Technology Innovation Award Global Satellite Transponder Global, Frost & Sullivan s Global Research Platform

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1 Technology Innovation Award Global Satellite Transponder Global, 2012 Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year in business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360 Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2012 Global Technology Innovation Award in the Global Satellite Transponder Market to Cisco. Significance of the Technology Innovation Award Key Industry Challenges Addressed by Cisco s Internet Routing in Space (IRIS) solution Alternate technological forces heavily impact fixed satellite service providers. On one hand, voice and data communication technologies evolve at lightning speed, while on the other hand the development cycle for a typical communication satellite takes at least five years or more from project formation to satellite launch and beginning of service. This means that fixed satellite service firms must have a good view of what future communication needs are going to be in order to properly serve their current customers and garner new clients. Cisco s IRIS solution, including the Cisco Series Space Router, allows satellite providers to future proof their satellite fleet by enabling increased flexibility of their satellite communication assets. The world market for fixed satellite services provided by geostationary orbit satellites is extremely competitive. Commercial satellite providers that lease transponders for communications must compete with other satellite firms, government satellite communications programs, and traditional wireline and wireless telecommunications firms. This can be very challenging as traditionally governments and wireline and wireless telecommunications firms often have much larger budgets to spend on communication programs and services. Nevertheless, fixed satellite service firms have several marketable advantages; they have much greater expertise in dealing with satellite communication than traditional telecom carriers, and they often are able to meet government communication needs faster and more cost effectively than an internal government satellite development program. Cisco s IRIS solution allows satellite operators to better compete in the greater communications industry landscape by offering standardized IP protocols to the satellite market. Previously, satellites relied on proprietary communication protocols. This 2012 Frost & Sullivan 1 We Accelerate Growth

2 standards-based approach allows satellite operators to seamlessly integrate their satellites with terrestrial networks and offer a unified set of communication services across these networks. Customers typically lease transponder capacity or satellite bandwidth for one to five year periods. As prices for satellite bandwidth fluctuate, long-term leases can become profitable assets for fixed satellite service providers or loss leaders. Customer demand for satellite bandwidth can also change rapidly. For example, government customers may have little demand for satellite communications capacity in one region of the world and then have extremely high demand due to a military operation almost overnight, examples of this would include U.S. actions in Iraq and Afghanistan after 911 to recent NATO activity over Libya. Cisco s IRIS solution allows satellite operators to market more flexible communication solutions to their customers and also allow them to be able to rapidly change customers as service contracts reach fruition. The world market for fixed satellite services via geostationary orbit satellites is a large mature market with slightly over $10 billion in revenue and over 300 satellites in operation. There are three major types of end users served by these fixed satellites. Consumers rely on satellite services for Direct Broadcast Satellite television and video programming as well as Internet access. Businesses use fixed satellites to network and communicate with remote locations, track assets using machine-to-machine applications, backup traditional wireline networks in case of loss of service, and distance learning and telepresence applications. Finally, governments are important users of fixed satellite services enabling communication for military and other assets in far flung corners of the world. Cisco s IRIS solution is capable of serving both government and enterprise users of satellite communications. Impact of Technology Innovation Award on Key Stakeholders The Technology Innovation Award is a prestigious recognition of Cisco s accomplishments in the Global Satellite Transponder Market. An unbiased, third-party recognition can provide a profound impact in enhancing the brand value and accelerating Cisco s growth. As captured in Chart 1 below, by researching, ranking, and recognizing those who deliver excellence and best practices in their respective endeavors, Frost & Sullivan hopes to inspire, influence, and impact three specific constituencies: Investors Investors and shareholders always welcome unbiased and impartial third-party recognition. Similarly, prospective investors and shareholders are drawn to companies with a well-established reputation for excellence. Unbiased validation is the best and most credible way to showcase an organization worthy of investment Frost & Sullivan 2 We Accelerate Growth

3 Customers Third-party industry recognition has been proven to be the most effective way to assure customers that they are partnering with an organization that is leading in its field. Employees This Award represents the creativity and dedication of Cisco s executive team and employees. Such public recognition can boost morale and inspire your team to continue its best-in-class pursuit of technology leadership for Cisco. Chart 1: Best Practices Leverage for Growth Acceleration Key Benchmarking Criteria for Technology Innovation Award For the Technology Innovation Award, the following criteria were used to benchmark Cisco s IRIS performance enhancement over legacy satellite solutions: Uniqueness of Technology Impact on New Products/Applications Impact on Functionality Impact on Customer Value Relevance of Innovation to Industry Decision Support Matrix and Measurement Criteria To support its evaluation of best practices across multiple business performance categories, Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is an analytical tool that compares companies performance relative to the industry standard with an integration of quantitative and qualitative metrics. The DSM features criteria unique to each Award category and ranks importance by assigning weights to each criterion. The 2012 Frost & Sullivan 3 We Accelerate Growth

4 relative weighting reflects current market conditions and illustrates the associated importance of each criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for each market and Award category. The DSM allows our research and consulting teams to objectively analyze each company's performance on each criterion relative to the industry standard and assign performance ratings on that basis. The DSM follows a 10-point scale that allows for nuances in performance evaluation; ratings guidelines are shown in Chart 2. Chart 2: Performance-Based Ratings for Decision Support Matrix This exercise encompasses all criteria, leading to a weighted average ranking of the award recipient as compared to the industry norm. Researchers can then easily identify the value of the increase in technical innovation brought to the industry by the award recipient. Best Practice Award Analysis for Cisco The Decision Support Matrix, shown in Chart 4, illustrates the relative importance of each criterion for the Technology Innovation Award and the ratings for the award recipient as compared to the industry status quo. Chart 3: Decision Support Matrix for Technology Innovation Award Measurement of 1 10 (1 = lowest; 10 = highest) Award Criteria Uniqueness of Technology Impact on New Products/Applic ations Impact on Functionality Impact on Customer Value Relevance of Innovation to Industry Weighted Rating Relative Weight (%) 20% 20% 20% 20% 20% 100% Cisco Industry Legacy Level of Technological Innovation Comparative Difference Frost & Sullivan 4 We Accelerate Growth

5 Criterion 1: Uniqueness of Technology Cisco is the market leader in the sales of networking routers with more than half the worlds routers sold in While other companies also make networking router, Cisco is the industry standard for routing capabilities. The Cisco IRIS payload is the only router in space and Cisco has 100% market share of the space routing market, a new market for routing capabilities. While other companies have brought switching capabilities to space within satellites, the Cisco Space Router takes advanced routing and switching in space to a completely new and previously unseen level within the industry. Cisco IRIS score on this criterion is based on the improvement in capability going from a satellite with a networking switch on board to that of a satellite with a fully functional network router on board. Criterion 2: Impact on New Products/Applications Cisco IRIS greatly enhances the use of new satellite communications services and capabilities. Cisco IRIS greatly improves time to market of new services and the transfer of satellite communications bandwidth from one application to another, allowing service providers to optimize bandwidth use and maximize revenue by being able to shift capabilities to better suit customer needs. Cisco IRIS score on in this criterion is based on its positive impact and improvement of government and enterprise communications and its ability to bring new services to market. Criterion 3: Impact on Functionality The Cisco Space Router greatly improves communication satellite functionality. Cisco IRIS makes satellites more flexible and enables them to maximize bandwidth utilization on communication services that are delivered while at the same time allowing the satellite to change services and applications delivered much more rapidly. Cisco IRIS score on this criterion is based on the improvement that the router provides to equipped satellites in operation as compared to traditional bent pipe satellites. Criterion 4: Impact on Customer Value The Cisco Space Router increases customer value in several key ways. The first way is the increase in performance and bandwidth utilization which helps service providers to increase revenues by getting the very most out of their satellite throughput. The second way that customer value is enhanced is through the ability to change services, applications, and customers rapidly helping satellite service providers to seamlessly transition satellite bandwidth usage. Finally Cisco IRIS enables satellite service providers to better serve their customers communication needs by being able to adapt to changing environments and changing requirements much faster than traditional satellites. Cisco IRIS score on this metric is based on its current low penetration of satellites in space offset by Frost & Sullivan s belief that as the industry is educated on the benefits of the 2012 Frost & Sullivan 5 We Accelerate Growth

6 Cisco IRIS solution, more customers will adopt this product and increase customer value considerably. The impact on customer value is already off to a very good start. The Cisco Space Router was launched on Intelsat 14 and tested extensively by the U.S. government. Intelsat is the largest operator of geostationary orbit satellites and the successful testing of Cisco IRIS by the U.S. government has demonstrated that the Cisco Space Router is market ready. Industry participants have taken notice of this fact and TCS, a leading satellite communications system integrator, mobile communications specialist, and government contractor, has signed an agreement with Cisco to exclusively market IRIS communication services to the enterprise and government satellite communications market. Criterion 5: Relevance of Innovation to Industry Cisco IRIS is revolutionizing the satellite communication industry by bringing the performance of Cisco s wireline and wireless networking capabilities to space. The improvement in satellite communication by Cisco IRIS cannot be overstated; it is bringing the satellite industry up to speed with the terrestrial networking improvements that Cisco has pioneered since their inception in Cisco IRIS score in this metric is based on the large improvement to the satellite communications industry that has been made possible by Cisco. Conclusion Cisco IRIS allows communication satellites to interface better with traditional wireline and wireless networks, thus allowing more seamless communication among mixed networks. Cisco IRIS is focused on extending the value and capability of networking to space and satellite communications. The advancement that Cisco IRIS brings to the market is the ability to utilize the benefits of the Internet Protocol (IP) within satellite communications which have in the past have utilized proprietary protocols that are difficult to network within traditional IP-based wireline and wireless networks. IRIS is satellite frequency band agnostic and will improve communication and bandwidth with traditional Ku- and C- band satellites as well as up and coming high throughput Ka-band satellites, and new military X-band satellites. Cisco IRIS brings reduced latency, increased throughput, improved network intelligence, and greatly enhanced flexibility to satellite communications. This allows satellite operators and communication users to maximize the value of the limited satellite bandwidth currently in orbit. IRIS allows satellite operators, satellite communication service providers, and satellite users to more effectively communicate via satellite. IRIS brings the benefits of Cisco networking to space and satellite communications and has been deemed extremely worthy of Frost & Sullivan s 2012 Technology Innovation Award by our Satellite Industry research team and Best Practices staff Frost & Sullivan 6 We Accelerate Growth

7 The CEO 360-Degree Perspective TM - Visionary Platform for Growth Strategies The CEO 360-Degree Perspective model provides a clear illustration of the complex business universe in which CEOs and their management teams live today. It represents the foundation of Frost & Sullivan's global research organization and provides the basis on which companies can gain a visionary and strategic understanding of the market. The CEO 360-Degree Perspective is also a must-have requirement for the identification and analysis of best-practice performance by industry leaders. The CEO 360-Degree Perspective model enables our clients to gain a comprehensive, action-oriented understanding of market evolution and its implications for their companies growth strategies. As illustrated in Chart 5 below, the following six-step process outlines how our researchers and consultants embed the CEO 360 Degree Perspective into their analyses and recommendations. Chart 4: The CEO's 360-Degree Perspective Model 2012 Frost & Sullivan 7 We Accelerate Growth

8 Critical Importance of TEAM Research Frost & Sullivan s TEAM Research methodology represents the analytical rigor of our research process. It offers a 360 degree view of industry challenges, trends, and issues by integrating all seven of Frost & Sullivan's research methodologies. Our experience has shown over the years that companies too often make important growth decisions based on a narrow understanding of their environment, leading to errors of both omission and commission. Frost & Sullivan contends that successful growth strategies are founded on a thorough understanding of market, technical, economic, financial, customer, best practices, and demographic analyses. In that vein, the letters T, E, A and M reflect our core technical, economic, applied (financial and best practices) and market analyses. The integration of these research disciplines into the TEAM Research methodology provides an evaluation platform for benchmarking industry players and for creating high-potential growth strategies for our clients. Chart 6: Benchmarking Performance with TEAM Research About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit Frost & Sullivan 8 We Accelerate Growth