1. Asian 3G Overview+ Business Development 101 Greg Tarr CrossPacific Capital/Kodiak Networks gtarr@kodiaknetworks.com

2. Outline Asian 3G Overview Asian Business Development/Strategy Model Asian Channel Issues Asian Markets and Customer Access Asia: Global Center of Technology Production St Paul Ventures/Proquent Systems Asian Case Study Ascend Communications Asian Case Study Key Relationships What Action Do I take Now in Asia/Japan? About Greg TarrGreg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 3. NTT Docomo, SK Telecom, China Mobile Data% ARPU Data % Developing according to Handsets available and Customer spending power(Source:Goldman Sachs 2002) 35% 30%30%25%20% 20% 17% 15% 11% 10% 9%5% 4%0% 20022005 NTT Docomo SK Telecom China Mobile Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 4. Mobile Data Network Evolution Plancdma2000 cdma2000Standard IS-95AIS-95B W-CDMA 1x-RTT1x-EV-DODeploymentIn ServiceIn ServiceIn Service 20022003 Schedule D14.4 kbps 57.6 kbps 144 kbps~ 2.4 Mbps ~ 2 MbpsL Data RateU14.4 kbps 14.4 kbps64 kbps 153 kbps384 kbpsL Low rateMedium rateHigh rate InternetInternetVODaccessaccessMultimediaAODMultimedia/ApplicationSMS Location/Different Moving Data only VoiceStill image Freq. Band image VISS MovingMobile IP VMSimage Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 5. Backward Compatibility 2G/3G Voice/Data Roaming On top of nationwide back-bone network for voice (IS-95A/B network), On top of nationwide back-bone network for voice (IS-95A/B network), KTF will deploy cdma2000 1x/EV-DO & W-CDMA KTF will deploy cdma2000 1x/EV-DO & W-CDMA Coverage plan of each network generation- Voice service : Nation-wide coverage (2G/3G roaming service)- Data service : Provide access to different network with different speed according to market needs 2G data(64k~144kbps) : Nation-wide coverage 3G middle data rate(144k-300kbps) : Major cities (including metropolitan area) 3G high data rate(300k ~ 2Mbps) : Major citiesW-CDMA dual mode handset 1x 1x EV-DO handset/1x EV-DO/W-CDMAvoice roaming1x data roamingcdma2000 1xW-CDMA dualmode handset 2G 1x handset/IS-95 A/B , 1x voice roaming 2G datavoichigh speed dataroaming 1x handset 2G voice2G/3voice,3G middle speed dataroaming2G/3G voice, 2G low speed dataGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 6. Asia leading the World in WLAN Access SEOUL TOKYO KOREA CHINA15,000 Hot spots YE 350 Hot spots 90 Hot spots Airport, Ritz-CarltonAirport, Okura, Hilton Beijing, Shanghai Subway, Post OfficeMini-Stop Convenience Guangzhou,ShenzhenKT, HanaroNTT Communication Leading the world in Guangdong Telecom WLAN DEPLOYMENT China Netcom W/ 15,000 Access Points TAIPEI 9 Hot spots Airport, Convention NEW DEVICES HONG KONGWTC, Au Bon Cafe Expect Seamless Roam200 Hot spotsChungwha Telecom Service, Networks, BillingAirport, Pacific Coffee CDMA, W-CDMA, WLANStarbucks, Pac Place PCCWSK TELECOM & KT KUALA LUMPUR 25 Hot spotsMANILA Global Leadership RoleAirport, Convention15 Hot spots Marriott, Chase Coffee Airport, Seattle Coffee VIOLET VENTURES Airzed NetworkCalifornia Pizza KitchenSINGAPOREPLDT, Airborne Access Leadership Validating208 Hot spots U.S. VCs Portfolio& Airport, ConventionShangri-La, Starbucks Korean Portfolio> ChinaSingtel, BluengineGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 7. What Do Customers Demand from 3G Services?High Volume Content for a Low Price, Reducing Price/Bit is Critical High Volume Content for a Low Price, Reducing Price/Bit is Critical by discount packet Power of Expression/ package tariff for Price per Transactionheavy usersVideo/Movie orA Single Title of Music (5MB/965JYEN)Video Clip (100KB/15sec/80JYEN) An obstacle of advancedMusic Clipapplications/rich contents is(85KB/5sec/68JYEN)the charge per bit. Karaoke (30KB/60JYEN) by discount packet Ringing Melody -package tariff4 Chords (4KB/8JYEN) 16 Chords (10KB/20JYEN)by basic EZweb tariffAmount of Dataper TransactionGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 8. Mobile MultiMedia Services Movie-mail15 sec max recording 96x80 dpfSmooth movie at 7.5fps max Capable of dubbing Capable of text superpositionCapable of location advice indicated on a map using GPS Capable of movie exchange with PCsGreg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 9. Top 5 Mobile MultiMedia Services 1st 2nd 3rd 4th 5th Top 5 Contentsfor 2GRing-tone Character MSNEmoticon PictureDownloading Downloading(Portal&Mail) (SMS) DownloadingTop 5 Applicationsfor 1x Multipack VOD Player Theme ParkGo StopCartoon ShopKaraoke Source : KTF statistics (Jan, 2003) (Ringtone(Network Game)&Character Downloading)Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 10. New Potential Growth Areas Mobile MultiMedia Mobile Multimedia Services with 3G phones VOD Video on Demand Case Study: Music Videos MMS MultimediaMessaging Korean Pop Group-Noel Exclusive Release on SKT 11/02=40,000 Users @US$9 Song Ringtone=1,100 Won Video Screensaver=1,200W CD Song=3,500 Won Full Music Video=10,900W Mobile Movies2min=5,500WDownload & Streaming VODPhone Web PhoneShort & long video clip Long Text + Image, MIDI, Video clipContent : Education, Music video, News, Handset with built-in cameraMovie preview,Email to Phone (Data Push)SKT Plans TV Phone broadcasting has spent Content : News, Education, MP3,US$22m R&D (US$13Month=15channels)video clip, etc Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 11. Conclusion: Key Korea/Japan Success Drivers/Factors Value to Customers !!! Fast, Easy, Fun & Useful !!! Marketing Drivers Technology Drivers Services on the front line of advertisements Handset Functions Standardized by Less technology platform Focus i.e. (3G) Carrier,not Manufacturer Rapid roll-out: Monthly news of coverage Handset with Color LCD, MIDI and Marketing & Promotions / Customer Training Multimedia Platform for Mobile Internet Many Hi Speed Network Options Services/Products Drivers WLAN, 1X-RTT, 1X-EVD0, W-CDMA Early Adopter: launched data services 1998 Inherent backward compatibility to Large number- Content/Service ProvidersIS-95, leading to: Continuous service availability within 2G cdmaOne coverage Killer applications, Win-Win Business Model Uncompromised QoS and service portfolioTech maturity inherited from IS-95 compared with those of 2G cdmaOne operational records, leading to: No increase in handset Size No degradation in specs at minimal priceNo degradation in handset battery life increase compared with 2G cdmaOne phonesKorea/Japan expertise in 2G cdmaOne network operations contributing to the Movie-mail (movie recorder-enabled) stable services offering - CDMA2000 1x phones followed Photo Mail quickly Photo-mail (camera-equipped) phone released on Day One of 1X-RTT in Japan Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 12. Asian Strategy+BD+Customer Roadshow=Sales Executed by BD Advisor w/China,Japan,Korea Customer CTOs Asia/Japan Business Development Model For PortfolioStep 1 Step 2 Step 3Step 4 Research, Broaden Recruit Architect Asian Leverage Advisor Regional/LocalManagementStrategy withfor Asian roadshow SI/Channel Candidates w/ VC, CEO, BD &w/Customer CTO Localize Product ChinaJapanKorea Advisor OEM+Channel Trials Track record Asia is usually priority #3 after U.S./Europe sales, this is faulty strategy as Asian mobile markets are more advanced and have higher Capex growth than U.S./Europe Working in Japan for 1-2 years does not qualify someone as the Asian expert. Asia covers a larger global area with more diverse language, culture and GDP compared to Europe/U.S. Find rare Regional Experts who know China, Japan, Korea, not the guys flying in for 1day a month from Hong Kong/Singapore/U.S. lacking customer CTO friends. VCs should phase out U.S. Centric views of the world by recruiting Partners/Principals who can reduce risk & enhance portfolio firms network/traction with Asian customers.Startups hiring an expat to head the region is ok to start but the sooner you can replace them and locate Western Educated locals, the sooner you start scaling revenues.Greg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 13. Top Tier Asian Channel Can Boost Revenues80% of Asian Capex comes from Japan, China, KoreaBuilding Asian Channels is complex compared to U.S./Europe.Most U.S. VCs/portfolio lack local knowledge/Relationships to plan/execute strategy Channel Issues: Selecting/Closing Top Tier Partners Channel Conflict Managing Multiple SI Product Functions Solid Customer Trial Top Launch Customer Service/Training/Price Fragmented regionally Ethics Risk/Low Sales Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 14. Asia=Advanced Mobile/Broadband markets & HighCAPEX but COO/CTO customer Access is tough2004 Global Mobile Internet Users% As U.S./Euro Carriers slash spending, Asia is a larger piece of CAPEX pie to target. Asia 49% Carriers in Asia are very loyal to local products/SIs due to relationships which USoutweigh product performance.29% Europe i.e. Accenture, Cap Gemini do not have the 22% relationships/skillsets/creditability in China,Source: IDC Japan, Korea to initiate and drive channel revenue for early stage portfolio firms.2001-2005 Global Telecom Capex Top Tier Advisors can introduce Portfolio CEOs to customer COO/CTOs whichAsia40%speed up trials and the Sales cycle. Most early stage firms never get access to customer COO/CTOs and wasteRest ofWorldtime/money/cycles on customer middle 60% management.Source: Yankee Group Greg Tarr Asia 3G Overview+ BD101Proprietary c Copyright Greg Tarr 2004 15. Asia leads in Semis, Mobile, Broadband &TFTAdvisors have to assist in leveraging Asian customers/partners U.S. firms need Asia Sales+OEM Partners Innovation is up in Japan,Korea,Taiwan2005E Global TFT-LCD Production by2000 Patent US1995 Patent US1990 Patent USRankRankRank Country%1-U.S. 85KU.S. 56KU.S. 47K Korea2-Japan 31K Japan 22K Japan 20K34%3-Germany 10K Germany 6.6KGermany 7.6K4-Taiwan 4.6K France 2.8K France 2.9K5-France 3.8K UK 2.5K UK 2.8KJapan6-UK 3.7K Canada 2.1K Canada 1.9K 13% Taiwan7-Canada 3.4K Taiwan 1.6K Switzerland 1.3K53%8-Korea 3.3KKorea 1.2KItaly 1.3K 2005 Global Semi Sales by Region%2004E Global Mobile Handset%(37% Global Sales from Asia)SonyNokia EricssonAsiaMotorola 38% 7%40%14% NingboSiemens 1% 8% Japan23%TCL1% SharpSamsung1%EuropeToshiba Sanyo KyoceraMitsubishi Panasonic 12% America 19%3% Others LG 1%1% 1% NEC 4%18%2% 5% 2%Source: JP Morgan, SIASource: Morgan StanleyGreg Tarr Asia 3G Overview+ BD101 Proprietary c Copyright Greg Tarr 2004 16. Asian Entry Case Study:St Paul Ventures+Proquent Systems+Violet=Results St Paul Ventures requested Violet architect a low cost Asian entry strategy for U.S. Com Equip firm Proquent Systems that lacked Asian customer access +market knowledge and could not hire local staff until Asian customer validation Actions Taken: Asian Strategic Plan Created in 30 days with Greg acting as Interim MD-Asia/Japan 5 Road Shows in 120 days/10 Asian Countries=30 customers CTOs/10 OEM Partners Part Time MIT MBAs Recruited to handle Chinese/Korean/Japanese follow up Results: 5 RFPs Issued with bids and influenced CTOs on new RFPs 5 OEM/Channel Partners negotiating OEM/Marketing agreements Asian Sales and Engineering team recruited and ready to be deployedGreg Tarr - Asia BD101 Proprietary c Copyright Greg Tarr 2004 17. Channel Case Study: Ascend launch in Asia Ascend Communications was too small to secure Asias largest SI in 1995 Ascend had to turn to a small, scrappy, cutting edge SI to get Asia jumpstarted Ascend Communications 10Q 11-14-1996International sales accounted for approximately 45% of net sales for the ninemonths ended September 30, 1996 compared to approximately 24% of net salesfor the nine months ended September 30, 1995. This increase was principally dueto increased sales of the Company's products in Asia and the Pacific Basin. 9 Months later, the largest SI in Asia contacted Ascend and signed on Securing/motivating the right SI relationships with market entry and knowing the Right time to stimulate and broaden the channel without alienating your first partner is critical and can be set up with a top tier Venture advisorGreg Tarr - Asia BD101 Proprietary c Copyright Greg Tarr 2004 18. Gregs Key Global Relationships Customer CTO/COOs, Channels, OEMs, Co-investors,I-Banks Operators Handset/Infrast Corporates/SI I-Bank/Consultant Venture FundsVC Greg Tarr - Asia BD101Proprietary c Copyright Greg Tarr 2004 19. What action do I take now to grow Asia/Japan? VC/Directors Imperative Recognize Revenue opportunity and address it before your competition Recruit Partner/Principal w/ Regional Asian experience to lead Asian BD Do not be U.S. Centric, Asian Customers have different needs-Visit them Recruit Top Advisor w/ Japan/China/Korea CTO/COO customer friends Portfolio Business Development, Market Intelligence, BD Execution Build Asian Advisory Board, plan Asian Road show to build relationships Build Asian Customer shopping list for input PRIOR to product launch Recruit Engineers/Sales/Advisors w/Japan/China/Korea language+friends R&D, Fund Raising, VC Relationships, Marketing R&D in Asia can keep portfolio ahead of competition and reduce costs Form Relationships with Asian VCs who can assist in BD, politics, sales VC/portfolio should raise Asian profile w/ Customers-Conferences& media GPs/Directors and Portfolio CEOs need to visit Asian customers often Venture PartnerGreg Tarr gtarr@violetventures.com Menlo Park 650-269-9818 Japan 8180-3407-3333Korea 8216-9699-3333 Greg Tarr - Asia BD101 Proprietary c Copyright Greg Tarr 2004 20. BD/Strategy Advisory to U.S. VCs/Tech Startups- Violet Ventures 7+Years Based in Korea/Taiwan/Hong Kong/Singapore Founders Track Record (Boston) Advisor- Asian Business Development w/ Top Mr. Tarr founded Violet Ventures Asian Operators CTOs & advise portfolio firms on BD an angel investor and advisor totop tier U.S. VCs+portfolio firms. (Taiwan) Negotiated GP Relationship& wrote PPM for Asia Tech Fund,Wrote Taiwan Tech Investment Strategy He advises St Paul Ventures-US$3b VC Fund and CDP Capital (Boston) Advisory Board -Asian Business Development, Asia-US$10b PE Fund.As angel SNOWSHORE Shareholder (Matrix/St Paul/Charles River) investor/Advisor, his portfolio (Boston) Advisory Board, Wrote Asian Strategic Plan,includes 8 Com Equip firms where (St Paul/Nokia Ventures) Interim MD Asia/Japan he has held Interim VP-BD roles. (Shanghai) Angel Investor w/(Acer, Fidelity, AsiaInfo) At Deutsche Bank Securities he Intro Korean Tech Partners and assist BD/Strategy/Mktranked #4 sell side Asian Tech (Shanghai) Angel Investor w/(Acer, Fidelity, AsiaInfo, analyst after his 1st year, worked Mitsubishi) Intro Korean Tech Partners, assist BD/Mktin operations at Toyota U.S. HQ (Seoul) Hired COO, Alliances-Vodafone, Verizon, Sun,and interned for MTV at startup Qualcomm,BusinessPlan,Advisory Board-Shareholder mode. He worked 8 years inKorea, Taiwan, Hong Kong, (Seoul) Generated 2 Valuations at 3X, Global BD/Mkt, Singapore+ worked in Europe/U.S. Business Plan, Shareholder (CDP Capital) (Hong Kong) Global BD/Mkt, Strategy, Fund Raising, He attended Pepperdine Business Shareholder, CSFB Tech Conference (Walden) School-MBA (L.A.) + U Colorado -Boulder-BA. He guest lectures at (Hong Kong) Raised US$100m PE, Wrote Nasdaq S-1 Stanfords MBA/Engineering Filing, Secured CSFB-IPO, M&A values,Options (GE, JPM)Classes and is on the advisory (Singapore)-Lead Analyst on US$40m Secondary, Adviseboard+Judge of Venture Awards Fidelity/ Capital on Equity Purchase, Advisor- post DBat 3GSM World Congress-France (Asia) Ranked #4 Asian Tech Analyst after 1st Year& 3G Congress-Asia covered Semi, Com, S/W, supported Global TechResearch (L.A.) Lexus Product Launch, Marketing/Sales/Retail (N.Y.) Summer Intern 85/84-Startup Mode-Marketing/Sales