2010 TECH OUTLOOK: H2 REVIEW Recovery or Double-Dip?

1. 2010 TECH OUTLOOK: H2 REVIEWRecovery or Double-Dip? Joshua Reynolds Jay Andersen Global Technology Practice Director Vice President, Analyst Relations

2. AGENDA Innovation vs. Ingenuity IT Spending Outlook CIO Trends IT Predictions Mobile/Telco Trends Consumer Tech Trends VC Trends Bottom Line for Tech Marketers 1

3. INNOVATION VS. INGENUITY:An H&K PERSPECTIVE • Innovation: Inventing something that wasn’t there before • Example: The wheel • Ingenuity: Combining existing innovations in new ways for new functions • Example: Attaching two wheels to a stick and putting a cart on top of it • In a time of surplus, innovation abounds • In a time of scarcity, ingenuity takes lead • 2010 and 2011 will be remembered as a time of incredible ingenuity • Examples: Renewable energy infrastructures; Cloud computing and SaaS; Mobile device functionality and connectivity; Social network applications • When telling our respective corporate stories, ingenuity trumps innovation • What we invent is less interesting than the problems we’re tackling, and our collective human ingenuity to solve big problems in new ways 2

4. Worldwide IT Spending, 2010 reforecast • Gartner lowered its outlook for IT spending to more modest levels due largely to currency devaluation of the euro. • WW IT spending is still expected to grow 3.9%, down from 5.3%. • Gartner predicts IT spending to total $3.35 trillion in 2010. • One bright spot identified by Gartner was IT spending by vertical industries, which are expected to grow 4.1%, led by governments, banking, and retail. • Forrester actually raised their IT spending forecast by 1.5% from its Q210 number, due largely to countries entering an ‘Innovation cycle marked by adoption of new technologies.’ • Similar to Forrester, IDC raised its projections due to capital spending on new hardware infrastructure and emerging markets; however a double-dip recession is still a very real possibility. Sources: Gartner (07/10) , Forrester (07/10), IDC( 08/10) 3

5. The impact of cloud and software-as-a-service • Despite the tremendous amount of hype surrounding cloud, analysts agree that cloud computing services are ‘finally crossing the chasm.’ • CIOs are sold on the cost-savings and time-to-market advantages, but are still voicing concerns about security, availability, integration, standards and cost management. • Gartner has pushed vendors to adopt a cloud services bill of rights to guarantee service level agreements, ownerships of data, notification of service disruptions, legal requirements, security levels and adherence to software license requirements. • According to IDC, the growth rate of cloud-based services is expected to grow five times faster than traditional IT products. IDC expects that: • By 2012, nearly 85% of net-new software firms coming to market will be built around SaaS service composition and delivery. • By 2014, about 34% of all new business software purchases will be consumed via SaaS, and SaaS delivery will constitute about 14.5% of worldwide software spending across all primary markets. Sources: Forrester (12/09), IDC (06/10, 07/10) 4

6. Trends in Disruptive technologies Advancing technologies and their swift adoption are upending traditional business models • Distributed co-creation moves into the mainstream • Making the network the organization • Collaboration at scale • The growing ‘Internet of Things’ • Experimentation and big data • Wiring for a sustainable world • Imagining anything as a service • The age of the multisided business model • Innovating from the bottom of the pyramid • Producing public good on the grid Source: McKinsey (08/10)

7. CIO survey: Top Business Priorities Gartner surveyed over 1,500 CIOs across 41 countries and 27 industries in Q4/2009 about their top business priorities. • Business process improvement • Reducing enterprise costs • Increasing the use of information/analytics • Improving enterprise workforce effectiveness • Attracting and retaining new customers • Managing change initiatives • Creating new products or services (innovation) • Targeting customers and markets more effectively • Consolidating business operations • Expanding current customer relationships 6 Source: Gartner (01/10)

8. Top 10 Strategic Technologies Gartner identified the top ten technologies with the potential for significant impact on the enterprise in the next three years • 2009 • Virtualization • Business Intelligence • Cloud Computing • Green IT • Unified Communications • Social Software • Web-Oriented Architecture • Enterprise Mash-ups • Specialized Systems • Servers -- Beyond Blades 2010 • Cloud Computing • Advanced Analytics • Client Computing • IT for Green • Reshaping the Data Center • Social Computing • Security – Activity Monitoring • Flash Memory • Virtualization for Availability • Mobile Applications Technologies in bolditalics are new to the list 7

9. 2010 IT Predictions • Cloud computing greatly expands and matures; security concerns increase. • Mobile devices are on a path to eclipse PCs . • Public networks will be transformed – Aggressive build-out of broadband, fixed and wireless networks. • Analytic apps evolve - Fusing social software and analytics to business data. • Green IT rebounds - Rising energy costs and pressure from the Copenhagen Climate Change Conference will make sustainability a source of renewed opportunity for the IT industry in 2010. • “Intelligent” industries accelerate - Vertical industries will come out of recession with transformation agendas. • Transformations drive M&A – Potential targets include Juniper, BMC, CA, etc. • IT focuses more on transforming economics rather than innovation. • Fierce budget battles lead to competition across categories for overall IT spend. 8 Source: Gartner, Forrester and IDC predictions (Q409)

10. 2010 MOBILE THEMES Mobile Continues to Dominate the Conversation • According to IDC, for the first half of 2010, vendors shipped a total of 620.6 million phones, up 18.5% from the 523.5 million units shipped during the first half of 2009. • Smartphones leaders (Apple, RIM and HTC) dominate headlines, but feature phone players (Nokia, Motorola) should not be overlooked. • Microsoft’s mobile efforts continue to stall as executives are shuffled and Windows Mobile 7 fails to impress critics. • Apple’s successful iPad launch confirmed the viability of the tablet market. • Carriers continue to worry about the impact of Net Neutrality. • WW mobile payment users will exceed 108.6 million in 2010, a 54.5% increase from 2009, particularly amongst consumers with limited access to financial institutions. Source: IDC (07/10) 9

11. Social Networking Trends Social media continues unabated, backlash has yet to materialize • According to Nielsen, consumers are spending 41% of their online time on just three activities- social networking (23%), playing video games (10%), and emailing (8%). • Venture capital firms poured hundreds of millions into social media companies (Facebook, LinkedIn, Twitter, Zynga, etc.). • Facebook surpassed 500 million members with no slowdown in sight, despite public outcry over privacy policies. • Advertisers continued to experiment with social, which has been one of the hottest marketing channels of the past year. • LinkedIn has dominated social networks for business professionals. • Google and Yahoo! have begun to focus significant efforts on partnering, and competing with social media competitors. • Early-adopter enterprises (a small group) have begun to reap the benefits of social media, both financially and brand-wise. 10

12. 2011 Online marketing & Advertising outlook • Audience targeting and demand-side platforms will improve multichannel performance. • Video ad inventory will take off as sites increase frequency. • Social technologies will break down silos across the organization, including IT, PR and customer service. • Marketers will continue to talk about, but not implement, mobile programs. • Geo-location (Foursquare) promises search, social, and mobile synergy but mainstream adoption will not emerge. • Social media consolidation is expected to heat up. • For B2B marketers, sales is going to play a key role in the planning process. • Search engine optimization technologies and tools will help automate the SEO process. Source: Forrester (July 2010) 11

13. Venture capital outlook • Venture capital investments rose sharply in the first half of 2010; 1,646 deals totaled $11.4 billion, up 49% year-over-year. • The clean technology investments doubled sequentially to $1.5 billion in Q210. • Investments in life sciences, including biotech and medical devices, rose 52% sequentially to $2.1 billion in the second quarter. • Seed and early stage deals also increased notably in Q2 from prior quarters, accounting for a greater percentage of total deals. • However, according to a Deloitte study, venture capitalists in the U.S. widely expect their industry to contract while those in emerging markets, including China, India and Brazil, are expected to see their ecosystem expand over the next five years. • Factors cited most often for an unfavorable investment climate in the U.S. were difficulty in achieving successful exits; unfavorable tax policies; and unstable regulatory environment. Sources: NVCA & Deloitte (07/10)

14. US tech VENDOR Marketing BUDGET mix 13 Source: IDC (12/09)

15. Bottom Line for Tech Marketers • Economists predict a double-dip recession or stagnant growth for foreseeable future. • Lead with innovation to leapfrog competition or defend market leadership. • Prepare for competitive disruption and M&A. • B2B IT vendors need to tie messages to OpEx transformation and recovery capitalization. • Consumer tech vendors should focus as much on long-term value as short-term fascination. • Make social media a core marketing pillar, even for B2B marketing, not an add-on. • Emerging market and vertical plays are key. • Capitalize on the race-for-equity and corporate valuation with smart influencer relations. 14

16. For more information … Jay Andersen Vice President, Analyst Relations Hill & Knowlton jay.andersen@hillandknowlton.com Joshua Reynolds Global Technology Practice Director Hill & Knowlton joshua.reynolds@hillandknowlton.com

17. Appendix The following slides are for internal purposes only. Please remove if you share externally. 16

18. CIO’s focus: IMPACT on Bottom line Gartner highlighted some of the key issues that IT leaders must address with a return to business growth • A Shift from Capital Expenditure to Operational Expenditure in the IT Budget —CIOs need to model the economic impact of IT on overall financial performance. • Impact of the Increased Age of IT Hardware —Delayed purchases of hardware are likely to continue into 2010; organizations must start to assess how that impacts performance. . • IT Must Learn to Build Compelling Business Cases —IT needs to demonstrate true line of sight to business objectives for every investment decision. • Control Application Portfolios -- Rationalize and simplify investment. • Living in a digitally enabled and socially connected world – Use social computing to identify the people most important to organizational performance. • One version of the truth - Data underpinning metrics is adequate; standardize info management tools, focus on leading indicators, and use predictive technologies. • Balancing risk management with performance –Accommodate letting outside information in, and share inside information appropriately. 17 Source: Gartner (10/09)

19. CIO survey: Top tech Priorities Gartner surveyed over 1,500 CIOs across 41 countries and 27 industries in Q4/2009 about their top business priorities. • Virtualization • Cloud computing • Web 2.0 • Networking, voice and data communications • Business intelligence • Mobile technologies • Data/document management and storage • Service-oriented applications and architecture • Security technologies • IT management 18 Source: Gartner (01/10)