SWsoft Corporate

1
SWSOFT GLOBAL HOSTING SUMMIT 2006
Industry Trends and Challenges SWsoft Products,
Corporate Update and Future Plans Serguei
Beloussov, CEO Kurt Daniel, VP Marketing and
Alliances Ezequiel Steiner, Director of Business
Development May 2006
2
Agenda

• SWsoft intro why should you listen?
• Strategic Industry Challenges and Trends
• Automation and SWsoft products are formed around
  addressing them
• Some of the tactical service provider challenges
• Virtuozzo as a solution
• More tactical service provider challenges
• OPEN FUSION as solution
• Plesk, other products and product strategy
• SWsoft corporate
• Overview, status and plans
• Partnership update by Ezequiel Steiner
• Marketing update by Kurt Daniel
• Summary and Executive QA

3
Why Should SWsoft Have a Perspective?

• Serving Web Hosting Industry since 1999
• The global market leader in Web Hosting service
  provider software
• Over 10,000 service providers in over 100
  countries
• Control Panel Automation powering more than
  150,000 physical servers
• 15,000 additional physical servers each month
• Over 400,000 VEs on over 10,000 Virtuozzo servers
• 1000 Virtuozzo servers (for hosting) every
  month, accelerating
• Over 10 mln domains/active sites, over 50 mln
  mailboxes
• Product and services portfolio which covers all
  aspects, all major platforms for all types of Web
  Hosting in 21 languages

4
Strategic Hosting Market Challenges

• Lack of Investment community interest
• Large players failed
• Perceived small market
• Results
• Lack of capital led to
• slower than possible growth
• Unique purchasing and payment patterns
• Lack of Media Analyst coverage
• Large players failed
• Results
• Higher customer acquisition costs
• No medium to educate customers and partners
  about service differentiations
• Persistent confusion about the market size,
  structure and players

5
Unique Industry features

• Mass Market Hosting defined
• Not Telco/ISP, Not Colo, Not Online Services and
  Not Enterprise IT Outsourcing
• Low-end, mid-size, high-end up to 20K/service
  unit per year
• Sells - Domain, Shared, VPS, Dedicated, Managed,
  Application, Access, Certificates, Colo and
  Marketing focus on the large numbers
• Different competitive landscape from general IT
• 75 Linux only slightly changing with Microsoft
  push
• Dell is by far No.1 branded server vendor
• Germany is the most advanced market with the
  highest service
• penetration and sophistication, lowest prices
  but highest profits
• Web Hosting is a very segmented market
• The largest players less then 5 in revenue share
• Each geographical market has its own leader
• On top of that variety of generalized and
  specialized players
• Full service, dedicated, managed, application,
  mail, shared, registrar, certificates, VPS-only,
  ISP/Telco, marketing monsters ?, domain
  portfolios ?, community sites

6
Market Trends as Suggested 1 Year Ago

• More Full Service providers
• VPS DS, DDS Virtualization
• Advanced Windows hosting
• Discounted Dedicated
• Advanced Managed Dedicated
• Registrar and HSP convergence
• Telco/ISPs moving back in
• BLOG hosting
• Discounted Advanced Shared

7
Potential Trends Opportunities as of 1 Year Ago

• Potential Trends
• Hosted Exchange, SharePoint, LCS
• Market Consolidation
• DSL other connectivity
• Marketing Services
• Game Hosting
• Opportunities
• Virtualized low to high-end dedicated/managed
  services
• Resurge of free web and email hosting
• Complete and easy-to-use CMS hosted
• Full service and easy-to-use eCommerce hosting
• Even more application hosting (CRM, etc)
• Resurge of investment community/press interest
  IPOs

8
Future Trends As We See Them Now

• Virtualization everywhere
• Secondary domain services, domain hosting
• Managed, complex and high-end dedicated
• Shared hosting threatened by community sites,
  free hosting and monsters
• Rich email/collaboration
• Certificates resurge
• More full service providers including registrars
• Industry consolidation, continued interest from
  investment community and increasing valuations
  0.3x gt 1x gt 2x gt 4x gt whats next?
• IT/Software as a service?
• Virtualization for complex hosting?

9
Automation as Enabling Technology

• Marketing50 of success
• Good Products
• Good Pricing
• Good Promotion
• Service Support20 of success
• Efficient
• Satisfying
• Operations Finance10 of success
• Process Driven
• Enabling Technology20 of success
• Ticket to the game
• Must be single transparently integrated system

Hosting Business
Operations Finance
Marketing
Service Support
Automation Virtualization
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SWsoft Product Portfolio

• Server Automation and Virtualization Software
• Hosting Service Provider and Enterprise Markets
• Windows and Linux/Unix Platform Support
• Complementary Solutions
• Powerful Server Virtualization and Tools
• Leading Hosting Control Panel
• Innovative Web-based Website Builder
• Comprehensive Hosting Automation
  Solution
• Carrier-Grade Datacenter Automation
  Solution

11
Tactical Industry Challenges

• Facility Related Challenges
• Data center inventory is shrinking
• Building out from scratch is long and capital
  intensive
• Rising power use, costs and capacity
• Hardware Related Challenges
• Hardware vendors offer bigger/faster servers per
  unit price but it usually exceeds customer
  requirements
• How easy is it to provision, manage and support
  1000s of servers over many years?
• What to do with the old hardware?
• Customer Related Challenges
• Low End Shared hosting competition from Google,
  Yahoo!, and Microsoft
• Mid Level Budget-conscious customers drive down
  prices of low-end dedicated servers. They prefer
  direct control over their hosting environment,
  but use only a fraction of servers capacity
• High End Developers of fast-growing
  web-applications demand rapid, seamless
  scalability

12
Historical Architecture vs. Virtualization
1000s of Specialized Servers
Operating Systems History and Today
Inefficient IT Infrastructure
superuser
user
user
user
user
user
App 3
App 4
App 1
App 2
OS

• High cost
• Hard to automate
• Inflexible Service Levels

• Per Applications or User Group
• Physically provisioned/managed
• Poorly utilized lt10

• Single Task Single User
• Multi-Task Single User
• Multi-Task, Multi-User

Virtualization is a framework or methodology of
dividing the resources of a computer into
multiple execution environments...
http//www.kernelthread.com/publications/virt
ualization/
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Virtualization Provider Benefits

• Enables dedicated-like services with shared-like
  economies and infrastructure
• Efficiency direct cost savings, cashflow savings
  and oversell opportunities
• Hardware
• Electricity
• Datacenter
• Simplicity and Flexibility
• Zero cost of provisioning and automated
  management
• Comprehensive self management decrease support
• Better security
• Upgrade and migrate customers dynamically with no
  downtime
• Main result GROW REVENUE FASTER!
• More customers with new high margin services and
  pricing
• Upsell existing customers automatically
• Differentiate from Google, Yahoo! and Microsoft
  Live!

14
Virtualization End-Customer Benefits

• Pay less
• Better price for better service
• Easily upgradeable
• Burstable service
• Get more
• Easier and less to manage
• Comprehensive self management
• Higher availability and performance
• more reliable and faster hardware and disk
  systems
• zero downtime migration
• faster management operations
• Sophisticated backup/restore capabilities
• Why not There is nothing to lose!
• Suitable for low-end, mid-level and high-end
  customer

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Service Provider Virtualization Scenarios

• TrueVPS
• Better alternative to shared and cheaper than
  low-end dedicated
• DS/DDS
• Better alternative to low-end dedicated
• Split Dedicated
• Enable your channel/customer to leverage
  virtualization
• Split Shared
• Increase density, availability, security and
  manageability of shared
• ManagedVPS and Advanced Shared
• More flexible and powerful shared or easier and
  managed dedicated
• Virtualized Infrastructure
• Benefit from virtualization for all of your
  infrastructure
• The opportunity - Complex Hosting

60 of US hosting, over 6.2 billion by 08
per IDC
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Virtualization Momentum

• SWsoft Vision
• Virtualization software willbe used for all
  computing including server, desktop and even
  thin clients, and as such Will Run On Every
  Computing Resource
• Facts confirm the momentum
• 60 of Plesk licenses sold Virtualized,
  compared to lt30 12 months ago
• Rate of Virtuozzo licenses shipped increased 7x
  from 12 months ago, 50x from 24 months ago
• Over 20,000 Virtuozzo partitions were sold in
  Feb06 compared to 10,000 Feb05
• SWsoft believes
• Within the next 36 months majority of the new
  revenues in the hosting market would come from
  virtualized infrastructure

Plesk vs. Plesk in Virtuozzo VPS
Plesk
Plesk in Virtuozzo VPS
Virtuozzo Physical Servers
Q205
Q305
Q405
Q106
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Different Types of Partitioning

• Hardware partitioning
• Multiple OSs run natively
• IBM, Sun, HP, Unisys, more

• Virtual Machine Monitors
• Virtualizes access to hardware
• Host OS and each guest has full OS running
• VMware, Microsoft Virtual Server, Parallels, XEN,
  UML

Host OS
Hardware
CPU

• OS Virtualization
• Virtualizes access to the OS
• Single kernel is running
• Virtuozzo, BSD jail, Solaris Zones

Operating System Virtualization
OS
Hardware
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Operating System Virtualization
Virtuozzo creates multiple isolated Execution
Environments or partitions or Virtual
Environments (VEs) on a single physical server to
share DC, hardware, software and management
effort with maximum efficiency. Works as light
add-on for commodity operating systems and
hardware
Physical Server 1
Physical Server 2

• Dynamic Partitioning of servers into hundreds of
  VEs with full dedicated-server functionality -
  root access, re-bootable, install any
  application, change any file, any IP settings

• Resource Management CPU, memory, disk, I/O
  min/max values and full isolation

App 2
App 2
App 2
App 2

• Migration allows VEs to be moved between physical
  machines w/zero downtime

App 4
App 4
App 4
App 4

• Mass Management Tools and OS Application
  Templates to enable automated mass
  management/deployment/updates of 10s of 1000s of
  VEs and 1000s of servers

OS
OS
OS
OS
Provision
Update
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Momentum
5 years 10,000 Servers400,000 VEs
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Unique Advantages for
Hosting

• Efficiency
• Highest Density
• 500 VE/server in production
• Lowest TCO per virtual server
• Performance
• Zero overhead, especially I/O
• Scalability
• Each VE can scale up to the resources of the
  whole physical server
• Manageability
• Manage Once
• Fast Management Operations
• Dynamic, Near Real-Time and Fair As-Needed
  Resource Allocation

• Management Tools
• Designed for 10s of 1000s of VEs
• Full multi-server API/SDK ready for integration
• Browser Based and GUI
• Unique VE Owner recovery UI
• Zero-Downtime Migration
• With or without shared storage
• Extensive Platform Coverage
• Windows and Linux
• x86, x86-64 and IA64
• Full Isolation and Security

Mature Complete Proven Since early 2001
400,000 VE, 10,000 servers, by 750
providers 1000s of provider requested features in
the product
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Lack of Automation - Another Industry Challenge

• Losing Money
• Low density levels
• High provisioning and management cost with manual
  operations
• Wasted marketing dollars with inefficient
  ordering processes
• Losing Customers
• Low service levels, multiple sign-on
• Lack of self management
• Incomplete service offerings
• Losing Opportunity
• Lack of automatic upsell, multiple control panels
  
• Extremely hard to launch new advanced services
• Lack of differentiation makes marketing difficult
  
• Automation is the key
• Must be fully integrated single system
• Also must be Complete, Comprehensive, Flexible
  and Different
• Single system/vendor could not deliver all
  cooperation is required gt

22
OPEN FUSION A Vision for Integration
OPEN FUSION is service provider automation
integration platform to be used by all SWsoft
products and fully open for 3rd party and
in-house developers

• Core Ingredients
• Consolidated API
• Pluggable, Integrated UI
• Authorization Engine (AE)
• Common Licensing
• Unified Versioning
• Unified Safe Updates
• Consolidated Localization
• Documentation
• Open Fusion SDK
• Open Fusion Community

Example OPEN FUSION with HSPcomplete
23
Plesk The Most Important Product

• Aggressive development from 2003 to date
• 5x development team size resulting in 9 major
  releases in 3- year
• Plesk6 gt Plesk6.5 Win gt Plesk7 gt Plesk7 Win gt
  Plesk7 Reloaded gt Plesk 7 Win Reloaded gt Plesk
  7.5 gt Plesk7.5 Win gt numerous point releases gt
  Plesk8
• Plesk Expand 1.0 gt Expand 1.1 gt Plesk Expand 2.0
  and Plesk Antivirus

PSA 5
Plesk 6
Plesk 6.5
Plesk 7
Plesk 7 Reloaded
Plesk 7.5 Reloaded
Plesk 8
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Plesk Future RD Directions - QUALITY

• We are not stopping
• Focus on quality of releases and upgrades
• Longer development and release cycles move to
  12-15 months, multi month public Beta gt RC gt RTM
• OPEN FUSION and better Virtuozzo integration
• Flexible and more support of 3rd party (mail,
  webmail, app server, cms, ecom, backup etc)
• Rapid and complete distribution and component
  support
• Ease of use, more server administration,
  distributed and provider feedback
• Specifically visit Plesk session

25
Other products update and roadmap

• - newest and simplest
• Transparent Plesk integration and OPEN FUSION
• More full CMS features one way or another
• Free on Windows until September 30th 2006!
• - committed
• OPEN FUSION will quickly make it more solid and
  complete (effectively 10x development team)
• Over time complete small to mid-size provider
  packaged BSS
• Any service shall be possible
• 5x development team
• Aggressive development advanced shared
  Linux/Windows,packaged Exchange, game,
  virtualized, high availability, streaming
• 15 implemented reference live accounts, many in
  implementation
• Soon - 100 native Microsoft PEM more Microsoft
  applications
• Future stronger customer focus, quality,
  flexible, complete and OPEN FUSION
• BM new as standalone product!
• Sophisticated, flexible and scalable Billing,
  Ecommerce, Marketing, CRM and Support
• Stellart RAD platform, proven process and very
  experienced separate team

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Overall RD Direction QUALITY and Completness

• Longer development cycles 12-15 month
• Longer release cycles few months for
  beta/rc/rtm
• Much higher attention to quality and upgrades
• Open complete API/SDK specifically OPEN FUSION
• More 3rd party
• Native Windows and continued Linux support
• Continued evaluation of customer feedback
• Carefully study how product changes could
  decrease support load
• Lots of work perfection is very distant still

27
SWsoft Corporate Overview and Growth

• Headquartered in Herndon, VA
• Offices in USA, Europe and Asia
• Privately funded, strong financials
• Founded end 99, financed to profitability by
  founders
• SWsoft is profitable, revenue at tens of
  millions, growing at 170
• Jun05 closed 12.5mm round by Bessemer, Intel
  Capital and Insight
• Expert team 700, 450 top-notch engineers and
  100 support
• Alexey Kuznetsov, TCP/IP in Linux kernel
• Unique hiring model at MIPT, NSU hiring
  gradually as revenue allows
• 28 patents pending
• Successfully expanding to Enterprise Market

Moscow,RussiaRD
London, UK Sales Marketing
Novosibirsk,RussiaRD
Frankfurt,GermanyInternational Operations
Tokyo,JapanSales Marketing
Beijing, China Sales Marketing
Headquarters Washington DC Sales
MarketingSupport, Services
SingaporeSales Marketing
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Growing Ecosystem of 500 Technology Partners
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Strategic Partners Update and Plans

• Joint Windows SiteBuilder offering
• Microsoft HCM automation through PEM, Plesk
• Cooperation on Windows-based DDS/VPS enablement
  through Virtuozzo
• Product certification
• Developing automation to acquire, resell, manage
  SSL certificates
• Introducing new online services through
  automation tools (like news feeds)
• Efficient server technology, especially designed
  for Internet Datacenters
• Server certification cooperation to provide
  complete solution
• Product certification support of RH/Virtuozzo
  SUSE/Virtuozzo kernel
• Server certification future cooperation on
  virtualization and automation solutions
• Advocating to raise awareness of the hosting
  opportunity/strategic implications

30
3rd Party Solutions Update and Pipeline

• Overall Strategy OPEN FUSION
• Facilitate integration of new products services
  
• Some Recently Added
• Types of 3rd Party Solutions in Pipeline
• Collaboration
• More antivirus/antispam options
• Secondary domain
• Marketing, CMS and eCommerce
• Hosted Web Services

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SWsoft Marketing How We Can Support You

• Joint PR
• Contact info directly on our website
• Hosting Analysts/Hosting Association
• Events/Seminars
• Industry, Yours, Ours, Others
• More/Better Communication
• Added documentation to website
• Communicating product launches/roadmaps in future
  in advance
• Whitepapers/Tools/Other Product Marketing
• International Support
• Pre-packaged Content/Demos for Your Website
• More Partner Marketing
• What can we do better?

jointmarketing_at_swsoft.com
32
Marketing Direct/Indirect Support Metrics
33
New SWsoft Branding Snapshot

• Why are we doing it?
• Many products, multiple acquisitions, OPEN FUSION
• More professional, cooler
• Customer and partner clarity, ease
• New Logos, New Website, Stronger SWsoft
• Elevation of company brand (many dont know Plesk
  is SWsofts)
• Completely new company and product logo SYSTEM
• New corporate style for ALL marketing materials
• Business system
• Emails, whitepapers, case studies, datasheets
• Upgraded www.swsoft.com website
• Full Implementation this Summer/ASAP
• Process included 10 interviews/feedback from
  trusted partners, analysts

34
Branding Vision/Promise and Who We Are

• Brand Vision
• Virtualization Automation Optimization
• Virtualization and Automation for the Real World
• We envision a world where computing and can
  infinitely optimized for business success
• Brand Positioning
• No company is more relentless about optimizing
  computing and business than SWsoft
• Brand Promise
• I am confident SWsoft will always deliver the
  most efficient solution for my business

35
Branding Corporate Logo (Work in Progress)

• New Corporate Logos (Work in Progress)

36
Summary

• SWsoft is committed to Web Hosting market
• Product strategy built around addressing industry
  challenges and trends
• Who could be your best and most independent
  partner today?
• SWsoft is real, stable and rapidly growing
• AttendVirtuozzo session
• Virtualization is inevitable as both threat and
  opportunity
• Will Virtuozzo bring you higher ARPU enterprise
  customers soon?
• Attend OPEN FUSION session
• Attend Plesk session
• Attend all other sessions!
• Meet our people and provide feedback
• Network! Lots of interesting/useful people to
  meet
• Have Fun and Ask Questions NOW and tomorrow!

37
SWsoft Executive (1st) Public QA

• Serguei Beloussov CEO/Chairman
• Yakov Zubarev COO/Head of Worldwide Sales
• Kurt Daniel VP of Marketing and Alliances
• Soeren von Varchmin Head of International Sales
  and Operations
• Alexei Kandikov Head of Hosting Automation
  Engineering and Support
• Ezequiel Steiner Director of Biz Development
• Another and complete executive QA/feedback
  tomorrow
• Do not hesitate to ask any question and provide
  direct feedback they are welcome!