Microsoft Business Solution Retail Management System Partnership Opportunity Microsoft classic and Business Solutions VAR seeking niche growth opportunity

Agenda Market Opportunity Worldwide Positioning ProductCompetition Target by Vertical Value in Partnering Next Steps

Single stores & small chains <25 stores Proprietor owned and operated stores Inventory managed within stores and/or at head office Specialty and general merchandise Inventory price-tagged and stocked in stores Gift, apparel, beer/wine/liquor, sporting goods Independent Merchants strengths Interact directly with their customers Provide superior customer service and offer unique products Act quickly and decisively on a local basis Can automate their store more quickly and cost- effectively using PC technology Target Market Independent Merchants

Small & Medium 62.8M Lanes! Enterprise 9.3M Lanes Strong Brand, Complete Solution Our Leadership Opportunity “Lane” = PC/Software opportunity Retail is the largest small business category Independent Merchants, 1-10 stores, 99% of all retailers, 80% of all checkout lanes Global Retail Market Company Size Lane Count No Market Leader Source = Clarendon 2003

POS Adoption By Independent Merchants Use of automation is increasing dramatically Over 75% are independent merchants Source = Clarendon 2003 Installed Base Units in Millions Units Shipped in Millions PCECR Manual Lanes ECRPC M Units M Units M Units M Units

PC with RMS After The Right Solution Makes A Big Difference… Before Cash Register + Paper Ledger + Extra Hardware Before After

Microsoft Retail Management System Overview Chain-wide pricing, purchasing & inventory control View & analyze data across entire business or store-by-store Set and monitor policies and procedures for every store Streamline business operations Make informed decisions Market, promote, and sell across channels Reduce POS system and operation costs Easily expand to multi-store operations One or More Store Locations Multiple Cash Registers per Store Head Office / Lead Store

Competitive Landscape $1B – Tier 1 $500M – Tier 2 Enterprise Medium Small 2-9 Stores $100M – Tier 3 $10M – Tier 5 $1M – Tier 6 1 Store Stores $50M – Tier Stores Retail Pro Synchronics CamCommerce ComCash Intuit Stores Island Pacific

Competitive Advantage Primary Competitors Pure POS vendors targeting independent retailers Vertical-focused POS vendors No-name POS applications “Techno-phobia” from non-automated retailers Long-term value and stability of Microsoft Experience of Microsoft and their partners serving the needs of small and medium businesses Value of integration with Microsoft solutions Ease of use and reporting strength Format

US Target Market FY ‘05 34% Best Solution Fit at 100% 18% Plan to Buy in FY05 Top 4 Sub Verticals= 19% All Independent Merchants, 77% fit for RMS L=Lane/PC 1.7M L/ 751K 756K L/ 331K 136K L/ 60K 26K L/ 12K Lanes (PCs)/ Retailers 19.0% of market; Deep market focus to drive high share with partners 64% of market; Broad, high level marketing 17% of market; high level marketing with plans for deep focus Design work and format needed 77% (75%-100% Solution Fit) 23% (0-50% Solution Fit) 43% (75 % Solution Fit) 34% (100% RMS Solution Fit) 59% Non- Automated 8% Upgrade 10% New 23% Delaying Priority # 3 Priority # 1 Priority # 2

Sub-Vertical New Lanes Radio, television, other electronics 22,172 Household appliance 19,934 Hobby, toy & game stores 13,872 Convenience, Snack, Specialty Food 84,506 Nursery & garden centers 71,275 Auto and Tire 83,184 Pharmacy & drug stores 50,136 Furniture37,520 Hardware stores 28,964 Books-CD-Music Stores 31,082 Other Specialty NA Sub-Vertical New Lanes Clothing & clothing accessory stores 157,710 Gift, novelty & souvenir 77,996 Beer, wine & liquor 82,046 Sporting goods 43,594 Top 15 Retail US Sub-Verticals The Top 15 Similar segmentations occur globally 75% to 100% of functionality required is already in RMS Value in providing sub-segment functionality through ISVs and VARs Strong sub-industry associations & communities RMS Partners successful in these sub-verticals

RMS International Strategy 20% of RMS FY04 Revenue FY05 focus on U.S. and English speaking countries FY05 GTM campaigns in U.S., U.K. & Canada Active POS specialty distributors OEM POS bundles Partner recruitment, training & certification Partner sales tools, programs and marketing materials Continue distribution in Germany, Australia and Central America Localized solutions from distributor compliment RMS Limited partner recruitment campaigns

Retail Management System Partnership

Partner Value Proposition Gain new customers in fast growing market Low cost hardware making automation appealing to cost-conscious customers Mature and high-value solution designed specifically for SMB retailers Trusted brand and strong partner community Leverage the momentum, commitment and investment by Microsoft Profit from additional value-added service Format

Retail Excellence – 2004 Customer Growth – USA NuRol Corporation, Atlanta, Georgia Customer Growth – International Business Computer POS, San Juan, Puerto Rico Field Advocate Tri-City Retail, Toronto, Canada Business Development Digital Retail Solutions, Roanoke, Virginia

Positive Technology Gaithersburg, Maryland USA

Awareness Amongst Retailers Microsoft is letting customers know about RMS through … Search Engines Articles & Advertorials Vertical / Industry Targeted print & mail On line Demo Tools You.. Our Partners! Through Partner Material: Sales Tools Kits Tradeshow Events Joint web casts

Sales Tools To Build Your Business Marketing Templates Web Banners HTML Splash Screen HTML Event Marketing Event in a Box Presentation Print Advertising Print Ads White Papers Enablement Tools Customization Guide Implementation Guide Enablement Guide Messaging Guide Competitive Battle Cards Verticalization Kits Access to tools at - Partner Sourcewww.microsoft.com/businesssolutions

Microsoft Retail Management System Sales & Industry Training Build customer awareness of YOUR businessBuild customer awareness of YOUR business Sustaining those contacts through the inspiration to purchasing cycleSustaining those contacts through the inspiration to purchasing cycle Prospect & QualifyingProspect & Qualifying Understanding the Prospect’s NeedsUnderstanding the Prospect’s Needs Relationship MarketingRelationship Marketing Build services into YOUR business value proposition!Build services into YOUR business value proposition! 40% of sales and 60% of profits come from services*40% of sales and 60% of profits come from services* ServicesSeminars MarketingSkillsSeminars Sales Skills Seminars Session schedules and recording posted.. Session schedules and recording posted.. >> Microsoft Business Solutionswww.msreadiness.com >> Microsoft Business Solutionswww.msreadiness.com Skill building sessions available to all partners. Data: Al Hahn, Hahn Consulting, 2004 WheretoAccess

Microsoft Retail Management System Product Training 2 in-depth certification eCourses focusing on the installation and set-up of the solution 2 in-depth certification eCourses focusing on the installation and set-up of the solution Fee based, available in English only Fee based, available in English only Hands-On Labs Online guiding you through real business scenarios 3 Hands-On Labs Online guiding you through real business scenarios FREE, available in English only FREE, available in English only In-depth certification training through Microsoft Certified In-depth certification training through Microsoft Certified Partners for Learning Solutions (CPLS) Partners for Learning Solutions (CPLS) Fee based Fee based Find your local CPLS and other trainings near you at: Find your local CPLS and other trainings near you at: ClassroomTraining eCourses Hands-OnLabsOnline 3 self-paced interactive online tutorials introducing features 3 self-paced interactive online tutorials introducing features and functions and functions Fee based, available in English only Fee based, available in English only FoundationLibrary Training Available to All Partners Training Available to Microsoft Business Solutions Competency Partners

Microsoft mitigates integration time New vertical bundles to maximize your sales success Targeted Top 4 Vertical Markets ApparelBeer/Wine/LiquorGift Sporting Goods Retail hardened Standard Bundles & Deluxe Bundles Available & pricing through distribution partners

ScanSource Standard Bundle Sporting Goods Standard Bundle Includes: Pioneer POS retail specific computer with a Celeron 1ghz processor, 256mb RAM, 20gb hard drive and Windows XP Professional SAMPO 15 inch LCD display Cherry 104 key compact keyboard Epson T88 Receipt printer MMF Val-U Line Cash drawer Metrologic Voyager 9520 Barcode scanner ID Tech Magnetic stripe reader Cherry Two button power wheel optical Mouse Required cable/accessories Microsoft Store Operations single user software Installation of peripherals and software VAR Price - $2299 ScanSource Part # MIC-SPORT-S

ScanSource Deluxe Bundle Beer-Wine-Liquor Deluxe Bundle (Pictured) Includes: Pioneer POS computer terminal with an integrated 12” LCD touch screen, integrated Magnetic Strip Reader, Pentium III 1Ghz processor, 512mb RAM, 20gb Hard Drive, Windows XP Professional Cherry 104 key compact keyboard Epson T88 Receipt printer APG Vasario Cash Drawer Epson DM-D110 Pole display Symbol LS9208 Omni-directional Barcode scanner Required cable/accessories Microsoft Store Operations single user software Installation of peripherals and software VAR Price - $3546 ScanSource Part # (MIC-BWL-D)

Tech Data Standard Bundle DigiPOS Main System Unit thermal receipt printer Metrologic hand-held scanner 15" LCD monitor customer pole display cash drawer Programmable 128 position matrix keyboard All required cables Microsoft Store Operations single user software VAR Price - $2810 Freight Included

Tech Data Deluxe Bundle DigiPOS Main System Unit thermal receipt printer Metrologic wireless hand-held scanner 15" resistive touchscreen monitor with mag stripe reader customer pole display cash drawer Standard 104 keyboard Microsoft Store Operations single user software All required cables VAR Price - $3245 Includes Freight

Retail Management System Next Steps

Microsoft Partner Program Certified Partner Benefits In-House Use Software In-House Use Software Upon Authorization – Store Operations Three User Upon HQ Certification – Headquarters 5 Store Base Competency Apply Certification Exam towards MBS Competency Certification must be met in order to procure product Status of a retail competency Registered Member Certified Gold Certified

Microsoft Partner Program -- Competencies Benefits-- -- Investment-- -- Brand-- -- MBS Services -- Registered Member Certified Gold Certified Register with distributor of your choice Certified partners earn discount Performance registered with Microsoft Sign Up for MPP Online Continue sourcing form Regional Operations Centers Partners Outside the USA Register with Distribution Partner Complete Certification Exam Retail Management System – Store Operations Retail Management System – Headquarters #1 #2 #3

Register with Distribution Partners Get Ready to start selling Retail Management Today! Tech Data and/or ScanSource will help you go from ready to selling!

Next Steps – Check List  Become A Partner for RMS Contact Distributor to Sign Up for RMS Receive RMS Welcome Kit including Store Operations NFR Receive access to Partner Source  Get Certified Register for RMS E-Learning Courses Successfully complete product exam  Build Practice Utilize sales & marketing training Deploy sales aids in your campaigns

Questions on Partnership? Resources – we are here to help! Retail Management System Partner ScanSource Tech Data

Thank You

© 2004 Microsoft Corporation. All rights reserved. This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.