Companies should permanent invest in research and development of new products in order to stay competitive. Total volume of R&D investments made by telecom operators has reached over 29.2 bln USD last year.
J’son & Partners Consulting presents short results of the research about R&D investments made by global telecom operators in 2013.
Main results of R&D investments made by telecom operators in 2013
In 2013 global R&D market volume reached 635 bln USD as evaluated by financial indices of 1000 largest R&D investors. Volkswagen, Samsung, Roche and Intel have the highest costs on R&D. There are no telecom companies in TOP 20 among largest R&D investors.
J’son & Partners Consulting evaluated R&D market volume in telecom industry as 1.4% of the total telecom market volume based on analysis of investment policy in the sphere of research and development. In 2013 market increased for 105 bln USD till 2 205 bln USD.
The range of global R&D market in telecom sector is estimated within $29.2-309 bln.
The approach to R&D by largest telecom operators mentioned on the illustration below was researched in this report.
China Mobile, the largest mobile operator in the world, was not considered because R&D information is not disclosed in corporate reports.
LTE, cloud services, M2M, e-health and energy saving are main R&D directions for largest telecom operators. All researched companies invest in LTE development; in cloud services – 6 from 10; in M2M, e-health and energy saving – 4 from 10 researched companies.
LTE includes projects on expansion and modernization of 4G network. J’son & Partners Consulting also distinguished the following priority M2M directions among operators:
- Connected car (Orange, Telefonica, Deutsche Telekom) – a car equipped with internet access, usually wireless local network. The system allows to provide internet connection inside and outside the car, integrate smartphones and tablets with its operational system.
- Trackers (Vodafone, KDDI) – devices for distance monitoring (tracking) of objects, is being used for personal use and for commercial purposes. The device transmits signal about objects' location (dogs, cars, bicycles etc) on smartphone or computer.
- Wireless monitoring systems for industrial use measurements (Verizon). Systems allow to collect data in order to cut the energy costs and are part of intellectual electricity networks.
J’son & Partners Consulting distinguish the following developments in e-health field:
- E-bracelets – allow to track the take of medicine and to update medical information about the patients. The device allows update medical information about user and to give conclusions from any device.
- Systems of distance monitoring after patient. The system uses range of sensors placed around the monitoring platform after people that require care.
- Mobile routers. Device provides the ER staff high quality wireless network with medical center for helping injured.
In the sphere of informational safety there are the following projects operated by communication operators:
- Cryptographic projects (Orange). Projects aimed at development of identification radio band mark for devices.
- Smartphone with increased level of safety (Deutsche Telekom). Product is aimed for corporate use. Smartphone encodes e-mail, contacts, photo, audio and phone calls in the secure way and the information is not leaving a company.
- Mobile system of access to the mobile data management (Deutsche Telekom). Systems allow to limit the access of external apps and networks to phone’s functions and data: access to photo, Wi-Fi or GPS connection.
J’son & Partners Consulting specifies the following leaders:
1. By absolute R&D costs – NTT, volume of investments – 2.6 bln USD
2. By relative R&D costs
a By share revenue – Orange, 2,5%;
b By capital expenditures share – Orange, 17.9%.
3. By the most diverse portfolio of fundamental projects - Telefonica. The company is actively participating in the largest EU projects on development and network’s modernization, including:
a. IDEALIST – research of the most perspective technologies for satisfying needs of optical transport network of new generation;
b. METIS – provision of standardization of the future wireless network 5G;
c. INSPACE – expansion of installed spectrum flexibility in spatial multiplexing.
The increase of absolute and relative R&D costs can be seen in 2013 by major telecom operators. For example, for 0,1% increased the average correlation of R&D costs towards revenue and revenue towards capital expenditures.
J’son & Partners Consulting consultants analyzed over 50 developed projects of operators and evaluated how did they differ for the announced directions. The directions of implemented projects by China Telecom Company differ from the announced: the company is developing devices as well as development projects and accomplishing the modernization of network.
1) R&D directions of America Movil and Verizon are fully corresponding to the announced one: companies develop projects on network’s expansion and modernization.
2) Vodafone and AT&T are investing in announced and additional R&D directions: Vodafone is additionally developing industrial applications, AT&T – solutions in the sphere of Big Data.
Brief analysis of R&D centers was made among largest telecom companies. Centers are mostly situated in the countries where head offices of the companies operate. A lot of companies are opening R&D centers in remote regions: Orange constructed innovational centers in Silicon Valley and Normand; KDDI also opened its own R&D center in Silicon Valley. More and more telecom operators are establishing their own business incubators and venture funds: Telefonica created accelerator: Wayra, Vodaone – Xone, Orange – Orange Fab.
Volume of telecom market increased for 5% in 2013. R&D investments market hasn’t changed significantly for the last 3 years. Almost all largest telecom operators are actively participating in different innovational projects. LTE, cloud services, M2M, e-health and energy saving are the main investment spheres among telecom operators.
Number of incubators and venture funds are also increasing. Operators are opening innovation centers in remote regions in order to exchange the international experience and penetration on new geographical markets.
Detailed results of the Research are presented in the full version of the Report: R&D policy of the largest global telecommunication companies:
Report is aimed at cellular operators and government institutions
1. Global R&D market
2. Global R&D market in telecom industry
3. Largest global telecommunication operators
3.1. Profiles of the largest telecom operators
3.2.Companies’ classification by georgraphy
4. Largest operators’ R&D directions
5. R&D expenditures in the largest companies
5.1. R&D share of investments of the yearly company’s revenue
5.2. R&D share of investments of the capital company’s expenditures
5.3. Median and average company’s inducators
6. Largest operators’ innovational projects
7. Largest operators’ R&D centers
7.1. Subsidiaries – development centers
7.2. Joint developments of telecom operators
List of companies mentioned the report
List of illustrations
Illustration 1. Dynamics of R&D costs in the world in 2011-2013, $ bln.
Illustration 2. R&D costs by Global Innovation 1000 industries, 2013
Illustration 3. Dynamics of R&D costs by industries of companies from the list - Global Innovation 1000 in 2012-2013, $ bln.
Illustration 4. TOP 20 global leaders by R&D costs, industrial structure
Illustration 5. Median volume of expenditures of revenue, %
Illustration 6. Global telecom market volume, %
Illustration 7. Revenues of largest operators, 2012-2013, $ bln.
Illustration 8. Operators’ share in the total structure of global telecom services market, 2013, %
Illustration 9. Companies’ distribution by regions
Illustration 10. R&D investments of largest telecom operators in 2013, $ mln.
Illustration 11. Dynamics of R&D investments Vodafone, 2011-2013, $ mln.
Illustration 12. Dynamics of R&D investments Telefonica, 2011-2013, $ mln.
Illustration 13. Dynamics of R&D investments Orange, 2011-2013, $ mln.
Illustration 14. R&D investments China Telecom, 2011-2013 , $ mln.
Illustration 15. Dynamics of R&D investments Deutsche Telekom, 2008-2012, $ mln.
Illustration 16. Dynamics of R&D investments NTT, 2011-2013, $ mln.
Illustration 17. Dynamics of R&D investments KDDI, 2011-2012, $ mln.
Illustration 18. R&D share of the companies total revenue 2013, %
Illustration 19. R&D share of the companies total revenue 2012, %
Illustration 20. R&D share of the companies total revenue 2011, %
Illustration 21. Dynamics of R&D expenditures of the Vodafone’s total revenue, 2011-2013, %
Illustration 22. Share of R&D expenditures of Telefonica’s total revenue, 2011-2013, %
Illustration 23. Dynamics of R&D expenditures of the Orange’s total revenue, 2011-2013, %
Illustration 24. Dynamics of R&D expenditures of the China Telecom’s total revenue, 2011-2013
Illustration 25. Dynamics of R&D expenditures of the Deutsche Telekom’s total revenue, 2008-2013, %
Illustration 26. Share of R&D expenditures from the NTT total revenue, 20112013, %
Illustration 27. Share of R&D expenditures of the largest telecom operators, 2013, %
Illustration 28. Share of R&D expenditures of the largest telecom operators, 2012, %
Illustration 29. Share of R&D expenditures of the largest telecom operators, 2011, %
Illustration 30. Share of R&D expenditures from Vodafone’s capital costs, 2011-2013, %
Illustration 31. Share of R&D expenditures from Telefonica’s capital costs, 2011-2013, %
Illustration 32. Share of R&D expenditures from Orange’s capital costs, 2011-2013, %
Illustration 33. Share of R&D expenditures from China Telecom’s capital costs, 2011-2013, %
Illustration 34. Share of R&D expenditures from Deutsche Telekom’s capital costs, 2011-2013, %
Illustration 35. Share of R&D expenditures from NTT’s capital costs, 2011-2013, %
Illustration 36. Share of R&D expenditures from Deutsche Telecom’s capital costs, 2011-2013, %
Illustration 37. Median R&D shares from capital costs and revenue 2011-2013, %
Illustration 38. Average share of R&D expenditures from capital costs and revenue 2011-2013, %
List of tables
Table 1. Top 20 R&D investors, 2013
Table 2. Vodafone profile
Table 3. America Movil profile
Table 4. Telefonica profile
Table 5. Orange profile
Table 6. China Telecom profile
Table 7. Telecom Italia profile
Table 8. AT&T profile
Table 9. Verizon Wireless profile
Table 10. Deutsche Telekom profile
Table 11. NTT profile
Table 12. KDDI profile
Table 13. Main R&D directions of largest telecom operators, 2013
Table 14. All R&D directions of largest telecom operators, 2013
Table 15. Companies’ innovational projects by directions
Table 16. Companies’ subsidiary centers of development
This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.