©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-1 PART FOUR Market Analysis & Future Outlook Market Horizons™ Report Geospatial & Field Automation Solutions (GFAS) in the North American Utilities Marketplace ( )

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-2 PART 4: Market Analysis & Future Outlook About This Report InfoNetrix LLC, an independent technical research and consulting firm specialized in utility automation and information technology (Utility Automation/IT) markets conducted the research for this report. InfoNetrix reports are available for subscription by any and all interested parties, foreign and domestic (except as prohibited by law), in accordance with the pricing and terms set forth in the prospectus, provided separately. This report addresses Geospatial & Field Automation Solutions (GFAS) in the North American Utilities Marketplace. Other reports in the Market Horizons™ Series provide similar analyses of Real-time Automation & Controls (RTAC) in the North American Electric Utilities Marketplace and Real-time Automation & Controls (RTAC) in the North American Water/Wastewater Utilities Marketplace. Please visit for more information about these and other InfoNetrix Advisory Services. InfoNetrix LLC, an independent technical research and consulting firm specialized in utility automation and information technology (Utility Automation/IT) markets conducted the research for this report. InfoNetrix reports are available for subscription by any and all interested parties, foreign and domestic (except as prohibited by law), in accordance with the pricing and terms set forth in the prospectus, provided separately. This report addresses Geospatial & Field Automation Solutions (GFAS) in the North American Utilities Marketplace. Other reports in the Market Horizons™ Series provide similar analyses of Real-time Automation & Controls (RTAC) in the North American Electric Utilities Marketplace and Real-time Automation & Controls (RTAC) in the North American Water/Wastewater Utilities Marketplace. Please visit for more information about these and other InfoNetrix Advisory Services.

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-3 PART 4: Market Analysis & Future Outlook General Information & Notifications PURPOSE The information contained in this document is for the sole use of InfoNetrix clients and is not to be distributed outside client organizations. No part of this publication may be reproduced, transcribed, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any electronic storage and retrieval system, without permission in writing from the copyright owner. DISCLAIMER This publication has been prepared with care, however, no guarantee of accuracy, completeness, or warranty of any kind is expressed or implied, nor shall InfoNetrix be liable to any user of the publication or any portion(s) hereof for any direct or indirect damages, expenses, costs or losses of any kind resulting from its use. COUNTRY OF ORIGIN United States of America PURPOSE The information contained in this document is for the sole use of InfoNetrix clients and is not to be distributed outside client organizations. No part of this publication may be reproduced, transcribed, or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any electronic storage and retrieval system, without permission in writing from the copyright owner. DISCLAIMER This publication has been prepared with care, however, no guarantee of accuracy, completeness, or warranty of any kind is expressed or implied, nor shall InfoNetrix be liable to any user of the publication or any portion(s) hereof for any direct or indirect damages, expenses, costs or losses of any kind resulting from its use. COUNTRY OF ORIGIN United States of America

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-4 PART 4: Market Analysis & Future Outlook Research Standards & Methodology The preparation of this report follows generally accepted standards of market research practice and is based on principles of truthfulness and professionalism. A reasonable and prudent effort has been made to ensure that factors and circumstances having a material impact on any decision-making process derived from, or impacted by, this report are included in the analyses and recommendations. The representations of industry and market data and portrayals of the business environment are based on market research conducted by experienced professionals with broad knowledge and experience in the markets addressed. The information upon which the findings and analyses contained in this report are based was obtained through a combination of telephone interviews with key suppliers and consultants and other individuals with extensive market knowledge and experience, augmented by survey with a cross section of utility managers and ongoing interactive research with over 1,000 utilities annually. Each telephone interview/survey was guided by a specially designed questionnaire to obtain pertinent data, insights and market perspectives. These interviews were augmented by secondary research across a wide range of reliable public and proprietary information sources pertinent to the study. The preparation of this report follows generally accepted standards of market research practice and is based on principles of truthfulness and professionalism. A reasonable and prudent effort has been made to ensure that factors and circumstances having a material impact on any decision-making process derived from, or impacted by, this report are included in the analyses and recommendations. The representations of industry and market data and portrayals of the business environment are based on market research conducted by experienced professionals with broad knowledge and experience in the markets addressed. The information upon which the findings and analyses contained in this report are based was obtained through a combination of telephone interviews with key suppliers and consultants and other individuals with extensive market knowledge and experience, augmented by survey with a cross section of utility managers and ongoing interactive research with over 1,000 utilities annually. Each telephone interview/survey was guided by a specially designed questionnaire to obtain pertinent data, insights and market perspectives. These interviews were augmented by secondary research across a wide range of reliable public and proprietary information sources pertinent to the study.

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-5 PART 4: Market Analysis & Future Outlook Research Reliability & Acceptance The information presented in this report was gathered, recorded and analyzed with care and precision. However, there will undoubtedly be differences between the findings presented and actual results for various reasons and, because future events and circumstances frequently do not occur as expected, those differences may be material. For these and other reasons (including, but not necessarily limited to human error, misinterpretations, misunderstandings and information sensitivities among respondents), the resulting data will most likely not be completely accurate in all respects. Moreover, the forecasts presented herein reflect judgments made as of the period during which this report was prepared. As such, some aspects can be expected to change as a result of numerous direct and indirect factors, which are beyond the scope of this report to accurately predict. For example, it assumes that current events will continue to have the same effect on the marketplace in the future and that the conventional wisdom of today will continue to be completely applicable to future market conditions, which is at best, unlikely. By accepting and using the information contained in this report, the user assumes all responsibility for its use for any and all purposes as user may deem appropriate and agrees to hold InfoNetrix, its principals and its staff harmless from any direct, indirect or consequential damages resulting from, or in any way related to, such use(s). However, InfoNetrix actively solicits and welcomes inquiries or other input regarding any errors, omissions or inconsistencies discovered during the course of using this report. Please direct any such correspondence to InfoNetrix Client Services. (Detailed company contact information is provided on the web at: The information presented in this report was gathered, recorded and analyzed with care and precision. However, there will undoubtedly be differences between the findings presented and actual results for various reasons and, because future events and circumstances frequently do not occur as expected, those differences may be material. For these and other reasons (including, but not necessarily limited to human error, misinterpretations, misunderstandings and information sensitivities among respondents), the resulting data will most likely not be completely accurate in all respects. Moreover, the forecasts presented herein reflect judgments made as of the period during which this report was prepared. As such, some aspects can be expected to change as a result of numerous direct and indirect factors, which are beyond the scope of this report to accurately predict. For example, it assumes that current events will continue to have the same effect on the marketplace in the future and that the conventional wisdom of today will continue to be completely applicable to future market conditions, which is at best, unlikely. By accepting and using the information contained in this report, the user assumes all responsibility for its use for any and all purposes as user may deem appropriate and agrees to hold InfoNetrix, its principals and its staff harmless from any direct, indirect or consequential damages resulting from, or in any way related to, such use(s). However, InfoNetrix actively solicits and welcomes inquiries or other input regarding any errors, omissions or inconsistencies discovered during the course of using this report. Please direct any such correspondence to InfoNetrix Client Services. (Detailed company contact information is provided on the web at:

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-6 PART 4: Market Analysis & Future Outlook Market Horizons™ Report Contents 1.Executive Market Briefing 2.Marketplace Characteristics 3.Market Drivers, Issues & Trends 4.Market Analysis & Future Outlook 5.Supplier Environment

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-7 PART 4: Market Analysis & Future Outlook Market Analysis & Future Outlook Current Market Assessment Market Outlook Synopsis General Market Outlook Systems & Services Outlook Field Automation Solutions Outlook

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-8 PART 4: Market Analysis & Future Outlook “You don't take technologies to market, you take products to market. A technology reaches the marketplace if it supports a product that provides utility and value." - Alberto Leon-Garcia, IEEE Fellow & Professor, University of Toronto Current Market Assessment Market Perspective

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-9 PART 4: Market Analysis & Future Outlook Current Market Assessment Market Composition & Direction Slowed pace of change in utility market structure & composition  Deregulatory/privatization models over-promised and under-performed  Last round of M&A activity still being digested/rationalized by utilities  Pervasive trend toward a back-to-basics utility business model Market restructuring (Electric) & privatization (Water/Wastewater)  Electric restructuring continued despite delays and setbacks  Standard Market Design (SMD) still 1-2 years from final adoption  ISO/RTO plan moving forward slowly, more confidently (except in Southeastern US where it is stalled indefinitely)  Privatization in re-evaluation stage (benefits not being realized) National Energy Bill may be enacted in 2004  Contents and key implications for electric & gas remain uncertain  Passage seen as a definitive step in overall industry direction  Will likely foster improved investment confidence by utilities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-10 PART 4: Market Analysis & Future Outlook Current Market Assessment Market Values & Growth Market rebounded in 2003, but issues linger:  Continued utility spending restraints… National economic recovery sustainability remains uncertain Budgetary & funding uncertainties (especially for municipal utilities)  Utility business realignment and redefinition Completing painful withdrawals from non-core business areas Ongoing utility mergers, acquisitions & divestitures Some privatization reversals; fewer new initiatives  Regulatory policies and politics National Energy Policy remains stalled in US Congress Regional ISO/RTO and SMD plans still unfolding for electric utilities Largely un-funded yet pervasive security mandates evolving  Supplier challenges… Intensified price competition (with slow recovery expected) Further pressure for more standards and product standardization Substantial reductions in the number of large projects

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-11 PART 4: Market Analysis & Future Outlook Current Market Assessment Project Opportunities: AM/FM/GIS Geospatial (AM/FM/GIS) Systems  Substantially all of the largest utilities now have some type of geospatial system in place  Most future IOU projects will be expansions/enhancements to existing systems  A large portion of enhancement projects will be sole-sourced  Moderate growth in numbers of large ($1M+) projects, still concentrated primarily among Tier 1 & Tier 2 IOUs  Continuing incremental upgrades/expansions by IOUs  Increasing numbers of smaller projects among MUNIs & RECs, gaining momentum in future years  Some “push up” from lower price ranges into $75K-$350K ranges will augment actual growth in these ranges

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-12 PART 4: Market Analysis & Future Outlook Technical & Integration Services (TIS)  TIS opportunities increasing but trail AM/FM/GIS projects Large utilities moving toward more outsourcing in Smaller utilities (MUNIs/RECs) less likely to outsource services Most municipals rely on internal resources (i.e., other departments, city/county engineering staff, etc.) when available  Influx of smaller geospatial systems projects among MUNIs, RECs and private water companies create less demand for outsourced services than IOU projects More modest project scopes Strong preference for use of internal resources  Continued sharp declines in large conversion projects Most conversion projects for largest utilities are complete Some projects in 2002 forecast were delayed due to recession Utility mergers create a few large integration projects each year Current Market Assessment Project Opportunities: TIS

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-13 PART 4: Market Analysis & Future Outlook Good growth and increased FAS spending by utilities of all types and sizes  Fewer pilots and proof-of-concept projects  More blanket deployments, especially for: Outage Management Systems Work Management Systems Workforce Management Systems  Growing utility realization that FAS delivers: Productivity and operational efficiency Improved customer service Documentation of performance improvement Measurable ROI when properly applied Current Market Assessment Project Opportunities: FAS

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-14 PART 4: Market Analysis & Future Outlook Opportunity Outlook  Nominal growth in under $75K ASP range; mainly entry-level, first-time REC and small MUNI buyers  Rapid growth across lower project ranges ($75K-$350K), driven by growing numbers of smaller projects among all utility types  Projects in higher ASP ranges ($350K-$3M+) will be mainly for large IOUs and other utilities serving 100K+ customers  Water projects escalate in as economy recovers Average Selling Price (ASP) Outlook  Nominal increases (3-8% CAGR; ) across most ranges  Rapid ASP increases (11-12% CAGR; ) in $75K-$200K range Market Value Outlook  Very strong growth (30-40% CAGR; ) in $75K-$200K range, driven extensively by rapid increases in number of smaller, COTS AM/FM/GIS projects among MUNI & REC buyers  “Push up” from lowest ASP range ($<75K) adds to growth at next level Market Outlook Synopsis AM/FM/GIS Systems

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-15 PART 4: Market Analysis & Future Outlook Opportunity Outlook  No growth among very small projects (≤$75K); most too small to be outsource candidates  Best growth opportunity (largest numbers of projects) is in middle ASP ranges ($350K-$1Mil) as outsourcing trend takes hold  Projects in higher ASP ranges ($350K-$3M+) will be mainly for large IOUs and other utilities serving 100K+ customers  Water projects escalate in as economy recovers Average Selling Price (ASP) Outlook  Nominal increases (1-6% CAGR; ) across most ranges  Flat ASPs for largest projects ($3M+) Market Value Outlook  Very strong growth (20-40% CAGR; ) across middle ASP ranges, driven extensively by outsourcing trends and rapid increases in number of AM/FM/GIS projects with TIS component  Anticipated“push up” from lower ASP ranges driving some growth Market Outlook Synopsis TIS Systems

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-16 PART 4: Market Analysis & Future Outlook Opportunity Outlook  Accelerating deployments of OMS & WMS/WFM driven mainly by productivity improvement, operational efficiency and customer service enhancement  Best growth opportunity (largest numbers of projects) is in lower ASP ranges ($75K-$350K); mainly entry-level systems  Projects in higher ASP ranges ($350K-$3M+) will be mainly for large IOUs and other utilities serving 100K+ customers  Water projects escalate in as economy recovers Average Selling Price (ASP) Outlook  Nominal increases (4-8% CAGR; ) across all ASP ranges Market Value Outlook  Very strong growth (15-30% CAGR; ) across all ASP ranges, attributable to relatively small annual values at this stage of market development  Anticipated“push up” from lower ASP ranges driving some growth Market Outlook Synopsis FAS Systems

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-17 PART 4: Market Analysis & Future Outlook FAS remains best prospect for future growth and increased spending by utilities of all types and sizes  Fewer pilots and proof-of-concept projects  More blanket deployments, especially for: Outage Management Systems Work Management Systems Workforce Management Systems  Growing realization that FAS delivers: Productivity and operational efficiency Improved customer service Documentation of performance improvement Measurable ROI when properly applied General Market Outlook Project Opportunities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-18 PART 4: Market Analysis & Future Outlook General Market Profile All GFAS Project Opportunities Number of Project Opportunities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-19 PART 4: Market Analysis & Future Outlook FAS remains best prospect for future growth and increased spending by utilities of all types and sizes  Fewer pilots and proof-of-concept projects  More blanket deployments, especially for: Outage Management Systems Work Management Systems Workforce Management Systems  Growing realization that FAS delivers: Productivity and operational efficiency Improved customer service Documentation of performance improvement Measurable ROI when properly applied General Market Outlook Market Values

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-20 PART 4: Market Analysis & Future Outlook General Market Profile GFAS Market Values (All Sectors) Annual Expenditures ($ Millions)

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-21 PART 4: Market Analysis & Future Outlook Annual Expenditures ($Millions) General Market Profile Market Composition & Contributions

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-22 PART 4: Market Analysis & Future Outlook Annual Geospatial Systems & Services Expenditures ($Millions) Systems & Services Outlook GFAS Systems & Services Values

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-23 PART 4: Market Analysis & Future Outlook Average Selling Price Ranges Detailed Market Profile All Geospatial Systems Opportunities Number of Opportunities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-24 PART 4: Market Analysis & Future Outlook Annual Expenditures ($Millions) Average Selling Price Ranges Detailed Market Profile All Geospatial Systems Values

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-25 PART 4: Market Analysis & Future Outlook Average Selling Price Ranges Detailed Market Profile All TIS Project Opportunities Number of Opportunities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-26 PART 4: Market Analysis & Future Outlook Annual Expenditures ($Millions) Average Selling Price Ranges Detailed Market Profile All TIS Project Values

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-27 PART 4: Market Analysis & Future Outlook Field Automation Solutions Outlook Annual Expenditures ($ Millions)

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-28 PART 4: Market Analysis & Future Outlook Average Selling Price Ranges Detailed Market Profile All FAS Project Opportunities Number of Opportunities

©2004 InfoNetrix LLC All Rights Reserved Worldwide 4-29 PART 4: Market Analysis & Future Outlook Annual Expenditures ($Millions) Average Selling Price Ranges Detailed Market Profile All FAS Project Values