StrategyofCorporateSalesApril15th,2002BeijingInvestmentConsultantsInc.

-Proposal1businessdefinitionProjectScoppingOurApproachQ&AAgenda2ExtranetStrategyandImplementationPlanCanMotorolagainclearmarketleadershipincorporatechannel?-realisticpotentialintheshorttomediumterm-longertermpotentialWhatactionsandinitiativesarerequired?Developaclearstrategyandactionplanto:GainclearmarketleadershipforcellularsubscriberunitsincorporatechannelFocusonkeystrategicindustries,organizationsandstrategiccitiesKeyQuestionsandObjectives3ExtranetStrategyandImplementationPlanCriticalIssuesHowdocorporatecustomerssegment(byindustry,geographic,#ofemployees,demographicsofemployees)Howattractivearesegments(size,growth,loyalty,value)?WhichsegmentsshouldMotorolatarget,participatein,andexit?Whatisthecorevaluepropositionintargetsegments?Whatareinitiatives?4ExtranetStrategyandImplementationPlan

“Classic”StrategyTools

proprietaryResearch/AnalysisStrategicFrameworkDevelopmentLessonsfromOtherIndustriesCellularHandset“RulesoftheGame”AtcorporatechannelChannelStrategiesIndustriesOrganizationsRegionsorcitiesInsightsforMotorola-Initiatives-actionplansApproachRulesoftheGameOutputStrategicFramework5ExtranetStrategyandImplementationPlanWearebiningproprietarydatawithleadingedgetoolsandtechniquesProprietaryDatapanyResearchpetitorDiagnosticMarketReviewDistributorInterviewsRetailerSurveys&InterviewsCustomerSurveysInterviewsFocusGroupsProprietaryAnalysisRootCauseAnalysisClusteringAnalysisforCustomerSegmentationPriceExperienceCurveLoyaltyStrategyFrameworksMarketForecastModelProductLifecycleAnalysisBrandEquityFrameworksA&PEffectivenessAnalysisPricingvs.PerceivedValueAnalysisTools&Techniques6ExtranetStrategyandImplementationPlanProjectScopingOurApproachQ&AAgenda7ExtranetStrategyandImplementationPlanSalesRequirementsChannelSwitchingServiceIntensiveAccountisprioritizedif:Accountsizing

:OwnershipType:AccountPrioritizationMethodology8ExtranetStrategyandImplementationPlanMining/OilGovernmentProf.ServicesTransportationTV/MediaExplorationAerospaceEducationTelGov.TechServicesHighTechFinanceServiceSectorHeavyMFGConstructionRetail/DistributionHotelsAgricultureEnergy120%1008060200200400600MobileRatio(Handsets/1000Heads)GrowthRate(1996-2001E)200,000EstimatedTotalAnnualPurchases(2001)9ExtranetStrategyandImplementationPlanNewvs.ReplacementPurchasesCustomersophisticationriseswithincreasingreplacementpurchasesUnits(MM)

CAGRFY97-FY99E37%90%15%PercentageNewHandsets:~95%77%68%55%ReplacementpurchasesNewpurchases10ExtranetStrategyandImplementationPlanLargeLargeLargeIndustrySegmentWhilethe~14,000“corporatechina”accountsarespreadacrossallindustrysegments,thelargestopportunitiesareconcentratedinfinance,education,retail/tradeandgovernmentPercentofTotalorganizationMegaMegaMegaMegaFinanceEducationgovernment2,00018001300Total=14,000organizationsMedium11ExtranetStrategyandImplementationPlanChannelSwitching(MegaSegment)PercentofTotalOrganizations50-60%oforganizationsarewillingtopurchasedirectVirtalDirectFromManufacturerViaphoneorfaxVirtualDirectFromManufacturerViaSalesCallNoYesSalesCallFromDistributorOverPhone/FaxFromDistributorDealerStore/RetailOutletNoYes12ExtranetStrategyandImplementationPlanAddressableRelationshipSegmentOfthe~58K“corporate”largeandmegaaccountsvolume,theMotorolaaddressablerelationshipsegmentisestimatedat40KorganizationsPercentofTotalOrganizations“CorporateChina”SmallbusinessHousehold>100putersPurchasedperyear30-100putersPurchasedPerYear<30puterPurchasedPerYearOtherGovernmentLightIndustryRetail/DistributionFinaceEducationandResearchInstitutesOtherGovernmentLightIndustryFinaceRetail/DistributionEducationandResearchInstitutesRestofchinaTop15Cities~285K~120K~200K~120K~58K~40K~40K13ExtranetStrategyandImplementationPlanAccountConcentrationAround8,000largeandmegaaccountsareresponsibleforalmosthalfofthe“CorporateChina”putermarketSmallBusinessMediumAnnualOrderVolume10-30AnnualOrderVolume30-100AnnualOrderVolume>100~200k~380k~660k~35,000Large~7,100~1,2001.65MM1.7MM~43,000Organizations~1.2MMUnitsMega“CorporateChina”AverageOrderSize(Unit)~180~50~20PercentofTotalorganizations14ExtranetStrategyandImplementationPlanRelationshipAccountsTotalNumberofPotentialRelationshipAccountsTotalPotentialMegaAccounts=~1200TotalPotentialLargeAccounts=~7100FinaceDistributinLightIndustryTelConstructionMining/OilTransport.HighttechProf.ServiceTV/MediaEducationGovernmentExplorationEnergyGov.TechServiceSectorAgricultureAerospaceHotelsHeavyMfg.15ExtranetStrategyandImplementationPlanKeyCustomerLocationsBothpotentialMotorolarelationshipandtransactionaccountsareheavilyconcentratedaroundthetop15largecitiesOtherOtherMedium(10~30purchasesperyear)Large(30~100purchasesperyear)HarbinHarbinGuangzhouBeijingBeijingChangchunChangchunZhangjiangJinanJinanGuangzhouZhangjiangXianShanghaiShanghaiXianHangzhouHangzhouMega>100~8,300Accounts~43,300Accounts~35,000AccountsPercentofTotalorganizations16ExtranetStrategyandImplementationPlanIndustrySegments:BarriersCertainindustrieshavespecificcharacteristicsthatlimittheaddressablepotential.Forexample,??%ofgovernmentpurchasersboughtonlylocalbrandsand??%ofeducationwillbuylowendmachinesPercentofTotalOrganizationsPercentofTotalOrganizationsOthersBoughtonlyLocalBrandsBoughtbothForgeinandLocalBrandsBoughtonlyForeignBrandsMotorolaEricosonNokiaLGGreatWallPansonicGovernmentP166<2000<1800<1500<1000yuanP133P100486P75Education17ExtranetStrategyandImplementationPlanBrandBundling(MegaandLargeSegments)TargetaccountswithbundledhardwarepurchasestooptimizesaleproductivityPercentofTotalOrganizationsPercentofTotalCustomersNoYesD:DesktopS:ServerN:NotebookSW:SoftwareMegaSegmentLargeSegmentM+N+S+SWM+N+SWM+N+S+SWM+N+SWM+S+SWM+S+SWM+E+NM+SWN+EM+N+SM+NMNoYesM+E18ExtranetStrategyandImplementationPlanProductBundling(MegaandLargeSegments)TargetaccountswithbundledhardwarepurchasestooptimizesaleproductivityPercentofTotalOrganizationsPercentofTotalCustomersNoYesD:DesktopS:ServerN:NotebookSW:SoftwareMegaSegmentLargeSegmentM+N+S+SWM+N+SWM+N+S+SWM+N+SWM+S+SWM+S+SWM+E+NM+SWN+M+N+SM+MNoYesM+Walki/Talki19ExtranetStrategyandImplementationPlanCorporateBundling(MegaandLargeSegments)TargetaccountswithbundledhardwarepurchasestooptimizesaleproductivityPercentofTotalOrganizationsPercentofTotalCustomersNoYesD:DesktopS:ServerN:NotebookSW:SoftwareMegaSegmentLargeSegmentM+N+S+SWM+N+SWM+N+S+SWM+N+SWM+S+SWM+S+SWM+E+NM+SWN+M+N+SM+MNoYesM+Walki/Talki20ExtranetStrategyandImplementationPlanKeyPurchaseCriteria(MegaSegment)Price,productqualityandafter-salesservicearemostimportantPriceQuality/ReliabilityQuality/ReliabilityAfterSalesServicePriceQuality/ReliabilityAfterSalesServiceAfterSalesServicePriceTechnicalPerformanceTechnicalPerformanceTechnicalPerformanceBrandNameBrandNameBrandNameOtherOtherOtherCorporateAffiliationRelationshippatibilitywithOtherITRequirementandPeripheralsPastExpericewithBrandpatibilitywithOtherITRequie\rementandPeripheralsPastExpericewithBrandPastExpericewithBrandpatibilitywithOtherITRequirementandPeripheralsPercentofTotalOrganizations21ExtranetStrategyandImplementationPlanOtherOtherMedium(10~30purchasesperyear)Large(30~100purchasesperyear)HarbinHarbinGuangzhouBeijingBeijingChangchunChangchunZhangjiangJinanJinanGuangzhouZhangjiangXianShanghaiShanghaiXianHangzhouHangzhouMega>100~8,300Accounts~43,300Accounts~35,000AccountsPercentofTotalorganizationsKeyPurchaseCriteria(MegaSegment)Price,productqualityandafter-salesservicearemostimportant22ExtranetStrategyandImplementationPlanSomeApprovedvendorListsarealreadyinplaceApprovedVendorLists(MegaSegment)PercentofTotalOrganizationsNoYesManufactureronlyBothMfr.AndDis.Distributoronly1-50%50-59%60-69%70-79%80-89%100%23ExtranetStrategyandImplementationPlan0%20%40%60%80%100%OrganizationsPurchasingdecisionmakerPurchasingBehavior(MegaandLargeSegments)TargetaccountswithbundledhardwarepurchasestooptimizesaleproductivityPercentofTotalOrganizationsWithAVLWithoutAVLDecisionmakersupervisorcollectiveSelf0%20%40%60%80%100%OrganizationsPurchasingProcessPercentofTotalOrganizationsWithAVLWithoutAVLPurchasingprocesscorporatelycollectivelyIndividually24ExtranetStrategyandImplementationPlanProjectScopingOurApproachQ&AAgenda25ExtranetStrategyandImplementationPlanPriceDiscountRequiredtoSwitchtoDirectChannel(megaSegment)A10%pricediscountwilllikelycapture~60%ofcustomersinterestedinbuyingdirectPercentageofTotalcustomersWhoareWillingtoSwitch11-20%6-10%0-5%21-30%>30%Same11-20%21-30%>30%0-5%Same6-10%6-10%>30%11-20%21-30%0-5%ExistingChannel26ExtranetStrategyandImplementationPlanDirectModelDellshouldsetuplocalmanufacturingtofullylegitimizeDirectModeloperationandreducelogisiticsleadtimeaswellasproductandinventorycostsLocalManufacturingLegalProductCostLogisiticsleadTimeandinventoryCostFulllegalstandingformarketing,selling,delivery,inventory,collection,partsdistributionandservicingoperationsEliminatesexposureassociatedwithdistributors’parallelimportpracticeEnsuresreliableproductsupplynotsubjecttopotentialcrackdownongreychannelimportsLowestcostoptiongivenlocalsourcingofMB,HDDandCRT,puls25%VATincentiveKeysubassembliescanbesourcedlocallyfromhighqualityapprovedsuppliers-MB:Solectron(Suzhou)-HDD:Seagate(Shenzhen)-CRT:Seamsung(Tianjin)Ordertodeliverytimereducedfrom~8week(APCC)to1.5weekEstimatedinventoryfinancingcostsaving~2.8%ofrevenues27ExtranetStrategyandImplementationPlanMegaLargeTransactionSegmentationbyIndustryand#employeeFinanceGovernmentEducationTransportation……….………………Hospitality50030020015010003000250030002500380020001500028ExtranetStrategyandImplementationPlanCentral-mediumProvincial-megaLocal-megaProduettaribafesA&PChannelofpromotion29ExtranetStrategyandImplementationPlanPoteontiallistCentral-mediuPrvincila-megaLocal-mega30ExtranetStrategyandImplementationPlanGovernmentalSegmentOtherSmallMediumMegaMediumMediumMegaMegaSmall100%80%60%40%20%070012001100Total=3000unts

CentralprovinciallocalNote:megaagency>500employces,medium500>50,small<5031ExtranetStrategyandImplementationPlanCentralporantialMegaprovicialLocalConcentritionPasibiailityofCorportporcisingSize#oftangetsPurelungCriteriaMotoralaBravelrepalationClecisionUnker85%40%40000units1000QualityBrovelpricehighPurchsingDireefor75%

60%50000units2000BraelPriceQualityhighchief65%35%20000units10000Pricehighchief32ExtranetStrategyandImplementationPlanTargetGovernenfalaCentralProvincialLocalMegaMediumSmall33ExtranetStrategyandImplementationPlanBudgetsAndPriceCeilings(MegaSegment)Dellshouldpriceundercustomer’spriceceilingspaniesWhoBuyputersWithaPre-setputerBudgetPercent