TelePresence MarketPlace Case Study


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Study on a new SaaS offering: TelePresence MArketPlace as a new ser

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  • I also had the pleasure to lead the team during this 7 months journey, so I’m taking the responsibility to give you a quick summary of how we want to expose the outcomes of our efforts. It’s going to be a team presentation, we thought that we all deserve to stand up and present the content that we individually took care of.
    This is the logic that we want to follow :
    First of all our Exec sponsor and coach will tell you what the STLDP is about, and where we all are coming from, going back over the initial case study definition.
    Then we are going to introduce you the new concept that we came up with, which we are going to explore together from different angles.
    The architecture perspective will tell us more about all components required to support this opportunity
    We then want to tell you what is in our opinion the best direction to follow to pursue the opportunity, as we investigated some segments that we think are going to be highly impacted by this offering.
    At that point we are ready to deep dive into revenue models, not only for Cisco, but for the entire ecosystem that we foresee around the opportunity. In particular we have identified new revenue dimensions for Cisco.
    Then you may want to know how we should organize to pursue the opportunity, and as part of that we will give you an idea of the cost components.
    We will terminate by summarizing of recommendations that came out of the presentation.
    At that point and we can answer all of your questions, and all together discuss how to move forward.
    Does it make sense?
    I leave the stage to Jedd a Gene the have a chance to introduce themselves and explain the origin of all this.
    In particular, I need to thx Gene, our coach, for the total support that he gave us, that was priceless.
  • Our vision, is one where Cisco Telepresence is the number one collaboration tool from Enterprise all the way through to the consumer. We also see the Telepresence unit as a way of delivering new services and deriving new revenue streams for both Cisco and our partners
    We would like to extend the power of collaboration by offering more than a one to one conversation opportunity. By building a TP Marketplace, we can start by bringing consumers and providers together and then build on this to offer even greater services such as applications and advertising.
    We all know that applications, be they telemecicine, distant learning or gaming as examples, will push a whole new level of TP adoption moving forward. Our vision is one where the Cisco MarketPlace is at the heart of all of these new and exciting offerings. For consumers, it is a way of connecting to services, for providers, it is a way of delivering services and for developers, it is a consistent platform and a way to reach this new market.
    If Cisco can be the glue that binds consumers and providers together, then we can leverage this position to derive new revenue streams, be they a percentage of the providers offering or by offering targeted advertising.
    The key to success is the ability to connect the consumer to the service providers be they large corporates or smb's. We can do this initially by ensuring that all new TP units that are added, must register on the marketplace to enable services. This way, if they want to purchase services, Cisco controls the billing and hence owns the consumer. This then provides the platform to tie the consumer to the market place and provide targetted advertising. However the TP Marketplace is adopted, the key is that the TP ease of user experience is preserved.
    HOw do we see this being done, by building a world class Internet accessible portal that is accessible by all TP or SUb-TP users but with a differentiated service for Cisco TP users.
    The other key component is the the world class global directory that enables all users to be connected together.
    By extending the TP OS or by providing a cloud based framework, we can develop an environment that is both attractive and consistent for developers.
    And key to all this success, is to recognise that we need a different approach, and hence a new software-as-a-service organisation to deliver new sales models and approaches to capturing this market.
    And this leads us into an important analogy that demonstrates what can be achieved.
  • The Apple app and iTunes store has created a new paradigm in the way that applications are distributed and how we charge for them. $2.65 is the average cost of an application from the iTunes APP store, which is a small number compared to today’s shrink wrapped s/w but developers are recouping their costs through volume sales and with over 50,000 apps currently available, it has proved hugely successful.
    The result is over 1 billion downloads from when the store launched less than a year ago which is a phenomal success has has spawned a number of apps stores from the likes of Google, Nokia and T-mobile to try and capture this market.
    And let’s be clear, with revenue of around only $160 million, this is not deemed a major revenue opportunity but it is a game changer in terms of the buying patterns of consumers. People are no longer just buying the iPhone for it’s phone capability but for apps such as the Webex app or the Starbucks finder. In fact, the list of applications and uses for the iphone is mindboggling.
    The clear and over whelming upshot of the appstore, and what others are looking to exploit, is the pull through effect that this is having on sales of the iPhone, with industry analysts suggesting that this alone has resulted in a 15-20% increase in iPhone sales, and when you are talking sales in the millions, this is a signficant number. Apple, in a very short space of time, has 20% of the smartphone market.
    The significant point is that we believe that the Cisco TP Marketplace can create the same effect for the TP sales as Apple have seen with their app store. Applications will differentiate Cisco TelePresence from other TelePresence and Sub-Telepresence companies.
    The crucial component to delivering this meetingplace is a global architecture and at this point I hand over to Stefano.
  • Let’s now go one level down, into more details in order to help you better visualize what we are trying to achieve.
    Let’s start with what’s happening today: the AT&Ts of the world are creating their own TP communities on their TP local exchange, offering inter-companies collaboration, also adding specific sw features off their clouds, to enhance the TP experience and attract more customers into their TP Exchange. They are also promoting TPaaS, to simplify deployment of TP solutions, and minimize upfront customer investments to make TP more attractive.
    That allows what we can call Intra-TP Exchange communications. And I’ll go in a second to Inter-TP Exchange communication.
    At this point we introduce the TPMP. A portal that TP users can access to either look for a service, or offer a service.
    How do users connect into TPMP? We do not have that capability in our TP endpoint as of today?
    We do not want to go into any technical discussions at this point, but it’s important that you get the best possible image of how this would work for your own judgement, so I’ll give you the quickest summary for that aspect.
    We have analyzed many possible ways to do that, spanning from the most immediate (which is by deviating from TP, using a normal PC+ Internet connection), through the option of adding technical features to TP end points, to exploiting the power of the cloud to ‘inject’ portal screens directly into the TP video flow. This is probably not the moment to go into that discussion, which has technical sides to be considered. I’m highlighting the fact that those options are totally compatible, not exclusive, and we should enable all of them to have the maximum possible flexibility.
    The users is now capable of connecting into TMPM regardless of the technicality in place to support that process. He can now see the portal, and, after an initial registration procedure as a purchaser or as a seller, he is able to use it.
    As a seller he can decide to register a new service offering, or to buy an advertisement space for that service. An example is on the right side of the screen.
    In the case of a purchaser, he can access the global directory and select a service. What type of services can he find here?
    Let’s talk for a second of the services, just to help you visualize some examples of those. Many taxonomies can be used to classify services according to the perspective you are taking. One of those is to think of 2 categories: Human-terminated services, and sw-terminated services. The first class may include offering from doctors, psychologists, fortune tellers, consultants, or any other expertise-offering where ‘intimacy’ is almost mandatory. In the second class you can find services such as video recording, video mail, that can very well fit into a business environment as well as a consumer one. An example of C2C service: I’m talking to my best friend about my last vacation, and he gets so excited that he wants to see some of the pictures or video that I have. So I can quickly ask for the service directory, select that “share photo”, the backoffice will take care of charging that to my account, and using a portion of our TP screen we can both look at the picture and comment it, without losing that intimacy that friends have.
    These are only few examples of services, we have more on a list, but I’m sure that there are so many that we have not thought of yet, and will come as people get used to MP and their creativity is stimulated by the flexibility on this new collaboration platform.
    Another good business analogy that we could use for the TPMP is with eBay: TPMP is connecting sellers and purchaser as eBay is doing, and also is providing the opportunity for jobs, either old jobs done in a new ways, and also new jobs that probably we cannot yet think about at this point. And Cisco will have its name on that. Can you see the impact on Cisco image in the world?
    You may easily understand that the success of the TPMP depends on the possibility to have everybody on it, regardless of TP exchange provider. That’ s why we need the capability of an Exchange of Exchange. We understood from the conversation from Ted and other people working on it that this is a very delicate one, not only because of the technical nature of it, but especially because of the political game that Cisco may want to play, with the associated risk of irritating our SP partners. We therefore decide not to investigate that area.
    The additional reason for a TPXX is that we want the TPMP critical mass of users to be reached asap. In order to do that we recommend an open policy, allowing any VC format and protocol to be accepted into TPMP, the cloud providing that format conversion capability to do that, so that we can really have Any2Any communication.
    We will talk later more about strategies for TPMP fast start.
    As you can now imagine, there’s a consistent number of revenue streams associated to this platform, both for Cisco and all other players around this. In order to precisely define those, let’s first define how feasible this is, and eventually what are the business segments that we need to address with this, and then we can come back to revenue models. Michael will take us through his analysis of target segments.
    [for backup]
    TPMP flow:
    TP SP registers once in TPMP using a normal PC/browser/internet connection. He provides all required info (description of offered service, cost, VC type (TP, H323)….) and creates an account) to be validated by TPMP management.
    TP User registers once in TPMP using a normal PC/browser/internet connection. He provides all required info (TP alias, VC type (TP, H323), credit card, ….) and creates an account to be validated by TPMP management.
    TP users connect to TPMP using TP unit and select the required service. If user is on non-TP unit or without required Embedded Browser to connect to TPMP on VC unit, he needs to schedule with PC and Internet connection.
    TP connection can be initiated or scheduled.
    To start a session TP units are called by TP Exchange, therefore TPMP send connection request to TP Exchange
    TP Exchange sends session info (duration) back to TMPM for tracking and billing purposes
    User account is charged of required fee.
  • Transcript:
    During our research, we discovered no group within Cisco was focusing on Telepresence for the SMB market. The traditional drivers for Enterprises to buy TP will differ than those for an SMB or consumer TP for that matter. Travel avoidance, internal collaboration and building multinational teams don’t provide the ROI for SMBs as it does for larger companies. Revenue generation, new lines of business, expanding a customer base, feeling part of a community will drive TelePresence in the consumer and SMB space. We feel the TP MarketPlace will provide that functionality and use case for SMBs.
    There are two aspects of the MarketPlace that needed investigation to understand the Total Addressable Market.
    1. Consumers of MarketPlace Services
    2. Businesses that would advertise via the MarketPlace
    Cisco commissioned IDC to research the penetration of Telepresence into the consumer space. This chart shows TP penetration into “Telepresence Ready” homes in the US through 2015 as well as penetration into the total number of US house holds. A “Telepresence Ready” home is the intersection of homes having suitable bandwidth in which to transmit and receive a telepresence call AND a 40” or larger HDTV.
    <----- Click ---->
    By 2015, with a penetration rate of less than 4%, it is projected that nearly 3 Million units will be installed in the US alone. At the projected price per unit, consumer telepresence will have generated over $1 Billion dollars in product and services. $1B in revenue generated with less than 4% penetration into “Telepresence Ready” homes and ~2.5% penetration based on total US house hold numbers.
    This projection equates to a target of nearly 3 Million affluent and technology savvy households for the Cisco Telepresence MarketPlace by 2015. Remember, the MarketPlace customers are not only consumers but can be other businesses as well. We hope the buzz around the marketplace will trend this graph high and to the right, leading to increased TelePresence sales, similar to the iPhone and app store analogy Alan provided earlier.
    Now that we have an idea of the consumer base, we needed to investigate the merchants of the Marketplace.
    Projected TP units in homes expected to be ~3M by 2015 with barely 4.0% penetration in target homes
    2010 2011 2012 2013 2014 2015 CAGR
    Total US Households (000) 117,549.4 118,607.4 119,674.8 120,751.9 121,838.7 122,935.2 1%
    Broadband TelePresence Capable HHs (000) 25,169.5 40,512.7 53,574.8 65,774.1 75,463.5 83,679.9 27%
    HHs with 40"+ HDTVs (000) 57,328.2 70,818.7 82,062.3 91,556.5 98,808.8 104,486.1 13%
    TAM of HHs with Capable BB & 40"+ HDTVs (000) 12,275.1 24,189.6 36,736.8 49,871.2 61,199.4 71,121.9 42%
    CPE Shipments (000) 48,605 104,061 219,532 467,426 820,492 1,276,323 92%
    TP Households (000) 48,605 152,180 370,185 833,646 1,644,735 2,901,589 127%
    Revenue from CPE 72,908,079 132,677,148223,922,554357,580,750489,587,651609,265,33453%
    % change 82.0% 68.8% 59.7% 36.9% 24.4%
    Monthly Subscriber Fee ($) 20.00 20.00 19.00 18.05 17.51 18.38 -2%
    Annual Revenue from TP Services ($) 11,665,293 36,523,162 84,402,202 180,567,704345,562,206 640,111,243123%
    213.1% 131.1% 113.9% 91.4% 85.2%
    Total Revenues ($) 84,573,372 169,200,310308,324,756538,148,454835,149,8571,249,376,57771%
    100.1% 82.2% 74.5% 55.2% 49.6%
  • Transcript #2:
    The 2nd item that needed investigation when thinking of the MarketPlace’s TAM is the # of businesses that may advertise services.
    A study by IBSG on SMBs yielded some interesting information regarding SMB spending patterns and their use of or willingness to use video conferencing. Today video conferencing has a relatively low penetration rate of 35% (and somewhat consistent regardless of size of the SBM) within the SMB market.
    < --- Click for Animation --- >
    Yet nearly 83% of all SMBs are either using or are planning to use some form of video conferencing.
    < ---- Click for animation --- >
    Based on the # of SMBs in the US alone, that equates to 5 Million SMBs as potential TP customers and TPMP subscribers/advertisers. We all know the effectiveness and user experience of traditional video conferencing. It certainly doesn’t provide the immersive in person effect of Cisco TelePresence. I for one wouldn’t connect and conduct business with potential clients using traditional VC if there was any alternative.
    < --- note: We can speak or can add a slide to show it from the same Girish material we have. --- >
    SMBs tend to deal with Partners or VARS for more complex technology which TelePresence obviously is. For example, 70% of SMBs buy servers direct vs. only 19% for telephony equipment. We will talk about partner strategy a little bit later, but based on that buying model TP for SMBs would greatly benefit both Cisco and our Partners. Stefano still speak more to the revenue model and how we see it.
  • Now that we have an idea of how profitable this opportunity can be and where we need to direct our efforts, let’s come back to revenue model. Let’s start with Cisco, and then Brian will take you through the analysis of the entire ecosystem.
    We identified a good set of new revenue streams, that can be classified as follows:.
    ADV is the easiest one to understand. The basic subscription to the TPMP as a provider of TP services will give the right to be added to the directory list, which we want to have as rich as possible. But of course we can think of additional charges as providers want to invest in highlighting their own offering in the portal itself. More over, we can think of TPaaS or TP Exchange providers as strong advertiser community in the portal. Lastly, any external business may want to use the strong characteristics of this niche audience to have itself under the spotlight.
    [Advertisement is becoming a big thing in Cisco, I therefore would like to quickly drop a suggestion. We need a common ADV BU in Cisco because of the economy of scale leveraging the same platforms across Bus, and because of the common skill set, but also to have advertisement models across various platforms (virtualization advertisement)]
    The second revenue stream comes from transaction fees: the analogy with iPhone already showed an example of that; the Cisco can shave off a part of any transaction made on the MP.
    Registration: TP SP can subscribe to be able to propose their services, we can think of fees per services, and we can think of subscription also of user, this always being the last one to be charged following fast start principles.
    Services: TPMP is a platform for anybody the sell services, Cisco not only can do the same, we suggest that Cisco makes sure that an initial portfolio of services is in place to fast start the MP.
    VPM: when the MP becomes a reality we may have too many svc on that, and some industries of class of professional may not like inviting their customer at the ‘common’ TPMP, as it could be equivalent to giving a RDV at the train station. Therefore they may ask for their own Private TPMP, as a differentiating factor, that we can create simply as a logical instance of the TMPM using our cloud virtualization capabilities. This is something coming with maturity of the MP and widespread adoption of TP, but it for sure represents a direction not to forget, and therefore an additional revenue flow for the TPMP organization.
    These 5 classes are totally relevant and specific to the TPMP organization itself. It’s important to know them as we proceed with a sales force organization model and related compensation model, as compensation come from sales of these 5 classes here.
    We used an Excel simulation to get some estimates of these revenues streams over a 10 years period, adopting conservative or aggressive approach. Individual numbers may not make the most sense, but for sure there a pint always coming out: whatever the approach is, the largest numbers are coming from this last revenue stream, which is of course not new, and it’ s the reason why we want to build this: additional TP sales are created by the TPMP, therefore the TSBU has the largest stake in this.
    There’s also another revenue stream that we intentionally did not propose here: that has to do with the previously mentioned TPXX opportunity, and we did not want to consider that for the same reasons as before, but definitely that could represent a significant business for Cisco.
    Let’s review our recommendations for a Fast start strategy: the one main principle is: reach critical mass asap, critical mass being the one that feeds the MP and let the engine run with its own energy.
    Balance the “for free” and “for fee” offering, making sure that you are not preventing a fast start of the opportunity with the f”for fee”, at least at the launch of the MP. { Start mostly free and go into “for fee” if sure that user growth is not impacted, charge Adv first, then Service transaction, Service Registration, User at last. VPM is for future evolution.]
    From a service offering perspective, this is the way to proceed:
    Partner with existing TaaS provider to offer their existing Services on TPMP. Cisco to complement initial service portfolio (SW type)
    Open policy: any VC can participate, TP Exchange of Exchange to support any2any
    If you are worried of the competition form other TP provider
    Global directory necessary to make this the TP community place!!!
    We can now expand our view into who else can make money here, and what is the entire ecosystem that we need to promote. Let’s listen to Brian’s analysis on that.
  • So we have seen the strategy around the architecture, revenues, and Addressable market for the telepresence marketplace. Our case study focused on ways to help drive sales and adoption of SaaS.. The Telepresence marketplace provides us with a unique opportunity to drive Telepresence sales by utilizing software services and software as a service in a hybrid model. I will highlight 6 benefits on how these services would impact Cisco and our ecosystem.
    First let us look at our partner community. Most Cisco business partners have consulting practices around multiple manufactures and services . The marketplace provides an opportunity to provide consultative services around Telepresence and business provided by a video portal..
    Service providers can leverage the TP Marketplace to drive more network sales and additional services. Several ATP partners already have Telepresence service offerings such as AT&T. The marketplace give them additional features and service to enhance their offerings.
    Cisco Field Sales is another benefactor to from the marketplace in that is helps us penetrate other buying centers that are outside of the traditional IT realm. Coupled with a hybrid model this could become a very exciting solution sale of hardware and services.
    So what are the services we offer?
    Outside of what Stefano has shown you with the architecture our sales teams will be able to sell Advertising services which can be part of annual subscription to the marketplace
    Consumer subscriptions is like the accounts that most people have with i-tunes this account and all services related to the account will be hosted out of the marketplace where consumers can purchase products against their personal account.
    Finally the biggest benefit is the expansion of business that the Marketplace will bring. Services industries will have a new way to reach customers and provide new and exciting services.
  • Now that we have discussed the benefits and how the marketplace will impact our ecosystem I would like to discuss the Sales model
    Customers are defined as those that provide business to business, business to consumers, and just consumers. Today businesses provide a services via many solutions such as Web, Call Center, Chat to name just a few. Cisco will need to utilize the multiple Sales force strategies to bring these different customers and services to the market place.
    First would be the internal Marketplace Sales team who would be responsible for :
    Advertising for business customers
    Product Development
    Maintaining Account base
    Scheduling Services
    Self Service Portal
    Second would be the Field Sales team who would be responsible for :
    Hardware and MPS subscription services
    Finally our Partners will help bring customer to the market place through:
    Hardware and MPS subscription services
    Network sales
    Consulting Opportunities
    Additional Marketing services
  • So how do we make all this happen?
    To optimize performance from our SaaS offering and given the expectation that additional BU’s within Cisco are developing a SaaS based model of some sort, we recommend creating an operating entity that focuses solely on SaaS. This will eliminate the need to each BU to try and figure out how to make the SaaS model work.
  • Let me summarize for you the set of recommendations that we highlighted so far.
    I’ll start with what we discussed few minutes ago: as the TSBU is having the largest stake on the TPMP, funding should mostly come from it
    How to fast start the and reach critical mass quickly: populate the service directory with a consistent service offering since the launch, balance Fre/Fee, go for an open policy to attract the entire VC community, use the TPXX for a real Any2Any platform.
    Favour the TP experience with additional features, even directly on TP endpoint or injecting from the cloud
    Create a MP sales force, that reports to a common SaaS BU, common across XaaS offering, for economy of scale and common skill set required
    We suggest a cross compensation model to compensate Cisco and MPO AM for both TP sales and MP sales, to better integrate the teams
    Last but definitely not least, leverage the new revenue opportunities to collaborate with existing and new partners, and teach them how to use the new message for a different possibility to engage with SMBs.
    These are the key points that we believe are necessary and hopefully sufficient to create this exciting new opportunity for Cisco, and make the TPMP a success in a reasonable amount of time.
    I would like to add that we all liked what we worked on, the excitement level went really high. We all would love to investigate the possibility to take this from pure conception to implementation. Alan is now asking for your help to move forward.
  • [What we do is really sketch 3 approaches that we though of, and the benefits of each.
    The first one is what we could call the “do nothing” approach: Cisco will not provide any TPXX capability, leaving to the individual SP agreement to create that capability. That will for sure delay the success of the TPMP.
    The second approach is the extreme opposite of the first one, therefore let’s call it “aggressive”: Cisco to build TPXX, and to strongly play as a video backbone provider. The associate risk is pretty, high, as SPs do not want us to do that, and the business that we do with them could be impacted.
    The third option is what we can call the “moderate” one, sitting in the middle: Cisco to provide that capability only to “fill the gap”, waiting for SP to create their own interconnection.]
  • TelePresence MarketPlace Case Study

    1. 1. The next 10B$ opportunity case study Stefano Soliani Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 1
    2. 2. Introduction The Opportunity: TP MarketPlace Global Architecture Segment Analysis Revenue Model Organization Model Cost Model Recommendations & Next Steps Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 2
    3. 3. Case Study  Cisco’s next $10B SaaS Opportunity  Challenges –Existing partners and service providers –Compartners/Coopetition – e.g. IBM, Microsoft, AT&T –Motivation/Compensation and Organization of Sales force –Buying Centers – non traditional  Opportunities –Future SaaS Offerings –Hybrid SaaS service –TP Pull Through Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 3
    4. 4. TelePresence MarketPlace STRATEGY VISION TPMP as a platform to deliver a rich consumer experience that leverages the power of the network and drives TP adoption TelePresence as the main collaboration tool across all customer segments. Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. TP MarketPlace for anybody to offer and purchase services Tie the TP endpoint to the MarketPlace Portal to own the customer experience Multiple revenue streams from subscription services, add-in applications and advertisements TP endpoint a truly flexible platform to deliver a rich customer experience The fundamentals of TP ease of use are preserved EXECUTION Internet based Portal – the MarketPlace World class global directory and scheduling system accessible through the MarketPlace Targeted advertising framework New sales force org to capture the opportunity Extend the TP OS, or use the power of the Cloud to inject services into TP session Cisco Confidential 4
    5. 5. TP MarketPlace – The “App Store for TP” 15-20% Pull through sales “Buying Scenario” $160million 1,000,000,000 $ 2.65 Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 5
    6. 6. Global Architecture TP Exchange of Exchange (includes global TP directory BT TP local exchange Verizon TP local exchange AT&T TP local exchange AT&T client1 In te rse exc ss ha io ng n e Intra-exchange session Verizon client1 AT&T client2 Verizon client2 BT client1 BT client2 INTERNET TP Marketplace TP Marketplace MP subsystems Presentation_ID MP Software Services (Registration, Billing, Tracking, Directory, ….) (Gaming, Video recording, Photo Sharing, ….) © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 6
    7. 7. Shipments and Penetration of Consumer TP HH TAM Presentation_ID 12.3M 24.2M © 2006 Cisco Systems, Inc. All rights reserved. 36.7M 49.9M Source: IDC - 2009 Cisco Confidential 61.2M 71.1M 7 7
    8. 8. Video Conference Penetration and SMB TAM 47.2% Do Not 82.6%Use But Plan to Use of all SMBs are ONLY 17.4% using or 5,032,868 – TAM for SMB VC Not Use Do & Do Not considering VC Plan to Use 35.4% Currently Use 6,093,061 – US Based SMBs (2007) Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Source: IBSG Cisco Confidential 8
    9. 9. TPMP Revenue Model for Cisco Additional TP sales VPM Cisco Services Registration Transaction Advertisement Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 9
    10. 10. Benefits of Cisco MarketPlace Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 10
    11. 11. Sales Model Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 11
    12. 12. SaaS Organizational Model TSBU Cisco SaaS Business Unit WebEx  Marketplace XaaS Establish separate SaaS business unit across Cisco – Leverage similar SaaS infrastructure requirements – Cisco Collaboration Cloud – Share back-office systems – billing, reporting, support, etc. – Shared resources for marketing, sales, and operations – Develop expertise and share best practices – Separate leadership team for individual SaaS offerings Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 12
    13. 13. Cost Model Building Block Level Pilot approach – US only at beginning – scale up with success of MP Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 13
    14. 14. Recommendations Summary TPMP to be funded by TSBU TP Marketplace TP Marketplace Service offering – Balance Free/Fee - Open policy – TPXX in place Reach critical mass asap Enriched Cisco TP experience – add features in TP or Cloud Common SaaS Sales force org, separate leadership teams for individual SaaS offerings New compensation model for both Cisco and TPMP AMs Increase partner collaboration by offering new revenue opportunities Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 14
    15. 15. Next Steps Understand the technical challenges to achieve our objectives Fully assess all marketing information Develop a commercial model Review the opportunity with the application development community Find an executive sponsor Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 15
    16. 16. Thank You! Any Questions? Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 16
    17. 17. Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 17
    18. 18. TPMP service example C2C Class B2B Fee Class Fee Video/photo sharing SW basic TP reservation system SW basic TP invitation SW basic Video mail SW basic Video message center SW basic Record&Playback SW basic Directory SW basic Directory SW basic Dating apps SW premium TP Broadcast to PC SW basic Gaming SW premium Data integration SW basic Connect to VC SW basic B2C Class Fee Language translation SW/HUMAN premium Mix audio & video SW basic [adult] entertainment HUMAN premium Broadcast to mobile SW basic fortune teller HUMAN premium Language translation SW/HUMAN premium psychologist HUMAN premium Teleprompter/Video receptionist HUMAN Premium telemedicine HUMAN premium Virtual Background SW Premium shopping HUMAN premium Training HUMAN premium training HUMAN premium Consulting/mentoring HUMAN Premium consulting HUMAN Premium Telemedicine (next slide) HUMAN Premium Customer Support HUMAN Premium Remote Recruiting HUMAN Premium Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 18
    19. 19. TP Exchange approach AGGRESSIVE Cisco to play in video backbone exchange domain MODERATE Cisco to facilitate SP interconnection until they create their own SOFT SPs to create their own interconnections Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 19
    20. 20. Revenue model – TPMP features sales Year Volume Forecast MP Service Provider (50% growth) Service Advertisement (% of total Services) AVG Service per SP User (100% growth) Advertiser (100% growth + saturation) Transactions (100% growth - 2/user per year) Transaction avg value Transactions on Cisco svcs (% of total) VPM # Revenue Source - Average Cost ($) Service Advertisement (ARPS/year) External Advertisement (ARPA/year) Service Transaction fee (% of transaction) SP Registration fee (yearly) Service Registration fee (yearly) Cisco Service - unit avg cost User Registration fee (yearly) User Transaction fee VPM fee Revenue Source Value ($/year) Service Advertisement External Advertisement Service Transaction SP Registration Service Registration Cisco Services User Registration User Transaction Virtual Private Marketplace total per year sales per year 0 1 50 0% 1 150 0 300 10 20% 0 169 5% 1 2,000 4 4,000 10 20% 0 4 5 6 7 8 9 10 380 5% 2 8,000 16 16,000 10 20% 0 570 5% 2 16,000 32 32,000 10 20% 0 854 5% 2 32,000 64 64,000 10 20% 1 1,281 5% 2 64,000 128 128,000 10 20% 2 1,922 5% 2 128,000 128 256,000 10 20% 4 2,883 5% 2 256,000 128 512,000 10 20% 8 120 130 140 150 160 1,000 2,000 3,000 4,000 5,000 0.0% 3.0% 5.0% 6.0% 7.0% 0 0 10 20 30 0 0 0 5 10 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 10,000 10,000 10,000 10,000 10,000 170 6,000 8.0% 40 15 1 10 0 10,000 180 7,000 9.0% 50 20 2 11 1 10,000 190 8,000 10.0% 60 25 2 12 1 10,000 200 9,000 11.0% 70 30 3 13 1 20,000 210 10,000 12.0% 80 35 3 14 1 40,000 220 11,000 13.0% 90 40 4 15 1 80,000 10,252 16,232 25,629 224,000 512,000 1,152,000 28,800 64,000 140,800 28,477 51,258 89,701 22,781 42,715 76,887 12,800 25,600 76,800 176,000 384,000 832,000 32,000 64,000 128,000 0 10,000 40,000 535,109 1,169,804 2,561,817 451,528 999,089 2,216,130 40,366 1,280,000 307,200 153,773 134,552 153,600 1,792,000 256,000 160,000 4,277,491 3,579,739 488 2,000 300 0 0 0 0 0 0 2,788 2,488 113 5% 1 1,000 2 2,000 10 20% 0 3 253 5% 2 4,000 8 8,000 10 20% 0 0 0 0 0 0 0 0 0 0 0 0 75 5% 1 500 1 1,000 10 20% 0 2 788 1,266 4,050 6,455 6,000 16,000 40,000 96,000 1,000 2,400 5,600 12,800 1,125 3,375 7,594 15,188 0 844 5,063 11,391 0 0 1,600 3,200 0 0 0 80,000 0 0 0 0 0 0 0 0 8,913 23,884 63,906 225,033 7,913 20,641 53,244 200,842 cumulated per source 168,954 63,432 4,736,000 1,408,000 1,228,500 665,600 609,983 259,493 524,892 230,660 683,200 409,600 7,104,000 3,840,000 992,000 512,000 850,000 640,000 8,028,784 16,897,529 6,620,524 14,152,137 * In red the features that can be ‘sold’ by sales rep Presentation_ID © 2006 Cisco Systems, Inc. All rights reserved. Cisco Confidential 20
    21. 21. Revenue model – TP sales Year 6 7 8 9 20% 25% 25% 20% 20% 20% Revenue Source - Average Cost ($) Avg revenue per TP endpoint 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Volume Forecast % of TP sales due to MP 0 10% Revenue Source Value (K$/year) TP revenue impact 30 Presentation_ID 1 10% 100 © 2006 Cisco Systems, Inc. All rights reserved. 2 15% 300 3 15% 4 20% 5 600 1,600 3,200 Cisco Confidential 8,000 16,000 25,600 10 51,200 102,400 total 209,030 21