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www.intelcapital.com
Intel Confidential – For Internal Use Only
Connecting the World
Lisa LambertManaging Director, Intel Capital
Software Solutions Group
November 14, 2007
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Web Evolution
2004: “Web 2.0” coined from conference. Headline companies
mostly small and known to few
Web 1.0: Building the web foundation (from static to dynamic)
XML, RSS, Java, Web Services, AJAX, Flash, Web APIs
2005-2006: Entry of large corporations fuel growth (via
acquisition, investment or engagement)
2006-2007: Major startups emerge as household names for consumer
and enterprise (similar to first wave of the internet)
The near future: Full force adoption and engagement from the enterprise; next generation of consumer soln’s
*Other marks and brands are property of their respective owners
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Environmental TrendsStatus• Web 2.0 for the consumer remains very active and web 2.0 for the enterprise is experiencing strong
growth. Majority of Web 2.0 technologies have enterprise penetration
• 85% for fortune 500 are users of multiple vendors for blogs, wikis, rss, and podcasting
M&A Market still VERY active.• Google & Yahoo remain very active. Cisco & Saleforce beginning to address the enterprise market. SAP &
Oracle actively evaluating acquisition candidates
Acquired by Google:
Acquired by Cisco:
Acquired by Salesforce:
Acquired by eBay:
Del.icio.us
Acquired by Yahoo:
Acquired by Microsoft:
Reason for Consolidation:• User acquisitions (monitizable via advertising)
• Talent acquisitions (primarily engineering – #1 reason for Google)
• Gap fillers for full internet “platform”
• High demand for Web 2.0 features by customers
• Competitive differentiation
• Low entry barriers into new markets (Cisco, Amazon)
• New technologies solving old problems (i.e., wikis for collaboration)
*Other marks and brands are property of their respective owners
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Web 2.0 EvolutionInternet evolving into the next application platform
• – Application platform
• – Open Social
• – Open Platform
• – Widget platform
Major movements to applications in the “cloud”
• Microsoft’s “Live” platform
• storage
• Cisco’s “virtual networked applications”
• Application Exchange
• moving components to SaaS model
Unleashing from Windows: Very rich applications & media being developed – Focus back on computing power
• Online Video (Joost), Virtual Worlds (Second Life), Gaming (WorldsOfWarcraft), Online Office (MSFT, Google)
*Other marks and brands are property of their respective owners
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How does this impact the user?
Internet
All applications from any device, anywhere
New Class of Collaborative Online Applications and Usage Models
Dev ToolsConsumer
Business
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Internet Ecosystem
Internet based applications forbusiness, move from client/server
Online MS Office, Desktop
Next Gen B2C – Often via Mashups
Social, Blogging, Tagging
Information gathered viacrawling then monetized
Community
Commerce
Virtual Desktop & Office
Services & Solutions
Search Enabled Business
Content
Tools quick dev for web 2.0Tools & Middleware
Audio/Video/Gaming/Photo/Wikis
monitor110
Consumer Internet
Business Internet
*Other marks and brands are property of their respective owners
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Consumer Internet:Investment Focus
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Consumer Internet Penetration
Very high Year over Year growth numbers in
Internet Usage
Highest growth outside the US
Majority of new users going to websites created as “web 2.0” companies.
First evidence of sites with majority of users outside the US making top ten list.
This list in 5 yrs will have much more global influence
*Other marks and brands are property of their respective owners
Source: Morgan Stanley, Alexa Global Tracking Rankings, 2007
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Consumer Microsoft Yahoo Google AOL NewsCorp Key Startup(s)
Photo B A A B PhotoBucket
Video B B B YouTube
VoIP A A Skype (Yahoo)
Social Networking B A A B A MySpace (NC)
Mapping B B A B
IM / Chat B B A B Meebo
Tagging A Del.icio.us (Yahoo)
Music B A B A Crowded
Games B A, B A Crowded
News B B B B A Commodity
A = Acquired
B = Built
Consumer Investment Opportunity
• Heavy activity and competition for content & community
• Space dominated by large corporations
• Likely Exit M&A
• Most white space completed by large players
• Intel should continue active engagement with large corps, with selective engagement with startups
B
A
A
B
B
B
B
*Other marks and brands are property of their respective owners
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Consumer Internet Maturation
2005 2006 2007 2008 2009
Consumer Maturation
Cycle of Web 2.0
Technologies
Continued M&A frenzy sparked by
Media Companies
Some IPOs for Mature
companies, slowing of M&A due to feature completion by large acquirers
Popularity of Consumer Internet
(Blogging penetration)
2007: “Web 2.0” mature and at its peak for M&A
Early M&A
Mostly via Google &
Yahoo
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Business Internet:Investment Focus
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Enterprise Penetration Growth
From 2006 to 2007, 50% increase in deployment (from
~20% to ~30%)
Consumer web 2.0 technologies are now being consumed by the
enterprise
Consumers bringing their tools to work
Estimated $4.4B market by 2010
2006–2007: the period of transformation
2008–2009: integration of the enterprise collaboration
platform
2010 and beyond: “joined up” collaboration (.e.g.,
LinkedIn/Jive/Meebo for the enterprise)
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Enterprise Investment Opportunity
Enterprise Microsoft Yahoo Google AOL NewsCorp Key Startup(s)
Blogging A A SixApart
Wiki SocialText
RSS NewsGator
Podcasting PodShow
Virtual Office B A, B Zimbra
Virtual Desktop B B B B B NetVibes
Online Data Store B A Box.net
2.0 Dev Tools Laszlo
A = Acquired
B = Built
• Activity still light but heating up in enterprise (including SAP & Oracle). Cisco is acquiring to fill gaps
• Space dominated by start ups, expected consolidation in 2007/2008 – likely via M&A by large companies
• Exception is MSFT who is building own capabilities
• Above list are most likely exit given their attention to web 2.0 and their recent interest in broadening into the enterprise (blogging first, wikis expected to be second)
B
B
B
B
A
A
B
*Other marks and brands are property of their respective owners
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Enterprise Software Maturation
2005 2006 2007 2008 2009
Enterprise Maturation
Cycle of Web 2.0
Technologies
Expected Enterprise
Penetration of Virtual Office,
Social Networking
Expected Enterprise
Penetration of Virtual Desktop, Online Storage
Popularity of Business Internet
(Blogging enterprise penetration)
2007: Still early but real penetration and revenues
30%+ Enterprise
Penetration of Blogging,
Wikis, Podcasting and
RSS
(SuiteTwo)
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Exits: Web 1.0 vs. Web 2.0
• Less expensive internet bubble
• Recent average exits at > 10x revenues
• Although higher barriers for IPO today, advertising revenue is large enough for large potential IPOs today
Source: Morgan Stanley, 2007
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Intel Capital Web 2.0 Portfolio
Social Networks Security and ToolsVoice and Online Revenue
Enterprise Collaboration
*Other marks and brands are property of their respective owners
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Intel Web 2.0 ApplianceOperating System
Software Infrastructure(Database, Web Server, etc.)
Xeon 2.66 GHz
System Admin
Console,Single
Sign-On,and
Authen-tication
SpikeNetUpdate
Manager
Integrated User Interface and User Management
Wikis
Social Text
RSSRead
NewsGator
RSSPub
SimpleFeed
Blogs
SixApart
SocialNetworks
VisiblePath
Search
Lucene
Document Repository & Workflow
Reporting Engine
*Other marks and brands are property of their respective owners
www.intelcapital.com
Intel Confidential – For Internal Use Only
Intel CapitalInvesting for Global Impact
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About Intel Capital
Intel Capital, Intel's venture capital organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet and semiconductor manufacturing. Since 1991, Intel Capital has invested more than US$6 billion in nearly 1,000 companies in more than 40 countries. In that time, about 180 portfolio companies have been acquired by other companies and another 155 have gone public on various exchanges around the world. In 2006, Intel Capital invested about US$1.07 billion in 163 deals with approximately 60 percent of funds (excluding Clearwire) invested outside the United States. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.