TeleSoft Partners EcoSystem Meeting

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TeleSoft Partners EcoSystem Meeting
Paul Chamberlain Managing Director, Head of
West Coast Technology Banking October 28, 2005
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Google and Beyond
Consumer Internet Trends
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The New Group Therapy
Hi. My name is Barry, and I Google two to three
hundred times a day.
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Jail Cell Confessions
I should have used Skype instead of email.
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Agenda

• Tech Market Snapshot
• Morphing of the Internet
• Whats Behind the Internet Scramble
• Whats Ahead

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Tech Market Snapshot

• Virtually all public tech companies (ex-Internet)
  are growth-challenged not capital-constrained
• Overall tech growth rates are expected to improve
  but still trail Internet considerably
• Internet valuations are consistent with high
  growth leaders in other tech sectors
• Financial sponsor activity at an all-time high
  but only limited investment to date in Internet

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Internet Growth is Pulling-Up the Averages
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Internet Valuations Are Not Out of Line
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A New Force To Be Reckoned With?
Financial Buyer Activity in Technology
Bn
of Deals 12 11
16 17
23
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Morphing of the Internet
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Big Changes Keep Coming
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My, How Communications Have Changed!
2005
Up to 1995
Mobile

VoIP

IM

Email

Blogs

Web

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Consumer Internet Data Points
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Internet Deal Mania?
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And It Doesnt Stop There
craigslist
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Whats Behind the Internet Scramble

• Internet (Narrowband) Internet (Broadband)
• Search 1.0 Search 2.0
• PC-centric Mobile-centric
• International North America
• Free email Free calling
• Browsing Communications

Massive shifts in spending in existing markets
and new market growth
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Self-Reinforcing Internet Momentum
Search
Broadband
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Mobile Broadband in Early Stages
Global 2.5G/3G Penetration
Subscribers (MM)
of Total Wireless Subscribers
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International Markets Are Leading the Way
Internet Users 1 Billion
Mobile Users 2 Billion
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Skype Fastest Growing App Ever?
Registered Users
Revenue Split
MM
54MM as of Sept. 2005
Months Since Inception
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Internet As a Communications Hub
of Time Spent on Internet
Communications
44
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Whats Ahead

• Search keeps getting better for users and
  advertisers

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The Power of Internet Ecosystems

• Incontrovertible leadership
• Defied convention
• Widening the gap competitively

• Powerful momentum
• Strong trajectory
• Hitting on all cylinders

In Q3 Yahoo! generated 1.3Bn in gross ad revenue
and PAID OUT 400 MM to partners like MSN, ESPN,
WSJ, etc.
In Q3 Google generated 1.6Bn in gross ad revenue
and PAID OUT 530 MM to partners like AOL,
AskJeeves, etc.
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Whats Ahead

• Search keeps getting better for users and
  advertisers
• Ad-supported desktops?
• Any content, anywhere
• Moores law coming to networking?

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A Gift to the Server and Networking Industries?
CapEx Spending by Major Internet Players MM
30
87
34
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What Does It Mean for You?
Can you hang on a sec? I think I just took
another picture of my ear.
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If It Can Work for Arjun
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QUESTIONS?Paul ChamberlainManaging
DirectorTechnology Investment Banking650-234-560
3paul.chamberlain_at_morganstanley.com