Technology / Internet Trends
November 5, 2008
Web 2.0 Summit – San Francisco
mary.meeker@ms.com / www.morganstanley.com/institutional/techresearch
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Outline
• Economy
1. Recession – a long time coming, how long will it last?
2. Technology & Advertising Spending – closely tied to GDP growth
• Technology / Internet
1. Digital Consumer – Undermonetized social networks / video / VoIP
driving powerful usage growth
2. Mobile – Innovation in wireless products / services accelerating
3. Emerging Markets – Pacing next wave of technology adoption
• Closing Thoughts
1. Companies with cogent business models that provide consumer
value should survive / thrive – consumers need value more than
they have needed it in a long time…
2

Economy
1) Recession – a long time coming, how long will it last?
1 year? 5 years?
3

Roots of Economic Challenge?
10+ Years of Rising Home Ownership + Declining Interest / Savings Rates
U.S. Homeownership Rates vs. Interest Rates vs. Personal Savings Rates, 1965-2008
70% June 2004: US home ownership = 73MM
20%
68%
16%
U.S. Interest Rate & Personal Savings Rate
U.S. Home Ownership Rate
66% January 1993: HUD began promoting
broader home ownership. US home
ownership = 62MM
12%
64%
8%
62%
4%
60%
58% 0%
65
67
69
71
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
U.S. Home Ownership Rate
U.S. Interest Rate U.S. Home Ownership Rate 30-year (1965-1995) Trendline
U.S. Personal Savings Rate
Note: HUD is Department of Housing & Urban Development.
Interest rate is the overnight federal funds rate.
4
Source: Federal Reserve, DOC Bureau of Economic Analysis (BEA), Morgan Stanley Research.

10 Years of Rising Home Prices – Up ~2x
U.S. Real Home Price & Building Cost Indexes, % Change 1965 - 2007
90%
80%
70%
60%
% Change From 1965 Level
50%
40%
30%
20%
10%
0%
-10%
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
U.S. Real Home Price Index U.S. Real Building Cost Index
Note: Real home prices & building costs are adjusted for inflation; Source: Robert Shiller. 5

USA Total Debt = Up ~2x Over 30 Years to 3x GDP
Foreign Ownership Ramped to ~60% US Treasuries – Helped Pace ‘Easy Money’ + Leverage
300% 70%
Foreign Ownership of U.S. Treasuries, % of Total
275% 60%
250%
U.S. Total Debt, % of GDP
50%
225%
Market Cap
40%
200%
30%
175%
20%
150%
125% 10%
100% 0%
1965 1970 1975 1980 1985 1990 1995 2000 2005
U.S. Total Debt, % of GDP
Foreign Ownership of US Treasuries, % of Total Market Capitalization
Source: Bridgewater, total debt include both public and private debt, US government debt = ~65% GDP, Morgan Stanley Research. 6

-0.3% Q/Q US GDP Growth in CQ3 / Consumer Spending Fell 3.1%
Biggest Q/Q Decline Since 1980 – October < September < August < July
U.S. Real GDP vs. Real Personal Consumption Expenditures (PCE)
Q/Q % Change, 2005-2008
6%
5%
4%
3%
Q/Q Growth Rates
2%
1%
0%
CQ1:05 CQ3:05 CQ1:06 CQ3:06 CQ1:07 CQ3:07 CQ1:08 CQ3:08
-1%
-2%
-3%
U.S. Real GDP Q/Q Growth U.S. Real PCE Q/Q Growth
Note, Real GDP and real PCE are inflation-adjusted, Real PCE is seasonally adjusted.
CQ3:08 data is “advanced,” may differ from final reported #s. 7
Source: BEA, Morgan Stanley Research.

Global GDP Growth Forecasts Have Downward Bias –
Decelerating / Negative Growth for 2008E + 2009E
Difference from
IMF Forecasts, 10/08 7/08 IMF Forecasts
Country / Region 2006 2007 2008E 2009E 2008E 2009E
USA 2.8% 2.0% 1.6% 0.1% 0.3% -0.7%
Euro zone 2.8 2.6 1.3 0.2 -0.4 -1.0
UK 2.8 3.0 1.0 -0.1 -0.8 -1.8
China 11.6 11.9 9.7 9.3 -- -0.6
India 9.8 9.3 7.9 6.9 -0.1 -1.1
Russia 7.4 8.1 7.0 5.5 -0.7 -1.8
Brazil 3.8 5.4 5.2 3.5 0.3 -0.5
Developed Markets(1) 3.0 2.6 1.5 0.5 -0.2 -0.9
Emerging Markets(2) 7.9 8.0 6.9 6.1 -- -0.7
World 5.1 5.0 3.9 3.0 -0.2 -0.9
Note: (1) IMF equivalent of “advanced economies”; (2) IMF equivalent of “emerging and developing economies”;
Source: International Monetary Fund (IMF) World Economic Outlook (WEO) database, 10/08. Morgan Stanley Research.
8

Stock Market = Leading Indicator of Economic Growth
China off 71% vs. 12-Month Peak, Russia -67% / Japan -50% / Oil -53% / S&P500 -36%
600 2006 2007 2008
500
Indexed Value (base = 100)
400
300
200
100
0
10/05 1/06 4/06 7/06 10/06 1/07 4/07 7/07 10/07 1/08 4/08 7/08 10/08
S&P 500 NASDAQ Composite Index
China Shanghai SE Composite India SENSEX
Russia RTS Light Crude Oil - Continuous Contract
Gold - Continuous Contract Japan Nikkei 225
Note: all indices start at a value of 100 on 10/31/05; data as of 10/31/08; Source: FactSet. 9

S&P500 –
Your Customers Have Taken Big Hits
Total Mkt % Change
Cap ($B) 2008 Peak to
S&P Sector 10/31/08 2006 2007 YTD Current (1) Market Cap Leaders
Financials 1,314 16% -20% -41% -53% JPMorgan, Bank of America
Consumer Discretionary 722 9 -18 -35 -46 McDonald's, Walt Disney
Telecom Services 281 32 -12 -39 -44 AT&T, Verizon
Industrials 930 8 7 -36 -41 GE, United Technologies
Information Technology 1,393 11 12 -37 -40 Microsoft, IBM
Materials 274 10 14 -37 -40 Monsanto, DuPont
Utilities 325 17 6 -29 -33 Exelon, Southern
Energy 1,118 14 36 -33 -30 Exxon, Chevron
Health Care 1,192 1 1 -23 -27 Johnson & Johnson, Pfizer
Consumer Staples 1,218 8 10 -14 -13 Wal-Mart, Procter & Gamble
S&P 500 Total (2) 8,767 11% 1% -33% -38%
Note: (1) % Change from S&P 500 peak of 10/9/07 to 10/31/08;
(2) S&P 500 total market cap and % change, different from SP50 index price & % change.
Source: Bloomberg, Morgan Stanley Research. 10

Economy
2) Technology + Advertising Spending –
closely tied to GDP growth…also, remembering 2000-2003
11

Retail Sales Growth Rates Slowing
Retail Sales vs. Adjusted E-Commerce Sales
Y/Y Growth, CQ3:01 - CQ2:08
40%
30%
Y/Y Growth
20%
10%
0%
CQ3:01 CQ3:02 CQ3:03 CQ3:04 CQ3:05 CQ3:06 CQ3:07
US Adjusted Retail E-Commerce Sales US Total Retail Sales
Note: E-Commerce adjusted for eBay by adding eBay US gross merchandise volume and subtracting eBay US transaction revenue;
Source: US Dept. of Commerce (CQ2:08), Morgan Stanley Research. 12

Advertising Growth Rates Slowing
U.S. Advertising Spending by Medium, Y/Y % Change
25%
20%
15%
10%
Y/Y Growth Rate
5%
0%
-5%
-10%
-15%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
Overall Cable+Broadcast TV Magazines
Newspapers Internet* Outdoor
Radio
*Note: Internet is adjusted to include search ad spending - TNS excludes search revenue from Internet ad spending, thus
unadjusted data may under-report online ad spending / growth. Source: TNS, IAB, Morgan Stanley Research. 13

Advertising Spending & GDP Growth =
High Correlation of 81%
U.S. Advertising Spending Y/Y Growth vs. Real GDP Y/Y Growth, 1986 – 2007
20%
15%
U.S. Ad Spend vs. GDP, Y/Y Growth
10%
Median Y/Y Ad Spend
Growth Rate = 5%
5%
0%
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
-5%
1991 Ad Growth = -2% 2001 Ad Growth = -12%
-10%
U.S. Real GDP Y/Y Growth U.S. Ad Spend Y/Y Growth
Source: Zenith Optimedia, IMF, Morgan Stanley Research. 14

Simple Regression Analysis:
1) Ad spend growth 3x sensitivity of real GDP growth
2) If GDP flat (current MS forecast), ad spend could decline ~4% Y/Y
U.S. Advertising Spending vs. Real GDP y = 3.0263x – 0.0394
20% 1986 – 2007 R2 = 0.6553
y – ad spend growth
x – real GDP growth
15%
Ad Spend Y/Y Growth
If real GDP Ad spend
Y/Y growth Y/Y growth
10% is… could be…
5% 11%
4 8
5%
3 5
2 2
1 -1
0%
0 -4
-1% 0% 1% 2% 3% 4% 5% -1 -7
-2 -10
-5% -3 -13
Real GDP Y/Y Growth
-4 -16
-5 -19
-10%
U.S. Ad Spend vs. Real GDP Y/Y Growth
Linear Regression Line (y = 3.0263x - 0.0394 R^2 = 0.6553)
Note: R2 of 0.655 indicates that correlation is not perfect (n=22), and correlation does not equal causation.
Source: Zenith Optimedia, IMF, Morgan Stanley Research. 15

Online Ad Spending Bad News =
From 2000 to 2002, USA Spending Fell 27%
$25,000 U.S. Online Advertising Spending & Y/Y Growth Rates, 1996-2007 250%
$21,206
200%
$20,000
U.S. Online Ad Spending ($MM)
$16,879
150%
Y/Y Growth Rate
$15,000
$12,542
100%
$10,000 $9,475
$8,225
$7,134 $7,267 50%
$6,009
$4,621
$5,000
0%
$1,921
$907
$267
$0 -50%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
U.S. Internet Ad Spending Y/Y Growth Rate
Source: IAB, Morgan Stanley Research. 16

Online Ad Spending Good News = Now, Less Ad ‘Over Spending’ vs.
Trend Line However, Q/Q Pattern Looks a Bit Like Early 2001
U.S. Online Advertising Spending & Y/Y Growth Rates, CQ1:96-CQ2:08
$6,000 300%
U.S. Online Spending & Search Revenue ($MM)
250%
$5,000
Total U.S. Online Spend Y/Y Growth
200%
$4,000
150%
$3,000
100%
$2,000
50%
$1,000
0%
$0 -50%
3/96 3/97 3/98 3/99 3/00 3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08
U.S. Online Ad Spending Spending on Search
Y/Y Growth Online Ad Spend Polynomial Trendline
Source: IAB, Morgan Stanley Research. 17

Tech Spending 2000-2003 – 2 Years of Negative / Flat Growth –
-1% in 2001 / 0% in 2002 / +13% in 2003
2500 Global Technology Sector Revenue & Y/Y Growth, 1998-2008E 30%
$2,261
$2,173
25%
$1,959
2000
Average Y/Y $1,789
$1,708 20%
Growth = 10%
$1,484
Revenue ($B's)
1500
Y/Y Growth
$1,331 $1,311 $1,313 15%
$1,087
10%
1000 $911
5%
500
0%
0 -5%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Total Revenue Y/Y Growth
Note: Revenue and growth rates compiled from 570 publically traded global technology companies as of 10/30/08.
Certain data points unavailable in earlier periods.
18
Source: FactSet, Morgan Stanley Research.

5 Quarters of Negative Q/Q Growth, Then 5 Quarters of Flat / Modest Growth –
Trough Y/Y Decline of 13% in CQ4:01, Current CH2:08 Forecasts Show Faster
Rate of Decline than CH2:01
Global Technology Sector Revenue & Y/Y Growth, 1998-2008E
700 30%
25%
600
Average Y/Y
Growth = 10% 20%
500
15%
Revenue ( $B's)
Y/Y Growth (%)
400 10%
300 5%
0%
200
-5%
100
-10%
0 -15%
CQ3:08E
CQ4:08E
CQ1:98
CQ1:99
CQ1:00
CQ1:01
CQ1:02
CQ1:03
CQ1:04
CQ1:05
CQ1:06
CQ1:07
CQ1:08
Total Revenue Y/Y Growth
Note: Revenue and growth rates compiled from 570 publically traded global technology companies as of 10/30/08.
Certain data points unavailable in earlier periods.
19
Source: FactSet, Morgan Stanley Research.

Technology / Internet
1) Digital Consumer –
Undermonetized social networks / video / VoIP
driving powerful usage growth – opportunity for innovative
marketers to capitalize on low CPMs
20

YouTube + Facebook Gained 500 Basis Points of Relative
Share in Past 2+ Years While Yahoo! + MSN Lost Share
Global Minute Share
7%
6%
% Share of Global Minutes
5%
4%
3%
2%
1%
0%
6/06 9/06 12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08
Yahoo.com Msn.com YouTube.com
Facebook.com Google.com
Source: ComScore Global 9/08, Morgan Stanley Research. 21

Undermonetized Internet Usage Growth Drivers –
Video + Social Networking + VoIP + Payments
Users Y/Y Growth Comments
#3 site in global minutes; 5B views of online
video in the US (Americans watched a total of
12.6B videos / 591MM hours online in 9/08);
329MM(1) +52% #2 global search engine – search queries on
YouTube reached 9.2B in 8/08 (+123% Y/Y),
surpassing Yahoo! sites with 8.5B searches
(+2% Y/Y).(1,2,3,6)
#5 site in global minutes; 120MM+ active
users; 50%+ users outside of college; 24K+
161MM(1) +119%
applications + 95% of Facebook members
have used at least one(1,4)
If ‘carrier’ then #2 behind China Mobile; $1.55
annualized revenue per registered user (-3%
370MM(5) +51%
Y/Y); 2.2B Skype Out minutes (+54% Y/Y);
16.0B Skype-to-Skype minutes (+63% Y/Y)(5)
$15B total payment volume (TPV), +28% Y/Y,
higher than eBay’s global gross merchandise
65MM(5) +19%
volume; Off-eBay payment volume +49% Y/Y
to 51% of TPV(5)
Source: (1) comScore global 9/08; (2) comScore Video Metrix 8/08; (3) YouTube; (4) Facebook;
(5) eBay CQ3, (6) comScore qSearch, 8/08. Morgan Stanley Research. 22

Ad Supply > Ad Demand –
Ad Impressions Growing Rapidly…CPMs Declining
U.S. Banner Ad Impressions & CPM, U.S. Rich Media Impressions & CPM,
2005-2007 2005-2007
1,000,000 $3.50 35,000 $40
900,000 $35
$3.00 30,000
800,000
$30
700,000 $2.50 25,000
Impressions (MM)
Impressions (MM)
$25
600,000 20,000
$2.00
CPM
CPM
500,000 $20
$1.50 15,000
400,000 $15
300,000 $1.00 10,000
$10
200,000
$0.50 5,000 $5
100,000
0 $0.00 0 $0
05
05
06
06
07
07
05
05
06
06
07
07
3/
9/
3/
9/
3/
9/
3/
9/
3/
9/
3/
9/
Banner Ads Impressions Banner Ads CPM Rich Media Impressions Rich Media CPM
Source: Internet Advertising Bureau (IAB), Nielsen NetRatings, Morgan Stanley Research. 23

Technology / Internet
2) Mobile –
Innovation in wireless products / services accelerating – changes
should create + destroy significant wealth
24

Mobile –
A New Computing Cycle With Game Changer Products with
Extraordinary Ease-of-Use
Nintendo Wii Apple iPhone 3G
30MM consoles since 11/06 launch 1MM units sold in three days (10MM
– raised bar with motion sensors + apps downloaded over the same
playability period); mobile browser market share
already 50% > Windows Mobile –
raised bar with ease-of-use +
functionality
Microsoft Xbox 360 3 Skype Phone
12MM Xbox Live members (+100% 500K+ units in < 200 days. Leverage
Y/Y) since 11/02 launch – raised large Skype user base of 370MM
bar with online playability (+51%Y/Y) + create a low-cost web-
enabled VoIP, social networking, digital
presence phone. INQ1 next…
Amazon.com Kindle Garmin + TomTom + Dash PND
With free EV-DO + 190K titles + 18MM+ units sold in 2007 (+125% Y/Y)
newspaper / magazine / blog – lower price points + innovative
subscriptions. Amazon may do with features such as spoken street names
books what Apple did with tunes. have driven NA / Western Europe PND
Kindle accounts for 12% of penetration of 11% in 2007
AMZN’s sales for titles available on
Kindle
Source: Nintendo (CQ2:08), Microsoft, Amazon.com, Apple, TechCrunch estimates, eBay (CQ3),
Garmin, TomTom, Net Applications 12/07, Morgan Stanley Research. 25

Notebooks Retrofitting to Cloud Via 3G –
PCs Retrofitted to Internet Via Dial-Up ~1995 Deja Vu?!
• Global cellular modem to rise from 5MM in 2006E to 68MM+
shipments in 2012E (53% CAGR) - ABI Research, 5/07
• 64% of new Austrian broadband subs used cellular modems, CQ2:07
• 66MM global WiFi unit shipments, C2007E - Synergy Research
• 13MM cellular modem users in USA, CQ2:08E - Nielsen Mobile
Source: ABI Research (Cellular modem shipments includes PC Cards / ExpressCards, USB modems, internal modems
+ 3G/Wi-Fi routers); Synergy Research Group (Access Points, Wireless Gateways / Routers, Wireless Client Adaptors,
VoWLAN phones); Nielsen Mobile. 26

Opera Mobile Web Browser Illustrates Mobile Internet Growth -
~17MM Users (+357% Y/Y), 4.1B Page Views (+337% Y/Y), 8/08
A full web experience + 50% faster Pages transcoded per month
− Remote Server first pre-
processes requested web
pages
− Web content is then
compressed to reduce the
size of data transfer
− Fully-rendered web pages
sent to your phone
− Advantage: full web rendering
and faster browsing on
simpler phones
2006 2007 2008
Source: Opera Software, Morgan Stanley Research. 27

Mobile Internet Evolving Very Quickly
Date Important Announcements in the Mobile Industry
10/01/08 AT&T announces reorganization to better align broadband, TV and mobile services for consumers.
10/01/08 Apple drops the non-disclosure agreement (NDA) for iPhone application developers.
9/30/08 Nokia to acquire leading consumer email and instant messaging provider OZ Communications.
9/29/08 Nokia’s Chief Technology Officer Bob Iannucci resigns.
9/28/08 Motorola to build a 350-person Android team.
9/24/08 Google, T-Mobile and HTC launch G1, the first phone based on Google’s Android open mobile platform.
8/04/08 Motorola hires Qualcomm’s Sanjay Jha as co-chief executive to oversee the mobile devices division.
7/23/08 Nokia, Qualcomm settle patent dispute.
7/11/08 Apple and AT&T launch iPhone 3G in the U.S.
6/24/08 Nokia acquires Symbian Limited and establishes the Symbian Foundation.
5/12/08 RIM introduces the BlackBerry Bold smartphone.
5/12/08 RIM, RBC and Thomson Reuters to anchor a $150MM BlackBerry Partner Fund focused on developing
mobile applications.
5/08/08 Apple, KPCB launches $100MM iFund venture capital pool to support iPhone / iPod Touch application
development.
Source: Nokia, AT&T, Apple, Motorola, Google, T-Mobile, RIM, as of 10/01/08. Morgan Stanley Research. 28

Symbian Dominates Smartphones But Losing Share –
USA Could Gain Lead in Mobile Internet Innovation!?
35
Quarterly Worldwide Smartphone Sales by OS Vendor
30
Units Shipped (MM)
25
20
15
10
5
0
CQ1:05 CQ2:05 CQ3:05 CQ4:05 CQ1:06 CQ2:06 CQ3:06 CQ4:06 CQ1:07 CQ2:07 CQ3:07
Symbian Linux Access Microsoft RIM Apple Others
CQ3:07 Dist.of Smartphone Sales
100%
80%
60%
40%
20%
0%
EMEA Japan China North America ROW
Source: Canalys, Symbian, 2007. 29

Still Early in 3G+ Ramp But…
2010 Should Be Inflection Point @ ~22% of Subscribers
Global 3G+ Penetration
5 40%
% of Total Wireless Subscribers
4
30%
Subscribers (B)
3
20%
2
10%
1
0 0%
2007E 2008E 2009E 2010E 2011E 2012E
2.5G and Below Subscriptions 3G and Above Subscriptions % 3G and Above Penetration
Note: 2.5G can be compared to ‘narrowband’ Internet access, while 3G can be compared to ‘broadband ’ Internet access.
Source: Ovum, Morgan Stanley Research. 30

Asia / Europe Lead in Mobile $s –
Mobile Data 25% of Carrier Revenue in Asia vs. 18% in US, 2007
1,600
1,400 30%
25%
25
Subscribers (MM)
1,200
20%
1,000 20 18%
800
15
600
10
400
200 5
0
Mobile Subscribers Mobile Data Subscribers Mobile Data as % of Revenue
(leading carrier in region)
Asia Pacific Europe LatAm ROW N. America
Source: ITU, Informa, Company Reports. Includes SMS; (1) Leading carriers by wireless subscribers in Asia
Pacific, Europe, and North America are: China Mobile, Vodafone (Europe only), and AT&T, respectively. 31

Japan Leads in Mobile Internet Usage –
Mobile Nearly Matches PC
Japan Internet Users by Access Device
100%
90%
81% 81% 83%
% of Japan Internet Users
80%
73%
70%
58%
60%
50%
40%
40%
30%
20%
10%
0%
2002 2003 2004 2005 2006 2007
% using PC % using Mobile
Source: Japan Ministry of Internal Affairs and Communication. 32

TV + Internet + Mobile (CBS) –
Complementary Platforms
2007 Football Season
2007 Football Season
Thursday
CBS Television
Kickoff NFL
CBSSports.com
Sundays
CBS Mobile Patriots vs.
Colts
• Plasma Screen TV – HD Quality Event
• PC Screen – Fantasy, Stats, and Injury Reports
• Mobile Screen – Highlights, Scores
Source: CBS Sports Interactive. 33

Technology / Internet
3) Emerging Markets –
Pacing next wave of technology adoption – leading players in
many emerging markets aren’t the usual suspects…
34

Broadband + Mobile + Internet =
Especially High Global Growers
2002 Y/Y 2007 Y/Y Global 2007 Net
Category Growth Rate Growth Rate Market Size Additions
Broadband Subscribers 78% 23% 349MM 64MM
Mobile Subscribers 20 20 3,319MM 563MM
(1)
Internet Users 26 16 1,352MM 182MM
(2)
Financial Cards 12 11 8,016MM 804MM
Installed PCs 12 8 900MM 66MM
Cable / Satellite TV Subscriptions 8 6 761MM 40MM
GDP per Capita 2 3 22K 1K
Population 2 1 6,501MM 77MM
Telephone Lines 5 -0 1,277MM -4MM
Note: (1) Include mobile Internet users, based on ITU’s compilation of country reports, surveys and estimates;
(2) Includes credit / debit / ATM / charge cards in circulation; Source: Morgan Stanley Research. 35

Top 10 Emerging Markets to Surpass Top 10 Developed
Markets in Internet Users in 2008
Top 10 Emerging Markets vs. Top 10 Developed Markets – Internet Users
700 80%
600 70%
60%
Internet Users (MM)
500
Y/Y Growth
50%
400
40%
300
30%
200
20%
100 10%
0 0%
2001 2002 2003 2004 2005 2006 2007 2008E
Top 10 Emerging Markets Top 10 Developed Markets
Top 10 EM Y/Y Growth Top 10 DM Y/Y Growth
Note: Emerging / developed markets as defined by IMF; Top 10 chosen based on largest GDP.
Top 10 emerging markets: China, India, Russia, Brazil, Mexico, Turkey, Indonesia, Iran, Poland, and Saudi Arabia;
Top 10 developed markets: U.S., Japan, Germany, U.K., France, Italy, Spain, Canada, South Korea, and Australia;
Source: IMF, ITU, Morgan Stanley Research. 36

Internet User Net Additions –
China, Brazil, Pakistan, Columbia, India, Iran, Russia Impressive
2007
Net Internet
Users Added 2007 Penetration
Rank Country (000's) Y/Y Growth Level
1 China 73,000 53% 16%
2 United States 9,800 5 73
3 Brazil 7,400 17 26
4 Pakistan 5,500 46 11
5 Colombia 5,395 80 25
6 India 5,000 7 7
7 Iran 5,000 28 32
8 Russia 4,311 17 21
9 Germany 3,900 10 52
10 France 3,553 12 55
11 Vietnam 3,188 22 21
12 Canada 3,000 12 85
13 Egypt 2,620 44 12
14 Indonesia 2,424 23 6
15 United Kingdom 2,400 6 66
16 Mexico 2,248 11 22
17 Thailand 2,003 18 20
18 Nigeria 2,000 25 7
19 Poland 1,915 14 42
20 Venezuela 1,580 38 21
Note: Penetration is per person. Source: ITU, Morgan Stanley Research. 37

Mobile Subscriber Net Additions –
Pakistan = 226% more than USA, Indonesia = 33% more than USA, Iran just 5% less than USA
2007 Net
Mobile Subs 2007 Penetration
Rank Country Added (000's) Y/Y Growth Level(1)
1 China 86,228 19% 41%
2 India 67,570 41 21
3 Pakistan 44,346 129 50
4 Brazil 21,062 21 64
5 Russia 19,326 13 120
6 Indonesia 18,032 28 36
7 United States 13,596 6 85
8 Iran 12,910 77 42
9 Egypt 12,046 67 41
10 Germany 11,499 13 118
11 Mexico 11,237 20 65
12 Thailand 10,654 26 78
13 Turkey 9,313 18 90
14 Argentina 8,891 28 103
15 Saudi Arabia 8,718 44 117
16 Vietnam 8,225 53 28
17 Nigeria 8,073 25 28
18 Philippines 7,306 17 57
19 Peru 6,645 76 55
20 Algeria 6,565 31 80
Note: (1) Penetration is per person; mobile subscribers include all active SIM card subscriptions; people in many countries outside
of the US use more than one SIM cards on a regular basis, which may results in greater than 100% penetration levels.
38
Source: Morgan Stanley Research.

Closing Thoughts
1) Companies with cogent business models that provide
consumer value should survive / thrive – consumers need
value more than they have needed it in a long time…and the
Internet should be the best place to find it…
39

Lots of Retail Share to Gain
USA Online Penetration = 6% and Rising
Categories’ Online Penetration of US Retail Market, 2007
>20% 10 - 20% <10%
Computer products 45% Toys / video games 19% Home furnishings 9%
Other event tickets 27% Baby products 19% Cosmetics / fragrances 9%
Books 24% Consumer electronics 18% Sporting goods / apparel 8%
Music / video 24% Office supplies 13% OTC meds / personal care 6%
Gift cards / certificates 21% Flowers / cards 12% Appliances / tools 5%
Jewelry 11% Pet supplies 4%
Apparel / footwear 10% Auto / auto parts 2%
Movie tickets 10% Food / beverage / grocery 1%
Source: The State of Retailing Online 2008 (Forrester Research). 40

Amazon.com Should Continue to Gain Share
High Customer Satisfaction / Recommendation Engine / Impressive Metrics
Amazon.com vs. US Retail Amazon.com
45% (1)
E-Commerce Sales Key Operating Metrics
40%
CQ4:07 CQ1:08 CQ2:08 CQ3:08
35%
Revenue $5,673 $4,135 $4,063 $4,264
30% Y/Y Growth 42% 37% 41% 31%
Y/Y Growth
25% Active Customers 76 79 82 85
~27ppts
20% Y/Y Growth 19% 19% 18% 17%
TTM Revenue per
$195 $202 $210 $215
15% Active Customer
Y/Y Growth 17% 17% 19% 18%
10%
Total Units 241 196 190 203
5%
Y/Y Growth 33% 31% 32% 30%
0% (All metrics in MMs, except for TTM Revenue per Active Customer)
CQ2:02 CQ2:03 CQ2:04 CQ2:05 CQ2:06 CQ2:07 CQ2:08
US Adjusted Retail E-Commerce Sales
Amazon.com North America Revenue
US Total Retail Sales
(1) Adjusted for eBay by adding eBay US gross merchandise volume and subtracting eBay US transaction revenue;
Source: Amazon.com (CQ2:08), US Dept. of Commerce (CQ2:08), Morgan Stanley Research. 41

Lots of Ad Share to Gain
$288 Per Home vs. $818 for Newspapers Implies Upside
2007 Advertising Ad Spending /
Medium Spending ($B) Households (MM) Household ($)
Direct Telephone $110 107 $1,032
Promotions 116 115 1,011
Newspapers 46 56 818
Classifieds 15 56 260
Direct Mail 61 114 532
Broadcast TV 44 112 390
Cable TV 27 80 327
Internet / Online 21 71 288
Radio 20 113 172
Yellow Pages 16 114 141
Outdoor 7 114 63
Total $469 $4,774
Average 47 477
Newspapers include Classifieds. Promotions ($116B) include: incentives ($30B), promotional products ($27B), point-of-
purchase ($19B), specialty printing ($9B), coupons ($7B), premiums ($7B), promotional licensing ($7B), promotional
fulfillment ($6B), product sampling ($2B), and in-store marketing ($2B). Households may use multiple advertising mediums.
Source: PricewaterhouseCoopers, IAB, Jupiter Research, McCann-Erickson, Morgan Stanley Research. 42

Search Should Continue to Become More Important –
34% Y/Y Google Query Growth (CQ3:08)
% of New Online Customers for Online Retailers / Marketing Spend Mix
40%
% Customers acquired from source
35%
30%
30% 27%
20% 18%
13%
11%
9%
10% 7% 6% 7% 6%
5% 4% 4% 3% 4% 4%
2% 2% 2% 1% 1% 1%
N/A N/A N/A
0%
es
g
ls
s
ts
es
g
ls
c
s
s
s
s
ne
tin
sin
ffi
m
ad
ea
ea
ke
lis
og
sit
sit
tra
ra
ke
gi
ta
ld
rti
ld
al
g
er
eb
og
en
ng
in
ps
ar
ve
at
ic
ta
rta
nn
rW
ct
pr
ki
C
m
an
ee
ad
or
on
Ba
po
pe
or
te
lp
ne
rg
Sw
he
ris
w
e
os
ia
ew
O
na
in
gi
et
pa
ot
fil
pr
ffl
en
ln
N
itio
Af
m
on
O
o
cia
co
ch
lt
ad
n
ai
So
ar
tio
Tr
ng
Em
Se
ra
pi
st
op
gi
Sh
re
o-
C
2006 2007
Source: The State of Retailing Online 2007 / 2008 (Forrester Research), comScore global 9/08, Morgan Stanley Research. 43

While CPMs / CPCs May be Under Near-Term Pressure, If Targeting / ROI
Continue to Improve (as they should) There Should Be Long-Term Upside
Estimated CPMs
Source: Yahoo! Investor Presentation, 3/08. 44

Best News =
History Proves That Ads Follow Eyeballs, It Just Takes Time
1996 – Morgan Stanley Global Estimates in ‘The Internet Advertising Report’ 2007 – We’re @
Internet Users:
1.35B(1)
Online Ad
Revenue:
$41B(2)
Ad Revenue
per User:
$30(3)
Note: (1) ITU, Morgan Stanley Research estimate, comScore reports a lower number for global unique visitors due to their sampling method;
(2) ZenithOptimedia; (3) Using comScore’s #s, global online ad revenue per unique user would have been ~$53;
Source: ITU, ZenithOptimedia, Morgan Stanley Research. 45

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Within the last 12 months, Morgan Stanley has received compensation for investment banking services from Dice Holdings, Inc., eBay, GSI COMMERCE.
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Disclosure Section
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50