Instant Messaging Global Trends & the Russian Market 20/4/2006

The Phenomena A 10 year revolution! By 2009 - 1.2 billion IM accounts and roughly 495 million users worldwide * Source: Instant Messaging market, 2005-2009, Radicati Group

IM - The Communication Leader Amongst text mediums, IM beats e-mail as the method of choice when talking with friends Communication Choices IM E-mail Text Messaging Face to Face Have a quick conversation with a friend that you see on a regular basis 26% 5% 7% 2% Talk with a friend about something really serious or important 9% 6% 3% 7% Have a private conversation with someone when you don’t want anyone else to know 18% 9% 6% 6% * Source: Teens and Technology, Pew Internet & American Life Project, July 2005

Multiple Communication Tools Are The Norm For Youth October 2005, Trends “How Youth Communicate”

Age Communication On the average, youth between ages 12-17 spend 10.3 hours a week in social activities outside of school, 7.8 hours of which they spend talking with friends via technology (telephone, IM, e-mail or text messaging) Older teens (aged 15-17) are heavier users of IM (84%) compared to younger teens (aged 12-14, 65%) While 75% of the online teens are using IM, only 42% of the online adults are exchanging IM’s * Source: Teens and Technology, Pew Internet & American Life Project, July 2005

Usage Trends From an open global to a closed local community Only 5% of the users, on an average Contact List, are from a different country Most of the IM correspondence within a given territory is between users from that same region, most of them friends IM Usage Research, AOL 2004

IM Trends in Russia IM growth rate in Russia is even higher than Internet growth rate IM is one of the TOP 5 Online activities in Russia (among Search, email, News websites, IM and Downloads) An IM user has 46 contacts, in average, in his IM address book The average ICQ user uses his IM for 5 hours a day! while the average online user in Russia is online for 3-4 hours a day (in comparison, the average online user only watches TV for 1.6 hours a day, in average) Sources: The Online Monitor - MASMI Russia (Nov - Dec 2005 Study), ICQ Analysis, ICQ Internal data, Information Technologies & Communications

Instant Messaging Future Trends

The Demographics IM is receiving legitimation within time, and becoming more of a communication tool for adults as well IM age demographics, 2003 & 2007 * Source: Ferris Research, Radicati, 2003

The Trends IM will be better positioned as intimate communication tool IM will become a Cross Platform Communication Center, a center of communication IM will continue to cannibalize traditional forms of communication including landline telephony and face-to-face interactions

The Russian Internet & IM Market One of the world’s most growing Internet countries with expected growth rate of 30% for Internet access users* ICQ expects that in a few years Russia will move into the group of countries with a high IM penetration, such as France and Spain High IM penetration combined with medium to high rate of Internet penetration * 2004-2009 CAGR (Compound Annual Growth Rate), Datamonitor - Industry Profiles, Russia Internet Access, June 2005

ICQ in Russia

ICQ has 13% of the Internet Users in Russia** ICQ #1 IM in Russia About 50% of “The Online Monitor” 2005 MASMI Study’s responders said that ICQ is their most frequently used Instant Messaging application* ICQ has 13% of the Internet Users in Russia** (*) Source: The Online Monitor, MASMI Russia (Nov - Dec 2005 Study). (**) Source: Information Technologies & Communications, ICQ Internal

From Global to Local ICQ is implementing the Idea of “think global, act local” and is becoming a multi-market player based on this localization strategy Implementing the ICQ Local Strategic Partners strategy (LSP) by cooperating with local Media & Communication companies Adopting a localization strategy that brings ICQ close to the users, partners, advertisers, and increases business opportunities

ICQ & Rambler

Rambler - ICQ Version Rambler- ICQ Messaging Service attracted ONE MILLION users in the first 6 months Rambler-ICQ users are highly active -50% higher than the average ICQ user - a strong and loyal community!

Ronen Arad, ICQ VP Product & Marketing