Www.intelcapital.com Intel Confidential – For Internal Use Only Connecting the World Lisa Lambert Managing Director, Intel Capital Software Solutions Group

www.intelcapital.com

Intel Confidential – For Internal Use Only

Connecting the World

Lisa LambertManaging Director, Intel Capital

Software Solutions Group

November 14, 2007

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Web Evolution

2004: “Web 2.0” coined from conference. Headline companies

mostly small and known to few

Web 1.0: Building the web foundation (from static to dynamic)

XML, RSS, Java, Web Services, AJAX, Flash, Web APIs

2005-2006: Entry of large corporations fuel growth (via

acquisition, investment or engagement)

2006-2007: Major startups emerge as household names for consumer

and enterprise (similar to first wave of the internet)

The near future: Full force adoption and engagement from the enterprise; next generation of consumer soln’s

*Other marks and brands are property of their respective owners

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Environmental TrendsStatus• Web 2.0 for the consumer remains very active and web 2.0 for the enterprise is experiencing strong

growth. Majority of Web 2.0 technologies have enterprise penetration

• 85% for fortune 500 are users of multiple vendors for blogs, wikis, rss, and podcasting

M&A Market still VERY active.• Google & Yahoo remain very active. Cisco & Saleforce beginning to address the enterprise market. SAP &

Oracle actively evaluating acquisition candidates

Acquired by Google:

Acquired by Cisco:

Acquired by Salesforce:

Acquired by eBay:

Del.icio.us

Acquired by Yahoo:

Acquired by Microsoft:

Reason for Consolidation:• User acquisitions (monitizable via advertising)

• Talent acquisitions (primarily engineering – #1 reason for Google)

• Gap fillers for full internet “platform”

• High demand for Web 2.0 features by customers

• Competitive differentiation

• Low entry barriers into new markets (Cisco, Amazon)

• New technologies solving old problems (i.e., wikis for collaboration)


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Web 2.0 EvolutionInternet evolving into the next application platform

• – Application platform

• – Open Social

• – Open Platform

• – Widget platform

Major movements to applications in the “cloud”

• Microsoft’s “Live” platform

• storage

• Cisco’s “virtual networked applications”

• Application Exchange

• moving components to SaaS model

Unleashing from Windows: Very rich applications & media being developed – Focus back on computing power

• Online Video (Joost), Virtual Worlds (Second Life), Gaming (WorldsOfWarcraft), Online Office (MSFT, Google)


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How does this impact the user?

Internet

All applications from any device, anywhere

New Class of Collaborative Online Applications and Usage Models

Dev ToolsConsumer

Business

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Internet Ecosystem

Internet based applications forbusiness, move from client/server

Online MS Office, Desktop

Next Gen B2C – Often via Mashups

Social, Blogging, Tagging

Information gathered viacrawling then monetized

Community

Commerce

Virtual Desktop & Office

Services & Solutions

Search Enabled Business

Content

Tools quick dev for web 2.0Tools & Middleware

Audio/Video/Gaming/Photo/Wikis

monitor110

Consumer Internet

Business Internet


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Consumer Internet:Investment Focus

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Consumer Internet Penetration

Very high Year over Year growth numbers in

Internet Usage

Highest growth outside the US

Majority of new users going to websites created as “web 2.0” companies.

First evidence of sites with majority of users outside the US making top ten list.

This list in 5 yrs will have much more global influence


Source: Morgan Stanley, Alexa Global Tracking Rankings, 2007

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Consumer Microsoft Yahoo Google AOL NewsCorp Key Startup(s)

Photo B A A B PhotoBucket

Video B B B YouTube

VoIP A A Skype (Yahoo)

Social Networking B A A B A MySpace (NC)

Mapping B B A B

IM / Chat B B A B Meebo

Tagging A Del.icio.us (Yahoo)

Music B A B A Crowded

Games B A, B A Crowded

News B B B B A Commodity

A = Acquired

B = Built

Consumer Investment Opportunity

• Heavy activity and competition for content & community

• Space dominated by large corporations

• Likely Exit M&A

• Most white space completed by large players

• Intel should continue active engagement with large corps, with selective engagement with startups

B

A

A

B

B

B

B


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Consumer Internet Maturation

2005 2006 2007 2008 2009

Consumer Maturation

Cycle of Web 2.0

Technologies

Continued M&A frenzy sparked by

Media Companies

Some IPOs for Mature

companies, slowing of M&A due to feature completion by large acquirers

Popularity of Consumer Internet

(Blogging penetration)

2007: “Web 2.0” mature and at its peak for M&A

Early M&A

Mostly via Google &

Yahoo

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Business Internet:Investment Focus

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Enterprise Penetration Growth

From 2006 to 2007, 50% increase in deployment (from

~20% to ~30%)

Consumer web 2.0 technologies are now being consumed by the

enterprise

Consumers bringing their tools to work

Estimated $4.4B market by 2010

2006–2007: the period of transformation

2008–2009: integration of the enterprise collaboration

platform

2010 and beyond: “joined up” collaboration (.e.g.,

LinkedIn/Jive/Meebo for the enterprise)

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Enterprise Investment Opportunity

Enterprise Microsoft Yahoo Google AOL NewsCorp Key Startup(s)

Blogging A A SixApart

Wiki SocialText

RSS NewsGator

Podcasting PodShow

Virtual Office B A, B Zimbra

Virtual Desktop B B B B B NetVibes

Online Data Store B A Box.net

2.0 Dev Tools Laszlo

A = Acquired

B = Built

• Activity still light but heating up in enterprise (including SAP & Oracle). Cisco is acquiring to fill gaps

• Space dominated by start ups, expected consolidation in 2007/2008 – likely via M&A by large companies

• Exception is MSFT who is building own capabilities

• Above list are most likely exit given their attention to web 2.0 and their recent interest in broadening into the enterprise (blogging first, wikis expected to be second)

B

B

B

B

A

A

B


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Enterprise Software Maturation

2005 2006 2007 2008 2009

Enterprise Maturation

Cycle of Web 2.0

Technologies

Expected Enterprise

Penetration of Virtual Office,

Social Networking

Expected Enterprise

Penetration of Virtual Desktop, Online Storage

Popularity of Business Internet

(Blogging enterprise penetration)

2007: Still early but real penetration and revenues

30%+ Enterprise

Penetration of Blogging,

Wikis, Podcasting and

RSS

(SuiteTwo)

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Exits: Web 1.0 vs. Web 2.0

• Less expensive internet bubble

• Recent average exits at > 10x revenues

• Although higher barriers for IPO today, advertising revenue is large enough for large potential IPOs today

Source: Morgan Stanley, 2007

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Intel Capital Web 2.0 Portfolio

Social Networks Security and ToolsVoice and Online Revenue

Enterprise Collaboration


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Intel Web 2.0 ApplianceOperating System

Software Infrastructure(Database, Web Server, etc.)

Xeon 2.66 GHz

System Admin

Console,Single

Sign-On,and

Authen-tication

SpikeNetUpdate

Manager

Integrated User Interface and User Management

Wikis

Social Text

RSSRead

NewsGator

RSSPub

SimpleFeed

Blogs

SixApart

SocialNetworks

VisiblePath

Search

Lucene

Document Repository & Workflow

Reporting Engine



Intel Confidential – For Internal Use Only

Intel CapitalInvesting for Global Impact

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About Intel Capital

Intel Capital, Intel's venture capital organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, home, mobility, health, consumer Internet and semiconductor manufacturing. Since 1991, Intel Capital has invested more than US$6 billion in nearly 1,000 companies in more than 40 countries. In that time, about 180 portfolio companies have been acquired by other companies and another 155 have gone public on various exchanges around the world. In 2006, Intel Capital invested about US$1.07 billion in 163 deals with approximately 60 percent of funds (excluding Clearwire) invested outside the United States. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com.

Documents

Www.intelcapital.com Intel Confidential – For Internal Use Only Connecting the World Lisa Lambert Managing Director, Intel Capital Software Solutions Group