Chris Matichuk Program Manager Microsoft Corporation, eHome Gerry Kaufhold Principal Analyst In-Stat,

Multimedia PC users take for granted that TV just works

Consumers with a TV Tuner Are 5 times more likely to use Media Center daily* Have 2 times more multimedia content* * Compared to the average Windows with Media Center PC buyer (Microsoft, U.S. data, July 2006) Tuner

Half of the U.S. consumers who do not get a TV tuner with their PC express interest after hearing the feature description (Microsoft, U.S. data, July 2006)

Mainstream TV tuners will generate increased opportunities Multiple tuners Hardware encode Advanced codecs H.264, VC1 TranscodePlaceshifting HD-DVD/ Blue-Ray burning Premium content Cable, Satellite Conditional access descrambling Digital rights management Semi Chips and Interfaces Reference Designs Driver Maintenance IHV SoftwareHardware IHV Hardware ODM Build and Sell Tuner Solution CM Build Tuner PC OEMs RetailChannels CM Build Tuner Semi = Semiconductor Manufacturer ODM = Original Development Manufacturer CM = Contract Manufacturer

Gerry Kaufhold Principal Analyst

HardwareSemiconductors Reference Designs PCs with Tuners Broadcasters offering special services Software Operating System Device Drivers Applications Maintenance and Updates

PC-TV only viewed as a hobby, with “some user assembly” required Countries rolling out Digital Terrestrial TV (DTT) services with unique features Need for multiple PC-TV Tuners in each PC to support user’s expectations Programming guides need to be more automated

People like their PCs, and like to customize their TV Viewing experience People with PC-TV Tuners regularly use more rich media, they are the hot market PC-TV Tuners are being integrated into smaller footprints, prices coming down The mobile segment is taking off Place shifting seems like a natural extension for Broadband PCs

Largest market, driven by Free-to-Air (FTA) Terrestrial and Satellite TV services Laptop and Mobile computing segments showing strong growth Europeans ride public transportation, giving them time to view rich media on their portable laptops and other devices Digital Terrestrial TV also driving growth

Digital Terrestrial still getting its legs-DTT to take off in late 2009 Japan rapidly transitioning from NTSC to ISDB China market exploding for analog tuners Small living quarters encourage using a PC for the family entertainment center Mobile segment is taking off

U.S. ATSC Digital Terrestrial not popular Cable TV MSOs moving slowly with Clear QAM and Digital Cable Ready (DCR) Not much Free-to-Air satellite service Pay-TV services provide PVR STBs Satellite TV may lead the way with Broadband PCs that include tuners Intel Viiv™ and AMD Live promoting Tuners

Source: In-Stat 03/07

Value of PC-TV Tuners by Region

PC-TV Tuners need to bridge the gap from hobby products to mainstream Digital Terrestrial TV and Free-to-Air Satellite will be key technologies that need support Mobile reception adds new opportunities Country-specific solutions will arise Combo PC-TV Tuners are coming Support for multiple video streams Support for DTT, analog, and broadband Broadband PCs can support interactivity Drivers for all this still need to be managed

Interactive Program Guides (IPGs) on the PC provide improved search capabilities for upcoming TV shows, and for content stored on the PC IPGs can access up-to-the-minute web Content that enhance users’ experiences Broadband-connected PCs with PC-TV Tuners can provide interactivity-Imagine pausing a TV show and watching a Honda ad from the Internet Huge opportunities will arise

PC-TV Tuners provide access to great TV Content from many sources Broadband PCs bring in the Internet Provide greatly enhanced search for IPGs Provide access to Internet video Permit sharing of video and social networking The Future of TV may come from PC-TV Tuners on Broadband PCs Nexus: n, Tie, Link, Connection

PC-TV Tuner Ecosystem must adopt “in box” drivers to provide the best support Semiconductor manufacturers need to lead the technology to drive standardization and ramp up volumes PC-TV Tuner products need to be as standardized as printers, DVD ROMs, video cards, and disk drives Microsoft Vista sets the stage Windows Update fulfills the promise

In-Stat contacts: Gerry Kaufhold, Chris Kissel, reedbusiness.com reedbusiness.com reedbusiness.com reedbusiness.com

Chris Matichuk Program Manager Microsoft Corporation, eHome

In-Stat (2007) forecasts 22.3M tuners in 2007 growing to 49.7M in 2010 Is there opportunity for higher growth? Consider that the Total Available Market will reach several hundred million units by 2010/2011 What’s The Tipping Point? * Product and price improvements? Promotion improvements? Can we learn from high attach rate geographies? In 2005 timeframe, the tuner attach rate in Japan was ~90% consumer desktops with tier 1 OEMs * See “The Tipping Point”, by Malcolm Gladwell, Back Bay Books

Most U.S. consumers are unaware of TV tuner options at the time of purchase Half of the U.S. consumers who did not get a TV tuner with their system express interest after hearing the feature description (Microsoft, U.S. data, July 2006) Promoting PC-TV features in retail will increase TV tuner attach rate and drive higher multimedia usage

Integration will result in single chip hybrid tuners Would a sub-$10 BOM for a WW analog/digital, free to air, single chip, low power tuner lead to mass adoption? Added value differentiators will include transcoding, hardware encode, dual and quad tuners, advanced codecs, premium content, conditional access, and digital rights management AnalogHybridHybrid

Product TV just works Broadcast formats DVB-S2, ATSC- M/H, QAM, DMB, DVB-H Premium ISDB, Cable, Satellite Categories Transcoding Networked Mobile Reliability, distribution Improved reference drivers Inbox drivers Windows Update Price Semiconductor integration More features at the same price Lower cost form factors Analog software encode Integrated IR Motherboard Tuner Promotion Point of sale consumer education, flashy TV demo’s Promote aftermarket tuner upgrades TV tuner as a standard feature on multimedia systems Tuner logo System logo

Drive PC-TV tuner adoption Ship PC-TV as standard with every multimedia PC Actively market PC-TV features in retail outlets Invest in new TV Tuner formats and categories that will continue to expand the business Continue to improve the end user experience by ensuring the most reliable drivers are available Promote tuners supported by Inbox Drivers Require the most recent approved/tested driver on Windows Update

Microsoft Contact: Chris Matichuk mediacenter.mspx mediacenter.mspxIn-StatContacts: Gerry Kaufhold Chris Kissel (content) (equipment) (research) microsoft.com microsoft.com reedbusiness.com reedbusiness.com reedbusiness.com reedbusiness.com

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