Marketing Strategy

TeleComputing’s vision is to be the #1 'pure-play' Application Service Provider (ASP) in the world, leading
the industry in the creation of a new model for IT, delivering Windows computing as a business service,
and operating customers’ entire IT environment from secure, remote data centers.

Several leading industry observers—GartnerGroup, IDC, Dataquest, Forrester and others—believe that
computing as a service will change the way in which applications, systems, hardware, and networks are
designed, sold and distributed to customers. TeleComputing has emerged as the predominant ASP in terms
of the ability to deliver Windows computing as a service to business customers internationally.

A new ‘land-grab’ approach is needed to create global momentum and drive customer and channel
adoption of the ASP model. TeleComputing is therefore taking a bold strategy of driving growth in the
ASP market, focusing on building a global ASP service network that includes a large number of global data
centers and with Microsoft’s help, the sales and marketing infrastructure to bring on and serve large
volumes of ASP users. A full technical, sales and marketing ‘triumvirate’ partnership between
TeleComputing, Microsoft and Compaq will enable a successful global launch and rollout of the services,
fundamentally changing the shape of the IT industry.

“We realized we needed to embrace the new technologies on two fronts: first, to make it
easier for our customers to do business with us, and second, to process our internal
workflows more efficiently to remain service and price competitive. TeleComputing was
our answer.”.…………………..Robert Parmenter, President, Printers Envelope Services

A series of focus groups conducted with prospective TeleComputing customers and resellers revealed that
demand for ASP services was not yet widespread enough to provide a mass market. The study confirmed
that the ASP market is still a substantial niche market offering opportunities to companies with a
competitive product. Medium and large customers appear to better understand the value of IT outsourcing
and are more familiar with its benefits. Even for those customers who expressed interest, there was a
reluctance to outsource their entire IT environment. Customers appear to want a staged piloting and
implementation process.

These focus groups have several key implications for TeleComputing. First off, the research confirmed the
absence of a mass market—and the existence of multiple niche markets—for TeleComputing’s service
offering. TeleComputing’s marketing strategy during 2000 will therefore be driven by a niche marketing,
not a mass market approach. This niche marketing will be driven by partnerships with leading Windows-
based Independent Software vendors (ISVs). When these ISVs’ products are combined with
TeleComputing’s IT management and application offerings, the result is a product/service combination that
has compelling price/benefits in the targeted niche markets.
 New Marketing Strategy

OLD Windows IT mgmt

Office/ Exch /GP/SL
Product Offering
1999 (Horizontal)

Early Adopters
(Niches)
NEW
New go -to-market Leading
2000 Strategy Win2000 Niche
(Niche/test market) ISVs Horizontals

Windows IT mgmt
Office/ Exch /GP/SL

Broader
Extend & broaden Verticals
(Niche/test market)

2001
Broader
Horizontal

Figure: New TeleComputing Marketing Strategy

TeleComputing’s niche marketing strategy during 2000 can be described as follows:

• Identify Leading ISV that has Windows focus

• Partner with ISV to develop solutions, channels
• Leverage MSFT help
• Develop ‘try-buy’ product offering
• Sell and Set up pilot projects
• Market success within niche
• Replicate

Potential Niche Target Markets that TeleComputing will test include:

• Retail
• Legal
• Financial Services
• Manufacturing
• Utilities
• Healthcare
• Hospitality
• Venture Capital firms
• Start-ups

The purpose of the joint Microsoft/TeleComputing ASP field pilots starting in April is to educate end users
and build the best ASP channel strategy for our companies. TeleComputing has the most ASP experience in
this indirect sales model and will embrace the MCSP and Compaq channel in providing world-class IT
services to their customers. Although TeleComputing is primary in six MS districts for the initial pilot, we
view this as only a launching pad for an aggressive land grab to the rest of the country in 2000.

TeleComputing is unique in the ASP marketplace because of its four-year history of providing hosting
services to small and medium sized companies. Currently the company has over 100 customers worldwide
with over 2000 users logging into Microsoft Windows 2000 and NT v4.0 servers every day.
TeleComputing’s unique competence is in building and operating Windows data centers offering Windows
software as a service to customers. The service includes everything—security, management, systems,
applications, connections and support—provided to the customer for a fixed monthly fee. We are also
unique in the marketplace because we utilize a comprehensive set of tools for installing, managing and
administering distributed users in a complex and efficient multi-company hosted environment. By
providing specialized security and administration solutions, we can host multiple companies’ data in a
shared server farm while still providing complete confidentiality of data and users on the system. This
unique approach allows TeleComputing to provide a level of reliability, redundancy, and backup that only
very large enterprises could normally afford or implement. We also have a completely integrated set of data
centers forming a single virtual network with centralized management architecture. This design allows us to
dramatically reduce the number of IT resources necessary to manage thousands of customers with local or
worldwide users. Such an approach is critical given the shortage of trained IT personnel that exists today.
The current shortage of IT personnel is estimated by GartnerGroup to be over one million worldwide and
growing.

TeleComputing shares this vision with the GartnerGroup, Upside, Unterberg, IDC and others.
TeleComputing is delivering operational efficiency, scalability and knowledge to its customers and partners
today. We also strongly believe that partnerships are a required component of any new market growth
strategy. Therefore, TeleComputing has developed a strategic partnership plan to grow the ASP market.
Unlike other vendors who seek to have a multi-pronged strategy of partnering with everyone including
SUN, Microsoft, HP, Compaq, IBM and others, TeleComputing has developed a focused three-tier partner
alliance strategic plan. At the highest and most important level, TeleComputing has focused its solution,
including the TECOS advantage on two strategic platform providers: Microsoft and Compaq. As a result,
our newest data center uses only the latest state of the art Compaq computers running Microsoft’s state of
the art Windows 2000. This data center is now the blue print for all future TeleComputing data centers.
TeleComputing wishes to cement these two relationships with a unique partner alliance agreement and
investment commitment. We are currently engaged with these companies in both joint development and
marketing programs but strongly believe that by quickly welding these relationships together the combined
efforts of all three companies will dramatically increase the acceptance and market growth of the ASP
market.

Below this highly integrated and committed top-level alliance is an infrastructure layer where
TeleComputing is partnering with Cisco, Exodus and Citrix. We are currently using only Cisco routers and
switches in our data centers and are working closely with Cisco to become a fully endorsed member of the
“Powered by Cisco Network” alliance program. In addition, TeleComputing has leased data center space in
more than a half dozen Exodus data centers and is participating in the Exodus Community Alliance
program. We also have a long-standing partnership with Citrix for thin client computing.

TeleComputing is totally committed to a channel-only distribution strategy and has over 40 Microsoft
Certified resellers in our TECpartner program. The TECpartner program has a solid business proposition
for the Microsoft channel, offering training, certification, education, and tools needed to enter and profit
from the ASP business by partnering with TeleComputing. TECpartners receive generous ongoing
annuities that in the small-to-medium business segment can double their margins on software, hardware
and services sales while transitioning them out from the ‘box’ business model into the ASP model that is
rapidly gaining ground—all the while retaining Microsoft’s influence over the channel. TeleComputing is
developing several channel programs to educate and motivate Microsoft channel partners to jointly grow
the ASP market.

Analyst Relations
TeleComputing intends to be perceived as the leading provider of Windows 2000 ASP services by the
leading analyst groups. The key groups that we are working with now are; the Gartner Group, Dataquest,
IDC, Yankee Group and Zona Research. We are planning to develop a relationship with additional IT
research and analysis groups, including; Meta Group, Jupiter Research, Giga Group and Aberdeen
Research. TeleComputing is also planning to work with consulting firms such as Booze, Allen and
Hamilton and Cap Gemini.
We will reach out to other companies and position ourselves as a leader. We will work out business
arrangements with the appropriate ones; such as buying some of their services. We would hope that they
would recommend us to their customers although one does not necessarily lead to the other.
We will be participating in at least two analyst tours during 2000. We will visit with the ASP analyst within
each of these two firms.
Marketing Vehicles
Many of the traditional marketing practices are not applicable to TeleComputing because they do not reach
our target audience. The primary lesson we have learned from focus groups that we have hosted is that the
key audience we need to reach is much higher in the organization than we expected. CIO’s are more of an
impediment than an asset. We need to reach the CFO’s and the CEO’s of our target companies. It takes a
very special kind of marketing to get to those people and to be able to tell our story effectively.
Considering the traditional types of marketing tools; direct mail, advertising, seminars, trade shoes,
promotions, the Web, channel partners or resellers, industry associations and local business organizations –
some of these work and some don’t.
Our major focus will be on partner marketing through seminars and events. We will be working with key
strategic partners, such as Compaq, Microsoft and various ISV’s. The particular ISV’s we will be working
with are leaders in specific vertical industries with a focus on the Windows platform.
We will be doing extensive advertising in local newspapers promoting our seminars as they are scheduled.
Microsoft Co-Marketing
An example of a TeleComputing/Microsoft co-marketing plan is shown in the above attachment. It is the
current Gulf States Marketing Plan, called Project ASPire.
Tradeshows and Speaking Engagements
We will be a sponsor of the Citrix iForum from the 2nd through the 5th of October. We will be very selective
in doing trades shows because our target audience does not attend them. CIOs and CFOs are more likely to
attend smaller seminars and regional meetings.
It is important however, to participate in trade shows selectively to establish credibility and for branding
pruposes.
It is a TeleComputing objective to have speaking representation at all key industry events. In many cases
we will do the major ones with Microsoft and Compaq, such as the Microsoft Partner CEO summit in Paris.
Web Marketing
It is extremely important to the TeleComputing marketing effort that we move from a static to a fully
interactive web and extranet presence to address the unique needs of each of our target audiences.
Phase I, the redesign of the web site, should be complete by June. Phase II will add commerce and
provisioning for TeleComputing resellers during the fall of 2000. We will use the web site as a tool to tie
together marketing activities between TeleComputing, Microsoft, and Compaq.
Local PR and Marketing
TeleComputing will spend considerable money on local PR and marketing within each of the sales regions
nationwide. The object will be to create awareness in the business community of TeleComputing and its
offerings. This will create demand for our services and develop interest within the sale channel.
We will advertise joint events with our business partners. We will advertise celebrating local customer
wins. We will participate in local events and PR, including community outreach programs.
Special Groups
ASP Industry Consortium – TeleComputing will continue its role as a founding member and promote our
position within that group.
We will continue to participate in ITforum of South Florida, and ITFlorida.com.
Collateral
We are working on a new collateral plan to explain TeleComputing to potential users. This plan will be
used by resellers when they meet with their customers either in person or by direct mail. It will provide a
detailed explanation of our core benefits.
We are, and will continue to be, developing partner material with Compaq and Microsoft. These tools are
to be used by the partners themselves – their channel and our channel. The materials will describe what a
joint offering is and its value to the customer.
TeleComputing is currently developing complete reseller toolkits that have all the elements necessary to
successfully sell our services.