1. MW-CH4107-20061025-106 Competitive overview Connected World/Global Web March 30, 2010

2. 1 Best Buy continues to gain share in the overall CE market despite Amazon’s impressive business and financial performance 1 Amazon is well positioned to deliver against customers’ needs for low prices and wide assortment, but ill-suited to provide the physical immersive experience they prefer 2 Amazon has made enhancements to their existing businesses and continues to create new business models and profit pools, including marketplace, Kindle, and Amazon Web Services 3 Despite their impressive performance, Amazon has limitations and risks, including impending changes to state sales tax laws and new competitive pressures 4 Amazon executive summary SOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

4. Amazon.com has over 60% share in movie sales and over 70% in music; entertainment overall is Amazon’s strongest category as they have 50% market share compared to Best Buy’s 5%

5. Best Buy has made strides in A/V equipment, which includes TVs, gaining four points of share year over year and actually beating Amazon in 4Q09Amazon outpaces Best Buy in online CE share growth… 1 Online market share, CE Percent of market Amazon Best Buy 03 2002 07 08 09 06 05 04 SOURCE: Comscore

6. 3 4 …but despite Amazon’s rapid online growth, Best Buy continues to outpace Amazon’s overall share growth in the CE market 1 Net share gain (2004-2009) US Market share % of total CE market (offline and online) CAGR 44% 3.7% 0.7 0.8 1.4 2.3 3.4 4.4 3% 2.0% 5% 6.0% Other retailers -4% -11.7% 66.3 65.5 65.2 63.4 59.3 53.5 05 06 2004 08 09 07 SOURCE: Stevenson Traqline

8. When combined with their flexible and compressed SG&A structure, Amazon becomes an investment that commands a high multiple

9. AMZN currently trades at 65x earnings, far ahead of any competitor, including BBY at 14x, Apple at 23x, and Walmart at 15x+3% p.a. +67% p.a. 09 08 07 2006 SOURCE: Company financials

10. 5 Amazon’s performance is driven by their ability to keep SG&A costs low, a result of their flexible SG&A structure 1 SG&A costs % of sales Amazon SG&A costs % of sales -1% p.a. 20.2% 19.8% 19.3% 19.1% 18.8% Fulfillment 0% 8.4% 1.7% Marketing 2.8% 07 08 06 2005 2009 Technology and content 1.2% 5.1% Best Buy SG&A costs % of sales +1% p.a. 9.3% Stores** 0% 21.3% 20.8% 20.3% 19.7% 19.8% Other general and administrative 7.2% 1.3% Total SG&A 19.4% 17.6% 2005 07 06 2009 08 * Figures are for year ending Dec. 31, 2009 for Amazon and Q3 projected fiscal year 2009 for BBY ** Stores includes store labor, rent and taxes, but does not include D & A Source: Amazon 10-K, BBY internal data

11. 6 Best Buy continues to gain share in the overall CE market despite Amazon’s impressive business and financial performance 1 Amazon is well positioned to deliver against customers’ needs for low prices and wide assortment, but ill-suited to provide the physical immersive experience they prefer 2 Amazon has made enhancements to their existing businesses and continues to create new business models and profit pools, including marketplace, Kindle, and Amazon Web Services 3 Despite their impressive performance, Amazon has limitations and risks, including impending changes to state sales tax laws and new competitive pressures 4 Amazon executive summary SOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

12. 7 Amazon continues to win on price…and product assortment 2 Price comparison by SKUs1 Percentage; 2010 Price per SKU of DSLR cameras, 10-11MP USD; 2009 Tied Best Buy lower 82 Amazon lower 1 Based on a price comparison of 128 overlapping SKUs SOURCE: Best Buy Competitive Strategies Group

17. As more consumers look to buy “connected world” solutions, having a trusted in-house installation and service offering is an increasingly important factorIn-house service offering VV%

18. 9 m = X Although consumers spend more time per visit on Bestbuy.com, they visit Amazon more often, resulting in 4x as much time spent on Amazon.com per month 2 Time on site per visit Minutes +37% Time spent on site per month Minutes Amazon.com Bestbuy.com -74% Number of visits per month Number Amazon.com Bestbuy.com -81% Amazon.com Bestbuy.com Source: iConsumer clickstream analysis

19. 10 m Amazon’s conversion rate among online shoppers is higher than Bestbuy.com, and we are losing significant value to Amazon 2 …moreover, estimates suggest we lost $570M in value to Amazon last year …and of those that make a purchase at BBY or AMZN, 75% go to AMZN… 29% of Bestbuy.com visitors also visit Amazon… Where BBY.com visitors make their purchase Percent; 2009 Lost value from bestbuy.com visitor non-buyers $ Millions Total BBY.com visitors Percent; 2009 100 100 2,000 Also visit Amazon Bestbuy.com Amazon.com 570 29 Dell.com 537 Visit Bestbuy.com only 213 Walmart.com 75 Amazon.com 71 680 All others Total BBY.com visitors Visitors that do make purchase Dollar Share Source: iConsumer clickstream analysis, Comscore

20. 11 Best Buy continues to gain share in the overall CE market despite Amazon’s impressive business and financial performance 1 Amazon is well positioned to deliver against customers’ needs for low prices and wide assortment, but ill-suited to provide the physical immersive experience they prefer 2 Amazon has made enhancements to their existing businesses and continue to create new business models and profit pools, including marketplace, Kindle, and Amazon Web Services 3 Despite their impressive performance, Amazon has limitations and risks, including impending changes to state sales tax laws and new competitive pressures 4 Amazon executive summary SOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

24. Additionally, Amazon has made an effort to expand their other downloadable media offerings, inlcuding Amazon MP3, which current offers over 8 million songs, and Amazon Video on Demand, which offers streaming movies and TVDownloadable media

29. Includes sales of physical goods, all downloadable media, Kindle device and content sales, etc.

30. Drives ~54-56% of overall profitability2009 SOURCE: Best Buy Competitive Strategies Group

32. Merchants receive a commission for each sale they generate

33. When customers click on the advertisement, they are directed to Amazon.com

34. Increases customer traffic to Amazon.com

35. Estimated to generate ~15% of overall revenue and ~10-12% of profitability after commissions

36. Amazon’s marketplace allows third party sellers to upload their inventory to Amazon.com and sell their products alongside Amazon’s own inventory

37. Amazon charges a 6-15% commission depending on the product sold as well as closing fees

38. Increases customer choice and provides a new revenue stream

39. Estimated to generate ~32% of overall revenue and ~33-35% of profitabilityTools & Industrial Apparel Physical media Sporting Goods Digital downloads Books Toys & Kids Home & Garden Grocery & Beauty Consumer Electronics Kindle SOURCE: Amazon.com, BBY.com

40. 15 Amazon’s marketplace allows third party merchants to sell alongside Amazon and provides ~30% of overall profitability 3a How it works 5 4 Payment is routed to Amazon first, who collects 6-15% commission and various fees, then sends remainder to Target Customer decides to purchase the Target product, and pays via Amazon.com 6 Order is sent to Target for fulfillment (Amazon offers fulfillment services) 1 3 2 Target uploads inventory to Amazon.com marketplace Customer can view “more buying choices” and find Target’s listing for the same product Amazon posts Target’s listing for the same product alongside their inventory and other third party merchants How it makes money… Marketplace Amazon as seller 84% 83% 2% 6% 14% 11% 0.56 1.73 3.19 3.26 Profit Price Proc. Fee Seller rev Price COGS Shipping Profit SOURCE: Team Analysis, Amazon.com, Amazon Financials,

42. Designed to make web-scale computing easier for developers

43. Amazon Web Services’ revenue is estimated at $400M per year and growing

44. AWS already boasts an impressive list of clients, including ESPN, eHarmony.com, and Eli Lilly

45. S3 storage is estimated to hold 82 billion objects and can receive 100,000 requests per second

46. Hundreds of thousands of developers currently using S3 storage functionality

47. In a 2010 FastCompany comparison between Amazon, Apple, and Google, Amazon was selected as having the superior web service offering

52. Acquired boxofficemojo.com, which provides in-depth information and statistics on movies

53. Amazon has used IMDb as a advertising mechanism; for example, if someone searches for information on Avatar, they will be presented with a one-click reroute to Amazon where they can buy the DVD

54. Still operates as an independently-branded site

55. Company that collects and publishes statistics on browsing behavior, including web traffic broken down by various demographics

56. Under Amazon Web Services, Alexa remains relatively unconnected to Amazon’s e-commerce business models

57. Human search engine for users to post and answer questions

58. Users get “experience points” depending on how often they contribute; has developed into a social network of sorts

59. Co-branded with Amazon (Askville by Amazon)

60. Amazon-related questions are amongst the most popular on the site

61. Users upload a virtual bookshelf with all their favorite titles

62. Users can rate, review, discuss, and suggest books to other users

63. When looking at any given title, Shelfari has a link to Amazon to buy the physical book or a digital Kindle edition

64. Amazon also has a stake in Shelfari’s main competitor, LibraryThing

65. Free web hosting site for wikis1

66. Users can browse different categories and follow wikis they find interesting

67. Monetized through advertising revenue

68. Limited connection to Amazon currently1 Amazon does not own Wikia, but has invested $10M SOURCE: Amazon.com, Company sites

70. Kindle device sales

71. Digital book revenues

72. Commissions off newspaper and magazine subscription sales

73. No revenue numbers released; unit sales estimated in the “millions”

74. Kindle is widely considered the market leading e-reader; Credit Suisse estimates that Amazon currently has 90% of the digital book market

75. Amazon’s streaming and downloadable video site; allows customers to watch on computers and TVs; competes with Netflix and free services like Hulu

76. Digital movie rentals

77. Downloadable and streaming TV/movie revenues

78. Widely believed to be well behind Netflix in market share

79. Amazon VOD recently became accessible on Roku digital video players

80. Amazon’s streaming and downloadable music site; competes with iTunes, Napster, and other download sites

81. Downloadable and streaming music revenues

82. Estimated at having 8% market share, well behind iTunes near 70% share

83. Has over 11 millions songs in its current catalog

84. First store to sell without digital rights management (DRM)SOURCE: Amazon.com, Analyst reports, FastCompany.com

85. 19 Best Buy continues to gain share in the overall CE market despite Amazon’s impressive business and financial performance 1 Amazon is well positioned to deliver against customers’ needs for low prices and wide assortment, but ill-suited to provide the physical immersive experience they prefer 2 Amazon has made enhancements to their existing businesses and continues to create new business models and profit pools, including marketplace, Kindle, and Amazon Web Services 3 Despite their impressive performance, Amazon has limitations and risks, including impending changes to state sales tax laws and new competitive pressures 4 Amazon executive summary SOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

87. Four states have recently passed laws designed to collect sales tax from e-commerce engines that enjoy “remote seller” status

89. Credit Suisse estimates that Amazon has ~90% of the digital book market

90. Apple’s iPad debuts on April 3 and has already sold out its initial order supply

91. The iPad, although slightly more expensive than the Kindle, will have much greater functionality than the Kindle, including access to a wider array of media

93. Customers’ number one complaint with online shopping is the lack of a physical store to try the product and get your questions answered; with no plans to open physical stores, Amazon will be unable to address this concern Lack of physical stores

95. Best Buy gained 3 points of share in the overall CE market last year while Amazon gained 1 point

96. Beating us on price for 82% of SKUs

97. Customers say not being able to interact with a knowledgeable employee is their biggest frustration with online shopping and our Blue Shirts fit that need

98. A great collaborative filtering engine that produces recommendations and product bundles

99. We actually have better and more comprehensive information to leverage with nearly a billion total visits (in-store, online, RewardZone, services, etc.)

100. A marketplace that provides 30% of their item sales and profitability

101. We can develop our own marketplace worth $XM

102. We have Remix, which gives 3rd party merchants access to our product library

103. A digital content offering, including Amazon Video on Demand and Amazon mp3

104. They only have 8% market share in digital music

105. We have Napster and Cinema Now

106. A tax advantage in most states as no sales tax is levied on e-commerce

107. Four states have already enacted laws designed to capture this tax and six more, including California, are considering following suit

108. A Web Services business that provides cloud computing, storage, and payments products

109. Their products are largely B2B with limited application for consumersSOURCE: Analyst reports, BBY Competitive Strategies Group, Team analysis

110. 22 BACKUP/APPENDIX

112. Bestbuy.com’s splash page provides standard content despite an extensive purchase history and 2 items in the cartAmazon.com effectively uses customer information to provide recommendations and typically-bundled products… 3c SOURCE: Amazon.com, BBY.com

113. 24 Amazon has developed the Kindle, connecting consumers to books and other media electronically 3d Kindle Magazines Blogs $1.99/month $2.99/month $259 Books Newspapers Non-revenue “connected” features $13.99/month $9.40 SOURCE: Amazon.com

115. As of July 1, 2008, New York state required sales taxes to be collected from e-retailers that use local marketing affiliates

116. North Carolina and Rhode Island passed similar measures in 2009

117. In 1999, Amazon tries to sue the state of New York on ground the new statute is unconstitutional; case is thrown out

118. Marketplace sellers must pay sales tax and often include it in the price listed

119. In February, Colorado passed a law requiring e-commerce sites to either collect sales taxes or provide the state with sales information so it can collect taxes from consumers directly; Amazon has severed ties with all Colorado marketing affiliates as of March 15

120. Six other states are considering similar provisions, including California, Connecticut, Illinois, Maryland, Virginia, and Vermont

121. Due to increasing budget constraints, more states are likely to look at remote seller sales taxes as a potential revenue source

122. 23 states have come together to try to create a national sales tax that treats online retailers the same as brick-and-mortar retailers

123. Estimates of lost sales tax revenue are as high as $12 Billion by 2012

124. In the first half of 2009, after New York passed the new regulations, the conversion rate for online retailers in the state fell by 11.4%, a much bigger drop than the 7.4% seen across the country

126. Sold exclusively by Amazon

127. Wi-Fi and 3G capabilities depending on model

128. Access to 450,000 digital books, many newspapers, magazines, and blogs

129. Can store up to 350,000 books

130. No internet or application functionality

131. Among consumers looking for an e-reader device, the iPad was seriously considered by 15%, while the Kindle stayed close at 14%

132. Comscore

133. 37% of potential iPad customers were planning to use it as an e-reader

134. Comscore March 23, 2010

136. Will be sold at Apple stores as well as third party retailers

137. Has Wi-Fi and 3G capabilities, depending on model and data package

138. Access to 150,000 apps from AppStore

139. Will feature an Amazon-created Kindle application

140. iPad sales will surpass all-time Kindle sales within three months of its debut

141. FBR Capital report

142. Amazon’s share of the e-book market will fall from 90% to 35% over the next five years

143. Credit Suisse analyst reportSOURCE: Amazon.com, Apple.com, Analyst reports