A Research Service By Business
Insider The Future Of Digital: 2014

intelligence.businessinsider.com Henry Blodget CEO &
Editor-in-Chief Emily Adler Senior Research Editor Marcelo Ballvé Editorial Director Cale Weissman Reporter Hope King Reporter Nicholas Quah Research Associate John Greenough Research Analyst Jessica Smith Research Associate Tony Danova Senior Research Analyst Mark Hoelzel Research Analyst John Heggestuen Research Analyst Cooper Smith Senior Research Analyst BI Intelligence

There are now nearly 3
billion people online Source: International Communication Union, Google 0 1 1 2 2 3 3 1990 1994 1998 2002 2006 2010 2014E Billions Global Internet Population

Four billion to go Global
Population Internet Population 0 1 2 3 4 5 6 7 8 1990 1994 1998 2002 2006 2010 2014E Billions Global Internet Population Source: International Communication Union, Google

Attention is shifting to digital,
especially mobile Source: eMarketer, April 2014 45% 25% 17% 9% 7% 4% 37% 18% 11% 4% 2% 23% TV Online Radio Print Other Mobile US Consumer Media Consumption Share 2009 2010 2011 2012 2013 2014

This is a generational shift
Source: Ofcom 0 10 20 30 40 50 60 70 80 90 100 Total Aged 16-24 Aged 25-34 Aged 35-44 Aged 45-54 Aged 55-64 Aged 65-74 Aged 75+ Digital Is Reaching The New Generation Top Five Media Mentions Among all Adults, 2013 Watch TV Read Newspapers/Magazines Listen To The Radio

One law of media…

Money follows eyeballs.

Ad spending is moving to
digital (and mobile) Source: IAB, U.S. Census Bureau, Strategy Analytics, BI Intelligence estimates Offline All Other Online Mobile $0 $60 $120 $180 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Billions U.S. Advertising

Print ads have fallen off
a cliff Source: Newspaper Association Of America *Estimate $- $10,000 $20,000 $30,000 $40,000 $50,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* Millions Newspaper Ad Revenue (Print vs. Online) Print Online

Google is now bigger than
all newspapers, magazines Source: Google, NAA, PIB $0 $10,000 $20,000 $30,000 $40,000 $50,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Millions Google vs. Magazine vs. Newspaper Ad Revenue, US Data, 2004-2013 Google (US) US Magazines US Newspapers

Google now dwarfs “big media”
Source: Company Filings, BI Intelligence estimates $30 $18 $16 $14 $5 $5 $3 $2 $70 Time Warner Facebook CBS Viacom Gannett Yahoo AOL New York Times Google Billions Estimated 2014 Revenue Select Media Companies

Google is almost half the
size of all global TV advertising $174 $70 Global TV Ad Revenue Google Billions Estimated 2014 Ad Revenue Google vs. Global TV Ad Market Source: Google, PWC

For many years TV folks
have (rightly) laughed off digital concerns

Time to stop laughing.

Ratings are falling… Source: Nielsen
5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 6 6.1 6.2 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 NielsenHouseholdRating (%OfHouseholds WithTVSetsWatching) Primetime Household TV Ratings Big 4 U.S. TV Networks Average

Pay TV subscriptions are dropping…
Source: Leichtman Research Group Cable Satellite Telephone Total (800) (600) (400) (200) - 200 400 600 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 NetAdditionsInThousands Pay-TV Net Additions (US)

Facebook reaches more young people
than free TV Source: Nielsen, January 2013 58% 73% 83% 89% 63% 68% 63% 42% Age 18-24 Age 25-34 Age 35-54 Age 55+ PercentReach Facebook vs. TV Daily Reach (US) Four TV Networks Facebook

Netflix now has more US
subscribers than HBO Source: Netflix, SNL Kagan HBO Netflix 0 10 20 30 40 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 MillionsOfUSSubscribers Paid Domestic Subscribers — Netlix v. HBO

YouTube reaches more 18-34s than
any cable network 0 200 400 600 800 1000 1200 1400 2010 2011 2012 2013 2014E Millions YouTube “Ratings”

Digital video revenue is no
longer a joke… Source: BI Intelligence estimates, Company Filings Netflix YouTube Hulu $0 $2 $4 $6 $8 $10 $12 2006 2007 2008 2009 2010 2011 2012 2013 Billions Estimated Digital Video Revenue

iTunes and Netflix already dwarf
small cable networks Source: News Reports, Company Filings iTunes Netflix AMC Networks $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 2007 2008 2009 2010 2011 2012 2013 Billions Cable Network vs. Digital Content Revenue 2007-2013

YouTube is closing in on
broadcast-network revenue Source: News Reports, BI Intelligence estimates, Company Filings $- $2 $4 $6 $8 $10 $12 2007 2008 2009 2010 2011 2012 2013 Billions YouTube Ad Revenue vs. CBS Ad Revenue And AMC Networks Revenue CBS Ad Revenue YouTube Ad Revenue AMC Networks Revenue

(Some) live sports are now
being streamed Source: Ooyala 2014 34.5 7.1 3.5 42.8 11 17.1 10.5 16.9 2.6 4.1 2.8 5.1 Desktop Tablet Mobile Connected TV TimeSpentPerPlay InMinutes Time Spent Watching Online Video By Content Type Global All Live Events Sports VOD

TV now has to share
attention with digital Source: Millward Brown, 2014 83 (55%) 65 (63%) 20 (45%) 68 (45%) 38 (37%) 24 (55%) Smartphone Laptop Tablet TimeSpentInMinutes (PercentageOfTotalTime) Daily Time Spent With Devices, While Watching TV Or Using The Device Independently Ages 16 - 44, United States Only Without TV With TV

So, eyeballs are leaving TV

But, so far, TV money
is hanging in there

TV still massive, digital video
still a blip Source: Nielsen, IAB $0 $20 $40 $60 $80 2007 2008 2009 2010 2011 2012 2013 Total TV Ad Spend (Billions) US Ad Spend, 2007-2013 TV Vs. Online Video TV Ad Spend Online Video Ad

So no worries in TV
land?

Yes, worries.

It’s a generational shift —
look what Millennials are doing Source: Ofcom TV TV TV Print Print Radio Radio Radio Computer 3 Computer Smartphone Smartphone All Adults Aged 75+ Aged 16-24 “Media you would miss most” Use A Smartphone Go Online On A Computer/Laptop/Netbook/Tablet Listen To The Radio Read Newspapers/Magazines Watch TV

Money follows eyeballs… Source: Mary
Meeker, IAB, eMarketer 5% 38% 25% 12% 20%19% 43% 22% 10% 4% Print TV Web Radio Mobile 2013 U.S. Ad Spending vs. Consumer Time Spent By Media

So it’s only a matter
of time.

What’s going on in digital?

Smartphone sales are still booming
Source: IDC, Strategy Analytics, BI Intelligence estimates Samsung Apple Xiaomi Lenovo Huawei LG ZTE Coolpad Nokia Sony Motorola HTC BlackBerry Other - 50 100 150 200 250 300 350 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Millions Global Smartphone Shipments By Vendor

PCs Tablets 0 20,000 40,000
60,000 80,000 100,000 120,000 140,000 160,000 180,000 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Thousands Global Computer Shipments Tablets have carved out a chunk of PC sales Source: Gartner, IDC, Strategy Analytics, Company Releases

“Phablets” are replacing small smartphones
Source: BI Intelligence estimates Phablets Tablets Smartphones (Non-Phablet) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2006 2008 2010 2012 2014E 2016E 2018E Millions Global Annual Shipments By Device

Nearly half of TVs are
now connected Source: Leichtman Research Group, BI Intelligence estimates 27.7 35.7 43.8 50.1 56.5 61.1 65.7 68.6 71.4 72.6 24% 31% 38% 44% 49% 53% 57% 60% 62% 63% 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E U.S. Households With Connected TV Percentage Of Households; Number Of Households In Millions

“Wearables” are overhyped but growing
Source: BI Intelligence estimates Smartwatches Fitness Bands And Other Activity Trackers Rest Of Wearables Market 0 20 40 60 80 100 120 140 160 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E MillionsOfUnitsShippedAnnually Global Wearable Device Unit Shipments Forecast 35% CAGR We Are Here

Cars are increasingly connected Source:
SBD, GSMA In-vehicle services Hardware Telematics service providers Telecom service providers € 0 € 5,000 € 10,000 € 15,000 € 20,000 € 25,000 € 30,000 € 35,000 € 40,000 € 45,000 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E Millions Connected Car Revenue Forecast

300 million PCs are still
sold each year Source: Gartner, IDC, BI Intelligence estimates Lenovo HP Dell Acer Other 0 20,000 40,000 60,000 80,000 100,000 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Thousands Global PC Shipments By Manufacturer iPad released Windows 8 released

Should you be “mobile only?”

No!

It’s a “multi-screen” world Source:
Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates Personal Computers Smartphones Tablets Smart TVs Wearables 0 1 1 2 2 3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E UnitsBillions Global Internet Connected Device Shipments

You should be “mobile, too.”

~60% of online devices are
now smartphones or tablets Source: BI Intelligence estimates Personal Computers (Desktop And Notebook) Smartphones Tablets Smart TVs Wearables 0 1 2 3 4 5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E NumberOfDevicesInUse(InBillions) Global Internet Device Installed Base

Other 8% Visit Websites 14%
Games 8% Social Networking 15% Talk 26% Text 20% Email 9%Breakdown Of The Average Smartphone Owner's Daily Time-Spend On Average, U.S. Smartphone Owners Spend 58 Minutes Daily On Their Phones We spend an hour a day on our smartphones Source: Experian Marketing Services, May 2013

We spend ½ hour on
tablet each time we use it Source: Google, August 2012 43 39 30 17 TV PC/Laptop Tablet Smartphone Average Minutes Spent Per Interaction By Device

More than ¼ of Internet
traffic is mobile Source: StatCounter, BI Intelligence estimates 0% 25% 50% 75% 100% Dec-08 Jan-10 Feb-11 Mar-12 Apr-13 May-14 Global Internet Traffic Share Desktop Vs. Mobile

Mobile has extended the digital
day to 18/7 Source: Google Analytics, Business Insider 9/1/12 9/15/12 9/29/12 10/13/12 10/27/12 11/10/12 11/24/12 12/8/12 12/22/12 1/5/13 Mobile Visits Desktop Visits

Each device has a different
“prime time” Source: comScore, Telefonica, Macquarie Capital (USA), December 2011

Where are we in the
mobile device cycle?

Developed mobile markets are nearing
maturity Source: comScore 18% 72% 0% 10% 20% 30% 40% 50% 60% 70% 80% Jan 10 Jun 10 Nov 10 Apr 11 Sep 11 Feb 12 Jul 12 Dec 12 May 13 Oct 13 Mar 14 (asapercentageofthemobilepopulation) U.S. Smartphone Penetration

The action is now in
China, India, and emerging markets Source: Mediacells via The Guardian 0 50 100 150 200 250 300 MillionsOfSmartphones Smartphone Sales In 2014 Will Be Driven By New Users In Emerging Markets Sales To New Smartphone Users In 2014 Smartphone Upgrades In 2014 Top 11 Markets Other Markets

China is already twice the
size of the US market Source: China Internet Network Information Center Mobile Users Total Users US Users 0 100 200 300 400 500 600 700 June 06 Dec 06 June 07 Dec 07 June 08 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 June 12 Dec 12 June 13 Dec 13 June 14 MillionsOfInternetUsers Chinese Internet Users

Prices are dropping fast Source:
BI Intelligence estimates $100 $150 $200 $250 $300 $350 2010A 2011A 2012A 2013E 2014E 2015E 2016E AverageSellingPrice Global Smartphone Average Selling Price Forecast

iPhone sales growth has slowed
(iPhone 6 will help) Source: Company Filings 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2 0 10,000 20,000 30,000 40,000 50,000 60,000 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 YoYSalesGrowth UnitSales(Thousands) iPhone Sales Unit Sales YoY Growth

Chinese companies sell ~25% of
smartphones in world Source: Canalys, IDC, Strategy Analytics, BI Intelligence, Company Reports 0 10 20 30 40 50 60 70 80 90 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Millions Selected Local Manufacturers From China Global Quarterly Smartphone Shipments Xiaomi Huawei Lenovo ZTE Coolpad

Global tablet growth has hit
a wall Source: IDC, Strategy Analytics, BI Intelligence estimates Year-Over-Year Growth -100% -50% 0% 50% 100% 150% 200% 250% 300% 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Tablet Shipments Quarterly Year-Over-Year Growth Sequential Growth

(iPad now experiencing “negative growth”)
Source: Apple -50% 0% 50% 100% 150% 200% 0 5,000 10,000 15,000 20,000 25,000 30,000 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 YoYSalesGrowth UnitSale(Thousands) iPad Sales Unit Sales YoY Growth

Why have tablet sales cratered?

1. Long upgrade cycle 2.
Phablet cannibalization 3. Need keyboard for serious input 4. Price

What about the
platform war?

We have a winner!

Apple is strong in the
US, where it’s a two-horse race Source: comScore Android Apple BlackBerry Windows Phone Other 0% 20% 40% 60% 80% 100% Jun 10 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Jun 13 Dec 13 Jun 14 US Smartphone Platform Market Share

But, globally, it’s an Android
world

~85% of smartphones run Google’s
Android Source: IDC, Strategy Analytics, BI Intelligence estimates Android iOS Microsoft BlackBerry Other 0% 25% 50% 75% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 ShareofGlobalUnitShipments Global Smartphone Market Share By Platform

~65% of tablets run Android
Source: BI Intelligence estimates Android Apple Amazon BlackBerry Nook Windows 0% 25% 50% 75% 100% 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Tablet Market Share By Platform

~70% of all new computing
gadgets run Android Source: Gartner, IDC, Strategy Analytics, Company Filings, BI Intelligence estimates Android Windows Apple BlackBerry Other 0% 20% 40% 60% 80% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 Global Computing Platform Market Share

Android used to lag Apple
badly with app developers.

Not anymore.

Android “fragmentation” problem is improving
Source: Google Other Froyo Gingerbread Honeycomb Ice Cream Sandwich Jelly Bean Kit Kat 0% 20% 40% 60% 80% 100% 9/15/12 11/15/12 1/15/13 3/15/13 5/15/13 7/15/13 9/15/13 11/15/13 1/15/14 3/15/14 5/15/14 7/15/14 Jelly Bean And Kit Kat Are Now ~80% Of Android

Android now more popular with
developers than iOS Source: Developer Economics, Q3 2014 Android 42% iOS 32% BlackBerry 10 3% Windows Phone 10% Other 13% Mobile Developers' Main Platform

Android will soon overtake iOS
in app revenue Source: Jana, App Annie, BI Intelligence estimates $0 $1 $2 $3 $4 4Q13 2Q14 4Q14E 2Q15E 4Q15E 2Q16E Billions Estimated App Revenue Apple App Store Vs. Google Play

Android is catching up to
iOS in developer payouts Source: Jana, App Annie, BI Intelligence estimates Apple App Store Google Play $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 3Q13 4Q13 1Q14 2Q14 Billions Estimated App Developer Payout Apple App Store And Google Play

Android now generates more global
ad traffic than iOS Source: Opera Mediaworks Android iOS BlackBerry Symbian Other 0% 20% 40% 60% 80% 100% 2Q12 4Q12 2Q13 4Q13 2Q14 ShareOfTraffic Global Mobile Ad Traffic Share By Platform

The key digital media trends…

Mobile
Social
Native
Video
Programmatic

Most digital growth is now
mobile Source: comScore, April 2014 Smartphone 131 Smartphone 442Tablet 11 Tablet 124 0 200 400 600 800 1000 1200 Dec-10 Dec-13 BillionsOfMinutes Time Spent By Digital Platform Per Month U.S., December 2010 Vs. December 2013 1,040% Growth 237% 7% Desktop 401 Desktop 429

Messaging apps are exploding Source:
Company Statements, News Reports, BI Intelligence estimates 0 100 200 300 400 500 600 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Millions The Messaging Wars — MAUs For Top Apps (Monthly Active Users - Global)

Social networks and sharing are
exploding Source: BI Intelligence estimates based on data from company filings, comScore, Global Web Index, Totem and news reports Facebook Twitter Tumblr Instagram Snapchat Google Plus LinkedIn Pinterest Vine 0 500 1,000 1,500 2010 2011 2012 2013 2014E Millions Social Network MAUs (Global)

Mobile video is booming… Source:
Cisco, 2013 0 1 2 3 4 5 6 7 8 2011 2012 2013 2014 2015 2016 2017 MillionsofTerabytesPerMonth Global Mobile Video Traffic Will Continue To Surge

Mobile video has enabled the
rise of the YouTube stars Source: Company Filings 35 million viewers 8 million viewers 1 million viewers

Social and music are now
mostly mobile Source: Company Filings Pandora Facebook Twitter 0% 25% 50% 75% 100% 2008 2009 2010 2011 2012 2013 Mobile Usage: Pandora, Twitter, Facebook

Mobile is driving all of
Facebook’s growth Source: Company Filings Advertising (Non-Mobile) Mobile Advertising Payments And Fees $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Q3 14 Billions Facebook Revenue By Segment (Global)

Mobile is now a third
of eCommerce traffic Source: Monetate PC Tablet Smartphone 0% 25% 50% 75% 100% 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Ecommerce Website Traffic By Device

PayPal powers $30 billion in
mobile payments *PayPal counted a small portion of Braintree’s transaction volume as its own in the last 12 days of Q4 2013.Source: PayPal PayPal Mobile Braintree Mobile* $0 $5 $10 $15 $20 $25 $30 $35 2008 2009 2010 2011 2012 2013 U.S.DollarsInBillions PayPal Mobile Transaction Volume (Including Braintree 2013)

Venmo is (finally) replacing friend-to-friend
payments Source: PayPal, BI Intelligence $81 $105 $141 $194 $314 $468 $700 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 MillionsOfDollars Venmo Payment Volume

Ad growth is mobile, social,
video, native, programmatic Source: BI Intelligence estimates based on data from BIA/Kelsey, IAB, IDC, and Magna Global Note: Formats overlap. Mobile includes all ad formats that appear on mobile. -0.4% 15.1% 2.3% 42.6% 18.0% 34.7% 35.7% Desktop Display Desktop Video Desktop Search Mobile Social Native Programmatic Advertising Revenue Growth (US) CAGR 2013 - 2018

Mobile is a “green field”
Source: eMarketer $1 $1 $1 $3 $10 $12 $1 $1 $1 $3 $15 $30 $1 $1 $1 $4 $19 $46 Latin America Middle East and Africa Eastern Europe Asia-Pacific Western Europe North America Annual Mobile Ad Spend Per Mobile Internet User By Region 2011 2012 2013

Social is booming Source: BI
Intelligence estimates, BIA/Kelsey Non-Mobile Mobile $- $2 $4 $6 $8 $10 $12 $14 $16 2013 2014E 2015E 2016E 2017E 2018E Billions FORECAST: Social Media Advertising Spend (US)

“Display” ad spending is still
respectable, but… Source: Company Filings, BI Intelligence estimates Google Other Yahoo AOL Microsoft $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 Total Display Advertising Revenue (Millions) US Display Advertising, 2006-2014 (Quarterly)

Growth is shifting to “native”…
Source: BI Intelligence estimates, IAB $1.0 $1.3 $1.9 $2.7 $3.9 $5.7 $0.8 $1.0 $1.3 $2.0 $2.7 $3.4 $2.9 $5.6 $7.5 $9.2 $10.7 $11.9 $0 $5 $10 $15 $20 $25 2013 2014E 2015E 2016E 2017E 2018E Billions Native Advertising Revenue (US) Desktop And Mobile Native-Style Display Sponsorship Social

And “programmatic” Source: BI Intelligence
estimates, Magna Global, IDC $6 $8 $12 $18 $23 $28 2013 2014E 2015E 2016E 2017E 2018E AdSpendInBillions FORECAST: Programmatic Ad Spend (U.S.)

Google is still the digital
advertising king Source: Company Filings Note: Based on GAAP revenue. Google Facebook Yahoo AOL $0 $4 $8 $12 $16 $20 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Billions Digital Advertising Revenues (Global)

Google’s YouTube dominates digital video
and video ads Source: Company Filings, BI Intelligence estimates YouTube Tremor YuMe TubeMogul $0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 RevenueInMillions Global Digital Video Advertising Revenue (Select Companies)

Google’s Chrome browser is crushing
Firefox and IE Source: StatCounter Other Safari Firefox Internet Explorer Chrome Opera 0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 Global Web Browser Usage Share

Google’s Android has peak-Windows-like market
share Source: IDC, Strategy Analytics, BI Intelligence estimates Android iOS Microsoft BlackBerry Other 0% 20% 40% 60% 80% 100% 1Q09 3Q09 1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 ShareofGlobalUnitShipments Global Smartphone Market Share By Platform

Google 93% Bing 3% Yahoo
2% Other 2% Europe Search Market Share Oct. 2014 In Europe, Google has peak-Windows-like search share Source: StatCounter

Basically, Google is swallowing the
world… Source: Google, 2014 Is An Estimate $- $10 $20 $30 $40 $50 $60 $70 2009 2010 2011 2012 2013 2014E Billions Google Global Annual Revenue

(And people are noticing!) Source:
StatCounter

(For Microsoft, DOJ attack was
the beginning of the end) Source: StatCounter

Have Google and Facebook won?

Not necessarily.

Money follows eyeballs.

Search click growth is finally
decelerating Source: Google 20% 23% 26% 31% 26% 25% 17% Q1 13 Q3 13 Q1 14 Q3 14 Google Paid Clicks Growth Global, Year-Over-Year

US desktop search queries are
now shrinking Source: comScore Note: Explicit user initiated search queries only. 10% 12% 14% 10% 7% 4% 0% -3% -5% -7% -8% -7% -7% Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Total Monthly Search Query Growth U.S., Year-Over-Year; Desktop Only

“No one uses Facebook anymore”
— Gen Z-er Source: Piper Jaffray 42% 33% 27% 23% 27% 30% 31% 27% 12% 17% 27% 30% Fall 2012 Spring 2013 Fall 2013 Spring 2014 The Most Important Social Networks To US Teens Percent Of Respondents Who Say The Network Is Most Important Facebook Twitter Instagram

Why do teens love Instagram?
0 50 100 150 200 250 300 2010 2011 2012 2013 2014E Millions Instagram “Because parents see that camera icon and think it’s a photo app. They don’t know it’s a social network.”

What’s Tumblr for? 0 50
100 150 200 250 300 350 2010 2011 2012 2013 2014E Millions Tumblr “Fandom. And depressed and creepy people.”

What about phone calls? Do
people talk anymore? 0 200 400 600 800 2010 2011 2012 2013 2014E Millions WhatsApp “No. Everyone has phone numbers, but they’re for texting.”

Digital is the medium for
the new generation. Digital will grow for decades.

So, what’s next?

Connected cars — we spend
1.2 hours a day in them Source: Bureau Of Labor Statistics 8.8 hours 7.6 hours 2.5 hours 1.2 hours 1.1 hours 1.1 hours 1.7 hours 0 12 24 Average Daily Time Spent Per Person U.S. Employed Citizens ages 25 to 54 Other Household Activities Eating And Drinking In The Car Leisure And Sports Sleeping Working

Wearables (someday) Source: BI Intelligence
estimates Smartwatches Fitness Bands And Other Activity Trackers Rest Of Wearables Market 0 20 40 60 80 100 120 140 160 2010 2011 2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E MillionsOfUnitsShippedAnnually Global Wearable Device Unit Shipments Forecast 35% CAGR We Are Here

Smartwatches, like Apple Watch, should
do okay Source: BI Intelligence estimates Total Smartwatch Market Apple Watch 0 20 40 60 80 100 120 140 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E Millions Apple Watch Annual Shipments Forecast 2015-2020

Fitness bands will remain niche
Source: NPD Group, BI Intelligence estimates; Annual Data From April Through March Fitbit Jawbone Nike Other - 500 1,000 1,500 2,000 2,500 3,000 3,500 2010-2011 2011-2012 2012-2013 2013-2014 ThousandsOfFitnessBandsSold Fitness Band Hardware Annual Unit Sales By Device Maker, US Only

“Internet of Things” — 20B
connected devices by 2020 Source: BI Intelligence estimates Enterprise Government/Infrastructure Home - 5 10 15 20 25 2014E 2015E 2016E 2017E 2018E 2019E BillionsofDevices Estimated Number of Installed IoT Devices by Sector

We’ll fill our houses with
smart devices Source: ABI Research, TechNavio, Pike Research, BI Intelligence estimates Smart Home Energy Smart Home Security Smart Appliances Other Systems 0 500 1,000 1,500 2,000 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E Millions Global Connected Home Device Shipments By Device Category

And companies will buy them
by the billions Source: BI Intelligence estimates - 1 2 3 4 5 6 7 8 9 10 2014E 2015E 2016E 2017E 2018E 2019E BillionsofDevices Global Enterprise Device Growth Five-Year (2014-2019) CAGR 49%

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