
N. America
W. Europe
Asia Pacific
Latin America
E. Europe
Middle
East/Africa
TOTAL
1998
82.9
34.7
24.6
2.7
3.0
2.9
%
55.0
23.0
16.3
1.8
2.0
1.9
150.8M
2005
229.8
202.2
171.1
43.5
43.8
26.7
%
32.0
28.2
23.9
6.1
6.1
3.7
717.M
Source: Computer Industry Almanac, August 1999
By 2005, Western and Eastern
Europe combined will surpass the
U.S. in % of Internet users.
Top 5 countries account for 65% of
all Internet users; Top 15 countries
account for 84.5% of all
Internet users.
Source: Computer Industry Almanac, November 1999
Lucent Technologies Proprietary
New Business Models
Today
Tomorrow
Time
Content
Distance
Operator
Metrics
Bandwidth
Price
Commerce
Communications
End-User
Metrics
Convenience
Customization
Lucent Technologies Proprietary
Challenges for ISPs
 Rapid
growth in usage will strain network resources
and test quality and reliability
 Targeting
and acquiring new customers most
effectively
 Need
to differentiate themselves from the multitude of
competitors.
 Ability
to deliver and support value-added services as
well as broadband applications such as e-commerce,
Voice over IP, and Streaming Video.
 Attain
required resources and skill sets through
strategic acquisitions, mergers and partnerships.
Lucent Technologies Proprietary
Focus on Services
Web
sourcing
Get closer to the customer

Engage customer at a
higher level

Integrate and bundle

Differentiate and tailor

Evolve and innovate
apps
hosting
LAN
outsourcing
Server
farms
access &
network
mediation
IP
backbone
systems
integration
service
hosting
content
hosting
Connectivity
provision
desktop
mgmt
Ride up the value chain

Create network needs

Make the network ‘smarter’
by centralizing storage and
processing
Competitive pressures driving
evolution up value chain
Source: Analysys, 1999
Lucent Technologies Proprietary
The Sky’s the Limit
Applications
Hosting
Managed
Services
Value-Added
Services
Broadband
Access
Unprecedented Opportunities to Make Money
Lucent Technologies Proprietary
Bandwidth is Here and Growing
Worldwide Installed Base of Finished Modems
200
150
Millions
of Units
100
50
0
1993
1994
1995
1996
33.6 Kbps or lower
1997
1998
56 Kpbs
Source: VisionQuest 2000
Lucent Technologies Proprietary
1999
2000e
2001e
2002e
Broadband
2003e
Broadband Fueling
Access Revenue….
U.S. Broadband Access Spending
$25
$20
Consumer 20
Internet
access
spending 15
(billions)
27 million
broadband
consumers
Annual growth rate
for broadband
80%
10
Annual growth rate
for dial-up
$7
45 million
dial-up
consumers
8%
5
$1
Source:
Forrester Research
April 1999
0
1993
Annual growth
rate
for dial-up
48%
1998
2003
Broadband will propel consumer spending to $20 billion.
Lucent Technologies Proprietary
The DSL Market Is Exploding!
Number of DSL Lines in the U.S.*
(Millions)
12

267% increase from
1998 to 1999

Expected to double
again next year

Carriers are rushing to meet
the demand

New service
opportunities abound
MILLIONS
10
8
6
4
2
0
1998 1999 2000 2001 2002 2003 2004
* Source: Computer Economics, 1999
Lucent Technologies Proprietary
DSL Primary Drivers
 End-user
requirements for higher bandwidth and
easier access
 New
applications
 Efficient
 Telco’s
re-use of existing copper infrastructure
answer to high-speed cable offerings
Lucent Technologies Proprietary
Wireless Internet:
A Billion Dollar Market...
Worldwide Wireless Internet Access Revenues
($ Millions U.S. Dollars)
1400
1200
Business
Consumer
1000
800
600
400
200
0
1998
1999
2000
2001
2002
Source: Dataquest, 1999
Lucent Technologies Proprietary
Wireless Primary Drivers
 Deregulation
and competition fostered by
Telecommunications Act of 1996, and FCC allocation
of spectrum for local access services.
 Service
Provider desire to bypass incumbent LECs
with their own networks.
 Increased
need for bandwidth in the local loop, driven
by expanded Internet traffic.
 Data
demands of small and medium-size enterprises.
 Speed-to-Market
and cost-effectiveness of deploying
broadband wireless services.
Lucent Technologies Proprietary
Hosting Opportunity
Web-Hosting Service Revenues by Business Size
18000
Small
15000
Medium
12000
Large
Total
9000
6000
3000
0
Source: IDC, 1999
1998
1999
200
2001
2002
2003
Small business the largest customer segment for
Web-hosting services will reach $10.7 billion in 2003
accounting for almost 61% of total.
Lucent Technologies Proprietary
Hosted Application Revenues
Application
ECommerce
1999
.240
2000
.630
2001
1.417
2002
2.768
2003
4.738
CRM
Manufacturing
/Logistics
HR
Finance &
Accounting
Supply Chain
Product
Development
Industry
Specific
TOTAL
.244
.166
.475
.325
.871
.598
1.507
1.036
2.453
1.686
.091
.151
.182
.263
.335
.404
.573
.625
.911
.916
.018
.015
.039
.032
.078
.065
.149
.124
.269
.224
.008
.017
.033
.064
.115
.933
1.964
3.802
6.846
11.311
Hosted applications are expected to experience
significant growth over the next few years
Lucent Technologies Proprietary
Hosting Primary Drivers
 Vigor
of the IT industry, particularly Internet
E-Commerce
 Need
for bandwidth and high-performance
web-technology
 Need
for rapid time to market
 Complexity
of sophisticated Web-site
architectures
 Shortage
 Need
of high-quality IT personnel
to focus on core competencies
Lucent Technologies Proprietary
Data Centers
Foundation for Hosting
Data Centers offer ISPs an opportunity to increase
their access to profitable segments of the marketplace
by delivering web and application hosting services.
 Increase
revenue through delivery of new hosted
application services such as email and unified
messaging.


Host internet services for 3rd parties
Differentiate yourself through the delivery of
“convergent” applications that integrate voice, data
and video features, and offers content, commerce and
communications functionality.
Lucent Technologies Proprietary
Data Centers an Apps Bonanza

Media
– Video on Demand/Streaming
– Broadcast/Realtime
– Audio/Entertainment

Search Engine

Web site management

Database/directory services

Data storage management

Business Processes
– Sales Force Automation (SFA)
– Enterprise Resource Planning (ERP)
– Customer Relationship Management
(CRM)
– Knowledge management
– Data analysis
– Risk management
– Financial Management
– Groupware
– Human Resources
– Legal

Industry Specific applications

Commerce-based applications
–
–
–
–
–
–
–

E-commerce
E-services
E-procurement
Supply Chain Management
On-line Auction
On-line Gaming
Advertising
Communications
–
–
–
–
–
–
–
–
–
–
Lucent Technologies Proprietary
Distance Learning
Unified messaging
Instant messaging
Communications management
Email
Chat
Multimedia Collaboration
Security
Voice services
Call Centers
Data Example:
IP VPN Market Continues to Grow
U. S. Market
2500
2016
2000
1392
1500
900
1000
585
500
336
0
1999
2000
2001
Lucent Technologies Proprietary
2002
2003
Voice Example:
VoIP Poised for Explosive Growth
Billions of $ (U.S.)
12
Wholesale
Business
Consumer
10
8
6
4
2
0
1998
1999
2000
2001
2002
2003
Worldwide Market To Reach $10 Billion by 2003
Source: IDC, 1999
Lucent Technologies Proprietary
New Opportunities Abound...

Broadband content brings files closer to the user. As portals and
application providers shift to multimedia, their performance will be
determined by the ability of their servers to shell out data. Content providers
will contract with content distribution service vendors to deploy local
content POPs.
Opportunity for ISPs to be the local POP for content and application hosting

Consumers with multiple PCs and accounts will need IT support for
installation, home networking, and ongoing help.
Opportunity for ISPs to offer Installation, VAR, and Hotline services directly
or in partnership with broadband providers

Users will turn to wireless for high speed access where population is not
large enough for cable to install two-way service or is too far from an ADSLenabled central office
Opportunity for ISPs to become broadband access providers by
deploying new products for unlicensed wireless spectrum
Lucent Technologies Proprietary
The Lucent Difference
Next-Generation
Networks
Business
Solutions
Obsessed
with our
Customers’
Success
Expertise
Lucent Technologies Proprietary
Network
Management
& Customer
Care
NetCare Professional Services:
A Full Suite of Network Services
Planning








Business & Network
Consulting
Network Audit &
Assessment
Network
Optimization
Voice/Data
Convergence
Assessment
Network Security
Planning, Policy,
and Assessment
Network
Applications
Requirements
Windows 2000
Readiness
Co-Location
Transport Strategy
and Planning
Design


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

Implementation
Network Design
(WAN & LAN)
Engineering
Tools & Software
Development
Multimedia Design
Converged
Voice/Data Network
Design
Network Security
Design
Windows Network
Infrastructure
Design
Operations
Architecture
Design
Service Provider
Backbone and
Infrastructure
Network Design










Staging & Testing
Project
Management
Integration and
Testing
Upgrades
Remote Access
Converged
Voice/Data
Implementation
Network Security
Implementation
Windows Network
Infrastructure
Implementation
Back Office
Implementation
SLA Management
Lucent Technologies Proprietary
Operations








Network
Operations
Consulting &
Optimization
Staff Augmentation
Network
Management
Network
Maintenance
Operational
Security Support
Penetration Testing
Microsoft
Exchange Tune-Up
NOC Operations &
Transition for
Service Providers
and Enterprises
Lucent Full Circle Program

A Comprehensive Program to develop applications for NextGeneration Networks through partnership

Lucent Working with and supporting:
– Content Developers and Aggregators
– Independent Software Vendors
– and Technology Partners

For the Purpose of Creating a Rich Collaborative Environment for
the Creation of Customized Applications, Services & Content

Enabling the Delivery of these New Applications and Services to
Lucent Customers and Partners

Leading the Industry in Making Next-Generation Networks a
Reality
Lucent Technologies Proprietary
ISP Marketing Support Program
Marketing Tools
Checkmate Marketing Tools
Churn Reduction Tools
Lucent Technologies Proprietary
For More Information...
Lucent Support Programs:
 Full
Circle Program
www.lucent.com/full_circle
 NetCare®
Professional Services
www/lucent.com/NetCare
 ISP
Marketing Support Program
www.lucent.com/isp
Lucent Technologies Proprietary