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Speech & Search – Impact on VAS Revenues

MOMO Bangalore

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Emerging Markets Landscape

3

Closer Look on the Emerging Markets

455 million455 million

Common IssuesOn mobile phone adoption & usage

LOW COST!

DifferentInformation Needs

GeographicChallenges

MultipleLanguages Price

Sensitivity

SMS > Voice Calls

Limited MobileNetwork Coverage

Prepaid > Postpaid

Illiteracy

Total Addressable Market =

Market data from Vital Wave™ Consulting

Can I increase myincome through my

phone?

LimitedCash Flow

4

India’s Existing and New Mobile Market Segments:Existing and Upcoming Segments

New Upcoming Segment – the nextBillion

• New consumer: mix of urban and rural

• Needs are for low cost handset and

voice

• “Connect me”

• By 2011

– will grow to 500 million in 3 years,

at a CAGR of 35%

• Driven by Voice

– enhanced with income-increasing

data services and infotainment

– support for local languages and

voice navigation

• VAS offering – speech and smsbased applications in vernacularlanguages

Existing Market Segment – want more

• Saturated market: mix of

business and youth

• Future needs go beyond Voice

and P2P SMS

• “Give me more”

• By 2011

– will grow to 150 million in years, at

CAGR of 15%

• Driven by data services

– complement with superior user

experience

– support for rich media and user

generated content

• VAS offering - Search

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VAS and Rural Telephony – The UpComing Segment

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This is the newmarket!

• Public service announcements (partner with Gov’t/NGOs)• Basic education

• Basic health

• Food, water, shelter

• Lower voice and service costs (new business and financingmodels)

• Mobile education applications/modules

• Access to job opportunities, vocational skills programs

• Agriculture/economic development solutions

• Money

• Employment/jobopportunities

• Education/skills

• Aspirations / status symbol

• Insurance

• Text (SMS/MMS, IM, Bluetooth), photo exchange, social networking

• Conducting financial or other transactions over mobile

• Security

• Belonging/communications

• Time with family

• Phone design/colors, ringtones

• Ringtones, emoticons, wallpapers, personalized screen themes

• Gaming, watch TV/movies, listen to music/radio, downloadnews/information over the mobile

• Coolness/status

• Individuality

• Fun/entertainment

Appropriate Mobile SolutionsSubscriber Basic Needs

Different Approach for Low-Income Markets

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This is thenew market!

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Lack of additionalincome opportunities

Lack of additionalincome opportunities

Lack of basicinformation

Prices, weather,inputs, techniques

Lack of basicinformation

Prices, weather,inputs, techniques

Pain pointsPain points Potential ServicesPotential Services

Note: 2008 data Source: FAO database; China rural statistical yearbook 2008; BCG analysis

Target segmentTarget segment

516M

803M

43%58%

AgricultureTotal workforce

Suppliers / buyers

Info dissemination

Suppliers / buyers

Info dissemination

Customizedagricultureinformation

Customizedagricultureinformation

Local informationand news

Local informationand news

Product informationmessages

Product informationmessages

Example of UpComing Segment: The MeraNokiaAgriculture service in Maharashtra

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Opportunity in Rural – the untapped market

• A huge proportion of the population is illiterate

– Growth from rural sector (700m people) eg. Vernacular messaging and speech in vernacularlanguages

– IFFCO/Airtel venture; ITC E Choupal; Reuters Market Light.

– According to Gartner, the village is not what it used to be: 70% of India’s population, 56% ofincome, 64% of expenditure and 33% of savings come from rural India.

• Mobile information service for farmers

• Reuters-RML has 300K three months subscription; Nano Ganesh (mobile information portal) at USD15 to USD 30 has 50000 customers

• Challenge: Not enough handsets with vernacular messaging capability

• Challenge: None of the speech engines in the market currently is tuned for rural dialects; Nuance hasHindi and Indian English; Indian rural dialect should be available in NMSP and NVC

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India – Linguistic Geographies

Punjabi

Gujarati

Marathi

Malayalam

Bengali

Hindi

Telegu

Tamil

Kannada

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Relevance of Search

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Current Mobile Landscape – Operator Challenges

• Aggressive voice pricing plans have been placing downward pressure onsubscriber ARPUs

– Bharti Airtel and Reliance recently announced unlimited local, long distance androaming voice plans

– Operators seek to leverage mobile data services to offset declining voice ARPU

• Mobile internet consumption is evolving beyond brief transactions (weather,sports scores), to more time intensive interactions (mobile banking, travelplanning, social networking)

– In Mar 08, Reliance, along with Corporation Bank, launched mobile bankingservices that enable account balance inquiries, check status queries and fundtransfers via mobile handsets

– Operators desire efficient marketing vehicles to promote new data value addedservices

• Existing consumer frustration with accessing Customer Care cells (primarilydue to occasional network congestion)

– Frustration heightened among Pre-pay subs (_% total subscribers) who experiencelonger wait times in Customer Care call queues

– Operators seek to improve subscriber satisfaction while lowering Customer Carecosts

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1 CMO Council: Feb. 2007 Global Mobile Mindset Audit™2 Mobile Marketing Association3 eBrain Market Research, July 2006

Market View:

Addressing a Growing Problem

Simultaneously On the Rise

Demand forAdvanced Features

“Feature Fatigue”

Consumers want

• More features

• More data access

• More productivity

#1 complaint: “Too manyfunctions I did not use”1

89% of users: Never useor don’t know how to usemobile search2

84% of users: Wantfeatures that save time3

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What if?

• You could increase traffic to your portal by simplifying access to it...

• You could efficiently expose value added content and services to yoursubscriber base to drive awareness and trial...

• Increase your mobile advertising revenue by delivering more impressionsto ad supported pages on your portal…

• You could migrate transactional data users to higher ARPU data plans bypromoting deeper discovery of premium downloadable content andincentivizing impulse purchases…

• You could improve customer satisfaction and reduce churn byempowering your subscribers to maximize the utility of feature richhandsets and on your network…

• Reduce your CRM costs by diverting Customer Care calls to your portaland enabling account self-service solutions…

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Drastically reduces keystrokes needed to findany feature, any content

87% of users say T9 Nav makesfinding features easier.**2007 Research conducted by Strategy Analytics

Example: Locate clock settings•Spell “TIME”

•Press: 8 (tuv) 4 (ghi) 6 (mno) 3 (def)

•Choose “Clock (Time)” from the list

T9Nav - Simplifying Search at the Key Press Level

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T9 Nav™ & the Consumer

• Problem

– Content searching (WAP browsing) isoften slow and unsuccessful

• Solution

– Deliver targeted search terms(keywords) intermixed with relevantcontent in results lists

• Frequently queried content categoriesare easily accessed (maps, news,weather, etc.) with links that “cut thedeck”

• Since the keywords are stored on thehandset, they are returnedinstantaneously, requiring only one clickto take the user directly to the content

76% of users: Wouldabandon their mobilesearch session after twonetwork connections1

Slow Navigation

1 ActionEngine usability study - 2005

T9 Nav “Cuts the Deck”

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T9 Nav™ is Targeted Discovery

• Problem

– Consumers don’t use or buy what they can’tfind

• Solution

– T9 Nav™ unobtrusively promotes contentand services to users while they performnormal handset tasks, like making phonecalls

• Discover billing information keywords whiledialing a phone number

• Discover mobile banking service whilesearching for a calendar entry

• Discover a new mobile blog while silencingyour ringer

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Relevance of Search & Speech

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The Challenge of Mobile Search

Too Many Clicks!

Mobile Content, Application and ServicesMust Be Quicker to Access and Easier to Use

Content Search Example

6Clicks

24Clicks

92Clicks

0 0 3 5 0 1 2 5 0 3 1 0

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NVC 2.0 Solution Features

Messaging

Safely and Efficiently Dictate and Listen to e-mail and Text Messages

Message Dictation• Dictate e-mails and text messages

• Create e-mails of any length

• Higher accuracy/Reduced latency

• Easily edit messages before sending

Message Reader• Reads back e-mails and text

messages with TTS

• Natural-sounding dialog Powered byNuance TTS technology

Inbox Navigation• Check e-mails and navigate inbox

by voice

• Reply, forward, and delete messageswith simple voice commands

“Send TextMessage”

“Send TextMessage”

“Meet me at9:00 in front ofthe theater”

“What time isthe movietomorrowsmiley-face”

“ReadMessage”

“ReadMessage”

“ForwardTo Patrick”

“ForwardTo Patrick”

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NVC 2.0 Solution Features

Search, Web, Content

Quicker access to content and easier use with intelligent results

Business Search• Search local

business listings

• Speak your businesslocation or use GPScoordinates

Content Search• Search music, games,

video and otherpremium content

• Leverage Nuance’s1.2 million track musicsearch grammars

Entertainment• Find movie listings and

other entertainmentinformation

Directions• Access navigation

applications and maps

• Speak destinationparameters and betaken directlyto the listing results

Web Content• Access Web content

including news,weather, and sports

Web Search• Open and free-form

Search for informationthrough a carrier’spreferred search engine

“FindBusiness”

“FindBusiness”

“FindMusic”

“FindMusic”

“FindMovies”

“FindMovies”

“FindDirections”

“FindDirections”

“GetWeather”

“GetWeather”

“WebSearch”

“WebSearch”

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Examples of Industry Research

Examples of Data We have

• 24% cell phone users desire voice-activated dialing on their next cell phone– - Harris Interactive

• Navigation users: 46% use TTS and 19% use speech to input destinations– ABI Research

• Customers are willing to pay more for devices that have improved usabilityfeatures such as predictive text

– Strategy Analytics Study

• Speech SMS usage for speech customers up 40% by month 8 of usage– NVC 1.0 data

• After a few months of use, attrition rates for speech subscribers who pay$6.00 per month drops to below 5%

– NVC 1.0 data

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Nuance Open Voice SearchFully Automated Speaker Independent Technology

“Say anything” search capability: enabling open-

ended search queries across multiple domains

Broad domain coverage: includes business listings,music and content, and frequent web searches

Links to any search engine

Broadest device support, including smart phones andfeature phones

A new, more compellingconsumer search experience

Nuance Open Voice Search allows mobile consumers to search forcontent and information by simply speaking their request

No training or enrollment required

Uniquely available with the “one button” access of NVC2.0

Exclusiv

e!

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Nuance Open Voice Search: NVC 2.0

The Easiest Experience…On All Devices

– “Call Scott” and the phone will dial Scott

– “Send Text to Scott; I’ll be 5 minutes late to themeeting” and a text message addressed to Scottready to send will appear

– “Find ringtones; The Rolling Stones Satisfaction”and the Satisfaction ringtone will be available fordownload

– “Search Web; How many calories are in acheeseburger” and your browser will provide links justlike a text based search engine result

NVC 2.0 users access OVS for business listings, content andmobile web search with just one click from phone idle

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Nuance Open Voice Search

Nuance Unveils Voice Search Prototype on iPhone

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Nuance Overview

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Who is Nuance?

• Leading provider of speech,

text input and imaging

solutions

• Founded in 1992 and publicly

traded on NASDAQ (NUAN)

• Headquartered in Boston,

Mass. with 5,200 employees

• 2009 revenue projected to

between $1.01 and $1.13

billion, up from $918.8 million

• More than 1000 filed and

pending patents

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Four Key Business Divisions

PDF and documentworkflow solutions

Manual transcriptionin healthcare,legal andprofessionalapplications

voice search,messaging andcontrol capabilitiesformobile environments

Improve customercare throughimproved customerself service

ImagingDictaphoneHealthcare

Mobility andCustomer Services

Enterprise