1. Device Wars Ned May Director & Lead Analyst nmay@outsellinc.com 617.722.0850 And the Implications for the Enterprise

2. Agenda Why now Device landscape Penetration outlook Content fit Monetization paths Enterprise Implications

3. Why All the Fuss? The is to as the is to ….

4. 4 © 2010 Outsell, Inc. All rights reserved. The Device Landscape – Three Types Smart phones Tablets e-readers

5. Three Publisher Concerns: 1.The device adoption rate 2.The content fit across each device 3.How to monetize

6. #1 Device Adoption Rate Source: Outsell estimates and company reports iPhone iPod Sony Reader Kindle iPad

7. 7 © 2010 Outsell, Inc. All rights reserved. Are e-Readers An Interim Device?

8. 8 © 2010 Outsell, Inc. All rights reserved. e-Readers Become Niche Base = 37 Source: Outsell’s February 2010 e-book survey, interim results

9. 9 © 2010 Outsell, Inc. All rights reserved. #1: The Device Adoption Rate Conclusions: SmartphonesNearly ubiquitous Tablets Likely high e-ReadersLow but loyal

10. 10 © 2010 Outsell, Inc. All rights reserved. #2: The Content Fit Across Each Device

11. 11 © 2010 Outsell, Inc. All rights reserved. Content Fit – Lessons from iPhone Bases = Total: 2,540 Source: Outsell’s News Users Survey June 2009. Q33

12. 12 © 2010 Outsell, Inc. All rights reserved. Bases = Total: 5,660; iPhone Users: 358; Non Iphone Users 5,302 Source: Outsell’s Information Markets & Users Database, December 2008 Survey, Q20f Content Fit – Lessons from iPhone

13. 13 © 2010 Outsell, Inc. All rights reserved. Bases = iPhone Users: 358; Non Iphone Users 5,302 Source: Outsell’s Information Markets & Users Database, December 2008 Survey, Q20 Content Fit – Lessons from iPhone

14. 14 © 2010 Outsell, Inc. All rights reserved. #2: The Content Fit Across Each Device Conclusions / observations: e-ReadersLinear / static / engrossing SmartphonesInteractive / tactical / demand driven TabletsEngaging / rich media / leisurely

15. 15 © 2010 Outsell, Inc. All rights reserved. An Aside - Segmentation Matters

16. 16 © 2010 Outsell, Inc. All rights reserved. #3: How to Monetization Conclusions / observations: e-ReadersTransactional / Subscription SmartphonesAdvertising TabletsAll paths

17. 17 © 2010 Outsell, Inc. All rights reserved. Enterprise Implications? Three key points to consider 1.These are side pocket devices 2.Consumer expectations will trickle over 3.Not all devices are equal

18. Come By and Visit Us Outsell, Inc. In the United States: Call +1 650.342.6060 Fax +1 650.342.7135 330 Primrose Road, Suite 510 Burlingame, California 94010 In the United Kingdom: Call +44 (0)20 8090 6590 Fax +44 (0)20 7031 8101 25 Floral Street, London, WC2E 9DS info@outsellinc.com www.outsellinc.com Copyright 2010 All rights reserved

19. Appendix Publisher Paths to Monetization

20. Books Sales Move to e-Readers US Trade Wholesale Electronic Book Sales See data from International Digital Publishing Forum: http://www.idpf.org/doc_library/industrystats.htm http://www.idpf.org/doc_library/industrystats.htm

21. But What About Other Content? Base = 2,787 Source: Outsell’s New User Survey 2009

22. News Unlikely To Ever Get Paid Base = 2,787 Source: Outsell’s New User Survey 2009

23. Application Overdose http://www.knowyourcell.com/news/415234/inapp_advertising_still_a_bad_model_for_mobile_apps.html “A new report from Flurry Analytics tells the same old story where mobile app retention rates are concerned. For developers, the best way to make money in the mobile app ecosystem is to take the money and run.” [6 months, 100 apps, 800 million user sessions]

24. Advertising Not Viable Route Today B2B: % Freq Selected in Top 3 for ROI

25. Some B2B Segments Showing Promise Today Source: Outsell Advertising & Marketing Study 2009 Key Adoption Rate Findings Highest usage in Business and Financial Services Usage up more than 2x in 2009 over 2008 in maximum use industries Rate of use varies greatly: max 10.6% is 7x more than min 1.5%

26. Yet Dollars Remain Low Source: Outsell Advertising & Marketing Study 2009 Key Spending Findings Highest wireless marketing spending in Business and Financial Services Rate of spending groups into 3 industries near 2% of total, 3 industries at one-third of that level near 0.7% and Legal trailing at a very low 0.4% Note that other Outsell Ad Study data shows advertisers primarily targeting consumers are spending approximately 2x the level of B2B wireless spending. Note: Percents are Based on Online Marketing Spending Excluding Spending on Companies’ Own Sites

27. But Change Is Coming “iAd is a breakthrough mobile advertising platform from Apple. With it, apps can feature rich media ads that combine the emotion of TV with the interactivity of the web. For developers, it means a new, easy- to-implement source of revenue. For advertisers, it creates a new media outlet that offers consumers highly targeted information.” Apple Inc.