DATACLOUD ASIA23 February 2017 / Singapore

BILL BARNEYChief Executive OfficerRELIANCE COMMUNICATIONS & GLOBAL CLOUD XCHANGE

2017:THE CLOUD REVOLUTIONCONTINUES…

1. Observations On The Impact Of The Cloud Revolution 2. 2017 And Beyond: The Disruptive Opportunities 3. The Sure Bets of the Future 4. Final Thoughts

Agenda

Observations on the Impact of the Cloud Revolution

Cloud has enabled new forms of Data Generators

Source: Apple, DJI, Waze, Tesla, Microsoft, Ring, Fitbit, B & H Foto & Electronics.

The Facts:

Source: Forbes “2017 Internet of Things Facts”

This year, we will have 4.9 billion connected things....some predict that by 2020, the number of Internet-connected things will reach or even exceed 50 billion.

In 2015, over 1.4 billion smart phones will be shipped and by 2020 we will have a staggering 6.1 billion smartphone users.

By 2020, a quarter of a billion vehicles will be connected to the Internet, giving us completely new possibilities for in-vehicle services and automated driving.

Today, the market for Radio Frequency Identification (RFID) tags, used for transmitting data to identify and track objects, is worth $11.1 billion. This is predicted to rise to $21.9 billion in 2020.

Machine-to-machine (M2M) connections will grow from 5 billion at the beginning of this year to 27 billion by 2024, with China taking a 21% share and the U.S. 20%.

CISCO believes the IoT could generate $4.6 trillion over the next ten years for the public sector, and $14.4 trillion for the private sector.

We are seeing unprecedented growth because the “global data” ecosystem is finally here

Sour

ces

of L

ever

age

for G

loba

l Int

erne

t Gro

wth The Network Large investments in fiber optic & last-mile cables created connectivity that

facilitated the early Internet growth

The SoftwareOptimizing the network with software became far more capital efficient than additional capex buildouts...ultimately resulting in the creation of pervasive networks (siloed data centers AWS)...& then ➔ pervasive software (Siebel ➔Salesforce)

The Infrastructure Emergence of pervasive software created the need to optimize the performance of the network & store extraordinary amounts of data at extremely low prices

The DataNext Big Wave = Leveraging this unlimited connectivity & storage to collect / aggregate / correlate / interpret all of this data to improve people’s lives & enable enterprises to operate more efficiently

Source: Adam Ghetti, Ionic Security; Ted Schlein, KPCB.

The “Third Wave” of Cloud Innovation will bring hyper-growth and unprecedented appetite for fiber and big computing

New Major Technology Cycles = Often Support 10x More User & Devices, Driven by Lower Price + Improved Functionality

Increasing Integration

– lower cost

Note: PC installed base reached 100MM in 1993, cellphone / Internet users reached 1B in 2002 / 2005 respectively;Source: ITU, Morgan Stanley Research.

Computing Growth Drivers Over Time, 1960 – 2020E

1960 1970 1980 1990 2000 2010 2020

1MM+Units 10MM+

Units 100MM+Units

10B+Units??

1B+Units/Users

The falling costs are a huge catalyst of growth Global Data Growth Rising Fast = +50% CAGR since 2010...Data Infrastructure Costs Falling Fast = -20% CAGR

Peta

byte

s of

Dat

a

Cost

per

GB

of S

tora

ge

$0.20

$0.15

$0.10

$0.05

10B

8B

6B

4B

2B

0B2010 2011 2012 2013 2014 2015

Data in Digital Universe (Petabytes) Storage Costs ($/GB)

Data in Digital Universe vs. Data Storage Costs, 2010 – 2015

Source: IDC, May 2016.

Hyper-growth and unprecedented appetite for fiber and big computing in the “Third Wave” of Cloud Innovation…So

ftwar

eSe

curit

yIn

frast

ruct

ure

Evolution

Breaking ApartData Bottleneck

Revolution

Data Integratedinto Everything

FIRST WAVEConstrained Data...

Monolithic Systems, Expensive Storage,Data for Targeted Use Cases

BUSINESS INTELLIGENCE (BI)

Business Objects,Cognos, Micro Strategy

DATA INTEGRATIONInformatica

DATA INTEGRITYMicrosoft, Oracle

Age of Oracle, Sybase

SECOND WAVEData Explosion / Chaos...

Decentralized Systems,Cheap Storage, Big Data Everywhere

VISUALIZATION

PREP / WRANGLING

INFRASTRUCTURE-CENTRIC SECURITY &

MANAGEMENTPalo Alto Networks, FireEye

Age of Big DataHadoop, Teradata,

Netezza, NetApp, EMC, Greenplum

CLOUD BI

ETL

CACHING

THIRD WAVEMass Data Intelligence...

Pervasive Systems, Big/Fast Storage,Data Instruments the Business

DEPARTMENTALAPPLICATIONS

Gainsight, Datadog,InsideSales

ORGANIZATION-WIDE ANALYTICS PLATFORMS

Looker, Domo, Anaplan

DATA-CENTRIC SECURITY & MANAGEMENT

Ionic Security, Tanium

Age of Big/FastRedshift, BigQuery,

Spark, Presto

Source: Looker, Ionic Security, KPCB 2016

Current Generation of Internet Leaders = Growing Faster than Previous Generation

MarketplacesGross Merchandise Value (GMV), Time Shifted

Alibaba vs. eBay vs. Airbnb vs. Uber

CommerceGross Merchandise Value (GMV), Time Shifted

Amazon.com vs. JD.com

EnterpriseEst. Quarterly Revenue ($MM), Time Shifted

Salesforce vs. Slack

1 2 3 4 5 6 7 80

4

8

12

16

20

Alibaba/Taobao eBayAirbnb Uber

1 3 5 7 9 11 13 15 17 190

20406080

100120140160180200

JD.com Amazon.com

1 2 3 4 5 6 7 8 9 10 11 12 13

Salesforce Slack

Marketplaces Source: Company data, Morgan Stanley Research. eBay founded in 1995. Amazon founded in 1995. Alibaba.com founded in 1999 as B2B portal connecting Chinese manufacturers andoverseas buyers. Uber launched 2009, gave first ride in 2010. Airbnb founded in 2008..Commerce Source: Publicly available company data, Morgan Stanley Research. JD.com launched B2C shipments in 2004, founded 1998 as an online magneto-optical store. Amazon founded in 1995.Enterprise Source: Slack. Graph starting point based on similar est. revenue figures. Salesforce quarterly revenue approximated from publicly disclosed annual GAAP revenues.

GM

V ($

B)

Years Since Launch (T+)

GM

V ($

B)

Years Since Launch (T+)

Reve

nue

($M

M)

The Cloud market is exploding!

World wide Hosting & Cloud Market Size, 2010 – 2019

Source: 451 Research, Cloud Computing Market Monitor, 2016 & Transforming Network Infrastructure

2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

26,16231,358

38,50749,188

59,806

71,912

85,402

100,333

116,619

134,411

Cloud Share Increases from 7% to 28%

“Data is moving from something you use outside the workstream to becoming a part of the business app itself.

It’s how the new knowledge worker is actually performing their job.”

FRANK BIEN, CEO OF LOOKER, 2016

2017 and Beyond:The Disruptive Opportunities

If Jobs were alive today he would likely say...

“Whoever masters the combination of server orchestration, fiber ubiquity and low cost global access to competing computing

resources will be the technology infrastructure company of the next decade”

And this is just the beginning...

“We’re going to demote the PC and the Mac to just be a device. And

we’re going to move the digital hub, the center of your digital life,

into the Cloud” --Steve Jobs

Company Region 2017 Market Cap ($Bn)Apple USA 698.89Alphabet Inc. (Google) USA 580.78Microsoft USA 500.51Facebook USA 387.40Amazon.com USA 397.47Alibaba China 258.12Tencent China 246.76AT&T USA 249.94China Mobile China 234.98Samsung Electronics Korea 230.43Verizon USA 198.21IBM USA 179.36Intel USA 169.70Oracle USA 168.57TSMC Taiwan 164.42Cisco Systems USA 160.43SAP Germany 113.65NTT Japan 87.45

Disruptive Opportunity #1 : There has yet to be a value creator in the global infrastructure space

Source: Ycharts, Feb 2017

Most of these companies used their internal Clouds, yet have not yet built it for the rest of the enterprises.

Amazon and Tencent have an early lead in compute and storage, yet have very limited high-end global distribution.

ABIL

ITY

TO E

XECU

TE

ASSETS TO EXECUTE

CHALLENGERS

SINGLE OR LIMITED ASSETS ALL ASSET CLASSES AND GEOGRAPHIC REACH

LEADERS

ORACLE

AMAZON

ALIBABA

GLOBAL FIBER OPERATORS

MICROSOFT

GLOBAL DATA CENTER OPERATORS

US FIBER WHOLESALERS

EUROPENA FIBER WHOLESALERS

The Future Cloud Infrastructure Quadrant

Note: Data above based on countries including the US and those in the Middle East, Europe and Asia ex-China

Disruptive Opportunity #2 : Whoever can make the emerging markets their home markets will have an unprecedented advantage with huge demand ahead Innovation and expansion across emerging markets will reap biggest benefits of the Cloud as requirements continue to grow

75% of world’s population is in Emerging Markets and is underserved;

Emerging Markets saw >1400% Internet growth in last 5 years;

4 Billion+ people still do not have Internet access.

75% of world’s population is in Emerging Markets and is underserved;

Emerging Markets saw >1400% Internet growth in last 5 years;

4 Billion+ people still do not have Internet access.

Source: WCI and EIU data

The Emerging Markets Corridor connects over 2.0bn Internet subscribers currently and is expected to account for over 70% of the world’s smart phone growth and over 80% of

the world’s GDP growth over the next 5 years

Digital user distribution by region – JAN 2017Each region’s share f the world’s population, global internet and

social media users, and global mobile connections

T: Total Population A: Active social Media Account I: Internet Users M: Mobile Connections

North AmericaT:5% A: 8%I: 8% M: 5%

West EuropeT:6% A: 8%I: 9% M: 7%

East EuropeT:6% A: 7%I: 8% M: 8%

East AsiaT:22% A: 33%I: 24% M: 22%

Central AmericaT:3% A: 4%I: 3% M: 3%

Middle EastT:3% A: 3%I: 4% M: 4%

Central AsiaT:1% A: <1%I: 1% M: 1%

Southeast AsiaT:9% A: 11%I: 9% M: 11%

South AmericaT:6% A: 9%I: 7% M: 7%

AfricaT:16% A: 6%I: 10% M: 13%

South AsiaT:24% A: 9%I: 16% M: 19%

OceaniaT:1% A: 1%I: 1% M: 1%

Cloud computing will exponentially increase the speed of Internet penetration...

Grow

th in

201

25

Growth Potential (2015-2022)

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Japan

Growth Markets Indonesia

IndiaChina

ThailandVietnam

High Growth Markets

Mature Markets

AustraliaPhilippines

Hong Kong

SingaporeMalaysia

SouthKorea

Taiwan

New Zealand

Data Center Owners will be big winners in the next decade, and the Emerging Markets will be growth engines of these Data Centers...

Note: CAGR for the period 2015-2022Note: All figure are rounded; the base year is 2015. Source: Frost $ Sullivan analysis.

Disruptive Opportunity #3: There is no leading player in the emerging market corridor in the data center space, only one in the orchestration space and lastly a mere two competitors with fiber leadership

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The high concentration of Data Centers in USA and Europe are far from most

users in the Emerging Markets. Regulatory

compliance, user experience, reliability and cost factors will mandate significant movement of data

closer to users.

The Sure Bets of the Future for Cloud Providers

1 2 3 4 5 6 7 8 9 100

10000

20000

30000

40000

50000

60000

KVA Per Rack

USD

in R

even

ue P

er R

ack

100 MVA facilities with Exabytes of Fiber capacity will be the centers of the next decade

Network CostsBuild CostsOperating CostsData Center MarginNetwork Margin

Source: RCOM/GCX Research

Sure Bet #1: The Networked Data Center will be at the Core of future

Sure Bet #2: Distributed focused compute centers will be the wave of the future

Understanding the FOC High Power density data centers with strong fiber

connectivity and internet gravity Located in city and tech centers 80% to 90% of cash generated from services and “spot

services” High customer engagement with average customer growing

at double digits or more per year Expensive build at $12K to $14K a KVA Tech like investment vehicles with hyper growth and high

velocity of innovation

Understanding the STOC Lower power density with build costs ranging from $6K to $9K a

KVA Longer term stickier customers and revenue streams Located in low rent optimal cooling locations 80% to 90% of cash generated from storage and “industrial

computing” Real estate like investment profile with REIT or Trust like capital

structures

Sure Bet #3: With Orchestration ecosystems in your data centers, you will win!

CRM, ERP, etc.Already Integrated with 100+ Networks

Low cost, Pay as you go /deviceLaunch in weeks

Devices Networks IoT Services Platform IoT Apps / IT

deep

ly in

tegr

ated

AutomateThe Service Lifecycle

Orchestration capability

25

Final Thoughts

26

Whoever masters the combination of server orchestration, fiber ubiquity and low cost global access to competing computing resources will

be the technology infrastructure company of the next decade...