THE BRAINS OF THE NEW GLOBAL NETWORK

HOSTED BUSINESS SERVICES BRINGING YOUR SERVICES TO MARKET

Bryan Grimm February 5 th , 2015 Metaswitch Networks | Proprietary and confidential | © 2015 | 1

THE NETWORK BRAINS ARE ON THE MOVE…

…FROM DEDICATED HARDWARE APPLIANCES TO PRIVATE AND PUBLIC CLOUDS NETWORK INTELLIGENCE SERVICE INTELLIGENCE INTELLIGENT SOFTWARE GENERIC HARDWARE COMMODITY COMPUTE COMMODITY STORAGE COMMODITY SWITCHING

THE NEW GLOBAL NETWORK IS MORE…

COST EFFECTIVE FLEXIBLE PROGRAMMABLE REVENUE GENERATING INTELLIGENT COMPETITIVE

METASWITCH: THE BRAINS OF THE NEW GLOBAL NETWORK      Unmatched Communication Software DNA  30+ years of software development; broad portfolio  proven business model; financial stability Cloud, NFV, SDN leadership  Industry experts, first-to-market virtualized applications 650 employees   High retention of engineering expertise Innovative, agile development methods   1000+ global customers  Service Providers Equipment Manufacturers Large Enterprises Built on     Innovation Quality Engineering Reliability Exceptional customer support

AGENDA

    Hosted Voice Market Observations Product Positioning Sales Engagement Support Services Metaswitch Networks | Proprietary and confidential | © 2015 | 5

MARKET OBSERVATIONS

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LEGACY PBX IS IN DECLINE WHILE HOSTED IS GROWING

Hosted IP PBX/UC Market Size and Forecast by Region

$14 $12 $10 $8 $6 $4 $2 $0 CY12 CY13 North America CY14 EMEA CY15 CY16 Asia Pacific CY17 CALA CY18 Though PBX systems have had stagnant-to-declining sales over the past few years, the market for cloud services continues to expand, with businesses worldwide seeking out hosted alternatives. * Infonetics, 2014 Metaswitch Networks | Proprietary and confidential | © 2015 | 7

WOULD YOU LIKE A SLICE?

YES PLEASE!!!

COMPETITIVE LANDSCAPE

North America 14.9 million seats (YE 2014)

 Over 100 providers  8x8, RingCentral, West, Verizon, Vonage Business, Thinking Phone Networks, Comcast, Broadview Networks, Star2Star, Mitel, ShoreTel, Cox, Intermedia, Telesphere, Megapath

EMEA 6.5 million seats

 BT, Telenor, Orange, TeliaSoneria, Telefonica, TDC, Vonafone, DT, SFR, Bezeq, KPN  Country level activity with dominate providers  UK has broad competitive landscape

Asia Pacific 7.3 million seats

 Healthy markets in S. Korea, Australia, China, Japan  Telestra, Optus, KT, Samsung Networks, China Unicom, China Telecom,

CALA 1.6 million seats

 Still nascent market with slower competitive activity  Mexico, Brazil, Argentina * Infonetics, 2014

IP ADOPTION RATES BY COUNTRY

30% 28% 25% 23% Low adoption rates are an opportunity for service providers willing to address the needs of the SME market 20% 18% 17% 16% 15% 13% 10% 10% 11% 5% 3% 4% 7% 4% 4% 8% 13% < 10 Employees 10-49 Employees > 50 Employees 3% 6% 9% 0%

VOIP DEPLOYMENT BY COMPANY SIZE

Plenty of opportunity…

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6% 94% 17% 83% 22% 78% 22% 78% 29% 71% 1 to 4 5 to 19 TDM 20 to 49 IP 50 to 99 100+

TIMING?

HISTORY LESSON

Early 90’s Early 90’s • Business as usual • Global Economic Recession Recession • Build up to Y2K Future Future • Window closes closes

OPPORTUNITY COST

  Hosted PBX has a high opportunity cost factor Once the customer chooses another provider they are “lost” for at least 3 years – probably much longer  Given you may have a limited number of businesses to go after, this has a big economic impact

Market Example:

  ILEC with CLEC markets 1,600 businesses in a single target market  6 month delay results in $900K less revenue over 5 years – 20% less!

$2 000 000 $1 800 000 $1 600 000 $1 400 000 $1 200 000 $1 000 000 $800 000 $600 000 $400 000 $200 000 $0 Speedy Deployment Delayed Deployement Year 1 Year 2 Year 3 Year 4 Year 5 Metaswitch Networks | Proprietary and confidential | © 2015 | 14

THE TIME IS NOW

11%

<50 employees

24% 25% 8% 33% 15% 32%

>50 employees

25% 17% 10%

60% in the next 2 years 73% in the next 2 years

FIRST JOB IS TO…

COMMON UNDERSTANDING OF IP COMMUNICATIONS

39% Opportunity to educate 20% 16% 13% 11%

Unfamiliar Reduce Costs Innovative Features QoS Issues Better Way to Manage

CURRENT PHONES SYSTEM ISSUES

No Issues Too Expensive SP Customer Service Too Old or Outdated Billing Poor Call Quality Capacity MACDs Doesn't Meet Business Needs Lacking Features 5% 7% 4% 4% 11% 10% 9% 9% 8% 32%

~ 1/3 of the market is content with their current solution

COMMON PERCEPTION

Perception is that Hosted is cheap but not as good 20% 37% 45% 18%

Cost

32% 58% 52% 22%

Management

16%

Features

19% 56% 25%

Call Quality

STILL INTERESTED

<50 Extremely Interested Not Interested 11% 25% Very Interested 24% Moderately Interested Somewhat Interested 26% 15% Extremely Interested >50 21% Very Interested 33% Moderately Interested 22% Somewhat Interested 12% Not Interested 13%

INTERESTED IN WHAT THOUGH…

Visual VM Portal Softphone Presence IM Collaboration ACD Sim Ring Group Features Auto Attendant Advanced Call Ctr FMFM CRM Integration Music on Hold 0% 10% 20% Important to our company today 30% 40% 50% 60% Important to our decision to switch to VoIP 70%

MARKET RESPONSE – MORE COMPETITIVE PRESSURE

 An attractive market with good returns = competition  Hosted PBX is also a disruption on how companies purchase telephony services  Most haven’t thought about it in some time (or at all)  Two emerging players – large MSO’s and Over-the-Top  Both have aggressive pricing and a lot of marketing  US Pricing – normalizing in the $30/seat/month range   Slightly higher in EMEA Slightly lower in APAC and CALA Metaswitch Networks | Proprietary and confidential | © 2015 | 22

YOU HAVE THE HOME FIELD ADVANTAGE

     Not only can you deliver a best in class product at an attractive price, you can deliver: Personalized service Local sales force On-call technicians nearby Reference customers in the community  This needs to be central to your marketing messaging and sales model!

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PRODUCT DESIGN AND PACKAGING

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THINK SIMPLE WITH YOUR OFFER!

Sales to position Customers to under stand Operations to turn-up and support

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RECOMMENDED HOSTED PBX PACKAGING AND PRICING

Includes: Target Lines Pricing (MRC) Basic Seat Standard Seat Premium Seat Global Features (included in every sale)

• • PBX Feature Set • • • PBX Feature Set CommPortal Unified Messaging Easy Call Manager • • Mobility (Accession) E-fax Conference room Break room • Typical end user configuration • Mobile Worker Included • • • Admin Portal Auto Attendant Music on Hold

$ $$ $$$ Long Distance Phone Price

Unlimited or large bucket of minutes

$-$$$ per

month based on chosen phone with option to purchase

Non-recurring

Minimal Metaswitch Networks | Proprietary and confidential | © 2015 | 26

SEGMENTATION

 Understand your marketplace and what customers are looking for  Put a dollar value on those segments so you know where to focus  This might minor changes to your offer to meet business requirements of a certain type of customer (size or vertical)  Also examine your salesforce and their capabilities

SEGMENTATION NEEDS BY MARKET SIZE

 Bigger companies have more specialized needs

Product Timing SLA’s Smaller Businesses

Simpler needs Faster sales cycles SLA’s generally not needed Generally no

Mid-Size Businesses

More complexity Slower sales cycle SLA’s desired

Multi-site requirements Call Center Network Redundancy Network Security Design

Yes Existing hosted capabilities OK (MLHG) Not an issue Concerned Generally will need ACD and call recording Many will want geographically diverse servers Critical concern

MOBILITY – GET IT INTO YOUR OFFER

  Mobility package would enable integration of desk phone environment with any device  For instance, if the end user has an iPhone, iPad, and Windows laptop, they can load the application on all devices for the same price Would allow “mobile-only” users – no desk phone, just client(s) – would still need to buy a “seat”  Research points to a $5/month price point 29

THINK THROUGH YOUR OPERATIONAL PLAN

 Hosted has lots of moving parts CUSTOMER – Hosted PBX Process Rev 1.0, May 2013 Order Entry/Site Survey From Page 1 Schedule Site Survey Customer Conduct Site Survey and LAN Assessment Customer STOP – cancel order NO Customer Accepts Changes?

YES Update contract to Hosted Voice Process Order Entry/Site Survey Negatioate Installation date with customer Customer Schedule Install Date Customer Accepts Changes?

Site Survey (Form) and Facility Pictures Any changes from original Proposal?

YES Notify Sales of any Changes from baseline proposal NO Upload revised site survey form into Goldmine Customer Schedule Site Survey Page 3 Customer Installation Rev 1.0 - INS NO STOP – cancel order Schedule installation date and load into dispatch system Revise Proposal(?) and Present to customer From Page 1 NO Create Service Order in Metasolve and append with Site Survey doc Notify finance for 911 processing Customer Page 3 Conduct Site Survey and LAN Assessment Site Survey (Form) and Facility Pictures Append Site Survey to order?

Any changes from original Proposal?

YES Notify Sales of any Changes from baseline proposal Revise Proposal and Present to customer From Page 3 Confirm Install Date/ TIme Install POE Switch, Router, Phones Test configuration Activate Port Finalize Installation – test service Customer Training Customer Test (form) Rev 1.0 - INS Customer Notify INS Sales Support order is complete Close out order in billing system Metaswitch Networks | Proprietary and confidential | © 2015 | 30

OPERATIONS MAKES A HUGE DIFFERENCE

 Strive to get a quote to a prospect within 48 hours Outreach to first sales conversation Outreach Referral to Sales Time from sales call to first quote Initial Sales Conversation Draft Quote Time from initial quote to final quote Revise Quote Final Quote    Once the sale is made, target a customer turn-up within 30 days Clearly communicate timelines with the customer Be professional throughout  Research shows that a positive up-front experience is a big indicator of a long term relationship – go the extra mile!

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YOUR WEBSITE

   Front door to your product and your company Prospects (that don’t know you) will almost certainly research you using your website Invest in it and make it current!

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PRODUCT MESSAGING

Easy Call to action Not a single acronym used

PRODUCT MESSAGING

Let videos with real employees tell the story Metaswitch Networks | Proprietary and confidential | © 2015 | 34

SELLING HOSTED UC

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THE WRONG APPROACH TO SALES TRAINING

Slide 1 – “Hosted Voice Service is Service Provider X’s answer to the communication needs of today’s Small and Medium Business Customer.” Slide 2 –

 Jargon and Network Diagrams in advance of customer benefits  No benefits statements to features or practical applications  Offer Training vs. Sales Training - Lack of Solutions Selling and practical use cases

SOLUTION SELLING

 Solution selling involves asking clarifying questions to understand a customer’s needs before you propose a solution  Key is to become the

trusted advisor

– helping them solve a business problem using your expertise  A short video: http://smallbusiness.chron.com/solution-selling-sales-training-71867.html

It is critical that sales know this product inside and out…this is a competitive market with very experienced sales people

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THREE SIMPLE STEPS

Ask

• 5 Questions that are not specific to technology • What are the business’ core values

Listen

• From the customer’s responses you can begin to formulate your solution • Listen for indicators about who else will be involved in the decision making process

Advise

• Craft your solution to address the customer’s stated business needs • Acknowledge where your recommended solution is a good fit/where it is not Metaswitch Networks | Proprietary and confidential | © 2015 | 38

THE BRAINS OF THE NEW GLOBAL NETWORK

QUESTIONS?