1. TeleSoft Partners EcoSystem Meeting Paul Chamberlain Managing Director, Head of West Coast Technology Banking October 28, 2005

2. Google and Beyond: Consumer Internet Trends

3. 3 The New Group Therapy “Hi. My name is Barry, and I Google two to three hundred times a day.”

4. 4 Jail Cell Confessions “I should have used Skype instead of email.”

5. 5 Agenda  Tech Market Snapshot  Morphing of the Internet  What’s Behind the Internet Scramble  What’s Ahead

6. 6 Tech Market Snapshot  Virtually all public tech companies (ex-Internet) are “growth- challenged”— not capital-constrained  Overall tech growth rates are expected to improve but still trail Internet considerably  Internet valuations are consistent with high growth leaders in other tech sectors  Financial sponsor activity at an all-time high but only limited investment to date in Internet

7. 7 Internet Growth is Pulling-Up the Averages Technology Sector Year-over-Year Revenue Growth %

8. 8 Internet Valuations Are Not Out of Line P/E to Growth Internet and Consumer Software

9. 9 A New Force To Be Reckoned With? # of Deals: 12 11 16 17 23 Financial Buyer Activity in Technology Bn

10. 10 Morphing of the Internet Catalyst Service Differentiation IT Objective Disruption Winners Internet 1.0Internet 2.0 Information access Online vs. offline Put big iron on Net Any-to-any Information relevancy Speed, relevancy, cost Low cost scale out Speed, intelligence

11. 11 Big Changes Keep Coming eCommerce Speed / Relevancy / Cost Wireline Voice Low Cost / VoIP Video Personalized / On-Demand Scalability / Reliability Enterprise Data Center Wireless Data Data / Entertain Speed / Cost Consumer Broadband $Bn $3,000 $300 $100 Size of Market

12. 12 My, How Communications Have Changed! 2005 Mobile VoIP IM Email Blogs Web Up to 1995

13. 13 Consumer Internet Data Points Search 8Bn global searches per month at Google Broadband 180MM global subs – 60MM in Asia – 50MM in U.S. Music 700MM iTunes downloads 7MM iPods sold in Q3 Personalization 40MM+ MyYahoo! users Video 1Bn streaming video sessions at Yahoo! Mobile Ringtones now a $3Bn revenue business

14. 14 Internet Deal Mania? DateEventValueWhat’s Behind It? 9/14/05Google Follow-on$4BnCost of entry for new markets? 8/10/05Yahoo!/Alibaba$4Bn“Outsource” strategy for Japan worked well – why not China? 9/12/05eBay/Skype$4BnBeefing-up its “viral network” credentials 8/5/05Baidu IPO$4Bn“Investors” who missed Google from $85-$340

15. 15 And It Doesn’t Stop There craigslist

16. 16 What’s Behind the Internet Scramble  Internet (Narrowband)Internet (Broadband)  Search 1.0Search 2.0  PC-centricMobile-centric  InternationalNorth America  Free emailFree calling  BrowsingCommunications Massive shifts in spending in existing markets and new market growth

17. 17 Self-Reinforcing Internet Momentum Search Broadband Commerce Commun- ication Content “Holy Trinity”

18. 18 Mobile Broadband in Early Stages Global 2.5G/3G Penetration Subscribers (MM) % of Total Wireless Subscribers

19. 19 International Markets Are Leading the Way Internet Users – 1 Billion Mobile Users – 2 Billion

20. 20 Skype – Fastest Growing App Ever? Registered Users Revenue Split MM Months Since Inception 54MM as of Sept. 2005

21. 21 Internet As a Communications Hub % of Time Spent on Internet Communications 44%

22. 22 What’s Ahead  Search keeps getting better for users and advertisers

23. 23 In Q3 Yahoo! generated $1.3Bn in gross ad revenue and PAID OUT $400 MM to partners like MSN, ESPN, WSJ, etc.  “Incontrovertible leadership”  “Defied convention”  “Widening the gap competitively” The Power of Internet Ecosystems  “Powerful momentum”  “Strong trajectory”  “Hitting on all cylinders” In Q3 Google generated $1.6Bn in gross ad revenue and PAID OUT $530 MM to partners like AOL, AskJeeves, etc.

24. 24 What’s Ahead  Search keeps getting better for users and advertisers  Ad-supported desktops?  Any content, anywhere  Moore’s law coming to networking?

25. 25 A Gift to the Server and Networking Industries? CapEx Spending by Major Internet Players $MM + 34% + 87% + 30%

26. 26 What Does It Mean for You? “Can you hang on a sec? I think I just took another picture of my ear.”

27. 27 If It Can Work for Arjun…

28. QUESTIONS? Paul Chamberlain Managing Director Technology Investment Banking 650-234-5603 paul.chamberlain@morganstanley.com