Information Appliance and Market Perspectives

1. Information Appliance and Market Perspectives • What Are Information Appliances? • Information Appliance Market Dynamics • IA Revenue Streams & Business Models • Information Appliance Market Potential • 2010 IA Scenario and Summary

2. What is Information Appliance? • An inexpensive device • An easy to use device • Based on computer technology • Dedicated to do one or a few functions • An application-specific computer • Most devices will have Internet access and may be called Web Appliances

3. An Information Appliance Segment • Add-On IAs • • Existing devices with IA functions added: • • Web set-top boxes • • Web digital TVs • • Web cellular phones • • Web screen phones • • Personal VCRs/DVRs • New IAs • • New devices or form factors with IA functions: • • Web PDAs & PDAs • • Web terminals • • Web pads • • Web music players • • Electronic book readers

4. InformationApplianceTypes

5. Information Appliance Examples

6. IAProductOverlaps

7. IADrivingForces

8. IAMarketCharacteristics

9. IAMarketDynamics

10. IAHindsight

11. IABusinessModels

12. IARevenueFlow

13. IARevenueFlowEstimate

14. IARevenueFlowEstimate

15. IARevenueStreamPerspectives • IA service is the largest revenue generator: 50-80% of customers’ expenditure over products’ economic life • IA purchase is 15-30% of customers’ expenditure • IA aftermarket is 5-25% of customers’ expenditure • More future IA services will further boost its share • E- & m-commerce fees (3-10% of purchase price) will add 6-10% to total IA vendors’ revenue potential • IA industry fees are proportional to each segment’s revenue size and IA users, but are difficult to estimate

16. IABusinessModelPerspectives • Recurring revenue model is preferred. Start-up companies must be early in a new segment or enter via large service companies • One-time revenue products should become customers’ repeat and replacement products • Two types of Internet access business models – In “Open Access” end-user controls Internet access pattern – In “Walled Garden” service provider controls Internet access pattern – Most IA customers prefer open access – ISPs prefer walled garden due to high referral fees – Walled garden is viable for small devices due to text entry problems • Influence products generate multi-year customer loyalty, which generate recurring revenue (i.e. walled garden products) • IA hardware device price discounting/bundling has subsided. May come back as customer spending pattern is better understood

17. IAForecast Methodologies

18. IA Related Markets

19. Interactive Service Networks

20. IA Service Networks

21. Web IA: Between Rock & Hard Place • • Web IA expectations have been unrealistic • – First business models were unbelievable • – Early products need better features • – High-tech slowdown forced several product withdrawals • – Cost/benefit versus PCs need improvements • • Is there a need for web-only IAs? • – Will web add-on IAs eliminate need for web-only IAs? • – Will PC price decline prevent web-only IA success? • • Web IAs still have opportunities • – Web Pads will succeed due to mobility advantage • – Low-priced flat displays will help tremendously

22. Total Unit Shipment

23. World Wide: New IAs vs. Add-on IAs

24. IA Market Growth Perspectives • Add-on IAs will have a much larger market than new, standalone IA products • IA product category success will vary by region and country • Current PC Internet user penetration level will impact the success of many IA product segments • Web enabled devices in use will be higher than subscribers • Many products will have IA functionality, but user subscriptions will lag until the user experience improves • IA product features for existing web users are different from the needs of new web users • “Killer apps” will vary by product segment & region/country

25. U.S. Telematics Potential

26. 2010 IA Scenario: USA

27. 2010 IA Scenario: Worldwide

28. IA Summary Perspectives