© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 1

Stefano SolianiStefano Soliani

The next 10B$ opportunity

case study

The next 10B$ opportunity

case study

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 2

IntroductionIntroduction

Revenue ModelRevenue Model

The Opportunity: TP MarketPlaceThe Opportunity: TP MarketPlace

Global ArchitectureGlobal Architecture

Segment AnalysisSegment Analysis

Recommendations & Next StepsRecommendations & Next Steps

Organization ModelOrganization Model

Cost ModelCost Model

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 3

Case Study

Cisco’s next $10B SaaS Opportunity

Challenges–Existing partners and service providers

–Compartners/Coopetition – e.g. IBM, Microsoft, AT&T

–Motivation/Compensation and Organization of Sales force

–Buying Centers – non traditional

Opportunities–Future SaaS Offerings

–Hybrid SaaS service

–TP Pull Through

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 4

TPMP as a platform to deliver a rich consumer experience that leverages the power of the network and drives TP adoption

TelePresence as the main collaboration tool across all customer segments.

VISIONVISION

STRATEGYSTRATEGYTP MarketPlace for anybody to offer and purchase servicesTie the TP endpoint to the MarketPlace Portal to own the customer experienceMultiple revenue streams from subscription services, add-in applications and advertisementsTP endpoint a truly flexible platform to deliver a rich customer experienceThe fundamentals of TP ease of use are preserved

TelePresence MarketPlace

EXECUTIONEXECUTIONInternet based Portal – the MarketPlaceWorld class global directory and scheduling system accessible through the MarketPlaceTargeted advertising frameworkNew sales force org to capture the opportunityExtend the TP OS, or use the power of the Cloud to inject services into TP session

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 5

TP MarketPlace – The “App Store for TP”

$160million

“Buying Scenario”

15-20% Pull through sales

1,000,000,000

$ 2.65

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 6

Global Architecture

INTERNET

TP MarketplaceTP Marketplace TP MarketplaceTP Marketplace

MP Software Services(Gaming, Video recording, Photo Sharing, ….)

MP subsystems(Registration, Billing, Tracking, Directory, ….)

AT&TTP local exchange Intra-exchange

session

VerizonTP local exchange

BTTP local exchange

AT&Tclient1

AT&Tclient2

Verizonclient1

Verizonclient2

BTclient1

BTclient2

Inter-exchange

session

TP Exchange of Exchange(includes global TP directory

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 77

Shipments and Penetration of Consumer TPHH TAM 12.3M 24.2M 36.7M 49.9M 61.2M 71.1M

Source: IDC - 2009

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 8

Video Conference Penetration and SMB TAM

Source: IBSG

6,093,061 – US Based SMBs (2007)

82.6% of all SMBs are

using orconsidering VC

ONLY 17.4% Do Not Use

& Do Not Plan to Use

35.4% Currently Use

47.2% Do Not Use

But Plan to Use

5,032,868 – TAM for SMB VC

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 9

TPMP Revenue Model for Cisco

RegistrationRegistration

Cisco ServicesCisco Services

VPMVPM

TransactionTransaction

AdvertisementAdvertisement

Additional TP salesAdditional TP sales

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 10

Benefits of Cisco MarketPlace

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 11

Sales Model

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 12

SaaS Organizational Model

Establish separate SaaS business unit across Cisco

– Leverage similar SaaS infrastructure requirements – Cisco Collaboration Cloud

– Share back-office systems – billing, reporting, support, etc.

– Shared resources for marketing, sales, and operations

– Develop expertise and share best practices

– Separate leadership team for individual SaaS offerings

Cisco SaaS Business Unit

WebEx Marketplace XaaS

TSBU

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 13

Cost ModelBuilding Block Level

Pilot approach – US only at beginning – scale up with success of MP

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 14

TP MarketplaceTP Marketplace TP MarketplaceTP Marketplace

Recommendations Summary

Common SaaS Sales force org, separate leadership teams for individual SaaS offerings

Enriched Cisco TP experience – add features in TP or Cloud

Service offering – Balance Free/Fee - Open policy – TPXX in place Reach critical mass asap

New compensation model for both Cisco and TPMP AMs

Increase partner collaboration by offering new revenue opportunities

TPMP to be funded by TSBU

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 15

Next Steps

Find an executive sponsor

Review the opportunity with the application development community

Develop a commercial model

Fully assess all marketing information

Understand the technical challenges to achieve our objectives

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 16

Thank You!Any Questions? Thank You!Any Questions?

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 17

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 18

TPMP service example

C2C Class Fee

Video/photo sharing SW basic

TP invitation SW basic

Video message center SW basic

Directory SW basic

Dating apps SW premium

Gaming SW premium

B2C Class Fee

Language translation SW/HUMAN premium

[adult] entertainment HUMAN premium

fortune teller HUMAN premium

psychologist HUMAN premium

telemedicine HUMAN premium

shopping HUMAN premium

training HUMAN premium

consulting HUMAN Premium

Customer Support HUMAN Premium

B2B Class Fee

TP reservation system SW basic

Video mail SW basic

Record&Playback SW basic

Directory SW basic

TP Broadcast to PC SW basic

Data integration SW basic

Connect to VC SW basic

Mix audio & video SW basic

Broadcast to mobile SW basic

Language translation SW/HUMAN premium

Teleprompter/Video receptionist HUMAN Premium

Virtual Background SW Premium

Training HUMAN premium

Consulting/mentoring HUMAN Premium

Telemedicine (next slide) HUMAN Premium

Remote Recruiting HUMAN Premium

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 19

TP Exchange approach

SOFT

SPs to create their own interconnections

MODERATE

Cisco to facilitate SP interconnection until they create their own

AGGRESSIVE

Cisco to play in video backbone exchange domain

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 20

Revenue model – TPMP features sales

Year 0 1 2 3 4 5 6 7 8 9 10Volume ForecastMP Service Provider (50% growth) 50 75 113 169 253 380 570 854 1,281 1,922 2,883Service Advertisement (% of total Services) 0% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%AVG Service per SP 1 1 1 1 2 2 2 2 2 2 2User (100% growth) 150 500 1,000 2,000 4,000 8,000 16,000 32,000 64,000 128,000 256,000Advertiser (100% growth + saturation) 0 1 2 4 8 16 32 64 128 128 128Transactions (100% growth - 2/user per year) 300 1,000 2,000 4,000 8,000 16,000 32,000 64,000 128,000 256,000 512,000Transaction avg value 10 10 10 10 10 10 10 10 10 10 10Transactions on Cisco svcs (% of total) 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 20%VPM # 0 0 0 0 0 0 0 1 2 4 8

Revenue Source - Average Cost ($)Service Advertisement (ARPS/year) 120 130 140 150 160 170 180 190 200 210 220External Advertisement (ARPA/year) 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000Service Transaction fee (% of transaction) 0.0% 3.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0%SP Registration fee (yearly) 0 0 10 20 30 40 50 60 70 80 90Service Registration fee (yearly) 0 0 0 5 10 15 20 25 30 35 40Cisco Service - unit avg cost 0 0 0 0 1 1 2 2 3 3 4User Registration fee (yearly) 0 0 0 0 0 10 11 12 13 14 15User Transaction fee 0 0 0 0 0 0 1 1 1 1 1VPM fee 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 20,000 40,000 80,000

Revenue Source Value ($/year) cumulated per sourceService Advertisement 0 488 788 1,266 4,050 6,455 10,252 16,232 25,629 40,366 63,432 168,954External Advertisement 0 2,000 6,000 16,000 40,000 96,000 224,000 512,000 1,152,000 1,280,000 1,408,000 4,736,000Service Transaction 0 300 1,000 2,400 5,600 12,800 28,800 64,000 140,800 307,200 665,600 1,228,500SP Registration 0 0 1,125 3,375 7,594 15,188 28,477 51,258 89,701 153,773 259,493 609,983Service Registration 0 0 0 844 5,063 11,391 22,781 42,715 76,887 134,552 230,660 524,892Cisco Services 0 0 0 0 1,600 3,200 12,800 25,600 76,800 153,600 409,600 683,200User Registration 0 0 0 0 0 80,000 176,000 384,000 832,000 1,792,000 3,840,000 7,104,000User Transaction 0 0 0 0 0 0 32,000 64,000 128,000 256,000 512,000 992,000Virtual Private Marketplace 0 0 0 0 0 0 0 10,000 40,000 160,000 640,000 850,000

total per year 0 2,788 8,913 23,884 63,906 225,033 535,109 1,169,804 2,561,817 4,277,491 8,028,784 16,897,529sales per year 0 2,488 7,913 20,641 53,244 200,842 451,528 999,089 2,216,130 3,579,739 6,620,524 14,152,137

* In red the features that can be ‘sold’ by sales rep

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 21

Revenue model – TP sales

Year 0 1 2 3 4 5 6 7 8 9 10Volume Forecast% of TP sales due to MP 10% 10% 15% 15% 20% 20% 25% 25% 20% 20% 20%

Revenue Source - Average Cost ($)Avg revenue per TP endpoint 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000

Revenue Source Value (K$/year) totalTP revenue impact 30 100 300 600 1,600 3,200 8,000 16,000 25,600 51,200 102,400 209,030