1. © Copyright IBM Corporation 2009 IBM Global Business Services Innovation driving strategic choices for P2P Saul Berman Global & Americas Leader, IBM Strategy & Change

2. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-142 Technology driven innovation across consumers, business models and business design impact P2P Business Design and Infrastructure Innovation Business Model Innovation Consumer Innovation Technology Disruption Demand will increase Social networking & consumer engagement Monetization remains a core question Content monetization & new business models P2P can address challenges Content explosion & efficiency challenges

3. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-143 Explosive growth in consumer interaction Source: 2008 IBM Digital Consumer Survey. Total responses = 2800 across six countries: Australia, Germany, India, Japan, UK, US. IBM 2007 digital consumer survey: Total responses = 2800 across five countries: Australia, Germany, Japan, UK, US *This category was not included in the 2007 survey. 2008 2007 2008 Global Digital Content Adoption

4. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-144 Consumer engagement especially among the digital savvy – driving growth of user generated content % who have watched online video % who regularly watch online video % who have rated video content online % who have uploaded videos Digital Content Interaction with Online Video Kool Kids Gadgetiers Massive Passives Aggregate Source: 2008 IBM Digital Consumer Survey. Total responses = 2800 across six countries: Australia, Germany, India, Japan, UK, US Influence and Interaction driven by the digital savvy 84% 45% 31% 25% 36% 40% 89% 7% 13% 25% 68% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Passive ExperiencerEngagedInfluencersContributors

5. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-145 Increased sharing and distribution of video content among social networks drives consumer internet traffic growth Global Consumer Internet Traffic forecast Source: 2008: Cisco Visual Networking Index: Forecast 2007- 2012 Cagr 2007-2012 104 % 57 % 24% 44 % 30 % 31% 34 % In 2012, the sum of all forms of video (TV, VoD, Internet, and P2P) will account for close to 90% of consumer traffic In 2012, Internet video (crossing Internet backbone) will be nearly 400 x the U.S. backbone in 2000

6. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-146 Increasing video traffic over the Internet challanges M&E companies to manage distribution cost Source: 2008: Cisco Visual Networking Index: Forecast 2007- 2012 Cisco 2008: Video, catching the next wave, Marthin de Beer IP Video to PC IP Video to TV Video Communication Internet traffic 1 2 3 Time Three waves of Internet video growth M&E Companies must manage distribution cost - especially in the current economic environment Disruptive innovation in CDN/P2P space can potentially reduce distribution cost by 50-80%

7. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-147 Lessons from the music industry: Value is not disappearing but shifting closer to the consumer ConsumeServiceCreateManageDistribute Music Value Chain CAGR 10% CAGR 11%CAGR 18%CAGR -1% Record Labels Distributors Devices Promoters In-Home Services Global CAGR* -3% KEY Decreasing share Increasing share Sources: PwC Global Outlook 2008-2012; CEA Market Research 2008; Veronis Suhler, 2007; eMarketer, 2007; IBM Analysis CAGR is 2003 - 2008 2008 Size: $20 billion Size: $12 billionSize: $37 billionSize: $2 billion Size: $13 billion US CAGR -5%

8. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-148 Lessons from the Advertising Industry: Fundamental shift in capability requirements *Interactivity considered a feature that is not essential to all advertising formats. Consumer-centric marketing: What is it? GRANULARITY INTEGRATION ADDRESSABILITY MEASURABILITY CONTINUITY BroadMicro Impressions Impact CONTEXT Single Platform Integrated, cross- platform Ad message disjointed from adjacent content Message tightly coupled with adjacent content INTERACTIVITY* One-way messaging Two-way dialogue From To

9. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-149 CDN Telco/ISP Access Internet Core OTTs $ $ $ P2P need to identify revenue models across the emerging ecosystem Access Wireless and Fixed Internet Access providers CDN Large network and cache of a variety of content Internet Core Global networks transporting Internet traffic OTT Providers Content, media and Application providers End Customer Advertisers SubscriptionsPay per Use Typically no charge Peering charges for access to content Charges for amount of data cached Possibly charges for bandwidth used Variety of transactions/models Per click or basic ad revenue Peering/CoLo charges to shift content around CDN

10. © Copyright IBM Corporation 2009 IBM Global Business Services | 15-Feb-1410 Saul J. Berman Partner & Global Executive IBM Global Business Services saul.berman@us.ibm.com