Capitalizing on the European Market Software Industry Conference 17-19 July 2008 Carmen Sebe , CEO / Avangate BV [email_address]

Market overview – why Europe? Europe – a software market as big as the US What to consider when going to Europe Overcoming the entry barriers Some ideas on how to generate money from a foreign market Agenda

Market overview – why Europe? Europe – a software market as big as the US

What to consider when going to Europe Overcoming the entry barriers

Some ideas on how to generate money from a foreign market

Market overview Global Software Market In 2011 , the Global Software Market is forecast to have a value of $271.8 billion , an increase of 33.6% since 2006 . Global Software Market Value Forecast: $ billion, 2006-2011 Source: Datamonitor

Market overview Global Software Market Segmentation Americas region accounts for 42.1% of the global market's value. European region generates 36% of the global market's revenue. % Share, by Value Source: Datamonitor

Americas region accounts for 42.1% of the global market's value.

European region generates 36% of the global market's revenue.

Market overview European Software Market In 2011 , the European Software Market is forecast to have a value of $91.9 billion , an increase of 25.4% since 2006 . European Software Market Value Forecast: $ billion, 2006-2011 Source: Datamonitor

Market overview Europe by Country France is the most lucrative software market in Europe, accounting for 23.7% of the European market's value. United Kingdom generates an additional 22.2% of the regional market's value. % Share, by Value Source: Datamonitor

France is the most lucrative software market in Europe, accounting for 23.7% of the European market's value.

United Kingdom generates an additional 22.2% of the regional market's value.

Software Piracy in Europe The software piracy record in Europe is mixed: Austria, Finland have the lowest rates Worldwide, 26% Average in EU – 36% Central and Eastern European rate 69% Rates in Russia and Ukraine have experienced the largest decreases in the world, but still very high – around 80% High piracy regions are also high market growth regions - for example: IT spending in Russia in the next five years is expected to grow between 15 and 20 percent -

The software piracy record in Europe is mixed:

Austria, Finland have the lowest rates Worldwide, 26%

Average in EU – 36%

Central and Eastern European rate 69%

Rates in Russia and Ukraine have experienced the largest decreases in the world, but still very high – around 80%

High piracy regions are also high market growth regions - for example: IT spending in Russia in the next five years is expected to grow between 15 and 20 percent -

Despite it’s late start Europe is now a mature eCommerce market and one of the biggest markets in the World . A mature market concentrated in Northern Europe (United Kingdom, Germany and the Scandinavian countries) where 60- 80% of Internet users are eShoppers . A growing market in France , Italy and in Spain with a ratio of eShoppers to Internet users the weakest (between 35-50% according to markets), but a very strong growth rate amongst new eShoppers which bodes for excellent potential for the short and long term. eCommerce Opportunities in Europe

Despite it’s late start Europe is now a mature eCommerce market and one of the biggest markets in the World .

A mature market concentrated in Northern Europe (United Kingdom, Germany and the Scandinavian countries) where 60- 80% of Internet users are eShoppers .

A growing market in France , Italy and in Spain with a ratio of eShoppers to Internet users the weakest (between 35-50% according to markets), but a very strong growth rate amongst new eShoppers which bodes for excellent potential for the short and long term.

eCommerce Opportunities in Europe A budding market represented by Eastern Europe , with different levels of maturity according to the countries 2008 and 2009 years will be significant for the development of e-commerce in Europe

A budding market represented by Eastern Europe , with different levels of maturity according to the countries

2008 and 2009 years will be significant for the development of e-commerce in Europe

Opportunities Europe – a market as big as US A software market accounting 91.9$ billion Both mature markets and new markets IT spending for decreasing the software piracy High end market Favorable exchange rate $/€ Entry barriers Language barriers Multiple currencies, eased by adoption of the Euro Differing tax and VAT regimes Uncertainty over and pending legislation on ecommerce taxation Cultural differences Is Europe a good place to be?

Opportunities

Europe – a market as big as US

A software market accounting 91.9$ billion

Both mature markets and new markets

IT spending for decreasing the software piracy

High end market

Favorable exchange rate $/€

Entry barriers

Language barriers

Multiple currencies, eased by adoption of the Euro

Differing tax and VAT regimes

Uncertainty over and pending legislation on ecommerce taxation

Cultural differences

What do I need to sell in Europe? Product Localization Product Localization English only No cost Help, Manuals, etc. - targeted countries languages Translation Cost: $2000/10000 words Product Localization - best selling countries With a dedicated Partner $3000 - $10000 With a partner Associated No cost

What do I need to sell in Europe? Customer Support Customer Support Localization Support in English No cost FAQs, Tutorials, etc. - targeted countries languages Translation Cost Multilanguage Support Using Call Center $6-$15 / h $3000 - $10000 In house Salary A Partner No cost No cost

What do I need to sell in Europe? VSO – ConvertXtoDVD - Product Localization

What do I need to sell in Europe? VSO-Software.fr – Website Localization

What do I need to sell in Europe? VSO – ConvertXtoDVD - Product Localization

What do I need to sell in Europe? VSO-Software.fr – Website Localization

What do I need to sell in Europe? VSO-Software.fr - Customer Support

What do I need to sell in Europe? VSO-Software.fr - FAQs

What do I need to sell in Europe? VSO-Software.fr - Tutorials

What do I need to sell in Europe? VSO-Software.fr - eMail

What do I need to sell in Europe? Other things to consider PRICING : US $ for the US ; Euros for Europe Online : to have an eCommerce provider that allows to set prices in different currencies Channel : to have a price list in Euros

PRICING :

US $ for the US ; Euros for Europe

Online : to have an eCommerce provider that allows to set prices in different currencies

Channel : to have a price list in Euros

What do I need to sell in Europe? Other things to consider LEGAL VAT EU countries for direct sales : The end user will pay their country VAT Should register in an EU country for VAT reimbursement Non -EU countries: VAT does not applies. Trade mark Register in EU to protect the mark (should be used in a 5 years period of time)

LEGAL

VAT

EU countries for direct sales :

The end user will pay their country VAT

Should register in an EU country for VAT reimbursement

Non -EU countries: VAT does not applies.

Trade mark

Register in EU to protect the mark (should be used in a 5 years period of time)

Start selling in Europe Make your product available online What you have to consider Cultural differences eCommerce is available in Europe from 1998 since in the US is available since 11 August 1994 (according to the University of North Carolina - the first retail Internet transaction probably took place then). More and different payment methods available Local online promotion

What you have to consider

Cultural differences

eCommerce is available in Europe from 1998 since in the US is available since 11 August 1994 (according to the University of North Carolina - the first retail Internet transaction probably took place then).

More and different payment methods available

Local online promotion

Your partner will: Generate revenue for you Market your product and generate brand awareness Local support and help you with the localization What you have to do: Generate an attractive partnership program Look for the right partner (or at least A partner) Support your partner actively Start selling in Europe Setting up a Distribution Channel

Your partner will:

Generate revenue for you

Market your product and generate brand awareness

Local support and help you with the localization

What you have to do:

Generate an attractive partnership program

Look for the right partner (or at least A partner)

Support your partner actively

Start selling in Europe Partnership Program Commercial conditions Partnership levels & Reseller discounts Payment terms Partner Training & Support Online Face to face Marketing coop-fund and joint marketing activities

Commercial conditions

Partnership levels & Reseller discounts

Payment terms

Partner Training & Support

Online

Face to face

Marketing coop-fund and joint marketing activities

Start selling in Europe Look for Partners Where and how to look for partners: Choose a country, if you have a reason to, or go generally Local IT events: conferences, trade shows Referral from your business partners or clients Online – sign up

Where and how to look for partners:

Choose a country, if you have a reason to, or go generally

Local IT events: conferences, trade shows

Referral from your business partners or clients

Online – sign up

Start selling in Europe DrWeb.com - Partnership Program

Start selling in Europe DrWeb.com – Look for Partners

Conclusions Going to Europe is not very expensive You can go by yourself, but it is more profitable and easy with a partner Balance your revenue Minimize the business risk More attractive for venture capital

Going to Europe is not very expensive

You can go by yourself, but it is more profitable and easy with a partner

Balance your revenue

Minimize the business risk

More attractive for venture capital

Thank you! Questions? Carmen Sebe CEO – Avangate B.V. [email_address]

Thank you!

Questions?

Carmen Sebe

CEO – Avangate B.V.

[email_address]