SMITH-TRG

SMITH -TRGBUSINESS PERFORMANCE & VALUE CREATION CONSULTANTS A

February 2010

‘Digital-Media Opportunities to Create Strategic Business Value’

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By: Richard D. SmithCEO, SMITH-TRG

RDSmith@SMITH-TRG.com

iPopping

contents

introduction

MEDIA LANDSCAPE

OPPORTUNITY

WHY ACT NOW?

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WHO WE ARE begins with WHO WE WERE.

A digital-media venture development and value

creation consulting firm.

Launched second venture as technology sector

imploded, drastically changing the playing field.

Many packed it in. Others didn‟t have the vision,

passion or „Attention Economy‟ experience.

We did. And, we embraced it.

Our consulting, IT/telecom & digital-media roots

uniquely enable us to assist carrier and media

industry/sector/segment CXO‟s develop and

execute business value creation strategies .

As you can tell, our past has a great deal to do

with our present.

As well as our future.

February 2010

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OUR value view. . .

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"Achieving consistently superior value growth is

the single accomplishment that most clearly

distinguishes great companies from all others. It

is the hallmark of exceptional leaders. In our

experience, a focus on value is our key to helping

clients‟ achieve superior performance, and it

therefore forms the basis of everything we do”.

- Richard D. Smith, SMITH-TRG

WHAT we have done. . .

Advised 4 global consumer electronics innovation leaders on –

strategy

product portfolio(s) & pipeline

high-impact & high-value B2B deals

M&A

retail store transformation & expansion

emerging smartphone & multi-touch screenmarkets

new wireless application platforms & related services

Developed X-Otica a digital-media enabled retail store of the future – basis for world‟s most successful (revenue per square foot) retail chain

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plus . . .

Advised 4 global consumer electronics innovation leaders on –

strategy

product portfolio(s) & pipeline

high-impact & high-value B2B deals

M&A

retail store transformation & expansion

emerging smartphone & multi-touch screenmarkets

new wireless application platforms & related services

Developed X-Otica a digital-media enabled retail store of the future – basis for world’s most successful (revenue per square foot) retail chain

SMITH-TRG

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Advised wireless carrier, IT, consumer product, media

& entertainment, hospitality, automotive, advertising,

and marketing companies on digital-media

Assisted mall operators and retail chains ROI optimize

place based „Digital Out-of-Home‟ networks

Authored book, AD-MIRED, „Media‟s Power to Create

Business Value‟, 2006

Advised Seoul Korea on „Digital-Media City‟ (DMC),

multi-billion dollar city of the future

Founded Audient Media (AIM2) a audience interactive

mobile-marketing, „Advertainment‟ content, and

wireless advertising venture

Founded Saint CRISPIN a global video-messaging,

(precursor to „video-mail‟) venture, sold to F-500

WHAT we believe. . .

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“The greatest value creation opportunity

will fall to those who give the end-user

consumer what they want…really, really

want. And that is: an integrated, easy to

use, video media experience, anytime,

anywhere, and on any platform.”

- Richard D. Smith, SMITH-TRGAuthor, AD-MIRED, 2006 book

SMITH-TRG

February 2010

M E D I A L A N D S C A P E

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Market Size

$5 Trillion Global annual value

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Value Chain

Pieces

From content creation to

distribution to end-user

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Content creators

Media companies

Aggregators (network)

Aggregators (broadcast)

Back-office Apps

Network service providers

Carriers (domestic/global)

Infrastructure (IT/services)

Portals (music/video/books)

Devices (hardware)

Devices (software)

Apps providers

End-user (media consumer)

End-user (business)

Market

Players

Anyone, small to large, in

and/or around digital-

media eco-system

markets

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A Market Mover

SnapshotVision. Innovation. Value Creation.

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2005Apple

5 Year Snapshot

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Shares trading $45 to $55

Retail store chain (26) in

need of re-invention

(Revenue per Sq. Ft. $1,000)

Product portfolio & pipeline

decisions required

Value growth plan pending

“I think fanaticism is underrated.

I‟m a fanatic about the engineering

groups. Steve (Jobs) is a fanatic

about the user experience and

the design.”- Bill Gates, Microsoft

Advice for entrepreneurs, enterprise game changers

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February 2010

F A N A T I C I S M

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2007Vision & Value Progress

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Shares reach $199

Retail chain transformed,

revenue per Sq. Ft. $4,000

iPhone launched, AT%T

exclusive & user revenue

share deal reached

Product portfolio/roadmap

established

2009(Apple officially a computer

hardware & software company)

Strategically morphing

itself into a media

company

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iPhoneA "zero" revenue

contributor three years ago.

Fourth-quarter 2009,

iPhone revenue up 90%

year over year to $5.6 billion.

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iPhone & iPod contribution . . .

$9 billion of total $13.5 billion

in quarterly revenue.

Two thirds of total!

2010 5th Yr. Value Delivered

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Shares trading @ $200+/-

Earnings per share up 562%

Shareholder equity up 428%

Cash on hand up 411%

Retail chain 250+ stores

world-wide, still $4,000

revenue per Sq. Ft. iPad launched

AppleSystematically tilts wireless

playing field to their advantage.

Apple designed iPad chip, dubbed

A4, marks strategy shift first

signaled by 2008 purchase

of start-up P. A. Semi.

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“Apple extracts more and

more of the value, while

carriers get more and

more of the costs.”- Craig Moffett, Senior Analyst

Berstein Research

Value Strategy

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February 2010

iPad(again Apple demonstrates)

“To create greater business

value – One does not have to

be first to create, just first to

innovatively perfect what has

been created.” Richard D. Smith

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Mobile

Value Growth Sector

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. February 2010

2007 vs. 2012

Revenues $1.65T $2.2T

Dial-up 3% 2%

Broadband % share 8% 11%

Wireline % share 42% 31%

Wireless % share 47% 56%

(does not include satellite carriers)

Source: Verizon study

Global CarriersForecasted Wireline & Wireless Revenues

Transport

Trends

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U.S. Wireless Growth2005 vs. 2009

Subscribers 194.4M 276.6M

Penetration 66% 89% (% of U.S. Population)

Wireless Only Households 7% 20%

Annual Total Rev. $108.5B $151.2B

Annual Data Rev. $8.5B $37.0B

Annual Minutes of Use 1.26T 2.23T

Annual SMS Messages 52.2B 1.36T (Source: CTIA)

U.S.

Wireless

Google enters mobile space. . .

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Introduces

Android

Why?

Strategic Global Growth

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5 Billion

Cellphones world-wide(Global population 6.8 Billion)

Smartphone

LandscapeiPhone has 13.7% share &

74% user satisfaction rating

RIM has 20.9% share &

2nd place positive user

rating with 43%

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Forecast

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“Within five years 90 percent

of mobile traffic will be from

Internet-enabled laptops and

smart phones”.- John Chambers, Cisco

O P P O R T U N I T Y

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From M&A to

Reinvention

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February 2010

„06 Pixar & Disney MergeA proprietary technology & digital content value-creation deal

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Pending M&ANBC-Universal-Comcast

$30B Merger“Will competition be sustainable with

the largest video and broadband provider

controlling huge quantities of content?”

- H. Waxman (D-Calif.)

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Future Spin-OffMotorola to spin-off wireless

handset & TV box business

into new public company

Q1, 2011

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New Strategy

Content focused company

AOL acquired StudioNow

a Nashville based video

production firm.

Paid $36.5M cash & stock

Enterprise

Reinvention

From High-Impact Deals

to Media Applications

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Will the deal winner be

Verizon, T-Mobile, ?

Apple’s exclusive

AT&T carrier deal

expires in 2012.

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Apps market

larger than Apple

and Android. . . 2

X

Small businesses as

applications developers(**iPhone 200,000 apps) Downloads!

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Mobile

AdvertisingHigh growth Apps market

In-Cinema„Big-Screen‟ real-time

interactive advertising!

Doable? Yes!

Exist today? No!

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Imagine

There are 38,600 movie theatre

screens in the U.S.. In 2009,

1.4 billion patron admissions.

Interactively engaging

viewing audiences with

„Advertainment‟ content in

Traditional, IMAX or Digital

Cinemas.

From Multi-Touch Screens

to Niche TV Platforms

February 2010

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Digital Signage,

Out-of-Home

Ad Networks

The U.S. retail industry is comprised of nearly 1.1 million establishments with annual

sales of nearly $4.5 trillion. As retailers struggle in today‟s economy, digital signage is

increasingly finding its place as a branding and merchandising tool near point-of-sale.

Multi-Touch Wall Screens

the next generation of

place-based signage.

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Niche Media

Platforms

Commercial use TV/Screen applications

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W H Y A C T N O W ?

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A $5 Trillion

Target of Opportunity

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SMITH-TRG

(global media sector on growth curve)

W H Y ACT N O W ?

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February 2010

It‟s about building your. . .

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SMITH-TRG

BUSINESS ADVISORS.

VALUE CREATORS.

We assist. . .

CEO‟s to create business

value

CXO Stakeholders to solve

business performance

problems

Innovators to develop more

successful „customer-centric‟

propositions

Business Developers to

maximize return on their investments

Thank you!

www.SMITH-TRG.com

Enterprise leaders in the digital-media space are known for being

many things. Patient is not one of them.

SMITH-TRG

February 2010

Consequently, they want someone who understands creating

strategic business value in the media space, they desire „trusted-

business advice‟ and new competitive advantage solutions, and they

want and desire them today!

Fortunately, with two decades of international telecommunications,

wireless, and digital-media industry experience, SMITH-TRG excels,

not just at developing executable strategies specifically for the client,

but developing them quickly.

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OUR digital-media PRACTICE