Businessmodel of United Internet

Customer Segments

United Internet provides a range of internet services and technical services to a range of customers. The Company has around 15.97 million fee-based customer contracts and 33.15 million ad-financed free accounts around the world, primarily in Europe. United Internet focuses on two customer segments:

• General consumers, to whom it provides a range of internet services such as cloud storage, online office, communications, and organisation; and
• Business Customers, comprising small, medium and large enterprises from various sectors, to which it provides applications and solutions relating to website design, payment solutions, display advertising, business and mobile apps, and search engine optimisation. United Internet principally serves customers across Europe, with target markets in Austria, France, Italy, Poland, Spain, Switzerland and the UK, and across North America, with target markets in Canada, Mexico and the US.

Value Propositions

United Internet provides value to its customers in the following ways:

• Its privacy, support and security functionality, with the Company providing 24-hour data protection and security to its customers and contact partners, and 24-hour replacement of defective equipment;
• Its range of accessible business tools and applications, which enable to small business to easily establish a web presence and provide integrated sales and marketing tools;
• Its range of mobile products, its flexible and accessible range of mobile applications and functionality, allowing customers to access the Company’s services on the go; and
• Its brand name and reputation, with the Company being the largest and most established internet services provider across Europe, with a brand associated with quality services. ### Channels

United Internet operates a website at www.united-internet.de, through which customers can find information on the Company’s various services, tools and products. The Company operates a number of online brand channels that can be access through mobile and desktop browsers and mobile applications. These brands include GMX, mail.com, WEB.DE, 1&1, Arsys, InterNetX, Fasthosts, home.pl, affilinet, Sedo and united-domains.

Many of United Internet’s business services and solutions, including its display advertising services and payment solutions, are delivered through United Internet’s direct sales and marketing channels. The Company operates several sales teams across Europe, organised regionally.

United Internet additionally operates an affiliate program, through which a number of website and companies extend the Company’s own sales and marketing reach.

Customer Relationships

As an internet services company, much of United Internet’s services and products are available on a self-service basis through its online channels. The Company’s self-service offerings primarily serve general consumers, and include products and services such as email and communications platforms, cloud storage functionality and organisational tools.

United Internet’s relationships with customers come principally through fee-based, fixed-term subscriptions, which are designed to establish long-term, stable and recurring customer relationships, and advertisement-financed free accounts that provide the Company the opportunity to monetise its various applications and products.

United Internet provides a range of support and technical assistance services to its customers separately through its numerous internet brands, including FAQs, user guides and community support portals. The Company additionally has a policy in place that it will replace defective equipment within 24 hours.

Customers are also able to internet directly with United Internet through its social media accounts with Facebook, Twitter, Google+, LinkedIn, and Xing.

Key Activities

United Internet is a Germany-based Internet service provider and the parent company of a number of internet service providers.

The Company’s products and technical services are divided into two key segments: Access, which comprises narrowband, broadband and mobile access subscriptions, in addition to the corresponding applications; and Applications, which includes the provision of a range of applications including home pages, online stores, personal information management applications, online storage and office software solutions.

The Company’s Application segment also includes the operations of the Sedo and affilinet, which provide a range of performance-based advertising and sales solutions to business customers. United Internet additionally develops Internet based applications, such as cloud applications.

Key Partners

United Internet’s operations are supported by a network of partners, including companies operating across multiple sectors.

• Advertising and Marketing Partners, comprising advertising agencies and brand marketing companies that assist the Company in securing advertising revenue;
• Internet Service Partners, including companies that provide internet solutions and technical services to which services can be outsourced;
• Strategic Partners, which primarily comprise technology and internet companies that share tools and resources with the Company; and
• Media Partners, comprising media houses and media agencies. United Internet owns minor stakes in several of its key partners, including shares in media technologies and advertising company Virtual Minds, infrastructure-as-a-service provider ProfitBricks, email and solutions provider Open-Xchange, e-commerce solutions provider ePages, and online listings company Uberall.

Key Resources

United Internet’s key resources are its technology, its IT infrastructure, its network of partners, its personnel and its various internet brands.

The Company’s network of servers and data centres are key to its operations. Searches of records published by the German Patent and Trademark Office and the US Patent and Trademark Office identified no patent applications filed in the name of United Internet.

Cost Structure

United Internet incurs costs in relation to the management of its various brands, the maintenance of its IT infrastructure, the implementation of marketing and advertising campaigns, the retention of its personnel, and the management of its network of partners.

United Internet employs more than 8,000 staff members worldwide, more than 6,500 of whom are in Germany, who represent costs in the form of salaries and benefits. Personnel costs in 2015 were 429.7 million, up on the 351.7 million recorded in 2014.

Revenue Streams

United Internet generates revenue through the provision of various internet services and products. Its revenue streams are divided between its two business segments:

• Access, comprising revenue derived from fee-based landline and mobile access products – including home networks, online storage, telephony, and video-on- demand – as well as through data and network solutions for small and medium sized enterprises and infrastructure services for large corporations; and
• Applications, comprising revenue generated from fee-based subscriptions, including revenue generated from fixed monthly fees for the usage, administration and storage its applications, as well as income from the brokerage and administration of domains. The Company also derives a proportion of its revenue from the provision of advertising and marketing solutions. In 2015 United Internet generated annual revenue of €3.72 billion. The majority of this revenue, around 2.74 billion, was generated by the Company’s core Access business.