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Safe HarborThis presentation contains forward-looking statements concerning prospects and trends for the cable industry, demand for the products produced by ARRIS and general prospects for ARRIS in 2009 and beyond, expectations with respect to the combination of ARRIS, including expected benefits and synergies and the assumptions relating to the foregoing. The statements in this presentation that use such words as “believe," "expect," "intend," "anticipate," "contemplate," "estimate," or "plan," or similar expressions also are forward-looking statements. Actual results may differ materially from those contained in, or suggested by, any forward-looking statement. Specific factors that could cause such material differences include: the effectiveness and timing of the integration of the operations of ARRIS and C-COR and capital spending levels by our customers based in part on demand for broadband services. Other factors include the strength of the capital markets and the general economy, customer adoption of our technologies, development and marketing of technology by our competitors and risks associated with potential acquisitions. This list of factors is representative of the factors which could affect our forward-looking statements and is not intended as an all encompassing list of such factors. Additional information regarding these and other factors can be found in ARRIS’ reports filed with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2008. We disclaim any obligation to update these statements, whether as a result of new information, future events or otherwise.
March 2009 1Analyst / Investor Conference
Optical Metro
Transport
ARRIS WorkAssure™ Work Force Management• Customer Satisfaction• Dispatch Control• Expense Reduction• Workforce Potential
Regal®Taps
MONARCH®Splitters and
Supplies
ARRIS CHP Max5000™Headend Optics
ARRIS ServAssure™ HFC Network Surveillance and Maintenance• Network Visibility• Network Management• New Service Deployment• Improved Service
ARRIS D5™ Universal Edge
QAM
ARRIS C4® CMTS
ARRIS Flex Max®Amplifiers
ARRIS Opti Max® Nodes
Touchstone® E-MTA
PacketCable™ and SIP
ARRIS CORWave™
Optical Transmitters
ARRIS Products Address Virtually All of Our Customer’s Needs
March 2009 3Analyst / Investor Conference
ARRIS C3™ CMTS
Transceiver / AntennaARRIS WiDOX Telephony Modem
Video, Telephony and
HSD Operations
ARRIS C4c CMTS
ARRIS ConvergeMedia™ SuiteVOD, Advertising Delivery and
Management Platform
Employee / Revenue Mix
March 2009 4Analyst / Investor Conference
1,225 $812
611 $333
0%
20%
40%
60%
80%
100%
Employees: 1,836 Revenue $1.145B
Domestic International
Direct Employees In:NetherlandsArgentinaUSAChileChinaFranceBrazilCanadaColumbiaGermanyMexicoHong KongIrelandItalyJapanKoreaSpainPortugalUK
Deep technology bench with a rich patent portfolio leading to a commanding position in product categories
ARRIS Capabilities…
March 2009 5Analyst / Investor Conference
Over $110M of R&D Focused on the Cable Industry!
Revenue 2008
Revenue from 70 Countries in 2008
USA Canada Australia Bangladesh China New Zealand Hong Kong India Korea Malaysia GuamPhilippines Singapore Taiwan Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Finland France Germany Ghana Great Britain Hungary Ireland Israel Lebanon Netherlands Nigeria Norway Poland Portugal Romania Russia
Brazil Caribbean Islands
Peru Bahamas Grenada Jamaica
Trindad & Tobago Aruba Chile
Colombia Costa Rica
Dominican Republic Ecuador
Guatemala Haiti
Honduras Mexico
Panama Puerto Rico Saint Lucia
Saint Vincent and the Grenadines
Turks and Caicos Japan
Saudi Arabia Slovenia
South Africa Spain
Sweden Switzerland
Turkey Ukraine
United Arab Emirates Argentina
Bolivia
March 2009 6Analyst / Investor Conference
ARRIS Growth Strategy (2003)1. Maintain and Improve a strong Capital structure2. Leverage our current voice and data business: fill out
installed base of CBR Voice and establish a large installed base of high speed data
3. Transition to VoIP with an “Everything IP, Everywhere” philosophy and build on current market successes
4. Strengthen and grow our ARRIS TeleWire Supply® infrastructure distribution channel
5. Expand our existing product/services portfolio through internal developments, partnerships and acquisitions.
March 2009 8Analyst / Investor Conference
2008 Highlights - What Went Well…▪ Successful integration of C-COR
- Diversified customer base - Expanded product lines- Achieved promised synergies- Improved financial profile- Raised stature of ARRIS
▪ First $1 Billion sales year▪ Prudent Balance Sheet Management
- $189 million of cash from operating activities- Reduced debt by $35M- Used $76M to repurchase 10% of shares
▪ $1B milestone for C4 CMTS installed base▪ Led the introduction of DOCSIS 3.0 in our industry▪ MCS record revenue – AI, VOD, OSS▪ Increased Gross Margin Percentage▪ SG&A Efficiency
10Analyst / Investor ConferenceMarch 2009
2008 HighlightsWhat Didn’t Go So Well…▪ Infrastructure spending affected ATS▪ Domestic VoIP additions weaker than 2007▪ Macro economic factors
March 2009 11Analyst / Investor Conference
2008: A Strong Year That Positions the Company for the Future….▪ Strong balance sheet▪ Solid cash position▪ Leading market share▪ Sustainable business model▪ Great growth potential▪ Talented and experienced employee team
March 2009 12Analyst / Investor Conference
ARRIS Growth Strategy (2009)▪ Maintain a strong capital structure, mindful of our 2013 debt
maturity, share repurchase opportunities and other capital needs including M&A
▪ Grow our current businesses into a more complete portfolio including a strong video product suite. Continue to invest in the evolution toward enabling true network convergence onto an all IP platform (Convergence Enabled.)
▪ Continue to expand our product/service portfolio through internal developments, partnerships and acquisitions
▪ Expand our international business and begin to consider opportunities in markets other than cable
▪ Continue to invest in and evolve the ARRIS talent pool to implement to above…
March 2009 13Analyst / Investor Conference
ARRIS Leadership A Seasoned Team….
March 2009 14Analyst / Investor Conference
Bob StanzioneChairman of the Board of Directors, President and CEO
Bruce McClelland
PresidentBroadband
Communications Systems (BCS)
• C4 and C3 CMTS• D5 Universal
Edge QAM• E-MTA’s• Cable Modems• DOCSIS Wireless• T1 Modem
John CaezzaPresident
Access, Transport & Supplies (ATS)
• Optics• Nodes• Amplifiers• Passives• Supplies
Ron CoppockPresident
Worldwide Sales and Marketing
• Sales• Sales Engineering• Market
Development• Marketing• Business
Development
JimLakin
PresidentAdvanced
Technology and Services
• Advanced Technology
• Services• CTO• Integration and
Synergy
Ken Wright
Chief Technology Officer
Tom Cloonan
Chief Strategy Officer
Larry Margolis
EVP Strategy & General Counsel
• Legal• HR• Strategy• IR
DavidPotts
EVP & CFO
• Finance• IT
Bryant IsaacsPresidentMedia &
Communications Systems (MCS)
• VOD• Ad Insertion• Network
Management• Mobile Workflow
Management• FMC
Today’s Agenda8:00 AM Breakfast at ARRIS HQ ARRIS Hosts8:30 AM Call to Order Jim Bauer8:40 AM Welcome Bob Stanzione9:10 AM CFO “State of the Union” Dave Potts9:35 AM Break9:45 AM Technology’s Impact on ARRIS Markets Tom Cloonan10:20 AM Broadband Communications Group Bruce McClelland10:55 AM Technology and Trends in Access & Transport Networks Ken Wright11:15 AM Access, Transport and Supplies Group John Caezza11:50 AM Lunch12:10 PM Technology and Trends in On Demand & Service Assurance Ken Wright12:35 PM Media and Communications Systems Group Bryant Isaacs1:10 PM Markets, Customers Ron Coppock1:25 PM Closing Remarks & Final Q & A Bob Stanzione1:30 PM Final Housekeeping Jim Bauer
March 2009 15Analyst / Investor Conference
“Report Card” On Last Year’s Priorities
▪Operational Targets
March 2009 19Analyst / Investor Conference
Q3 2008 Q4 2008 TargetGross Margin % 36% 37% 33% - 35%
EBITDA Margin % 17% 16% 14% - 16%EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com.
“Report Card” On Last Year’s Priorities▪ Operational Targets
▪ Capital Structure Priorities - Generated $189M of cash from Operating Activities- Bought back 10% of outstanding shares for $76M- Retired $35M of Debt- Ended year with $427M of cash ($150M net cash), up from $392M at the end of 2007
March 2009 20Analyst / Investor Conference
Q3 2008 Q4 2008 TargetGross Margin % 36% 37% 33% - 35%
EBITDA Margin % 17% 16% 14% - 16%EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com
“Report Card” On Last Year’s Priorities▪ Operational Targets
▪ Capital Structure Priorities - Generated $189M of cash from Operating Activities- Bought back 10% of outstanding shares for $76M- Retired $35M of Debt- Ended year with $427M of cash ($150M net cash), up from
$392M at the end of 2007
March 2009 21Analyst / Investor Conference
Significantly Improved Financial Profile
Q3 2008 Q4 2008 TargetGross Margin % 36% 37% 33% - 35%
EBITDA Margin % 17% 16% 14% - 16%EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com
We Have Made Excellent Progress
2007• Sales $992M• Gross Margin 28%• EBITDA Margin 11%
Analyst / Investor Conference 22March 2009
EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com
We Have Made Excellent Progress
March 2009 23Analyst / Investor Conference
2007• Sales $992M• Gross Margin 28%• EBITDA Margin 11%
2008• Sales $1,145M• Gross Margin 34%• EBITDA Margin 14%
EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com
We Have Made Excellent Progress
March 2009 24Analyst / Investor Conference
How we did it:• C-COR acquisition• CMTS success DOCSIS® 2.0 and 3.0• MCS success• Commitment to R&D• Disciplined spending and product cost
management• Created leverage in the business
2007• Sales $992M• Gross Margin 28%• EBITDA Margin 11%
2008• Sales $1,145M• Gross Margin 34%• EBITDA Margin 14%
EBITDA Margin represents Operating Margin before depreciation, amortization, goodwill impairment, and in process R&D. EBITDA is a non-GAAP measure. See the reconciliation of EBITDA to Operating Income attached to this presentation and in the Investor Relations section of our website at www.arrisi.com
Current Environment
▪Macro environment -Expect MSO CAPEX will be down ~ 5% -10%
March 2009 26Analyst / Investor Conference
Current Environment▪ Macro environment
- Expect MSO CAPEX will be down ~ 5% -10%
▪Guided Q1 09 to $245M - $265M of Sales-Anticipate some growth past Q1
March 2009 27Analyst / Investor Conference
Current Environment▪ Macro environment
- Expect MSO CAPEX will be down ~ 5% -10%▪ Guided Q1 09 to $245M - $265M of Sales
- Anticipate some growth past Q1
▪Continue to invest aggressively in R&D-Anticipate similar run rate to that we exited 2008 with
March 2009 28Analyst / Investor Conference
Current Environment▪ Macro environment
- Expect MSO CAPEX will be down ~ 5% -10%▪ Guided Q1 09 to $245M - $265M of Sales
- Anticipate some growth past Q1▪ Continue to invest aggressively in R&D
- Anticipate similar run rate to that we exited 2008 with
▪ Efficient cost structure-Anticipate slightly lower SG&A run rate to that we exited 2008 with
March 2009 29Analyst / Investor Conference
Current Environment▪ Macro environment
- Expect MSO CAPEX will be down ~ 5% -10%▪ Guided Q1 09 to $245M - $265M of Sales
- Anticipate some growth past Q1▪ Continue to invest aggressively in R&D
- Anticipate similar run rate to that we exited 2008 with▪ Efficient cost structure
- Anticipate slightly lower SG&A run rate to that we exited 2008 with
▪Remain Profitable▪Operating Leverage may be impacted in the
near term
March 2009 30Analyst / Investor Conference
Current Environment▪ Macro environment
- Expect MSO CAPEX will be down ~ 5% -10%▪ Guided Q1 09 to $245M - $265M of Sales
- Anticipate some growth past Q1▪ Continue to invest aggressively in R&D
- Anticipate similar run rate to that we exited 2008 with▪ Efficient cost structure
- Anticipate slightly lower SG&A run rate to that we exited 2008 with
▪ Remain Profitable▪ Operating Leverage may be impacted in the near term
March 2009 31Analyst / Investor Conference
Manage through Current Environment and be Poised to Reap Benefits of Significant Opportunities
Capital Structure Priorities▪ Continued cash generation
▪ Ensure sufficient liquidity to run the business
March 2009 34Analyst / Investor Conference
Capital Structure Priorities▪ Continued cash generation▪ Ensure sufficient liquidity to run the business
▪ Ensure sufficient cash resources and access to capital for future acquisitions
March 2009 35Analyst / Investor Conference
Capital Structure Priorities▪ Continued cash generation▪ Ensure sufficient liquidity to run the business▪ Ensure sufficient cash resources and access to capital
for future acquisitions
▪Opportunistically repurchase shares – have increased authorization to $100M
March 2009 36Analyst / Investor Conference
Capital Structure Priorities▪ Continued cash generation▪ Ensure sufficient liquidity to run the business▪ Ensure sufficient cash resources and access to capital
for future acquisitions▪ Opportunistically repurchase shares – Have increased
authorization to $100M
▪Retire Convertible Debt on or before maturity in 2013
March 2009 37Analyst / Investor Conference
Capital Structure Priorities▪ Continued cash generation▪ Ensure sufficient liquidity to run the business▪ Ensure sufficient cash resources and access to capital
for future acquisitions▪ Opportunistically repurchase shares – have increased
authorization to $100M▪ Retire Convertible Debt on or before maturity in 2013
March 2009 38Analyst / Investor Conference
Cash Is King in this EnvironmentMust Prudently Balance Liquidity
and Potential Uses
Looking Forward…
March 2009 40Analyst / Investor Conference
Future• Capture share of IP Video CAPEX…
Convergence Enabled. • Continued IP voice & data success• Growth in MCS products• Resurgence of ATS as the economy recovers• We have a strong balance sheet • Profitable growth… operating leverage
Today
Well Positioned For The Future
GAAP Operating Income to Non-GAAP EBITDA Reconciliation
2007 2008Full Year Q1 Q2 Q3 Q4
Full Year
Operating Income - $M 93.9 6.5 15.5 36.3 (176.4) (118.1)
Depreciation - $M 10.9 5.0 5.1 5.4 5.4 20.9
Amortization of Intangibles - $M 2.3 13.3 12.5 9.1 9.3 44.2
In Process R&D - $M 6.1 0.0 0.0 0.0 0.0 0.0
Goodwill Impairment - $M 0.0 0.0 0.0 0.0 209.3 209.3
EBITDA - $M 113.2 24.8 33.1 50.8 47.6 156.3 EBITDA - % 11% 9% 12% 17% 16% 14%
March 2009 41Analyst / Investor Conference
Future Broadband Trends and the CMTS Architectural Evolution Beyond DOCSIS 3.0Tom CloonanChief Strategy Officer
ARRIS Confidential
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS® Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 45Analyst / Investor Conference
Optical Metro
Transport
ARRIS WorkAssure™ Work Force Management• Customer Satisfaction• Dispatch Control• Expense Reduction• Workforce Potential
Regal®Taps
MONARCH®Splitters and
Supplies
ARRIS CHP Max5000™Headend Optics
ARRIS ServAssure™ HFC Network Surveillance and Maintenance• Network Visibility• Network Management• New Service Deployment• Improved Service
ARRIS D5™ Universal Edge
QAM
ARRIS C4® CMTS
ARRIS Flex Max®Amplifiers
ARRIS Opti Max® Nodes
Touchstone® E-MTA
PacketCable™ and SIP
ARRIS CORWave™
Optical Transmitters
ARRIS Products Address Virtually All of Our Customer’s Needs
March 2009 46Analyst / Investor Conference
ARRIS C3™ CMTS
Transceiver / AntennaARRIS WiDOX Telephony Modem
Video, Telephony and
HSD Operations
ARRIS C4c CMTS
ARRIS ConvergeMedia™ SuiteVOD, Advertising Delivery and
Management Platform
CHP Optical Transport Platform
1DS (35 Mbps) 2 USs (20 Mbps)
MAC Domain 0/0
Combiner
C4 CMTS
Splitter
UpstreamControlFeeds
HHP = House Holds Passed
Opti MaxFiber
Node 1(1000 HHP)
Drop
Household
Diplexer
4 CoaxialDistribution
Legs
Service Group(500 HHP, 300 video subs, 150 CMs, 75 MTAs)
Assume:60% take rate on video30% take rate on HSD15% take rate on VoIP
DropDrop
79 analog video DSs36 digital video DSs
DropDrop
Flex MaxAmplifier
Flex MaxAmplifier
FiberNetwork
702MTA
702MTA
702MTA
702MTA
702MTA
DOCSIS Delivery Equipment in a Typical 2009 750-MHz HFC Plant Topology
March 2009 47Analyst / Investor Conference
Service Group: a pool of subscribersthat share the Bandwidth of a common set of Downstream & Upstream Channels
C4 CMTS
Hot CMTS Features In 2009▪ Downstream/upstream channel bonding
- Most important DOCSIS 3.0 features today- Will permit increases in bandwidth per subscriber for many years to
come▪ IPv6
- Upcoming DOCSIS 3.0 feature... increases available IP address pool size
- Will permit increases in number of subscribers for many years to come▪ L2 VPNs
- Provides secure and private business links- Will permit increases in number of business service subscribers for
many years to come▪ DOCSIS 3.0 has equipped CMTS vendors and MSOs with the
essential tools needed to provide the high-bandwidth services of the future
▪ BUT... CMTS technologies will expand their capacities to handle future bandwidth needs
March 2009 48Analyst / Investor Conference
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 49Analyst / Investor Conference
What Bandwidth Trends are Dominating DOCSIS High-Speed Data Deployments Today?
▪ The downstream-to-upstream bandwidth ratios have remain fixed at levels of ~4:1 for several years
▪ But... the leading protocol types and bandwidth ratios are expected to change as downstream-oriented video traffic continues to grow in the future
March 2009 50Analyst / Investor Conference
Protocol Type % of DOCSIS Downstream TrafficHTTP (Web-Surfing) ~40%BitTorrent Peer-to-Peer (File Transfer) ~15%All Other Protocols ~45%
Quick Traffic Engineering Tutorial:Maximum Offered Bandwidth vs. Average Consumed Bandwidth
March 2009 51Analyst / Investor Conference
time
Instantaneous BW
Min BW=0 Mbps
Max Offered BW=50 Mbps
Max Possible BW=160 Mbps(4-Channel Bonding)
On-line On-lineOff-line
Average Consumed BW=100 kbps
Average Consumed BW = (Max Offered BW)*(Fraction of Time When Transmitting)
How Much HSD Capacity Growth Is Expected in the Future?
March 2009 52Analyst / Investor Conference
Remember Last Year's Predictions on Maximum Offered Bandwidth Trends & Average Consumed Bandwidth Trends for Modems
Max Permitted Bandwidth for Modems (bps)
1982 1986 1990 1994 19981
10
100
1k
2002 2006
10k
100k
1M
10M
100M
1G
2010 Year2014
10G
100G
2016
The Era ofWideband
Cable Modems ???
12 Mbps
The past 25-years show aconstant increase of ~1.5x every year...Resulting in max offered bw=288 mbpsin 2016
~288 Mbps
128 kbps
256 kbps 512 kbps
1 Mbps 5 Mbps
The Era ofCable Modems2.4 kbps
300 bps
56 kbps
1.2 kbps9.6 kbps 14.4 kbps
28 kbps33 kbps
The Era ofDial-Up
Modems
60 kbps
~1.5 Mbps
Assume Avg BWincreases ~1.5xevery year yielding3.5 Mbps in 2016
50 Mbps(4x Increase)
75 kbps(1.3x Increase)
How Does An MSO Determine the DOCSIS Downstream Channel Requirements for Each Service Group?
Ex: For 50 Mbps Service to a 400 CM Service Group in which each CM Subscriber is expected to consume an average bandwidth of 220 kbps...
▪ Must determine # downstream channels that satisfy two key Constraints:- Constraint #1: Maximum offered bandwidth must be satisfied...
• Ex: Assume 50 Mbps maximum bandwidth serviceAssume ~36 Mbps/Downstream channelAlgebra: 50 Mbps/(36 Mbps/Downstream channel)
= 1.4 = 2 Downstream Channels/Service Group- Constraint #2: Aggregate average bandwidth must be satisfied...
• Ex: Assume 220 kbps average bandwidth/CM subscriberAssume 400 CMs/Service GroupAlgebra: (400 CM/Service Group)*(220 kbps/CM)
= 88 Mbps aggregate average bandwidth/Service GroupAlgebra: 88 Mbps/(36 Mbps/Downstream channel)
= 2.4 = 3 Downstream Channels/Service Group- Comparing both goals:
MSO must supply at least 3 Downstream Channels/Service Group... OR... MSO must decrease the number of CMs per Service Group via Node Splits
March 2009 53Analyst / Investor Conference
DOCSIS Downstream Requirements for HSD Traffic in a 40K HHP Headend of the Future(assuming a 1.5x Increase per Year)
▪ High-speed data demands will lead to many more DOCSIS downstreams per headend
54
0
200
400
600
800
1000
1200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# D
OC
SIS
Dow
nstr
eam
sR
equi
red
for 4
0K H
HP
Hea
dend
Year
40
>1000
25x Increase
*ARRIS Estimates
Analyst / Investor ConferenceMarch 2009
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video and IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 55Analyst / Investor Conference
IP-Based Video and Its Effects On Future DOCSIS CMTSs▪ IP-based Video content viewing (ex: YouTube) increased by
34% last year1 !!!
▪ YouTube + Flash Video have grown to be ~10% of all Internet traffic as of December 20082
▪ Each future Standard-Definition MPEG-4 IP-based Video Feed will require ~1.2 Mbps of continuous DOCSIS bandwidth during the duration of the video !!!
▪ IP-based Over-the-Top Video Transport is growing and willplay a major role in the future of DOCSIS capacity needs...
March 2009 56Analyst / Investor Conference
1. comScore Press Release dated January 5, 20092. Measurements provided by an MSO
IPTV... The New Kid On The Block▪ IP-based Video could become a significant revenue source▪ Many MSOs would like to become THE primary sources for
IP-based Video... but want to deliver a new flavor▪ IPTV = Delivery of High-Quality Digital Video Services over a
Managed Broadband Network via Internet Protocol to:▪ Personal Computers in the Home▪Hand-Held Devices (cell phones &
PDAs) in the Home▪ TVs with IP STBs in the home
▪ MSOs are now seriously looking into IPTV delivery using DOCSIS
▪ This is a game-changer for future CMTS channel requirements
March 2009 57Analyst / Investor Conference
MSO ContentInternet Content
Any Device, Anywhere
Place and Time Shifting
How Might IPTV Affect TheHFC Spectrum Evolution?
March 2009 58Analyst / Investor Conference
▪ Less Analog... More Digital▪ Less Broadcast... More Narrowcast ▪ Less Standard-Def... More High-Def▪ More HSD Spectrum▪ New IPTV Spectrum
Broadcast NarrowcastReturn
Up Analog DigitalSimulcast SDV VOD
Broadcast NarrowcastReturn
Toda
yTo
mor
row
Up Analog DigitalSimulcast
HSD(~10 ch)
SDV VODIPTV(~8 ch)
HSD (1-3 ch)
~8 More DOCSIS Channels !!!
HSD Downstream Requirements for a 40K HHP Headend of the Future
59
0
200
400
600
800
1000
1200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# D
OC
SIS
Dow
nstr
eam
sR
equi
red
for 4
0K H
HP
Hea
dend
Year
40
>1000
HSD
*ARRIS Estimates
Analyst / Investor ConferenceMarch 2009
HSD & IPTV Downstream Requirements for a 40K HHP Headend of the Future
▪ When adopted, IPTV demands will lead to even more DOCSIS downstreams per headend
60
0
200
400
600
800
1000
1200
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
# D
OC
SIS
Dow
nstr
eam
sR
equi
red
for 4
0K H
HP
Hea
dend
Year
40
>1000
HSD
IPTV + HSD
???
*ARRIS Estimates
Analyst / Investor ConferenceMarch 2009
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 61Analyst / Investor Conference
Required Increases in DOCSIS Bandwidth (per Subscriber) Will Lead to More Channels per Service Group
62
C4 CMTS
40 Mbps
30 Mbps
As more Bandwidth per Subscriber is Needed...
WBM750 CM(40 Mbps downstream
30 Mbps upstream)
Service GroupOpti Max 4100Fiber Node
Toda
y
WBM750 CM(160 Mbps downstream
120 Mbps upstream)
C4 CMTS40 Mbps40 Mbps
40 Mbps40 Mbps
30 Mbps30 Mbps30 Mbps30 Mbps
Service GroupOpti Max 4100Fiber Node
Channel Bonded
Tom
orro
w
Analyst / Investor ConferenceMarch 2009
Required Increases in DOCSIS Bandwidth (per Subscriber) May Lead to More Node Splits
March 2009 63Analyst / Investor Conference
As more Bandwidth per Subscriber is Needed...
1000HHP
CHP™ CWDMOpt. XMTR
750 MHz,5 GbpsCoax
VoIP/Video/HSD5 Gbps Feed #1
Opti MaxNode #1
BW/sub=5 Mbps
Toda
y
VoIP/Video/HSD5 Gbps Feed #1
VoiP/Video/HSD5 Gbps Feed #3VoiP/Video/HSD5 Gbps Feed #4
VoiP/Video/HSD5 Gbps Feed #2
CHP™ CWDMOpt. XMTR
Opti MaxNode #2
Opti MaxNode #3
Opti MaxNode #4
Opti MaxNode #1
250HHP
250HHP
250HHP
250HHP
750 MHz,5 GbpsCoax
BW/sub=20 Mbps
Tom
orro
w
# DOCSIS Downstreams Per Headend = (# DSs/Fiber Node)(# Fiber Nodes/Headend)
March 2009 64Analyst / Investor Conference
# Fiber Nodesin 40K HHPHeadend
2008 2009 20100
4080
120
2011
160200240280320360
Year
400
Exam
ple
A:
nodesplit#1
nodesplit#2
nodesplit#3
2008 2009 20100 2011
1
23
Year
4
Avg # DOCSISDSs/Fiber Node
Total # DOCSIS DSsin 40K HHP Headend
2008 2009 20100
4080
120
2011
160200240280320360
Year
400
# Fiber Nodesin 40K HHPHeadend
2008 2009 20100
4080
120
2011
160200240280320360
Year
400
nodesplit#1
2008 2009 20100 2011
1
23
Year
4
Avg # DOCSISDSs/Fiber Node
Total # DOCSIS DSsin 40K HHP Headend
2008 2009 20100
4080
120
2011
160200240280320360
Year
400
Exam
ple
B:
The Ever-Growing Demand for Bandwidth…and its Impact on DOCSIS CMTS Requirements
March 2009 65Analyst / Investor Conference
2008
• ~10 Mbps
• ~60 kbps
• ~1 Gbps
• ~1 DS
• ~25 DSs
• ~2 DSs/RU
Next 1-2 Years
• ~50 Mbps
• ~135 kbps
• ~10 Gbps
• ~3 DSs
• ~100 DSs
• ~7 DSs/RU
Next 5-7 Years
• 200 Mbps+
• 1.5 Mbps+
• 100 Gbps+
• 10 DSs+
• 500 DSs+
• 25 DSs/RU+
Peak BW per Sub
Avg BW per Sub
BW to CMTS
DSs/Fiber Node
DSs/CMTS
CMTS DSs/RU
▪ CMTS technologies will evolve to support these challenging future requirements !!!
Note: 1 RU = 1.75"
20x
25x
100x
10x
20x
14x
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 66Analyst / Investor Conference
Moore's Law & A Perfect Storm of New Technologies
March 2009 67Analyst / Investor Conference
▪ Permits higher capacities within a given chassis size▪ Permits much lower Cost/Channel▪ Permits CMTSs to support the HSD & IPTV DOCSIS
capacities of the future
Building Blocks 2007 Capabilities 2009 Capabilities Increase
L2/L3 Switch Chips 60 Gbps 640 Gbps 10x
High-Speed Digital-to-Analog Converters
1 Downstream Channel per DAC
100+ Downstream Channels per DAC 100x
Burst Receivers 2 Upstream Channels per Receiver
12 Upstream Channels per Receiver 6x
Processor Chips 2 Cores per Chip 32 Cores per Chip 16x
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 68Analyst / Investor Conference
Agenda▪ Introduction & CMTS Feature Trends▪ Future DOCSIS Bandwidth Growth
- High-Speed Data- IP-Based Video & IPTV
▪ MSO Response to DOCSIS Bandwidth Growth▪ Technologies for the Future▪ A Vision of the ARRIS CMTS Product Evolution▪ Conclusions
March 2009 71Analyst / Investor Conference
Conclusions▪ DOCSIS 3.0 provides the essential tools for the future▪ CMTS Architectures are always in a state of transition
- High-Speed Data bandwidth is increasing rapidly- DOCSIS/EQAM functions may be combined- IPTV bandwidth will be added to the mix
▪ Next-Gen CMTS Architectures must be flexible to accommodate greatly increased capacities and more complex feature sets
▪ ARRIS BCS, MCS, & ATS Teams are working closely with leading MSOs to define & design the CMTS & Video & Access Architectures of the future
March 2009 72Analyst / Investor Conference
ARRIS is Excited to be Developing the Technologies that MSOs Will Need in the Upcoming Decade...Questions
Broadband Communication Systems (BCS)Bruce McClellandPresidentARRIS Broadband Communication Systems (BCS)
ARRIS Organization MeetsSpecific Customer Needs
March 2009 75Analyst / Investor Conference
Access, Transport and Supplies
▪ Optical▪ RF▪ Supplies
▪ Favorable mix shift towards optics driven by HD video growth
Media and Communication Systems
▪ OSS▪ VOD▪ Ad Insertion
▪ Software reduces operators’ operating expense▪ Video on Demand provides operators
additional revenue generator▪ Leader in ad insertion at top MSOs
Full Year 2008Revenue $1.145 Billion
Broadband Communications Systems▪ CMTS▪ CPE▪ #1 market share for VoIP E-
MTA CPE, multi-line CPE▪ Record revenue and unit CMTS
levels in Q308▪ DOCSIS® 3.0 upgrade leader
2008 BCS Performance ResultsA Strong Foundation
• Mass deployment of DOCSIS® 3.0 ARRIS C4® CMTS
• >3Million subscribers• Worldwide installations
– North America, Europe, Japan, Korea, South America
DOCSIS 3.0 Success
• CMTS 4Q08 - 41%• Virtual tie for #1 share
worldwide!• E-MTA 3Q08 - 44%
• #1 share for 16 quarters
Solid Market Share Results
• Shipped over 60,000 downstream ports in 2H08 – up 300% from 1H08!
• Record level of sales revenue
Record Level CMTS Shipments
• Strong sales into Chile, Brazil, Columbia, Argentina, Peru, Mexico
• Local sourcing in South America
CALA Expansion
• E-MTA with integrated cordless phone
• Multiline – 4-line and 8-line
• DOCSIS 3.0 – data modem and E-MTA
New CPE Products
• Improved gross margin and net income contribution• Improved mix and cost
reductions
Improved Profitability
• Deep engagement with lead customers on network evolution
• Key input into next generation products
Thought Leadership
76Analyst / Investor ConferenceMarch 2009
Major Milestones Achieved!
77Analyst / Investor Conference
Note: Cumulative Totals
March 2009
0.0
5.0
10.0
15.0
20.0
25.0
2004 2005 2006 2007 2008
$0
$200
$400
$600
$800
$1,000
$1,200
2004 2005 2006 2007 2008
2009 Environment
• Majority of deployment currently for simple capacity expansion; very little true DOCSIS 3.0 100Mbps+
• Additional capacity expansion will be needed as DOCSIS 3.0 wideband services are deployed
Major DOCSIS 3.0 Network Upgrade
Cycle
• Majority of 2009 shipments focused on DOCSIS 2.0 devices
• Emerging markets will continue to grow• DOCSIS 3.0 upgrade cycle will happen over time -
first to market with deployable product
CPE Opportunities Ahead
• Fundamental shift towards service delivery convergence over a single integrated network
• Exciting new product opportunities for HFC edge and home driven by technology discontinuities
ConvergenceA Major Opportunity!
78Analyst / Investor ConferenceMarch 2009
BCS Growth OpportunitiesThree Year Horizon
79Analyst / Investor Conference
2009 – 2011 BCS Growth
OpportunitiesVOIP
Broadband Access
Digital Video IP Video
Home Networking
Small Business
Professional Services
March 2009
BCS Network TechnologiesLaunch ARRIS C4c 3.0 Compact CMTS▪ C4 and C4c CMTS
- Strategy in place to grow market share in order to grow business • C4c CMTS launch planned for summer 2009
▪ Addresses footprint of thousands of legacy DOCSIS 2.0 CMTS
• Additional growth will come from international markets
- In the midst of a major product and technology upgrade cycle• Primarily driven by competition, however
investment is being used for simple capacity expansion initially
• Installed base of ARRIS C4 CMTS’s primed for DOCSIS 3.0 upgrade
• Continue market share expansion in Europe and South America
• Bundling opportunities with other products and services
80Analyst / Investor Conference
ARRIS C4c CMTS
ARRIS C4 CMTS
March 2009
DTM602
BCS Touchstone® CPEState of the Business▪ CPE
- DOCSIS 2.0 CPE will still dominate in 2009 • Expect to maintain market share; additional
growth in CALA• Continued investment in cost reductions, but
rational pricing environment• Increased mix of wireless voice/data gateways
and business service gateways • Local sourcing in South America to improve
profitability and market share- Expect DOCSIS 3.0 shipments to
accelerate in late 2009 • Catalyst for additional market growth• Will address both data and voice DOCSIS 3.0
CPE market
81Analyst / Investor ConferenceMarch 2009
WBM750
TM702
WTM552
TM608
DTM604
Cable Residential Gateway
All images are the property of their respective copyright owners.© Copyright 2008. Broadband Directions LLC. All rights reserved.
Video Will Drive Growth
82Analyst / Investor ConferenceMarch 2009
IP Video: Significant Discontinuity → Major Opportunity!▪ IPTV will be a major
disruptive force ▪ Next technology upgrade
cycle will be driven by demand for content and choice- Whole home networking- Blend of internet and managed
content- Everything on demand –
storage, delivery, navigation and content management solutions
▪ Deep engagement with lead customers to validate business case and system requirements; will result in multiple new products
IPTV Technology
Upgrade
Whole Home Networking
Blend of Internet and
Managed Content
Everything On Demand
Deep Subscriber
Engagement
83Analyst / Investor Conference
IPTV Upgrade Cycle
March 2009
Broadcast
Narrowcast
IP Video – Convergence in the Home and in the Network
84Analyst / Investor Conference
Scheduled Programming
Phone
Video
Data/VideoInternet Video
Cable Residential
Gateway
Home Network
HFC Network
Intranet / Internet
Video Will Migrate to IP Just as Data and Voice Have Already Done!
Data/VideoData/VideoData/VideoData/Video
Data/VideoData/Video
March 2009
Streaming and Storage
Evolution of E-MTA to Cable Residential Gateway
Cable Modem• High Speed
Data
E-MTA• Voice• High Speed
Data
CableResidential Gateway• Multi-screen
Video Gateway• Voice• High Speed
Data
85Analyst / Investor ConferenceMarch 2009
DOCSIS 3.0 CPEBuilding Blocks for the Future
Video
DECT 6.0
PacketCable™ 1.5/2/0
Wireless -8021.11 G/N
IP Gateway –NAT, Firewall,
Parental Control
DOCSIS 3.0 Cable Modem
WBM750 Wideband
Modem
PacketCable™ 1.5/2/0
DOCSIS 3.0 Cable Modem
TM702G E-MTA
Wireless -8021.11 G/N
IP Gateway –NAT, Firewall,
Parental Control
DOCSIS 3.0 Cable Modem
WHG752G Wireless Home
Gateway
PacketCable1.5/2/0
Wireless -8021.11 G/N
IP Gateway –NAT, Firewall,
Parental Control
DOCSIS 3.0 Cable Modem
CHG752G Communication Home Gateway
DECT 6.0
PacketCable1.5/2/0
Wireless -8021.11 G/N
IP Gateway –NAT, Firewall,
Parental Control
DOCSIS 3.0 Cable Modem
Multimedia Home Gateway
IPTV (MOCA)
DECT 6.0
PacketCable1.5/2/0
Wireless -8021.11 G/N
IP Gateway –NAT, Firewall,
Parental Control
DOCSIS 3.0 Cable Modem
Analyst / Investor Conference 86March 2009
BCS 2009-2011 Outlook Summary▪ Proven team capable of delivering results, even in a
difficult operating environment- Established market leader in competitive CMTS and VoIP
CPE markets- Focused on controlling OPEX and maintaining profitability
▪ Will build on past success- Must maintain closeness with each customer- Customer support is key- Strong outlook – must continue to execute
▪ IPTV/Video will drive major discontinuity and opportunity for significant growth
87Analyst / Investor ConferenceMarch 2009
Optical Metro
Transport
ARRIS WorkAssure™ Work Force Management• Customer Satisfaction• Dispatch Control• Expense Reduction• Workforce Potential
Regal®Taps
MONARCH®Splitters and
Supplies
ARRIS CHP Max5000™Headend Optics
ARRIS ServAssure™ HFC Network Surveillance and Maintenance• Network Visibility• Network Management• New Service Deployment• Improved Service
ARRIS D5™ Universal Edge
QAM
ARRIS C4® CMTS
ARRIS Flex Max®Amplifiers
ARRIS Opti Max® Nodes
Touchstone® E-MTA
PacketCable™ and SIP
ARRIS CORWave™
Optical Transmitters
ARRIS Products Address Virtually All of Our Customer’s Needs
March 2009 90Analyst / Investor Conference
ARRIS C3™ CMTS
Transceiver / AntennaARRIS WiDOX Telephony Modem
Video, Telephony and
HSD Operations
ARRIS C4c CMTS
ARRIS ConvergeMedia™ SuiteVOD, Advertising Delivery and
Management Platform
Regal®Taps
MONARCH®Splitters and
Supplies
ARRIS CHP Max5000™Headend Optics
ARRIS Flex Max®Amplifiers
ARRIS Opti Max® Nodes
ARRIS CORWave™
Optical Transmitters
ARRIS Products Address Virtually All of Our Customer’s Needs
March 2009 91Analyst / Investor Conference
Access Network Must Support Growth
March 2009 92Analyst / Investor Conference
Max Permitted Bandwidth for Modems (bps)
1982 1986 1990 1994 19981
10
100
1k
2002 2006
10k
100k
1M
10M
100M
1G
2010 Year2014
10G
100G
2016
The Era ofWideband
Cable Modems ???
12 Mbps
The past 25-years show aconstant increase of ~1.5x every year...resulting in max offered BW=288 Mbpsin 2016
~288 Mbps
128 kbps
256 kbps 512 kbps
1 Mbps 5 Mbps
The Era ofCable Modems2.4 kbps
300 bps
56 kbps
1.2 kbps9.6 kbps 14.4 kbps
28 kbps33 kbps
The Era ofDial-Up Modems
50 Mbps(4x Increase)
Access & Transport NetworksDrivers For Growth▪ Cable Operators experiencing significant competition
- Telephone Companies- Direct to Home Satellite Providers- New Media companies
▪ New value added service offerings drive capacity growth- HDTV - VOD- VOIP- Wideband HSD
▪ Deploying technologies to increase capacity/accommodate new services while avoiding expensive system-wide upgrades- Node splits - smaller service groups, moving from ~1000 Homes Passed / node to
250-500 HP, with migration plan to 125 HP• Substantial driver for Headend Optics, Fiber Nodes, and Amplifiers• Optical multiplexing (e.g. ARRIS CORWave) is a key enabler of node splits
- Amplifier to Node ‘Lid Upgrades’ easing fiber deeper migration (secures installed base)
- 1 GHz equipment for Plant extensions & success-based pockets▪ Commercial Services to Small-Medium Businesses▪ Return path utilization increasing
- Return capacity will become critical within a few yearsMarch 2009 93Analyst / Investor Conference
Evolution of Bandwidth & UtilizationUpstream Capacity Limited
March 2009 94Analyst / Investor Conference
-Status monitoring-Set-tops return-DOCSIS return
Analog Video Digital broadcast
2040
50550 750 860MHz
DOCSIS forward
2000
-Status monitoring-Set-tops return-DOCSIS return-CBR telephony return
Analog Video Digital broadcast
-VOD, SVOD-HDTV-DOCSIS forward-CBR telephony forward
2040
50550 750 860MHz
2004
2009-VOD, SVOD-DOCSIS-SME-CBR telephony-VoIP
-Status monitoring-Set-tops return-DOCSIS return-CBR telephony return-VoIP & SME return
Analog Video Digital broadcast HDTV
2040
50550 750 860MHz
2012
-VOD, SVOD-DOCSIS-SME-SDV-VoIP-IPTV
-Status monitoring-Set-tops return-DOCSIS return-VoIP & SME return
Standard Definition Digital Video HDTV
2040
50550 750 860
Unicast
MHz 1,000
ARRIS Return Path Solutions▪ Return path utilization increasing, return capacity will
become critical▪ ARRIS has both analog & digital return
- Analog - supports higher bandwidth- Digital
• Longer reach, more multiplexing capacity • CWDM digital return today, DWDM later this year
March 2009 95Analyst / Investor Conference
Limitations of Overlay Architectures
March 2009 96Analyst / Investor Conference
Hub500
Homes
Headend
Home Run
Hub1200
Homes
Headend CAPA
CITY
MG
MTBroadcast l
Narrowcast lsReturn ls
OTNSecondary Ring
Overlay
▪ Broadcast & Narrowcast signals carried separately, combined at OTN or Node▪ Node segmentation limited by fiber count in secondary ring▪ Growth of narrowcast services (VOD, DOCSIS 3.0, SDV) requires increased fiber
capacity
CORWave II Solves Issues in Overlay Architecture▪ Substantial portion of existing fiber links are in Overlay
Architecture
▪ ARRIS CORWave II Benefits- For the 1st time, enables multiple full bandwidth, analog
forward signals on a single fiber- Solves the limitation on Narrowcast in QAM Overlay
architecture- Provides extended reach of QAM Overlay, with lower cost
and complexity- Enables up to 16 full bandwidth analog forward signals on
a single fiber, with distances up to 65Km
March 2009 97Analyst / Investor Conference
EvolutionFiber to the Home▪ MSOs want migration path to Fiber To The Home, without
stranding existing investment▪ RFoG (RF over Glass)
- Uses existing HFC infrastructure (CMTS, QAMs, optics, etc.) for easy as-needed migration
- Moves optical-RF conversion to premises- DOCSIS-friendly Passive Optical Network
▪ PON- Longer term evolutionary step- Can share fiber infrastructure with HFC/RFoG- Can overlay as needed
▪ Product migration to RFoG & PON offerings- Much of architecture uses current products- Complimentary products in development
March 2009 98Analyst / Investor Conference
Key Take-awaysAccess & Transport▪ Engaged in innovative solutions enabling more capacity
from existing infrastructure▪ Cost-effective evolution to all fiber networks of the future▪ Key building blocks in place to enable MSO network
migration
March 2009 101Analyst / Investor Conference
ARRIS Organization MeetsSpecific Customer Needs
March 2009 105Analyst / Investor Conference
Broadband Communication Systems
▪ CMTS▪ CPE
▪ #1 market share for VoIP E-MTA CPE, multi-line CPE
▪ Record revenue and unit CMTS levels in Q308▪ DOCSIS® 3.0 upgrade leader
▪ Media and Communication Systems
▪ OSS▪ VOD▪ Ad Insertion
▪ Software reduces operators’ operating expense▪ Video on Demand provides operators
additional revenue generator▪ Leader in ad insertion at top MSOs
Full Year 2008Revenue $1.145 Billion
Access, Transport and Supplies▪ Optical Transport▪ RF Amplifiers▪ Supplies▪ Favorable mix shift
towards optics driven by HD video growth
Access, Transport & Supplies Mission▪ Premiere provider of robust, innovative, high value and
cost effective infrastructure solutions to the Multi System Operators that meet their technology and service needs today and in the future- Optical Transport
• HFC• Passive Networks
- RF Amplifiers- Customer Premise Infrastructure
March 2009 106Analyst / Investor Conference
Current ATS Business Environment▪ 2008 ATS revenues down from 2007▪ Macro Economic conditions impacted the business
- Major rebuild/upgrade/plant extension projects• Slowing in North America• Growing internationally
- Decline in housing starts- Constrained customer CAPEX
March 2009 107Analyst / Investor Conference
Despite Macro Economic ConditionsWe Remain Optimistic
Reasons for Optimism▪ Billions of installed base will need
upgrades and enhancements to support growing capacity demands- Bandwidth upgrades- Amplifiers upgrade to nodes- Transmitter replacements
▪ Investment in technology and supply chain will help command superior market position- Advanced optical transport- CORWave™ multi-wavelength optics- Commercial services expanding- Fulfillment solutions expanding
March 2009 108Analyst / Investor Conference
Keys to serving our customers • Focused
technology innovations
• Superior fulfillment solutions
• Agile supply chain
2008 Business Performance▪ Market Share has remained stable▪ Q4’08 Gross Margins increased quarter over quarter
- Gains were primarily driven by the strength of the Optics Platforms and the realization of Supply Chain savings
▪ Reduced gross inventories significantly▪ Recently announced CORWave product is into
deployments with top domestic and international MSO’s▪ Three of the top five US MSO’s selected ARRIS
Supplies as primary supplier for key infrastructure builds▪ Fulfillment program with top MSO’s continues to expand
with good results
March 2009 109Analyst / Investor Conference
A Few of the ATS Initiatives▪ Expansion of Optical platforms from traditional
residential HFC applications to support new markets- Commercial services- RF over Glass- GePON and 10GePON
▪ Extended reach transmitters- Complement RFoG and PON needs
▪ Interfaces for RFoG and GePON- Headend (OLT)- Subscriber (ONU)
March 2009 110Analyst / Investor Conference
CHP Max5000 Platform
CORWave™ Multiplies Existing Network Capacity
March 2009 111Analyst / Investor Conference
It is the extraordinarily high Intensity of light in the optical fiber that generates various optical non-linear effects
SBS: Stimulated Bruillion Scattering
SPM: Self Phase Modulation
Single Wavelength Optical Non-linearitiesOccur in the presence of one or more wavelengths
SRS: Stimulated Raman Scattering
XPM: Cross Phase Modulation
4WM: Four Wave Mixing
Multiple Wavelength Optical Non-linearitiesOccur only in the presence of two or more wavlengths
Optical Non-Linear ImpairmentsGenerally Dependent on Optical Intensity
Fiber Dispersion
Fiber Loss
Fiber Linear EffectsDue to Fiber Design/Manufacture
Insertion Loss
Isolation
Passband/Passband Ripple
Impairments due to Optical PassivesDue to Optical Passives Design/Manufacture
Optical Linear ImpairmentsGenerally Independent of Optical Intensity
Optical Impairments
ARRIS has a Superior Solution
The CORWave™ Optical Platform…▪ Enables today’s advanced optical transport▪ Optimizes capacity of existing infrastructures▪ Gracefully supports revenue driven expansion▪ Readily supports Commercial service delivery▪ Provides future flexibility and service capabilities
March 2009 112Analyst / Investor Conference
Based on proven Head End optics (CHP) and Optical Node (OptiMax) technologies.
CORWave™ BenefitsCORWave™ Solution MSO BenefitConserves fiber • Saves CapEx
• Speeds deployment
Re-purposes spare fibers • Saves CapEx• Speeds deployment• Improves operating margins
Common business and residential fiber infrastructures
• Saves CapEx• Enhances competitiveness
Enhances segmentation for smaller service groupings
• Enhances competitiveness• Superior subscriber experience
Capacity for future expansion • Enhanced competitiveness
March 2009 113Analyst / Investor Conference
Optical EvolutionProducts 2009 2010 & Beyond
Comprehensive HFC Network equipment line with CORWave ü ü
CORWave II ü ü
RFoG test validation with DOCSIS 3.0 ü ü
RFoG Home Transceiver Q2’09 ü
CHP ePON Platform Q3’09 ü
CHP ePON integration with DOCSIS back office Q4’09 ü
DOCSIS Compatible Large scale PON system ü
10GePON version ü
March 2009 13Analyst / Investor Conference
Market focused technology innovations!Subject to change without notice
ATS Well Positioned for Success▪ Solutions positioned to enable MSOs use of existing
infrastructures and position for future growth; will mine billions of installed base of ATS products
▪ Internal business unit controls well implemented and managed; intense focus on technology, supply chain and sales execution
▪ Strong customer interest in optics platforms and fulfillment solutions; initial CORWave trials resulting in renewed optics traction
March 2009 116Analyst / Investor Conference
Positioned to Capture the Next Wave of Spending
Topics of Discussion
▪ On Demand
▪ OSS/Service Assurance
March 2009 119Analyst / Investor Conference
On DemandDrivers For Growth▪ Consumers increasingly dissatisfied with linear
scheduled content, turning to- PVR – Local and Network- Video over the Internet- Startover- Mobile Video
▪ Interactive Advertising on the rise- Advertisers have been shifting $ to online ads- Profile driven targeted ads- Ads On Demand & Ad supported VOD- Feedback to advertisers
March 2009 120Analyst / Investor Conference
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On DemandDrivers For Growth
121Analyst / Investor ConferenceMarch 2009
Technologies to Meet a Changing On-Demand World▪ Separated streaming and storage
- Distributed servers at edges of network, with popular content on RAM or Flash storage
- Central servers with “long tail” content library on hard drives or Storage Area Networks
- Can use same video server in different locations, attached to different types & sizes of storage – adaptive storage
- Dense central storage – dense streaming at the edge▪ Content Propagation Management system
- Automatically locates content based on Metadata & business rules
- Monitors content usage, and automatically redistributes• Frequently viewed content to edge servers near customers• Underutilized content to central library, lower cost storage
March 2009 122Analyst / Investor Conference
Meeting The Changing Needs▪ Unified Video Platform
- On Demand and Ad Insertion on single platform- Simplifies operations, lowers OpEx- Enables tighter integration of content and advertising
• Simplifies targeted advertising• Enables AdVOD & Searchable long form advertising
▪ Interfacing Back Office with 3rd party portals to enable- Browse content online & queue it on TV- Hooks to deliver On Demand content to non-TV devices- Bridging user generated content (YouTube, etc.) to On
Demand platform- Delivering On Demand content via IP over DOCSIS- Recommendation engines
March 2009 123Analyst / Investor Conference
Assurance – Drivers For Growth▪ Voice & Data service calls stable or declining
- ServeAssure helping to reduce service calls
▪ Video complexity increasing- More difficult to monitor service quality- Service calls increasing
▪ Operators becoming dissatisfied with home grown OSS tools- Growing complexity of networks and service offerings- Inability to scale- Dozens of stand-alone tools- Cost to maintain/update tools
March 2009 125Analyst / Investor Conference
Assurance – Drivers For Growth▪ Increasing momentum to add intelligence/automation
- Continual drive to reduce OPEX through more efficient operations
- Competition – Cable, Telcos and Satellite all are about bandwidth and delivering content. Differentiator is Quality of Experience
- Several MSOs:• “2009 is the year of Operational Excellence”• Service quality = customer satisfaction = reduced churn
March 2009 126Analyst / Investor Conference
What Drives OverallCustomer Satisfaction?▪ Service Delivery Quality
(Voice, Video, Data)- How does the user “receive”
the service he is paying for?▪ Customer Care Quality
(Call Center, Support, Dispatch)- Accessibility, Response
Time, Quality of Solutions offered
▪ Home Services- Installations, Upgrade,
Service Calls▪ Billing and Invoicing
- Intuitive, error-free invoicing
Service Quality
Customer Service Quality
Home Services
Billing / Invoicing
March 2009 127Analyst / Investor Conference
What are MSO’s Looking for inAssurance Tools?▪ Automation to increase technician productivity▪ Proactive monitoring of service quality, allowing
detection and correction of plant issues before customers see degradation
▪ Substantially reduced Mean Time To Repair of network issues
▪ Awareness of slowed data traffic due to congestion, and ability to manage traffic to restore speeds
▪ Monitoring of network powering, to avoid key cause of service outages
March 2009 128Analyst / Investor Conference
ARRIS Assurance Delivers All These and More…
Service AssuranceExample of an integrated solution▪ ARRIS has offered industry leading data & voice
diagnostics for years
▪ Recent changes in CableLabs specs (Tru2Way) give set-top hooks for more video diagnostics, but 1-2 years out
▪ In advance of Tru2way, ARRIS current assurance tools• Have done basic video diagnostics for years• Extended video diagnostics in lab trials now, field deployable mid-
year
March 2009 129Analyst / Investor Conference
ServAssure Collects, Analyzes and Shares Network Health Information Throughout the Company
March 2009 130Analyst / Investor ConferenceCustomer CSR/TSR NOC
Set Top Monitoring
Dispatch
Services Dependencies & Root Cause
Technician
Business Rule, Events, CASA
Billing /EMS Data
HFC Plant Equipment
Line Extender
Amplifier
Service-specific Infrastructure
Soft Switch
Switch
CMTS
Router
Network Connectivity CPE Devices
Set Top Boxes
DOCSIS Cable Modems MTA’s
Example: ServAssure HSD Diagnostics
March 2009 131Analyst / Investor Conference
31% of CMs are in a “degraded” condition (HSD @ 50% and VoIP
starts to have problems)5% of the CMs are not functioning at all
Example: ServAssure Voice Diagnostics
March 2009 132Analyst / Investor Conference
Analyze network problems based on the distribution of VOIP service quality for a certain period
Detect trends in positive or negative VOIP service quality by analyzing historical MOS graphs
Key Take-aways▪ On-Demand
- Significant trends indicate growing customer need for everything on demand
- Field experience in Interactive Advertising and continuing development
- Unified Platform enables integration of On Demand & Advertising
- Superior technology portfolio to address customer usage shift
▪ OSS/Service Assurance- Increased customer focus on OPEX and service quality- Solutions address workforce productivity and improving
service quality in face of increased network complexity
March 2009 133Analyst / Investor Conference
BCS Sales$822.8 72%
ATS Sales$262.5 23%
MCS Sales$59.3 5%
ARRIS Organization MeetsSpecific Customer Needs
March 2009 137Analyst / Investor Conference
Access, Transport and Supplies
▪ Optical▪ RF▪ Supplies
▪ Favorable mix shift towards optics driven by HD video growth
Broadband Communication Systems
▪ CMTS▪ CPE
▪ #1 market share for VoIP E-MTA CPE, multi-line CPE
▪ Record revenue and unit CMTS levels in Q308▪ DOCSIS® 3.0 upgrade leader
Media and Communications Systems▪ OSS▪ VOD▪ Ad Insertion▪ Software reduces operators’
operating expense▪ Video on Demand provides
operators additional revenue generator
▪ Leader in ad insertion at top MSOs
Full Year 2008Revenue $1.145 Billion
Media & Communications SystemsOverview▪ Mission
- Deliver solutions to satisfy present and emerging needs of our service provider customer base in the areas of: • Service Assurance and Mobile Workforce Management• Video Content Delivery, Management and Advertising• Fixed Mobile Convergence
March 2009 138Analyst / Investor Conference
Continued Focus in Areas of Strong Industry Growth
Market Drivers: MCS Addresses Key Operator Needs
▪ Intense Competition for Subscribers
▪ Lower CAPEX and OPEX Enabling Solutions
▪ Everything On Demand▪ HDTV▪ Advanced Advertising▪ Mobility: Three Screen
Play
Assurance
On Demand
FMC
March 2009 139Analyst / Investor Conference
Assurance Solutions▪ Service and Workforce
Management software allows operators to:- Reduce operating expenses
• Fewer truck rolls• Decrease mean time to repair
- Improve customer service experience
- Manage increasingly complex networks that enable multiple services• Service visibility• Analysis and controls• Proactive service recommendations
- Deliver commercial service level agreements and QoS guarantees
- Maximize workforce productivityMarch 2009 141Analyst / Investor Conference
Key Assurance Solutions Customers
Worldwide Assurance DeploymentsMarch 2009 142Analyst / Investor Conference
Assurance Market View Strong Market Position and High Growth Potential
▪ Estimate ServAssure™ solution can be applied to ~246M Revenue Generating Units (RGUs) worldwide- ServAssure software currently manages 59M RGUs
▪ WorkAssure™ solution can be applied to any mobile workforce- Estimate ~165K CATV technicians worldwide
• ~104K are managed by a workforce solution - commercial or in-house
• WorkAssure software currently manages 30K technicians
March 2009 143Analyst / Investor Conference
2008 MCS Assurance Highlights▪ Best Revenue Year Ever
- NET Serviços rollout of WorkAssure solution• Over 1,600 field technicians in first phase
- Launched WorkAssure HouseCheck™ solution • Integration with ServAssure software for the field technician
- Added Comcast as a customer• Acquisition and integration of OpsLogic™ products
- Launched and deployed ServAssure DOCSIS 3.0 functionality
- Integrated E-MTA voice quality metrics with ServAssure solution
March 2009 144Analyst / Investor Conference
ARRIS WorkAssure Workforce ManagementA Revolution for NET’s Field Support
March 2009 145Analyst / Investor Conference
“Field”: A new tool just arrived to create a revolution in NET’s technical area
ARRIS WorkAssure Solution-High ROI for Mediacom
March 2009 146Analyst / Investor Conference
“Mediacom has been using the ARRIS WorkAssure solution for some time now and we are very impressed with the results, especially in terms of the return on our investment.”
“Mediacom has been using the ARRIS WorkAssure solution for some time now and we are very impressed with the results, especially in terms of the return on our investment. We currently have over a thousand techs licensed with WorkAssure and we know it makes them more efficient -- we execute more installations and get more tickets resolved in a day, our customers are more satisfied and we are reducing our installation and maintenance costs significantly. We look forward to expanding our relationship with ARRIS by rolling WorkAssure out across an even larger footprint of our network.”
-John Pascarelli, EVP Operations
MCS AssuranceComing in 2009▪ Integration of OpsLogic and ServAssure platforms
- Customers have more functions to manage their services such as Powersense
▪ ServAssure DOCSIS 3.0 additional features- Enhanced and more complete management of DOCSIS 3.0
services including IPDR and IPV6▪ Intelligent data interpretation and reporting
- Providing the right information, to the right user, right now▪ Completion of triple play offering
- Customers can now manage video services in addition to voice and data with VideoAssure™ solution
▪ NexGen WorkAssure solution- Customers can easily achieve feature extensions leading to
improved resource and inventory management
March 2009 147Analyst / Investor Conference
ARRIS On Demand▪ Unified digital video backoffice and server platforms allowing operators to:
- Utilize less server equipment (lower CAPEX) to deliver all video services• VOD, Advanced Advertising• nPVR, SDV, IPTV• Mobile TV
- Utilize less storage based on reduction in content replication- Realize more flexibility to address linear and VOD Advertising to end users
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Widely deployed, tested and innovative solutions to power an On Demand World
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Analyst / Investor ConferenceMarch 2009
On Demand Key Customers
Worldwide Deployments, Including IPTV EnvironmentsMarch 2009 150Analyst / Investor Conference
On Demand Market View Many Opportunities for Growth▪ Everything On Demand becoming a reality
- StartOver available to 47% of TWC’s customers in Dec. 2008- Cablevision continues to focus network PVR- VOD reached over 10 billion orders in 2008- VOD content and concurrency continues to increase
▪ HDTV continues to grow- 40M US consumers have at least one HDTV set- Comcast: “Over 1000 HDTV choices”- TWC: “Offers more free HDTV than satellite”
▪ Interactive Advertising on the rise- Canoe project unveiled- Cable industry set an ambitious goal
• From current $5B to $15B in revenueMarch 2009 151Analyst / Investor Conference
2008 On Demand Highlights▪ Best revenue year ever▪ Launched StartOver in TWC/NYC
- Largest VOD installation in TWC▪ Increased linear advertising market share
- Displaced competition in key locations- Well positioned for advanced advertising applications
▪ Developed converged media ARRIS platform- Adaptive storage video server utilizing commercial-off-the-
shelf (COTS) hardware▪ Invested in Verivue
- High capacity streaming media distribution switch- Worldwide reseller rights
March 2009 152Analyst / Investor Conference
MCS On DemandComing in 2009▪ New ConvergeMedia™ management platform backoffice
features- Hierarchical storage- Web/mobile portal- Local content packaging- Centralized monitoring for advertising
▪ Introduction of new ConvergeMedia video distribution platforms- XMS “Any Media” Video Server- MDX Media Distribution Switch
March 2009 153Analyst / Investor Conference
Video Delivery Architecture and Use Cases
March 2009 154Analyst / Investor Conference
Town
Large CitySmall City
10 Gbps
200 Gbps
10 Gbps
10 Gbps
10 Gbps
Large scale VOD, SDV, NDVR andIP Video cache services
Small scale VOD, NDVR, DPI and VOD Ad Insertion services
Small scale VOD, NDVR, DPI and VOD Ad Insertion services
Medium scale VOD, SDV, NDVR, DPI and IP Video cache services
Library VOD andVOD Ad Insertion services
Content Delivery Network(CDN)
ConvergeMedia Distribution▪ Two media switching families designed to consolidate
and distribute multiple media types over any network to any device
▪ Origin servers- ARRIS XMS: any “X” media stored
and streamed- High storage to streams ratio- Central and regional for large video libraries
▪ Network appliances with storage- ARRIS MDX: media distribution switch “X”- High streams to storage ratio- Edge switch/cache for large streaming
capacity
March 2009 155Analyst / Investor Conference
XMS
ARRIS ConvergeMedia XMS▪ High storage to streams ratio
- Ideal for centralized, or lightly-networked distributed architectures
▪ 100% COTS based platform- Optimized cost/performance across 200 to
20,000 streams▪ Adaptive storage design
- SAS, SATA, SSD or RAM- Additional cost/performance optimization- 2 to 96 TB storage
▪ Cost-effective for network PVR (nPVR) applications
▪ Unified Platform: built-in linear and On Demand advertising support
March 2009 156Analyst / Investor Conference
MDX9200
by Verivue
ARRIS ConvergeMedia MDX▪ High streams to storage ratio
- Ideal for content delivery network architectures▪ VueStore™ solid state storage
- Purpose built flash optimization- High density FLASH storage- Green approach / lowest power
▪ Seamless multi-screen convergence- Web engine delivers Internet video
streams - Broadband video streaming at
line rates▪ Penalty-free high speed content ingest▪ MDX9200: up to 50,000 SD streams
200Gb/sec, up to 24TB local storageMarch 2009 157Analyst / Investor Conference
ARRIS MCSPositioned for Growth▪ Assurance delivers key OSS products
- Results in higher customer satisfaction and retention - Optimizes field workforce- Leading to lower OPEX and CAPEX
▪ On Demand delivers a unified video management and delivery platform including dual families of video servers
▪ Meets the ever increasing needs for HDTV and demand driven video services for a variety of architectures- Allows integration of managed and internet streamed video
services- Delivers on the promise of Advanced Advertising
▪ Coming off best revenue year with strong bookings ▪ ARRIS increasing investment in these key areasMarch 2009 159Analyst / Investor Conference
2009 and Beyond Sales Objectives▪ Continue to capture an increasing share of customer
CAPEX and OPEX
▪ Ensure premier industry sales force is deployed in the right place at the right time
March 2009 162Analyst / Investor Conference
Worldwide Sales Commitment▪ 200 sales professionals deployed in 19 countries
- Direct sales - Sales engineering - Inside sales - customer service - Business development - Global VAR network
▪ Enhanced industry stature▪ Seasoned and experienced sales team▪ Customers are engaging us earlier in buying process▪ Strong record of superior technology and service
March 2009 163Analyst / Investor Conference
Doing Business with Approximately 1,000 Customers in 70 Countries
March 2009 164Analyst / Investor Conference
ARRIS Sales Offices
March 2009 165Analyst / Investor Conference
Mexico City
Philadelphia
Atlanta
BostonChicagoDenver
State College
Beaverton Wallingford
Amsterdam
Barcelona
BerlinCorkFrankfurtLondon
Madrid
Milan
Singapore
Beijing
Hong Kong
Seoul
ShanghaiShenzhen
Tokyo
Bogota
Buenos AiresSantiagoSao Paulo
ARRIS Sales Offices
ARRIS VARs/Resellers
March 2009 166Analyst / Investor Conference
ARRIS Sales Offices
Poland
Sweden
Canada
Colombia
BrazilBolivia
Mexico
United States
Argentina
Australia
China
Philippines
Korea
Japan
Taiwan
Ukraine
Bulgaria
Belgium
Norway
Russia
United Arab Emirates
PortugalIsrael
Hungary
Germany Czech Republic
Turkey
SwitzerlandSpain
Slovenia
Singapore
ARRIS VARs and Resellers
Domestic Market Market Overview ARRIS Initiative• US operators are experiencing
significant competition • Telephone, satellite and new
media competitors• MSOs responding with new bundled
service offerings• HDTV VOD,VOIP and wideband
HSD• MSOs deploying a number of
technologies to increase capacity/accommodate new services
• Switched video, node splits and advanced video
• VOIP growth has leveled off• 2009 CAPEX will be down
• Focus on Comcast and Time Warner CMTS roll-out
• Benefit from 2.0 to 3.0 CPE transition • Grow CMTS market with second tier
operators• Grow ATS business by leveraging
new optical architecture• Introduce new generation of VOD
products • Position and sell Assurance products
into OPEX savings
March 2009 167Analyst / Investor Conference
Latin America MarketMarket Overview ARRIS Initiative• Major market consolidation occurring
• TELMEX• Televisa• Liberty• Telefonica• All are delivering bundled
services• VOIP just now starting to ramp• Argentine operators expected to
launch in 2009• Mexico, Colombia and Southern
Cone account for 80% of the CALA market
• Deregulation allowing telephone companies entry into the video space
• Have invested additional sales and engineering resources into CALA
• Have established regional presence with DOCSIS lab in Argentina and service facility in Chile
• Leverage Brazilian manufacturing relationship into regional advantage
• Major product opportunity exists for CMTS, optics, VOD, OSS as operators deploy more bandwidth in order to drive competitive services
• Currency exchange issues will have short term effect on market
March 2009 168Analyst / Investor Conference
Japan
March 2009 169Analyst / Investor Conference
Market Overview ARRIS Initiatives• Japan cable television market is
consolidating into two large companies
• JCOM and KDDI• Each own systems directly • Offering hosted voice solutions to
a subset of affiliates• The Japanese operators are rolling
out DOCSIS 3.0 in response to FTTX based competitors
• Have added resources into Japan to address growing DOCSIS 3.0 roll-out
• Increased focus on OSS and VOD opportunities
• Enhance VAR network• Opportunities for C4c CMTS into
second tier markets
China
March 2009 170Analyst / Investor Conference
Market Overview ARRIS Initiative• Chinese cable market slowed by
ongoing regulatory issues restricting wide scale voice and broadband deployments
• Government has mandated the roll out of digital television
• Still a struggle between SARFT and MOI over control
• Liberty entering into a joint venture with Gehua – Beijing
• Could develop into both a technology and commercial showcase model for the market
• Addressing market on an opportunistic basis
• Selling through a multiple distribution model
• Adding business development resources to address long term planning
• Leverage our Shenzhen engineering facility
• Ready when the market is ready
EuropeMarket Overview ARRIS Initiative• Cable operators are under significant
pressure from DSL competitors• Responding by offering additional
service offerings• Digital Video• DOCSIS 3.0• VOD
• Northern European market is highly concentrated with UPC, KDG, Virgin Media, ZIGGO and KBW as largest players
• Iberian operators are managing through a significant economic decline
• Growth opportunities in Central and Eastern Europe including Russia and Turkey
• Focus on customer diversification • CMTS and CPE success affords
opportunity for additional product sales
• Address growing VOD opportunitywith new suite of products
• Grow DOCSIS 3.0 project at UPC into new country footprints
• Leverage CMTS sales success in Germany across all product lines
• Strengthen VAR channels into Eastern Europe and Russia
March 2009 171Analyst / Investor Conference
Summary
March 2009 172Analyst / Investor Conference
Opportunities in current
environment
Product portfolio is aligned with customers
requirements
Global coverage and relationships
in place
ARRIS is intent on ‘owning the
upswing’ as world economies recover
2008: A Strong Year that Positions the Company Well for the Future….▪ Strong balance sheet▪ Solid cash position▪ Leading market share▪ Sustainable business model▪ Great growth potential▪ Talented and experienced employee team
March 2009 174Analyst / Investor Conference
2009 Outlook…▪ Current Economic Macro-factors and unknowns▪ New Internet based on-demand services emerging▪ International Opportunities▪ Growing interest in OSS for Opex reduction & network
improvement▪ Small & Medium business opportunities▪ DOCSIS® 3.0 will be ongoing growth driver
- Video traffic accelerates- Bandwidth and speed demands continue
March 2009 175Analyst / Investor Conference
Cautiously Optimistic About 2009
ARRIS…Growing Position in a Competitive Environment▪ Operators, faced with intense competition, must invest
- Satellite offers more HDTV channels- Telcos offer video and higher internet speed services
▪ We have invested in those areas where our customers, the operators, must invest for the future
▪ Focused, nimble development team- > $110M R&D per year
▪ Strong market positions in all product categories▪ Long and deep customer relationships
March 2009 176Analyst / Investor Conference
Growing Revenue and Market Share
In Summary, We are Ready for the Future….
High Speed Data and Telephony Solutions
Video on Demand and Ad Insertion Systems
Broadband Local Access Networks
Service Assurance Solutions
From Network to Subscriber –Worldwide
March 2009 177Analyst / Investor Conference