` The Market Research Business Presented by: Chris Sullivan Vice-President, Finance & Operations IDC (Canada) Ltd. 16 January 2008

My background After a year at the University of Western Ontario Computing Centre, 8 years with a small Canadian company, mostly managing software development Started as a timesharing operation in mid-70’s Developed communications gear for own use in 1977 Marketed it as a product in 1978, the year I joined (now 22 employees) Won huge contract with Ford Motor Credit in 1982 Went public in about 1983 at $7 Minority interest taken by Rogers Cable Opened offices worldwide, then closed them (around 140 employees) Stock fell to $1.50 Developed technology for Home Shopping, major investment by JC Penney I left the company (July 1986) Stock rose to $100 Sold off the communications division Home Shopping Pilot failed Stock fell to $1.50 Sold off its technology Delisted from TSE (now TSX)

After a year at the University of Western Ontario Computing Centre, 8 years with a small Canadian company, mostly managing software development

Started as a timesharing operation in mid-70’s

Developed communications gear for own use in 1977

Marketed it as a product in 1978, the year I joined (now 22 employees)

Won huge contract with Ford Motor Credit in 1982

Went public in about 1983 at $7

Minority interest taken by Rogers Cable

Opened offices worldwide, then closed them (around 140 employees)

Stock fell to $1.50

Developed technology for Home Shopping, major investment by JC Penney

I left the company (July 1986)

Stock rose to $100

Sold off the communications division

Home Shopping Pilot failed

Stock fell to $1.50

Sold off its technology

Delisted from TSE (now TSX)

My background, cont’d Went to Digital Equipment Corporation in 1986 Stock at $100, business growing fast, huge margins, hot products and hiring boom Chased IBM into the enterprise while Sun Microsystems chipped away at the low end Raised VMS prices exploiting demand inelasticity of proprietary operating system making excellent short term profits. Demand turned out to be elastic in long term as more and more customers adopted UNIX Shrank from 140,000 employees to 50,000 Recovered slightly in late 90’s, then bought by Compaq in 1998

Went to Digital Equipment Corporation in 1986

Stock at $100, business growing fast, huge margins, hot products and hiring boom

Chased IBM into the enterprise while Sun Microsystems chipped away at the low end

Raised VMS prices exploiting demand inelasticity of proprietary operating system making excellent short term profits.

Demand turned out to be elastic in long term as more and more customers adopted UNIX

Shrank from 140,000 employees to 50,000

Recovered slightly in late 90’s, then bought by Compaq in 1998

My background, cont’d Compaq Canada Bought Extreme Networks, Tandem, Digital Product lines had nice architectural fit, but sales approach was totally different I left for IDC Growth slowed, bought by HP IDC Canada Started in Global partnering and alliances practice, based in Toronto, mostly doing workshops in various parts of the world Moved to manage marketing and sales operations Moved to manage Finance, HR, IT, Research Operations, Research & Analysis, and the small vendor program called the “Market Acceleration Program (MAP)”

Compaq Canada

Bought Extreme Networks, Tandem, Digital

Product lines had nice architectural fit, but sales approach was totally different

I left for IDC

Growth slowed, bought by HP

IDC Canada

Started in Global partnering and alliances practice, based in Toronto, mostly doing workshops in various parts of the world

Moved to manage marketing and sales operations

Moved to manage Finance, HR, IT, Research Operations, Research & Analysis, and the small vendor program called the “Market Acceleration Program (MAP)”

About my company IDC analysts in 50 countries around the world Over 850 analysts providing a global information network

IDC analysts in 50 countries around the world

Over 850 analysts providing a global information network

Researching the researchers Top 6 companies in IT Market Research *Source: Outsell’s Publishers and Information Providers Database, 2006 1.2% -6.5% 0.0% 29 Yankee 1.4% NA 22.8% 33 Ovum 1.9% -2.7% 10.0% 44 AMR 6.6% -0.9% 10.7% 153 Forrester 11.4% 8.8% 14.2% 266 IDC 42.3% 0.7% 10.6% 989 Gartner Est. 2005 Market Share Est. 2001 – 2005 CAGR Est. 2005 Growth Est. 2005 Revenue ($M)

Key Trends in Emerging Markets – Central Europe, Middle East, Africa EU Enlargement The 2004 enlargement is still impacting IT markets in new member states; 2007 saw new additions to the union. Russian Juggernaut High oil prices, manufacturing, and other extraction industries have turned Russia into an economic powerhouse. Transition in the Middle East Economic liberalization, development, and modernization are opening IT and telecom markets and driving investment as oil revenue floods the region. Africa Enters the Information Age IT and communications are key to economic development. Low installed bases and a move toward mobility are creating significant opportunities.

Key Trends in Emerging Markets – Asia-Pacific Emerging Asia* Approaches BRIC-Like Performance A US$15.6-billion IT market containing almost 800 million people, with IT spending growing 80% over its market size in 2005. (*comprising Pakistan, Sri Lanka, Bangladesh, Thailand, Malaysia, Vietnam, Indonesia, and the Philippines) China Goes Online Over 150 million Internet users will drive rapid developments in the Internet market and create new IT and telecom opportunities. Unstoppable Growth in China & India Benefits Surrounding Economies Increased investments in China and India have sent costs spiraling in these markets, which benefits economies like Pakistan and the Philippines, as companies realize greater cost benefits there.

Key Trends in Emerging Markets – Latin America Stable Economic Environment With historically low interest rates, a weak U.S. dollar, more financing options available, and low inflation, Latin American consumers have high confidence leading to an explosion in the consumer electronics markets. Brazil: Growth Acceleration Program Measures to stimulate investment in infrastructure and tax breaks for targeted sectors will help accelerate GDP growth beyond the country’s sluggish long-term average, increasing IT spending in the country. Mexico: New rules for Government IT Spending Through the Austerity Decree the federal government declared its preference to contract IT services instead of purchasing hardware or software that eventually goes out of date.

Analyze The Future How We Analyze The Future Supply-Side Shipments WW Industry/Pop Demographics WW Standard Definitions & Taxonomies WW Forecast Methodologies WW Market Models WW Customer Behavior (Global Surveys) WW Technology Adoption (Panels/Surveys WW) Analyst Insight (50 Countries WW)

Analyze The Future

What is marketing? Brand image Qualified leads Media Relations Collateral Pricing Events

Which is the more appropriate measurement? Time First time buyers Revenue Innovators Early Majority Late Majority Laggards Early Adopters 1 2 3 4 “ early market” 1 S.D. 1 S.D.

Key Life-Cycle Questions Voice of the customer asks… © Frank Lynn & Associates, IDC 1 “ Will this work for me ? in my environment?” “ Can you make my life easy when I buy your product?” 3 4 “ Can you reduce my buying costs?” “ Can you solve my problem?” 2

“ Can you make my life easy when I buy your product?”

“ Can you reduce my buying costs?”

“ Can you solve my problem?”

Buyer motivation © IDC 1 “ I will work with vendors of bleeding edge technologies, to fundamentally reshape my business or my competitive environment” “ I will use stable but not yet common technology to develop a competitive advantage 2 “ I will deploy proven technology to deliver services expected by my customers” 3 4 “ I will buy commodity technology to cut costs”

“ I will use stable but not yet common technology to develop a competitive advantage

“ I will deploy proven technology to deliver services expected by my customers”

“ I will buy commodity technology to cut costs”

For Example

Co-Specialization Alliance Objectives Time © IDC Endorsement, global support and financial resources, MDF Endorsement, global support and financial resources, OEM agreements Endorsements, embedded OEM, access channels & integrators, availability of resources Product capability (technology alliances) Support, MDF MDF, product support, regional coverage Pipeline sharing, access to new markets (vertical, solutions, etc.) Differentiation Packaging and bundling Packaging and bundling Access to large & complex deals Technology revitalization, protection from obsolescence Packaging and bundling Packaging and bundling Access to large & complex deals protection from obsolescence; marketing cachet 1 2 3 4 1 2 3 4 Vendor A Vendor B

Why does the world need market intelligence? You can’t manage what you can’t measure G. Edwards Deming Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. Albert Einstein

You can’t manage what you can’t measure

G. Edwards Deming

Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.

Albert Einstein

Why is this important? WW Installed Base - Millions

The new reality for marketers “Today, marketers are in a ‘high accountability’ environment where they are being called to the table — and asked to bring hard numbers with them when they come. Most of us aren't prepared for this. “The lack of [marketing] accountability makes it very difficult to track the financial impact of marketing investments. And so marketing becomes abstract to the CEO ... .” Harvard Business Review ("Bringing Customers into the Boardroom , " November 2004) “We’re struggling with how to respond to our executives asking us: ‘What value is marketing adding to the company?..’” IDC Client

“Today, marketers are in a ‘high accountability’ environment where they are being called to the table — and asked to bring hard numbers with them when they come. Most of us aren't prepared for this.

“The lack of [marketing] accountability makes it very difficult to track the financial impact of marketing investments. And so marketing becomes abstract to the CEO ... .”

Harvard Business Review ("Bringing Customers into the Boardroom , " November 2004)

“We’re struggling with how to respond to our executives asking us: ‘What value is marketing adding to the company?..’”

IDC Client

Making use of market research

Estimating market share © Frank Lynn & Associates To estimate Revenue from market share, simply multiply by the total revenue in the market in question. This information is available from market research firms! Hit Rate Market Share Presence Product × × = × Preference

Estimating market share © Frank Lynn & Associates Product line coverage: How much of the market our product targets Form/fit/function/price point equivalency Hit Rate Market Share Presence Product × × = × Preference 50%

Product line coverage:

How much of the market our product targets

Form/fit/function/price point equivalency

Estimating market share For what percentage of the available market do we get to propose our product? What percentage of the time can our product be sold to the end user? Geographic presence Customer segment presence Solution presence © Frank Lynn & Associates Hit Rate Market Share Presence Product × × = × Preference 50% 50%

For what percentage of the available market do we get to propose our product?

What percentage of the time can our product be sold to the end user?

Geographic presence

Customer segment presence

Solution presence

Estimating market share How often is our product offered for sale? What is our share of market within our own partners? © IDC 50% Market Share Hit Rate Presence Product × × = × Preference 50% 50%

Estimating market share © Frank Lynn & Associates How often do we win the sale? 50% Market Share Hit Rate Presence Product × × = × Preference 50% 50% 50% 50%

Estimating market share 6.25% © Frank Lynn & Associates 50% Market Share Hit Rate Presence Product × × = × Preference 50% 50% 50%

Thank You Chris Sullivan [email_address]