Rtx A/s · OMXCOP:RTX
Rtx A/s — RTX Telecom — Investor Day (2003)
95 slides from Rtx A/s's investor day presentation, 2003
Slide 1: Agenda
Agenda • Strategies (Jørgen Elbæk, CEO & President) • Penell - wireless healthcare (Bjarne Flou, CEO) • Market development and customer needs (Jens Jungersen, Sales and Marketing Director) • Project Case Morion (Niels Henrik Olesen, Engineering Director) • The TD-SCDMA market situation (Klaus Ahlbec
Slide 2: Strategies
Strategies Jørgen Elbæk, President & CEO
Slide 3: RTX Telecom – 10 Years
RTX Telecom – 10 Years IP/Stck Spec. Dev. Cert. Test Prod. Supply NMT450 DECT DCT2.4G Bluetooth CDMA GSM/GPRS TD-SCDMA WLAN expansion into most major wireless technologies and to all parts of the supply chain 3
Slide 4: Since Last Year
Since Last Year • In general the market is still challenging • Decisions postponed • China GSM/GPRS market very challenging • High risk, low profit • We are cautious/careful • Penell Æ RTX HQ, name changing to RTX Healthcare • As of October 1st, 2003 • Net reduction of manpower with 12 people (group
Slide 5: New Strategic Initiatives
New Strategic Initiatives Issue • We may have lost revenues/contracts because we have not been willing to take full responsibility and deliver ”box-built” products on OEM/ODM basis • Strategic Action • We will also offer to manage the production of our designs on a ”volume based commitment” only • W
Slide 6: New Strategic Initiatives
New Strategic Initiatives Issue • In a few years’ time there will be twice as many mobile devices (machines) as mobile subscribers (humans) • Strategic Action • We will design our own GSM/GPRS module platform for use in M2S applications (Machine to Server) Find Home Automation Industrial Control Ele
Slide 7: New Strategic Initiatives
New Strategic Initiatives Issue • The competition on our Technology markets is fierce • Strategic Action • Increase market focus Bluetooth Healthcare/audio 2.4GHz/DECT Cordless phones/wireless command & control GSM/GPRS/CDMA Mobile operators/M2M/M2S 802.11a/b/g Networking communication equipment TD-
Slide 8: Differentiated strategy
Differentiated strategy 3G/Bluetooth GSM/GPRS, CDMA Wireless -Engineered by RTX -Engineered by RTX MobilTalk MobilMania Basic demand Advanced for talking demand for InfoCom DECT/2.4GHz TeleYesterday IPWorld services -Engineered by RTX Wired Smart Home for non-experts -Engineered by RTX 8
Slide 9: Strategy
Strategy “to be Global brands’ preferred partner in the development Mission of advanced wireless communication IP and solutions in all scenarios” Best Wireless Objective Engineering Experts Niche Strategy: Off Mainstream use of Our skills/IP and delivery of box-built Strategies products Indirect Sal
Slide 10: Penell – wireless healthcare
Penell – wireless healthcare Bjarne Flou, CEO 10
Slide 11: About Penell
About Penell Facts • Penell was acquired by RTX in 2001 • 14 employees • Currently located in Hadsund • From October 1st, 2003 • Penell moves to the RTX headquarter in Noerresundby • The company changes its name to RTX Healthcare 11
Slide 12: About Penell
About Penell “Penell provides world class wireless connectivity solutions to medical and healthcare device manufacturers worldwide” Penell - a better solution 12
Slide 13: Disease Management
Disease Management Increasing number of welfare diseases such as: • Cardiac problems • Asthma, Diabetes etc. Caused by: • Our Culture • Food • Way of living • Population age increasing 13
Slide 14: Background information
Background information Age 60 and over Age 60 and over Year 2000 Year 2020 14
Slide 15: Background information
Background information Challenge: Medical Device Medical Device How can Manufacturers Manufacturers technology Self-care General improve public Practioners health and cut Home Health Doctors down costs? Hospitals Public Health Costs Medical Device Manufacturers Medication Pharmacy Care Healthcare/ D
Slide 16: Background information
Background information “Selfcare” Relatives Nurses Doctors Specialists Lowest cost Highest cost 16
Slide 17: Business focus
Business focus Volumes Unit price Key Business Focus Hospital Home Healthcare Health Professional Semi Professional Consumer 17
Slide 18: System overview
System overview The Penell RTX3300 system helps Healthcare organizations, hospitals collecting Vital Signs from and homecare providers collect outpatients to healthcare centres in data in databases and maintain the the best and most secure way system Vital Signs from the Internet outpatients are col
Slide 19: RTX3300 solution overview
RTX3300 solution overview The Gateway connects the Internet through a local Internet Service Provider via PSTN or GSM/GPRS Internet Bluetooth Wireless Technology is implemented inside the monitoring Server devices with range up to 100 meter (300 feet) 19
Slide 20: Key aspects of success
Key aspects of success Penell believes that the key to success is to: • Create solutions and products that is: • Dedicated devices to specific target groups (disease, user etc.) • Simple in use • Creates motivation • Becomes “personal devices” • Focus on what is our core competence and…. • Create Pa
Slide 21: Market development and customer needs
Market development and customer needs Jens Jungersen, Sales and Marketing Director
Slide 22: Cordless
Cordless
Slide 23: Cordless overview (NSC)
Cordless overview (NSC) Sales of sets Cordle ss S ta nda rds CY 1998 CY 1999 CY 2000 CY 2001 CY 2002 CY2003 CY2004 DE CT 6 10 15 18 23 26 28 CT0 32 30 25 16 13 11 10 CT1 4 2 1 0 0 0 0 IS M 900 M Hz 26 34 36 39 40 32 25 IS M 2.4GHz 0 1 3 10 15 27 41 IS M 5.8GHz 0 0 0 0 0 1 3 P W T (US DE CT) 0 1 1 1
Slide 24: US Market size split on Technology
US Market size split on Technology 50 1600 45 1400 82 7 218 2.4 GHz Digital 40 10,3 2.4 GHz Digital 1200 286 463 35 4,5 7,9 607 2.4 GHz 1,7 252 592 Analog 0,5 63 Units (millions) 4,7 1000 30 2,7 2.4GHz Analog $ (millions) 3,3 3,9 3,9 201 3,7 3,3 900 Digital 25 800 94 20 900 Digital 851 153 124 600 1
Slide 25: Cordless SWOT
Cordless SWOT Strengths: Weaknesses: • Experience and system knowledge • NRE – new business model needed for Asia • IP and competence to execute also non- • Poor position in low/mid-end segment => little reuse mainstream product developments • NSC chip set not competitive in low/mid-end • Complete p
Slide 26: Strategies on Cordless
Strategies on Cordless Short-term strategy • Maintain market position •“Milk the cow”-strategy. Capitalize all IP investments • Find non-telecom niches for technology Two-leg strategy for Cordless under implementation • Low-cost strategy for (Chinese) customers • primarily to be serviced by CVM modu
Slide 27: Bluetooth
Bluetooth
Slide 28: Updated Market Analysis – Market Size
Updated Market Analysis – Market Size Bluetooth Market Size Forecast of Mu Solutions 1400 1200 1000 Mu Solutions 800 600 400 200 0 2001 2002 2003 2004 2005 2006 Source: Instat / NSC Year - Approx. 30 mio. units sold in 2002 Upper Low er 28
Slide 29: Updated Market Analysis – Products
Updated Market Analysis - Products Areas of Growth: • Computer accessory (mouse, keyboard, dongles, printer, pc card) Expected growth: 127 mio. units sold in 2006 • Handheld devices (PDA). Expected growth:15 mio.units sold in 2006 • Home environment equipment (access point, printer) • Cameras and vi
Slide 30: Bluetooth SWOT
Bluetooth SWOT Strengths: Weaknesses: • Audio experience/know-how • Price (both NRE and BOM) • Design re-use (BOM/NRE) - time-to-market • Availability of profiles/applications (NSC/TI) • High degree of experience with several • Limited partner choice/no subsidizing (NSC) platforms including CSR (low
Slide 31: Strategies on Bluetooth
Strategies on Bluetooth • Short term strategy: • Primarily driven by royalty-generating business model • Assist NSC to win volume customers • Generate more partnerships for volume/high-end products (IC’s/platforms) • Focus on high-end customers – various platforms • Focus on segments requiring audio
Slide 32: GSM/CDMA
GSM/CDMA
Slide 33: Updated Market Analysis
Updated Market Analysis Market share by region 120% 100% USA/Canada 80% Middle East Europe: Western 60% Europe: Eastern Asia Pacific Americas 40% Africa 20% 0% 03 04 05 06 07 97 98 99 00 01 02 20 20 20 20 20 19 19 19 20 20 20 st st st st st e e e e e e at at at at at at ca ca ca ca ca t im t im t im
Slide 34: Updated Market Analysis
Updated Market Analysis 1G, 2G and 3G market shares 120% 100% 80% 3G 60% 2G 1G 40% 20% 0% Estimate Estimate Estimate Estimate Estimate Estimate Forecast Forecast Forecast Forecast Forecast 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 34
Slide 35: Updated Market Analysis
Updated Market Analysis Penetration Global USA/Canada Middle East Europe Penetration Asia Pacific Americas Africa 0,0 10,0 20,0 30,0 40,0 50,0 60,0 35
Slide 36: Updated Market Analysis
Updated Market Analysis Exhibit 27: New Subscribers to Replacement Handsets * Es 0 Handect Unts (MMs) Source: Company data, CSFB estimates
Slide 37: Updated Market Analysis
Updated Market Analysis GSM Market Segments (Europe) - Simplified 10% 10% Safety 20% Avalibility Lifestyle 30% Effective Just talk Techno 20% 10% Legend: Safety Emergency GPS Alarm, small & handy Women Avalibility Convergens to PSTN/ISDN - one number, integrated camera Families Lifestyle Personal ri
Slide 38: GSM/CDMA - SWOT
GSM/CDMA - SWOT Strengths: Weaknesses: • RTX covers a wide range of wireless • RTX does not have own production, difficult to technologies compete against ODM solutions • RTX has good system level understanding, • Cost (Danish Engineering Cost + Motorola strenghts in niche-products. license) • RTX b
Slide 39: Strategies on GSM/GPRS
Strategies on GSM/GPRS • Short-term strategies • ODM's are the though competitors for RTX. RTX needs to develop competitive strategies to battle the ODM’s • Find complementary platform partner (BOM/flexibility) • The market for devices/modules offers opportunities and RTX is in the process of develo
Slide 40: Strategies on GSM/GPRS
Strategies on GSM/GPRS • RTX will pursue only special market segments in the CDMA area. Focus area CDMA450 for East European (Chinese) manufacturers and RF designs • Need to focus better BOM and greater design flexibility 40
Slide 41: W-LAN
W-LAN
Slide 42: W-LAN – Market
W-LAN – Market • The 802.11a/b products are EXTREMELY PRICE-SENSITIVE (95% made in Taiwan) • Short-term W-LAN is just a cable replacement, mobility and high speed • Long-term combining Internet access and VoIP will be the killer application • ”Smart home” will at some point use a W-LAN derivative (M
Slide 43: WLAN SWOT
WLAN SWOT Strengths: Weaknesses: • RFDM are one of the major semiconductors • No technical ”control” over 802.11a/b/g and has full program for 802.11b, 802.11a, platform (no control over the WLAN 802.11g baseband VHDL code and the MAC software from RFMD) • RTX is one of the few that can combine 802.
Slide 44: Strategies on W-LAN
Strategies on W-LAN Short term strategy • Maintain close links to RFMD and develop their reference designs • Focus on home entertainment networks with a high Quality of Service for Video and Audio (niche strategy) Possible differentiation strategy (under investigation) • Combine W-LAN and cordless p
Slide 45: TD-SCDMA
TD-SCDMA
Slide 46: TD-SCDMA - The Market
TD-SCDMA - The Market • All design houses - except RTX - offer only a basic design service • Siemens and Huawai combining resources to promote TSM solution • Handset manufacturers waiting for go from China, then they will need to buy know-how from RTX, no time for them to develop by themselves. • In
Slide 47: TD-SCDMA - RTX products
TD-SCDMA -RTX products • IP development, layer 1 (TSM & TDD-LCR) • Test terminals ”Buying criteria is low BOM” 47
Slide 48: TD-SCDMA - SWOT
TD-SCDMA - SWOT Strengths: Weaknesses: • RTX covers a wide range of wireless • Cost (Chinese market extermely price sensitive) technologies • RTX business model with high NRE payment • Lack of RTX organisation in China • Lack of RTX track record in the cellular arena Opportunities: Threats: • The tr
Slide 49: Strategies on TD-SCDMA
Strategies on TD-SCDMA Short term strategies: • Too early to initiate new market activities • We can not make TD-SCDMA happen in China on our own • We need to partner with local Chinese companies • RTX shall prepare for the TDD-LCR protocol in addition to the TSM protocol ”Convinced that the Chinese
Slide 50: RTX Strategies
RTX Strategies
Slide 51: Evaluation of RTX
Evaluation of RTX Quality card 5 Price Time to market Competent Engineering Experts Quality Quality 4 First with new technology Customer references Financial solid Company Flexibility Track record Turnkey Supplier Time to Market European supplier Price Low BOM First with new technology Satisfaction
Slide 52: Strategic Actions
Strategic Actions Positioning • Competent Engineering Experts Secondary Selling Propositions • Time To Market • Quality • Flexibility 52
Slide 53: Marketing - Main Activities
Marketing - Main Activities • Maintain, increase sale to and cross-sale of technologies to existing customers • More selective Direct Marketing activities • Improve www.rtx.dk as lead generating tool • PR worldwide to establish company profile and credibility • Continue RTX Newsletter incl. separate
Slide 54: Conclusion:
Conclusion: Challenges for RTX technologies • Technology barriers have been lowered for standard wireless telecom products • Chip integration hides complex technology and makes product design easier • SW stacks become commodities and cheap • Raised engineering know-how in low salary countries (esp.
Slide 55: Conclusion: Main strategies for RTX
Conclusion: Main strategies for RTX • Concentrate effort on complex technologies Æ higher NRE (not necessarily mainstream technologies/applications) • Patent new architectures and platforms Æ higher royalties • Partner with the major IC manufacturers for early access to their new technology • Siemen
Slide 56: Project Case Morion
Project Case Morion Niels Henrik Olesen, Engineering Director
Slide 57: April 2002
April 2002 ”RTX Telecom can now also provide turnkey designs within the field of GSM/GPRS technology, via an agreement with Motorola Semiconductor” 57
Slide 58: August 2002
August 2002 ”In August, RTX Telecom signed an agreement with Morion Inc. to develop a so-called telematic product based on the Motorola platform” 58
Slide 59: Morion Inc. Presents
MORION INC. PRESENTS CUSTOMERS IN REGIONS | = VSK
Slide 60: Morion Inc. Presents
MORION INC. PRESENTS OUR HISTORY | at the World Exhibition in Brussels ly telecommunication systems for the first international space-flight “Soyuz-Apollo” Was awarded the title of “Official Telecom Supplier of XXII Olympic Games in MORION was awarded the Order of Red Banner 3 Privatization. The com
Slide 61: Morion Inc. Presents
MORION INC. PRESENTS PERSONNEL QUANTITY ' ' ! | 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Slide 62: Morion Inc. Presents
500 000 400 000 300 000 200 000 100 000 0 682 391 1999 2000 2001 MORION INC. PRESENTS 2002 2003 ANNUAL SALES
Slide 63: Primary Multiplexers
PRIMARY MULTIPLEXERS OGM-30E |
Slide 64: Surface Mounting Assembly Line
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Slide 65: Research Laboratory
RESEARCH LABORATORY, y Wy Wi)
Slide 66: Typical technology transfer
Typical technology transfer Product launch RTX Involvement 3-5 years Customer Capabilities Development Customer Capabilities Manufacturing RTX Telecom is very open and interested in building up knowledge and capabilities at the customer, in order for the customer to be able to control the technology
Slide 67: From chipset...
From chipset... A Wireless Product Development Company 67
Slide 68: From chipset...
From chipset... A Wireless Product Development Company 68
Slide 69: ...development...
...development... A Wireless Product Development Company 69
Slide 70: ...to finished product
...to finished product A Wireless Product Development Company 70
Slide 71: Features / use cases
Features / use cases • GSM / GPRS • Standby mode • Voice / Data / SMS • Guarded mode • GPS • Alert mode • Backup battery • Silent alert • Configurable • Monitoring • Powersupply alert • External I/O control • RSSI alert • Voice promts • Build-in opto-coupler • DTMF control 71
Slide 72: Product of the Year
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Slide 73: Milestones
Project reporting: [Monroe] ° ra a a g 5 A Planned milestones Law —*— Contract signing Signing ofpreliminary PRS Delivery of ist prototype Release for pilot production ~~ Fest of ist samples L-sep Ol-sep Ol-okt Ol-nov Ol-dec Ol-jan Ol-feb Ol-mar Ol-apr 01-maj Date of reporting Oljun Oljul Ol-aug Ol-
Slide 74: Development
Development The Development and Productisation of Wireless Products Product testing • Prototype manufacturing • • Type approvals Product development • • Design of manufacturability Mechanical design • • Design of manufacturing testequipment Product specification • • Creation of manufacturing solutio
Slide 75: Skills
Skills RTX Skills Production Radio Test Frequency Equipment Project Management Baseband Software Engineering Engineering 75
Slide 76: Business model
Business model RTX - A Wireless Development Company 76
Slide 77: Questions!
Questions! Feel free to ask!
Slide 78: TD-SCDMA market situation, including product demo
TD-SCDMA market situation, including product demo Klaus Ahlbeck, Business Development Director
Slide 79: Conclusions from Beijing TD-SCDMA Summit 2003
Conclusions from Beijing TD-SCDMA Summit 2003 • Chinese Government is backing TD-SCDMA both in voice and fundings • Although no firm dates for licenses (estimates now: 2004 – 2005) • Fundings primarily for pre-development (research) activities (72 m$) • Datang, UT Starcom, Nortel focus on TDD-LCR •
Slide 80: Siemens/Huawei will be backing TSM
Siemens/Huawei will be backing TSM Siemens and Huawei to form a joint venture for TD-SCDMA. Joint press release Siemens and Huawei – Beijing, Aug 29, 2003 The Siemens Information and Communication Mobile Group (Siemens mobile) and Huawei Technologies Co., Ltd., today announced, that they will join f
Slide 81: The Value Chain is Being Set
The Value Chain is Being Set Chipset RF testers Test Systems Infrastructure Terminal Handsets • XXXI/RTX • Agilent • Siemens • Siemens Design • Soutec (TDIA) •R&S (test network) • RTX/Prisma • Philips/T3G • Huawei • China Putian • Racal (?) • T3G • TI/Commit • Datang •x • RTX/Prisma • Commit • STM •
Slide 82: RTX / Prisma is ready
RTX / Prisma is ready for developing commercial GSM/TD-SCDMA handsets • Based on the proven technology of the TD-SCDMA Test Mobile developed by RTX & Prisma Engineering • With the partnership of a leading GSM silicon vendor that will provide a TD-SCDMA chipset end of 2003 • A complete GSM/TD-SCDMA h
Slide 83: TD-SCDMA is optimal for handsets
TD-SCDMA is optimal for handsets • All leading GSM/GPRS chipset manufacturers are working on chips for TD-SCDMA •Their success will depend on • Time to market – chips need to be available within 6 - 9 months • Ability to integrate TD-SCDMA into standard GSM chipsets • Ability to re-use CDMA2000 or W
Slide 84: Financial management of development projects
Financial management of development projects Erling Andersen, Finance Director
Slide 85: Changes in accounting policies
Changes in accounting policies Background • An updated version of The Danish Financial Statements Act was passed on the 22nd May 2001 • The Financial Statements Act stipulates that ongoing work at third-party development projects is estimated to be the market value of the work done • RTX Telecom has
Slide 86: Changes in accounting policies
Changes in accounting policies Major changes from 2002/03 • Principle of production is valid as new income criteria • Listing of projects in progress in the balance sheet at net value (under receivables or liabilities) • Change of accounting policy may have some influence on the accounting periods •
Slide 87: Changes in accounting policies
Changes in accounting policies Other less important changes • Dividend, proposed by the Board of Directors, is listed separately under equity • Indirect production costs are included in the inventories • Changes of value of derivative financial instruments (e.g. forward exchange transactions), agree
Slide 88: Third-party development projects
Third-party development projects Accounting policy up till now • Accounting in accordance with invoicing principle (invoicing of milestones) • Each milestone is in principle considered a finished part of the project • Expenses are recognised in the profit and loss account as incurred 88
Slide 89: Third-party development projects
Third-party development projects New accounting policy • Projects are measured at market value of work performed • Market value is estimated on the basis of stage of completion and total project income • Project income is constituted by NRE and other payments agreed for the project • Royalty dependi
Slide 90: Third-party development projects
Third-party development projects Invoicing vs. Finished work 90
Slide 91: Own development projects
Own development projects Accounting policy up till now • Own development costs include costs, salaries and depreciations, directly or indirectly related to the development activities in the group • Expenses are charged to the profit and loss account as incurred 91
Slide 92: Own development projects
Own development projects New accounting policy • Capitalised development costs are measured at cost less accumulated depreciations or recoverable amount in case this is lower • When the development project is finished the development costs are straight-line depreciated over the estimated financial l
Slide 93: Own development projects
Own development projects Terms for capitalisation (IAS 38) • Technical possibilities for finishing and using or selling the activity • Intent to finish / ability to use or sell the activity • Sufficient technical, financial or other ressources to finish the activity • Financial advantages and/or com
Slide 94: Internal experience
Internal experience • Establishment of new business routines • Submission of accounts involves more people in the organisation • Even more focus on finances in the projects • We obtain a comprehensive experience for future use 94
Slide 95: Registration systems
Registration systems • ERP system is upgraded to Navision Attain early 2002 • The system for registration of working hours is upgraded by the development of a new system. This was implemented early 2002 95