Frank Stinson Partner & Sr. Analyst IntelliCom Analytics

1. The Evolving IP Communications Landscape:How UC and Collaboration are Changing How Customers Make Purchase Decisions and Who They Purchase From Frank Stinson Partner & Sr. Analyst IntelliCom Analytics

2. Focus Of This Session • Key Trends That are Driving Transformation of the IP Communications Market: • Software Centricity in competitive architectures and business models • Unified Communications (UC) definition, market acceptance, and barriers to broader adoption • How UC fits into broader Collaboration approaches and CEBP initiatives • Shifting stakeholders and decision influencers within customer organizations important in driving consideration for these emerging capabilities • How These Dynamics are Altering the Competitive Landscape • Summary and Discussion

3. The Business Communications Market Has Entered A New Stage Of Evolution Based On Software-Centric Delivery And Value Models And The Emerging Capabilities That They Enable Business Communications Software (BCS) IP Telephony TDM Voice as an Application Position of Voice Voice as a Feature Voice as a System Decision Focus Site-Centric Network and Enterprise-Centric Enterprise Community / User-Centric System Architecture Open Servers, SOAs, Communication and Business Applications w/Integrated Voice Features Central Processor Proprietary Servers and Appliances Services Focus Maintenance Shared Responsibility Management (Managed and Hosted Services) Applications / Solution Design and Integration, Innovation Services Management Key Customer Decision Attributes Business Process Optimization, User Experience, Incremental Business Revenue and Benefits Business Process Integration, User Productivity, ROI / TCO Reliability, Functionality Key Business Model Metrics Devices / Licenses Shipped Application / Feature User Attach Rates, Annuity Revenues Lines / Ports Shipped Source: IntelliCom Market DashboardSM

4. Although The Shift Toward BCS Value Models Is Still At An Early Stage, Some Vendors Already Derive A Significant Portion Of Their Product Revenues From Software Total Manufacturer Product Revenue North America – YTD (Q1-Q3) 2008 YTD (Q1-Q3) 2008 Percentage of Manufacturer Product Revenue by Value Layer – North America Source: IntelliCom Market Performance DashboardSM, November 2008

5. Communication- And Collaboration-Enabling Of Specific Business Processes (CEBP) Is Where Customers Will Ultimately Realize The Most Value From BCS Approaches Unified Communications IP Telephony Collaboration CEBP Infrastructure Convergence Personal Productivity Workforce Productivity Business Transformation Core Call Control Platforms Supporting Infrastructure End User Devices Centralized Management & Provisioning Unified Messaging Presence Management Instant Messaging Mobility Unified Clients Shared Workspaces Converged Conferencing Telepresence Enterprise Social Networking Comm. & Business Apps Convergence Event/Process-Driven Automation Reduced Latency Creation of New Services & Revenue Streams Technology Driven Benefits Business-Specific Benefits UC Plays an Important, But Not All-Encompassing, Role in This Shift From Traditional Technology Benefits Toward Highly-Specific Business Benefits Source: IntelliCom Market DashboardSM

6. Despite Considerable Vendor Positioning Efforts, More Than Half Of All Global Businesses Still Have No Plans For Deploying UC, Underscoring The Ongoing Confusion Existing At The Market Level What Are Your Organization’s Plans For Deploying UC? All Global Regions By Size of Business All All <20 <20 21 21 - - 100 100 101 101 - - 250 250 251 251 - - 500 500 501 501 - - 1000 1000 over 1000 over 1000 Businesses Businesses Employees Employees Employees Employees Employees Employees Employees Employees Employees Employees Employees Employees 100% 100% 90% 90% Planning to deploy UC in the 24 months and beyond timeframe 80% 80% 70% 70% Planning to deploy UC within the next 12-24 months 60% 60% Percentage of Businesses 50% 50% Planning to deploy UC within the next 12 months 40% 40% Already have started deploying UC 30% 30% 20% 20% No plans to deploy UC 10% 10% 0% 0% Occupational Role – Global Decision Makers N = 1384, IntelliCom Analytics/TMCnet Survey, September 2008 Larger SMBs and Very-Large Enterprises Have The Most Aggressive Deployment Plans

7. Planning to deploy UC in the 24 months and beyond timeframe Planning to deploy UC within the next 12-24 months Planning to deploy UC within the next 12 months Already have started deploying UC No plans to deploy UC LOB Decision Makers Indicate The Highest Potential Receptivity To UC, But Remain Mixed In Terms Of Influence On Purchasing Decisions Today What Are Your Organization’s Plans For Deploying UC? All Global Regions By Job Function IT Management Telecom Management LOB Management End User All Respondents 100% 90% 80% 70% 60% Percentage of Businesses 50% 40% 30% 20% 10% 0% Occupational Role – Global Decision Makers N = 1384, IntelliCom Analytics/TMCnet Survey, September 2008

8. A Fundamental Disconnect Between Where Voice Decisions Have Traditionally Been Made And Where The Benefits Of UC Are Most Likely To Be Felt Is A Key Barrier To Broader Adoption Traditional Voice Benefits UC Benefits Voice System Manager IT Infrastructure Manager IT Applications Development Functional Management (e.g. Sales) LOB Management Individual User CIO Benefits Derived Low Low Medium Medium High High High UC Exposure Low Low Medium Medium Medium Medium Low Business Value Focus Low Low Medium Medium High High Medium UC Selection Influence High Medium High Medium Medium Medium Low While BCS Is Partly a Technology and Cost Discussion, the New Capabilities That These Architectures Will Enable are Best Evaluated in Terms of Business Impact Source: IntelliCom Market DashboardSM

9. Some Vendors Are Positioning UC As A “Bolt-On” To Traditional Communication Silos, While Others Are Advocating It As Part Of A Fundamental Delivery Model Change Business Communication Software (BCS) Delivery Model Traditional Communication Silo Delivery Model With UC Bolted On Call Control Software Unified Messaging Platform Presence/IM Server Traditional Communication Applications Integrated and customizable software-based architecture delivered on common industry-standard hardware and infrastructure Traditional PBX/IP-PBX Platform UC Applications Converged Conferencing Platform Contact Center Platform Business Applications Source: IntelliCom Market DashboardSM

10. 100% 80% 60% 40% 20% 0% Knowledge Worker Telecom Management LOB Management Total Population IT Management About Half Of Those Customers Implementing UC Indicated That They Would Pursue A BCS Approach, But Roughly One-Third Of This Group Plan To Migrate From A Bolt-On Model Over Time Which Architectural Approach Will You Implement If Deploying UC? Implement standalone (“bolt-on”) UC solutions as a long-term solution Utilize a phased adoption with standalone UC today, but migrate to a software-based (BCS) architecture over time Move rapidly to a software-based architecture for IPT/UC to receive the benefits of tighter integration with business applications Move rapidly to a software-based architecture for IPT/UC to enjoy lower costs from industry-standard hardware and devices No plans to implement UC at the present time Percentage of Businesses Occupational Role – North American Decision Makers N = 1360, IntelliCom Analytics/TMCnet Survey, May 2008

11. In Light Of This, Some Enterprise Providers Are Moving Quickly Toward BCS, While Others Have Adopted A Bolt-On Approach – At Least In The Short Term IntelliCom Market Dashboard: Enterprise Segment* Scores Applications Positioning Index BCS Approach IBM Siemens Avaya Cisco Nortel Mitel Alcatel-Lucent Microsoft NEC Differentiated Bolt-On Approach 3Com Well-Positioned ShoreTel Competitive Challenged Deficient Applications Infrastructure Index Source: IntelliCom Market DashboardSM, January 2009 *Enterprise Segment = 1,000+ Users

12. All Businesses <20 Employees 21-100 Employees 101-250 Employees 251-500 Employees 501-1000 Employees over 1000 Employees 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% “We have no plans for using SOA in any aspect of our technology environment“ “We are currently using SOA in our overall IT environment, but have no plans to use it to integrate voice features into our business processes” “We are currently using SOA in our overall IT environment, and are planning to start utilizing it for voice feature integration within the next 12 months“ “We are currently using SOA in our overall IT environment, and will consider it for voice feature integration within the next 24 months” “We are currently using SOA in our overall IT environment, and will consider it for voice feature integration two or more years from now” While Enterprise Customers With Multiple LOBs And Separate, But Functionally Similar, Applications Are More Likely To Consider CEBP Implementation, Larger SMBs Indicate Surprising Receptivity All Global Regions By Size of Business Percentage of Businesses N = 827, IntelliCom Analytics/TMCnet Survey, September 2008

13. But Traditional Packaging Approaches Are Even More Prevalent In The SMB Segment, As Most Providers Tend To Place Greater Emphasis On The Ease Of Implementing Core Capabilities IntelliCom Market Dashboard: SMB Segment* Scores Applications Positioning Index BCS Approach Mitel IBM Siemens Cisco Nortel NEC Microsoft Avaya Differentiated Toshiba 3Com Bolt-On Approach Alcatel-Lucent Well-Positioned ShoreTel Competitive Challenged Deficient Applications Infrastructure Index Source: IntelliCom Market DashboardSM, January 2009 *SMB Segment = 20-250 Users

14. Much Like UC, Collaboration Means Different Things To Different People, Although Some Combination Of Web And Video Conferencing Scores High Across All Occupational Roles What Specific Point Applications Best Define Collaboration? 100% 80% UC Personal Productivity Web 2.0 Integration 60% Social Networking Video Conf./Telepresence Percentage of Respondents Document Storage/Search 40% Web Conf./Whiteboarding 20% 0% User/Knowledge Worker IT Infrastructure IT Apps Development Telecom Manager LOB Manager Total Respondents Occupational Role – North American Decision Makers N = 745, IntelliCom Analytics/TMCnet Survey, October 2008

15. Business Users Currently Tend To View Collaboration As Either A Luxury For Executive Management Or As A Tool For Customer-Facing Employees Rather Than An Enabler Of Internal Interaction Which Job Functions Will Derive The Most Value From Collaboration? 100% 80% Cross-functional Teams R&D 60% Customer Svc./Support Percentage of Respondents Sales 40% BU Leadership Executive Leadership 20% 0% User/Knowledge Worker IT Infrastructure IT Apps Development Telecom Manager LOB Manager Total Respondents Occupational Role – North American Decision Makers N = 1077, IntelliCom Analytics/TMCnet Survey, October 2008 This Perception Runs Counter to Most Vendor Value Propositions

16. They Also Tend To View The Utility Of Collaboration Through The Lens Of The Business Processes Most Relevant To Their Specific Job Functions Which Business Processes Will Benefit The Most From Collaboration? 100% 80% Operations Monitoring Employee Administration 60% Product/Service Development Percentage of Respondents Shipment Tracking 40% Financial Analysis Customer Service/Support Order Entry/Status 20% 0% User/Knowledge Worker IT Infrastructure IT Apps Development Telecom Manager LOB Manager Total Respondents Occupational Role – North American Decision Makers N = 1129, IntelliCom Analytics/TMCnet Survey, November 2008 Customer Support Scores Consistently High, While Product/Service Development and Order Entry/Status Vary Significantly Based on the Functional Role of the Respondent

17. The BCS Evolution Combined With The Need To Extend Collaboration Tools To Business Partners And Customers Will Increasingly Shift The Competitive Landscape Toward “Coopetition” Incremental Value/Benefits Alternate Delivery Approaches Voice Apps Open Hardware Core Voice SaaS & Hybrid Enterprise Apps Open Source User Devices Source: IntelliCom Market DashboardSM

18. Not considering new solutions from Nortel Concerned about a possible breakup, and halting plans until situation clarifies Concerned about a possible breakup, but moving forward with existing plans Confident that Nortel will emerge intact and moving forward with deployment plans These Dynamics, Combined With The Current Macroeconomic Situation, Mean That Existing Providers Must Make Major Business Model Changes While Also Adjusting To New Competition How Does the Nortel Restructuring Announcement Impact Your Deployment Plans? North American Results By Customer Environment 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mainly Nortel Environment Partial Nortel Environment Not Currently Nortel Customer N = 1780, IntelliCom Analytics/TMCnet Survey, January 2009 Nortel’s North American Base Expresses Initial Vote of Confidence in Restructuring

19. Summary Points • UC and Collaboration tools have the potential to deliver significant business value, but customers are confused by all the noise in the market and significant differences in how vendors position these terms • This value will ultimately be best appreciated by individual lines of business and end users – stakeholders that have not traditionally had a seat at the table for voice decisions • With few exceptions, providers have not adapted their go-to-market approaches to effectively reach this broader audience • A handful of providers are aggressively pursuing software-centric BCS delivery models, while others attempt to extend traditional, proprietary packaging approaches through incremental bolt-on capabilities • Business model shifts, macroeconomic factors, ownership changes, and new players are significantly altering the competitive landscape – this will only accelerate as UC and Collaboration move out of the early adoption phase

20. Reach Information Frank Stinson fstinson@intellicom-analytics.com 1259 Route 46, Building 1 Parsippany, New Jersey 07054-4913 Main: 908-686-4477 www.intellicom-analytics.com