CAP Ventures Executive Industry Breakfast Briefing, CeBIT 2003 Slide 1

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2 CAP Ventures Executive CeBIT Briefing March 15, 2003 Catherine Charlery European Group Director Sponsored by Toshiba CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

3 CAP Ventures & InfoTrends InfoTrends Joined CAP Ventures Team in May 2002 Slide 3

4 Practice Areas Consumer Corporate Services Office Production Digital Imaging Digital Photography Trends Image Scanning Trends Internet Imaging Trends x x x Workflow and Content Management Dynamic Content Software Network Document solutions Production Workflow Solutions x x x x Output On Demand Printing & Publishing Digital Peripherals Solutions Visual Communications Technologies x x x x Supplies Communication Supplies x x x Services Electronic Displays Production Workflow Solutions (Document Outsourcing) Narrowcasting x x Teams of industry analysts that track the market and help clients with their product and business strategies Slide 4

5 What Makes CAP Ventures Unique? Focus Experience Depth Largest consulting and research firm in the Business Communications & Imaging Industry Highly experienced staff: average 15+ years Global presence: United States, Europe and Asia Direct access to analysts Slide 5

6 2003 New Services and Studies Photo Printing Trends Vendor Advisory Service The Future of Photo Printing in Europe Multiclient Western European Large Format Digital Graphic Study - Multiclient Slide 6

7 Other Recent CAP Ventures Multi-Client Studies The New Corporate Print Customer: A Profile of a Market in Transition The Future of Paper The Future of Mail and Transaction Documents Print On Demand Quarterly Market Data Tracking Programme Slide 7

8 Private-Client Research Services Combining industry expertise with market research services Working with individual clients on specific assignments Market opportunity assessment Business plan development Product/service concept testing Customer requirements Brand awareness North America, Europe and Japan Slide 8

9 CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

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11 The Next Step After Convergence Catherine Charlery European Group Director CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

12 The Next Step After Convergence What are the future trends in the office? What are the growth opportunities in office Workgroup? Why players need to think more than hardware? Close Slide 12

13 Future Trends in the Office: 2003 & Beyond Copiers Hybrid in the office workgroup High capacity scanning to document repository Accounting software solutions Page Accounting/Tracking & Asset Management Accounting/Tracking Fax IP fax as standard in the office Colour fax and colour scan capabilities Printers Personal MFPs continue to grow as scanning and photo capabilities improve Photo printers expand due to industry standardisation; direct print from digital cameras Placement growth in mid-range workgroup printers (25 to 50 ppm) due to improved price / performance Growth in use of colour in the office Slide 13

14 Future Growth Area is Multifunction What s driving multifunctionality? Explosion of SOHO, full-time and part-time home working Computer networking Channel diversification Internet Dynamic document Virtual & collaborative working Buyer expectations Western European MFP Installed Base All Categories 30,000 25,000 20,000 15,000 10,000 5, Copier MFP Fax MFP Printer MFP Slide 14

15 Technology influencing the future of the document Data security (encryption) Wireless printing Output management Document management Device management Services Hardware Solutions Software A good solution is more important than just good hardware Slide 15

16 Future profit growth for those in the office copying/printing equipment business is reliant upon the adoption of colour. CAP Ventures Slide

17 The Use of Colour Personal Graphic Arts Slide 17 Office Colour use is high at both ends of the spectrum and very low in the Office

18 Competitive Colour and Monochrome Output in a Single Device Major Finding of CAP Ventures Colour Studies The emergence of the universal copier/printer (or colour enabled monochrome printer) 76% of respondents showed some interest in a universal device, 14% were highly interested Produces colour pages of a competitive cost per page Produces monochrome pages at prices competitive with monochrome copier/printers Capital cost is a small premium to monochrome copier/printer Has features and functions that match the best monochrome copier/printer Slide 18

19 The Market Impact The penalty for printing colour vs. monochrome is approaching an acceptable premium The advantages of colour are well known Cost per page has been the inhibitor to wide-spread office adoption CAPV research indicates colour pricing is reaching acceptable levels for document application owners Through these devices, corporate digital colour volumes will increase in both the manned and unmanned environments New in-house colour volume will come from Adding colour to monochrome pages Migrating colour offset and production volume back in-house Slide 19

20 Average B&W-to-Colour Output Migration At Various Cost Levels The current cost for black & white printing or copying is around 2 cents per page. What percentage of your black & white output do you estimate would be output in colour at the following cost levels? 100% 80% 60% 40% 28.2% 20% 6.6% 12.7% 19.1% 0% 10 cents per color page 7 cents 5 cents 2 cents (same as black & white) N = 37 companies % of B&W Printing That Would be Done in Colour at Different CPCs Slide 20

21 Latest Research by CAP Ventures Focused on workgroup colour European study = Future of Colour Interviews conducted between December January Web-based surveys with European companies Respondents were from a variety of industries, company size segments and countries US study = Colour in the Workgroup:The Next Frontier Conducted December Respondents A variety of size and types of companies Slide 21

22 The Value of Mixed Colour Source Jobs Spot Colour Page B&W Page Med. Colour Page Graphics Colour B&W Page Create one document, with colour and black & white pages Slide 22

23 Executive Summary 2003 Market Redefinition Growth opportunities Networking as standard; MFP Copier segments 2-4 POD applications in the office Colour CPC/CPP Universal copier/printer Marketing to global marketplace Solutions need organisation structure to promote it Slide 23

24 The Next Step After Convergence CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

25 Document Solutions Applications Driving Office Automation Joel Mazza Associate Director Network Document Solutions Consulting Service CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

26 Top Network Document Solutions By Category DEVICE MANAGEMENT Remote Diagnostics Device Relationship Management DOCUMENT OUTPUT MANAGEMENT Document Routing Print Tracking & Security CAPTURE // CREATION DOCUMENT MANAGEMENT & WORKFLOW Scan Hardware & Software Forms / Variable Data Document conversion Document repositories Project Management Tools Collaboration tools Slide 26

27 Network Document Solutions The Revenue Opportunity Network Document Solutions Forecast Total 2001 Market - $191 M Software Licensing - $47 M Consulting & Support - $69 M Installation Services - $63 M Potential Market - $879 M by 2006 Challenges to Growth Channel development & initiative Training infrastructure 0 $(M) 00' 01' 02' 03' 04' 05' 06' Installation Rev Software Rev Support Rev Software Maint Rev Slide 27

28 Document Management Today s Deployment Trends Becoming part of the computing infrastructure Lower cost entry-level solutions Out-of-the box design reduces integration costs Increasingly deployed enterprise-wide Supporting routine business processes & applications Support for a range of documents & information Integration between other office systems & equipment Intuitive workflow tools Scanner & Multifunction devices Slide 28

29 Areas of Greatest Need for a Document Management System Of these categories, where do you believe your company has the greatest need for a document management system? Publishing 11.4% Promotional 5.7% Engineering 12.4% Office 47.6% Transaction 22.9% N = 105 companies Slide 29

30 Purchase of New Digital Document Management Solutions Have you considered any of these solutions? Have you purchased any of these solutions? Yes 18.2% No 48.5% Yes 51.5% No 81.8% N = 68 companies that are aware N = 33 companies that have considered Slide 30

31 Using Any Devices to Scan Documents to or a Network Folder Are you using any of these devices to scan documents to or a network folder? The following devices were listed: - Inkjet printers - Black and white laser printers - Color laser printer - Workgroup multi-function device - Networked digital black & white copier - Color copier/printer Yes 40.9% No 59.1% N = 110 companies Slide 31

32 Time Period for Implementing a Document Management System Please indicate your company's plans for implementing a document management system? We define document management as a system of software, and possibly hardware, that enables document capture, storage, text and media retrieval, as well as integrated workflow tools for managing routine/knowledge based projects. No immediate plans 32.7% 2000 or prior 13.6% % % Considering for % Planning for % N = 110 companies Slide 32

33 NDS 2003 Research Document Solutions forecast Research Compendium Modules 1 4 End user research - Print tracking, security & accounting applications White papers Disruptive Innovation s Identifying Opportunities & Threats in the MFP Market Defining The Business Plan/Business Case End-User Training Programs for Solutions Deployment Defining The Document Workflow Assessment Slide 33

34 Document Solutions Applications Driving Office Automation CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

35 What s New at CeBIT 2003 Stuart Robinson Associate Director Digital Peripherals Solutions CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

36 What s New at CeBIT 2003 New Product Highlights Other Interesting Activities Summary of Trends Q&A Close Slide 36

37 Vendor: HP Model: Designjet 120 Highlights: A6 to A1, fast, affordable, 6-colour printer Stand: Hall 1, Stand 4h2 Vendor: Sagem Model: Laser Pro 345 SMS Highlights: F/P/C/S, colour scan, SMS, , LAN fax Stand: Hall 26, Stand E32 Slide 37

38 Vendor: Brother Model: MFC-4820C Highlights: platen-based colour F/C/P/S Stand: Hall 1, Stand 2b2 Vendor: Ricoh Model: FAX4410NF Highlights: Laser, colour scan, document workflow, large workgroup Stand: Hall 1, Stand 2k1 Slide 38

39 Vendor: Canon Product: MEAP Highlights: Java platform for s/w application development Stand: Hall 1, Stand 5b2 Vendor: Canon Model: CLC3200 & irc3200 Highlights: 32ppm colour MFP Stand: Hall 1, Stand 5b2 Slide 39

40 Vendor: Toshiba Model: e-studio 3511 / 4511 Highlights: 35/45ppm mono printer/copier, 11ppm colour Stand: Hall 1, Stand 6h2 Vendor: Xerox Model: DocuColor 3535 Highlights: Printer/Copier, Fiery controller, Xerox toner Stand: Hall 1, Stand 2g8 Slide 40

41 Other Interesting Activities Canon i450 (high quality 4-ink printer, 129) Olivetti HP Sagem Kyocera-Mita Minolta-QMS Olivetti Job-jet P200 (HP badged IJ printer) PSC 1210 (smallest flatbed All-in-one) Photo Easy-150 (their first photo printer, 4x6-inch) FS-C5016N (16ppm single-pass printer, 3k) Magicolor 7300 (21ppm single-pass, 4k) d-color P16 (16ppm single-pass, 3k) Slide 41

42 Other Interesting Activities (2) Samsung HP Kodak Epson Ricoh KN/Minolta ML-1252W (first printer with integrated WLAN) 7430cxi (largest flatbed AIO inkjet printer) PrinterDock (4x6-inch, die sub, one-click) Photo Stylus 935 (direct print, roll-fed with cutter) Aficio 1224C/1232C (black & white plus) Scan to workfile (single-button OCR to Word file) Slide 42

43 Gimmicks / Concepts Sagem Sharp Sharp Canon Canon Canon Concept cordless phone Pocket size organiser 3D LCDs U can talk fax ToyMe (SMS copying) Personalised profiles on copiers Slide 43

44 CeBIT 2003 Trends Colour-capable mono copiers Toshiba, Ricoh, Xerox +. Scan to On copier-, printer- and fax-based devices Photoprinting 2xUSB, Direct printing, multiple card slots Aesthetics SMEs Ease-of-use, GUI, ease of set-up and maintenance, stylish Target market for many vendors (~20 million in Europe) Slide 44

45 CeBIT 2003 Trends (continued) Network-ready copiers Solutions Software and services to get the most out of the hardware Slide 45

46 Full product list available to clients from Wednesday 19 th March via Slide 46

47 What s New at CeBIT 2003 CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

48 Slide 48

49 Presentations available from Monday 17 th March via Slide 49

50 Remember to complete evaluation forms! Slide 50

51 Any questions for the team?. see staff with red flowers Slide 51

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53 Worldwide Digital Camera Market Outlook Michelle Slaughter Director, Digital Photography Trends Service InfoTrends Research Group, Inc. 581 Boylston Street Boston, MA rgi.com Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 1 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

54 Session Agenda Worldwide Low End Digital Camera Market Market Trends Film Cameras vs. Digital Cameras Forecast Feature Trends Low End Digital Camera Market, Europe End User Trends, U.S. Camera Phones Conclusions Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 2 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

55 Worldwide Digital Camera Market Trends Mass market adoption in US, Europe and Japan 32% household penetration in Japan 20% household penetration in U.S. 12% household penetration in Germany Digital camera manufacturers offer products to suit all types of consumers From affordable user-friendly entry-level models, ultra- compact and stylish models to high-performance and feature-rich rich models Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 3 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

56 Worldwide Digital Camera Market Trends Consumers want to buy and use digital cameras to view and share photos immediately ing photos is leading application for digital camera users Film camera sales are declining (not including one-time use cameras) In Japan, unit sales of DCs have surpassed film camera sales. In the U.S., unit sales of DCs are expected to surpass film camera sales in In Europe, unit sales of DCs are expected to surpass film cameras in 2005/6. Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 4 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

57 Worldwide Camera Market Film Cameras and Digital Cameras Total Cameras Sold, Units (M) Film camera DC Digital Cameras 36% 2003 Units (%) Film Cameras 64% Note: Does not include one-time use cameras Source: 2001, 2002 GfK for worldwide film cameras Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 5 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

58 Worldwide Low End (<$1,000) Digital Cameras Units (K) 60,000 50,000 17% CAGR ,719 55,133 40,000 30,000 20,000 18,514 24,934 31,407 10, Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 6 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

59 Worldwide Low End (<$1,000) DC Revenues ($M) $14,000 $12,000 $10,000 8% CAGR ,095 10,427 12,578 13,058 $8,000 7,215 $6,000 $4,000 $2,000 $ Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 7 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

60 Worldwide Average Selling Price (ASP $) $500 $400 $300 $390 $365 $332 $281-8% CAGR $237 $200 $100 $ Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 8 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

61 2003 Projected Regional Unit Share ROW 9% Japan 23% North America 37% Europe 31% Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 9 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

62 Europe Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 10 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

63 Europe Low End Units (K) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, % CAGR ,454 7,200 9,732 14,469 17, Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 11 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

64 2003 Projected European Country Unit Share Scandinavia 7% Austria/ Switzerland 6% Rest of Europe 5% Germany 25% Iberia 7% UK 21% Benelux 7% Italy 9% France 13% Source: InfoTrends 2002 WW DC Forecast 10/02 Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 12 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

65 Digital Camera Feature Trends Price/ performance continues to advance for low end digital cameras Higher resolution at lower price points 3MP models start below 300 euro Low end models feature up to 6MP resolution Wide dynamic range to achieve film-like like results FujiFilm s 4th Generation SuperCCD SR delivers ISO 800, 1600 in 1MP mode 12-bit A/D conversion for Minolta s F300 and 7Hi models More models offer RAW format to prevent loss of data that occurs through compression Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 13 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

66 Digital Camera Feature Trends Video capture Capture length and image quality of video clips is improving Some models feature 30 frames/second at VGA mode High capacity memory cards enable users to capture longer clips Broadband Internet connectivity makes video clips easier to share and receive 52% of DC users in the U.S. have broadband connectivity Memory cards Ultra compact formats: SD, xd Cost per MB is improving Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 14 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

67 Digital Camera Feature Trends Direct to Printer connectivity Premium photo printers offer camera to printer connectivity CIPA* announced PictBridge industry standard to enable direct printing via USB between any brand DC and any brand of printer that supports the standard Products featuring PictBridge are expected to enter the market in 2004 Kodak announced printer dock 6000 Printers feature memory card slots *Camera and Imaging Products Association Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 15 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

68 Digital Camera Application Trends Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 16 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

69 U.S. Consumer Survey Results The survey was conducted via a questionnaire over the Web in the U.S. Invitations were ed to a balanced Internet panel participants. The balanced Internet panel represents the general population of Internet users. 2,628 qualified responses were received. 1,265 respondents answered the digital camera survey. The survey was live from November 22, 2002 through December 2, Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 17 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

70 Digital camera users primary activity is sharing photos - either through or print. Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 18 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

71 Which of the following personal applications do you do with your DC? Base: Those who own a DC, N=564 0% 20% 40% 60% 80% 100% Share via Share prints with friends/family Edit/Enhance photos Put prints in an album Create a slideshow View images on TV Capture video 12% 18% 6% 12% 7% 8% 33% 35% 61% 61% 55% 52% 81% 84% Source: InfoTrends US HH Internet Survey (11/02) Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 19 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

72 Those that plan to buy a digital camera have learned about digital photo activities from current users and they expect to do the same activities with their digital photos Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 20 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

73 What do you think you will do with the digital photos you capture with your DC? Base: Those who have considered purchasing a DC, N=476 0% 20% 40% 60% 80% 100% Share via 83% Share prints with friends/family Edit/Enhance photos Put prints in an album 40% 48% 62% Create slideshows Capture video 7% 14% View images on TV Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 21 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends 6% Source: InfoTrends US HH Internet Survey (11/02)

74 Printing photos at home is the leading digital photo print location, but more digital camera users are starting to learn about online and retail digital photofinishing services Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 22 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

75 At what location do you print photos from your digital camera? Base: Those who own a DC 0% 25% 50% 75% 100% Printer at home Printer at work Online photo printing service Retail location Copy or print shop Photo kiosk at retail location I don t print photos from my DC 15% 10% 4% 4% 3% 1% 2% 1% 1% 11% 16% 82% 80% Multiple responses allowed Source: InfoTrends US HH Internet Survey (11/02) Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 23 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

76 Camera Phones Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 24 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

77 Camera Phone Trends The camera phone market is developing at different rates in each region. Rapid market adoption in Japan Moderate adoption in Europe Slow adoption in the U.S. Camera phone provides spontaneous image capture and image communication Camera with you at all times - never miss a moment Opportunities for photo service Web sites, photofinishing retailers, and printer manufacturers Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 25 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

78 Camera Phone Trends Camera phones are not expected to take away from digital camera sales Camera phones feature low resolution and limited features 1MP and 2MP sensors will be featured in camera phones but sensor resolution is not the only factor to improve for image quality Consumers own a variety of cameras for different occasions Camera phones are expected to have an impact on one- time use camera sales Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 26 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

79 Conclusions 2003 will be another big year for digital camera sales. Digital cameras will remain a top-selling item in Q4 03 Digital camera penetration is rising quickly. Large installed base of DC users will increase demand for digital photo products and services. Printing digital photos at home is expected to remain the primary print location until retail services become widely available and as simple and affordable as film processing. By 2007, the consumer photography market will have undergone a significant shift from analog to digital photography. Copyright 3/03 by InfoTrends Research Group, Inc., Boston, MA USA T F Page 27 Circulation or disclosure of this content in whole or in part outside the authorized recipient organization is forbidden without prior written consent of InfoTrends

80 Central Eastern Europe Roundtable Catherine Charlery European Group Director CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

81 Central Eastern Europe Roundtable Why is CEE important? Results from annual survey What next? Interactive discussion Close Slide 2

82 EU enlargement growing importance of Central Eastern European market One Europe Copenhagen summit on 12 & 13 th December 2002 concluded accession negotiations with 8 CEE countries EU membership to increase from 15 to 25 by May million people will be welcomed as new citizens of the EU Slide 3

83 Vendors expect to sell more digital copiers and colour machines in 2003 In future (next 12 months), how do you see the level of sales for each product changing? More Less Same Level of Change Colour printers 60.0% 40% 20% Printer-based MFPs 100% 0% Printers 40.0% 60% 5% Colour copiers 80.0% 20% 15% Digital copiers 100.0% 25% Copiers 100.0% -15% Fax 20.0% 80% -15% 0% 20% 40% 60% 80% 100% % Respondents Slide 4 Source: CAP Ventures, 2002

84 Vendors expect to experience a 5-10% decrease in equipment pricing in 2003 How do you expect pricing to change over the next 12 months? -5% -10% -15% Ave Price Change Colour printers 50% 50% -12.5% Printer based MFPs 100% -5% Printers 100% -5% Colour copiers 100% -10% Digital copiers 86% 14% -5.7% Copiers, analogue 29% 71% -8.6% Fax 100% -10% 0% 20% 40% 60% 80% 100% % Respondents Slide 5 Source: CAP Ventures, 2002

85 Managing competitive pricing strategy is considered greatest challenge for vendors What do you see as the greatest challenges in the market in the next 12 months? Maintaining prices & profit levels through the migration from analogue to digital copiers Prevention of drastic price drops for analogue copiers Defending against expected price wars Slide 6 Source: CAP Ventures, 2002

86 Large corporations and small/medium-sized enterprises have embraced the Internet How advanced would you say the adoption of the Internet is in Central/Eastern Europe? None Basic Established Advanced Large corporations 100% SME 74% 26% Consumer 12% 62% 26% Schools/education 64% 23% 13% 0% 20% 40% 60% 80% 100% % Respondents Slide 7 Source: CAP Ventures, 2002

87 Segments 1 and 2 copier market provides a good opportunity in 2003 and beyond Where do you see the opportunities in the market in the next 12 months? Taking advantage of the growing DPS market which is affecting many segments Taking a higher market share, since many new digital models introductions are expected Shifting sales activity to Segment 2 copiers where Segment 1 models are overused Developing more solutions-orientated sales organisations Slide 8 Source: CAP Ventures, 2002

88 Major influences for the coming year In the next 12 months, what do you believe will be the most important influence in the Eastern European market? Dependency on economical developments in the region Terrorist activities in Central/Eastern European countries Oil price changes Russia could profit from higher prices per barrel, but others could suffer EU enlargement Slight push in member economies is expected Import taxes will reduce to 6% compared to current 12% rate (impact not likely to be seen until 2004) Adoption of European technical standards Slide 9 Source: CAP Ventures, 2002

89 How to approach the CEE market Focus on user requirements Gain knowledge of users expectations for document output Build awareness of future technology capabilities/applications Localised selling Product-centric sell rather than brand-centric Push cross-portfolio sales/bundling Bring structure to the channel Development of existing dealer base Investment in training (particularly IT/network experience) Vendor-led alliances Select effective distributor to ensure penetration in Personal segments Offer more effective pricing strategies Bring pricing stability to product portfolio Offer strong margins to dealers Reduce cost barriers to users Slide 10

90 The importance of the CEE market CEE offers growth opportunity for vendors as WE office equipment markets mature Slide 11

91 Central Eastern Europe Roundtable CAP Ventures Executive Industry Briefing CeBIT 2003 CAP Ventures, Ltd 7-9 Castle Street Luton, Beds LU1 3AJ Phone + 44 (0)

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93 Round Table Discussion What issues are you faced with? Slide 14

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