BLUETOOTH Ericsson T 39 Ericsson BluetoothEnabled Mobile Phones

BLUETOOTH: Ericsson T 39 Ericsson Bluetooth-Enabled Mobile Phones Tam Ho Ori Kanot Kathleen O’Connell Jim Wilson

AGENDA l Goal of our Analysis l Overview of Bluetooth Technology l Process – Critical Issues Grid – Critical Issues Network – Costs/Payoffs from Development/Introduction of Product l Go/No Go Recommendation and Sensitivity Analysis

GOAL To assess the go/no go decision Ericsson is currently facing concerning the development of its Bluetooth enabled mobile phones.

THE TECHNOLOGY l Wireless linking technology l 2. 4 GHz Radio Frequency l Connectivity radius of 30 feet l Utilizes spread-spectrum frequency-hopping scheme (1600 hops per second) l Supports data speeds of as much as 721 Kbps & three voice channels l Cost per unit - initially $20; later $5

THE TECHNOLOGY (cont. ) l Developed as open standard by Intel, Toshiba, Ericsson, Nokia, and others l Bluetooth Special Interest Group (SIG) – Guards interoperability and observance of standard – 2000+ companies

MOBILE PHONE APPLICATIONS l Companies weary of premature launching of Bluetooth applications for mobile phones l Joint project to create unified standard for secure mobile electronic transactions

ERICSSON l Originally developed Bluetooth in 1994 l Announced the forming of a separate company focused on Bluetooth wireless technology l Contract with Samsung

CRITICAL ISSUES GRID l Focus – Infrastructure - Bluetooth Technology – Industry - Mobile Phone Industry – Company - Ericsson l Environment – Political – Behavioral – Economic – Social – Technological

CRITICAL ISSUES NETWORK l Critical Issues Grid translated into Bayesian network using Hugin software program l Logical (causal) flow pattern l Chance nodes flow to value node l Value node encompasses estimated payoffs

COSTS & EXPECTED VALUE Estimation of costs resulting from go/no go recommendation l Development costs & expected values over threeyear basis l COGS assumed to decrease to $5 l Impact of different scenarios on assumptions l

SENSITIVITY ANALYSIS Critical Factors – Technology attracting many/few users – Impact on infrastructure of other businesses – Value added from the technology DECISION (in millions) SCENARIO Go No Go Most Likely Scenario $1, 672 $1, 172. 43 Best Case Scenario $2, 949 $0 ($54) $97 Worst Case Scenario

SENSITIVITY ANALYSIS

RECOMMENDATION l Ericsson should develop and launch the Bluetooth-enabled T 39 phone l Analysis dependent on assumptions

QUESTIONS?