Thinking about Microsoft and digital reading business. Reasons why Microsoft should have a closer look at this fast growing market. (disclaimer: ppt created in early 2011)

1. Digital reading… and Microsoft?

3. Digital book… and Microsoft State of Art Music & Video Digital readingsmarket How to becomenext leader Recommandations

4. First, a « revolution » for cutomer You canbringwithyou all music / videosyouown Buy music / videoyouwantwhenyouwant Payonlywhatyoureallywant Exceptthat… digital experienceis Same as physicalexperience(but don’tsayit!)

6. Differentiation via technologies (HD, 3D…) to limit digital business

8. Box office is going up and forecast are good.

9. Retail is decreasing strongly from 40B$ to 34B$ within 7 years (-15%!)

10. Rentalaftergoing up isnowdecreasing, sufferingfrom VOD / online video as well

12. In Europe: -4% total. Digital copies + 29,7 % (13% total).

13. 13 countries are growing their markets. Digital copies compensate physical copies market. Digital market From 2004-2009, + 940% VS -30% traditionnal industry. More than 400 music plateforms on Internet with 11M titles. Itunes (23 countries) have 100M members and more than 10B downloads. Wall Mart, Best Buy, Amazon are here too.

14. Learningsfromdigital Music & Video business 4 years to get15%marketshare US and Europe are the keymarkets

15. Digital Market Chain Value Software Content Device

16. Content Device Software To be the next digital reading leader, (re) build the digital value chain. But doesitworthit?

17. Digital Readings = Next digital entertainmenteldorado? Books Comics Press CA (trend) Digital % 60B$ 30B$ 3B$ Opportunity in 2014 9B$ 1B$ 15B$ Tablets will cannibalize netbooks, outselling netbooks starting in 2012.In 2015, 23% of all PCs sold to consumers in the US will be tablets. Approx 100 millions a year. Slate IB/ebooks IB approx 300M users. (IDC 2010) # slates 8,5B$/ year Leader Revenue Opportunity in 2014 with 30% marketshare

18. Digital Readings = digital Music / Video? Wouldreaders love to: Bringwiththem all books/ presstheyown? Buy books/pressyouwantwhenyouwant? Payonlywhatyoureallywant? …YES

19. Are you sure? Cultural Old story (6th century) Smell & touch fetichism Pillar of education The content is the container The Music, The Movie but Readings

22. Blue Ocean

23. Whereweshould go? Price 500$ 150$<X<400$ 150$ Experience New Reading + Video + Web Reading Reading + Video + Web Hardware 100+ 3 to 5 1 to 2 Business Models License + Ads + Content Content Hardware

24. Our Assets PLATEFORM PARTNERS CUSTOMERS DEVELOPERS 600K Partners 8.6 Million Professional Developers 1.1 BillionPC Users Worldwide 60%+ of PC are running Silverlight $506 BillionIn Ecosystem Revenue

25. What about the device?

26. What about the business? Key question: revenue sharing (OEM, Content, Dev, Microsoft, Retailer)

27. Appendix

29. The top book retailers in the United States Barnes and Noble Borders Books-A-Million Wal-Mart Costco B. Dalton Waldenbooks Amazon.com Books and Co. Bookland