Western European Blended Services Market Potentially Worth A Cumulative €14.0B for Carriers Over Five Years

Lucent Technologies: communications operators’ potential market for blended lifestyle services in France, Germany, Italy, Spain and the UK combined could reach a cumulative total of €14.0B by 2011.

Lucent projected the potential market size by surveying a targeted market sample – nearly 1,500 consumers and enterprises – across those five countries. To accurately assess interest in blended services, Lucent simulated market conditions using a leading statistical methodology known as discrete choice modeling. This method enabled Lucent to determine which blended services, consisting of key applications sets, will generate the greatest interest at which price points. The market simulation has the ability to assess likely product and service success before a product is ready for the test market.

The research objective was to identify the value, market demand and willingness to pay for blended lifestyle services – that is the inter-working of voice, video, data and multimedia applications to produce personalized services. Among the key findings:

• Twice as many consumers and enterprises are willing to pay more for blended services (inter-working or blending separate applications or services into a single service), than those who are willing to pay more for bundled services (a package of separate applications or services) alone.

• Early adopter consumers are more likely to be either young males looking for fresh, multiple applications to get things done or somewhat older consumers with a higher overall income (greater than €45K) seeking simple solutions for their technology needs.

• Early enterprise adopters are large, multi-location corporations seeking portability, company network access, and flexibility of communications with more emphasis on the quality rather than the price of blended services.

• Convenience is more important for very small companies (10 or fewer employees) than other enterprises, while portability and remote access to the company network are also important but not rated quite as high as with the large firms. These companies are more price sensitive and look for technology upgrades to have a more immediate impact on their bottom line.

• More than 60 percent of enterprises and consumers across five Western European countries are willing to switch providers to get blended services.

Based on survey responses, consumers’ most preferred blended service was a Family and Friends package containing key applications related to messaging, location-based and presence services, call management, calendar, and dual mode phone capabilities. Estimated revenue for Family and Friends peaked at a price of €39 a month and a theoretical 25 percent market share of the total number of individuals who prefer this service. The total consumer market for blended services is projected to have a five-year cumulative revenue opportunity of €6.6B by 2011 with an estimated 6.3 million subscribers.

Enterprises’ most preferred blended service was a Manager’s package, which emphasized communications management, containing a combination of messaging, advanced call management, conferencing, location-based services, and security applications. Estimated revenue for the Manager’s package peaked at a price of €59 a month and a theoretical 28 percent market share of the total number of individuals who prefer this service. The total enterprise market for blended services is projected to have a five-year cumulative revenue opportunity of €7.4B by 2011 with an estimated 6 million individual workers who would be subscribers.

Lucent’s Western European primary research shows operators that now is the time to pursue the blended services market. The operators can benefit from increased revenue as well as a greater share of the end-user’s telecom wallet and operational efficiencies that come with deployment of an IP Multimedia Subsystem infrastructure for blended services.

In addition to the consumer adult research, Lucent also completed an adjunct study of the Western European Youth segment, including tweens (8-12 years old) and teens (13-17). Among its highlights, the study found that European teenagers, with the authority to spend, are more likely to expect to pay more for blended services than their parents would expect to pay. The teens also are significantly more likely than their parents to place greater importance on the always on feature and the ability to use voice, video, data simultaneously during the same communication session.

The consumers surveyed for the Western European research were individuals ages 8 to 65, who use mobile phones, have high-speed Internet access at home and are one of the primary decision-makers regarding communication services for the household. The enterprises surveyed were a mix of micro, small, medium and large enterprises that were not telephone service providers or ISPs, and the business contact was a purchase decision-maker.

Western European Blended Services Market Publ 20060926