Electronic Engineering Business Plan

Rosafarbenes Nilpferd & Sons Engineering’s products are off-the-shelf ready platforms containing all the necessary infrastructure for Technology 1, so that appliance makers can immediately focus just on their own specific product applications.

3.1 Product Description

Rosafarbenes Nilpferd & Sons Engineering occupies an important segment of the “Technology 2 system” market.  A Technology 2 system is any system that is physically incorporated into a product that performs a dedicated function or specific application.  Consumer examples include kitchen appliances and home entertainment systems, whereas commercial examples are point-of-sale terminals, industrial process controls, etc.  The button you press which toggles back and forth between total miles travelled and the trip mileage is an example of the many Technology 2 systems found in new cars.

RNSE specializes in the segment of the Technology 2 system market that relates to Technology 1.  One example is the odometer as an ultra simple Technology 2 system that does not normally require communication.  However, one can imagine a company with a large fleet of vehicles wanting accurate, up-to-date information concerning mileage for purposes of scheduling servicing, or checking routing distances.  The Technology 2 device that would be needed here would require Technology 1.  The “net” in this case would be a small, simple, closed net that would be comprised of the Technology 2 devices (called “smart” devices) connected to the vehicles’ odometer (satellites) and one central terminal (the server) located at company headquarters.  There is a whole array of means to connect the satellites and the server.  A wire would obviously be inappropriate here.  A digital radio wave would be the likely choice.  Each individual odometer device would have a discrete identifier, and would communicate to the server.  Each would have the potential to communicate to and from anywhere on in the world.  However, in our example, it being a closed system, the rest of the world would not be permitted to gain access to these identifiers.

RNSE makes these Technology 1 devices.  The basic device (here called Product Wrasse), about the size of a credit card, is comprised of:

1. A central processing unit (CPU).  This is a very powerful chip supplied by Technology Manufacturer 1 which represents the computing brain. 
2. FLASH chip.  This is memory capacity that does not die when power is turned off. 
3. SDRAM chip.  Normal memory capacity. 
4. A Controller.  This governs the data flow from the satellites to the server. 
5. RNSE’s proprietary Product Blennie.
6. Other elements like voltage regulators, electrical conduits to connect chips and external hook-ups.

The Product Wrasse, described above, would be bought by original equipment manufacturers (OEMs) to incorporate into their appliance (such as an odometer).  The unit might also be bought by an “integrator” who takes a basic odometer, plus the Product Wrasse, and adds some software to end up with a “smart” odometer which the market integrator then tries to sell to companies with fleets of vehicles that might have good need for this specialized product.  RNSE would configure the Product Wrasse so that it is compatible with the operating system used in the appliance, and would build in whatever FLASH and SDRAM capacity are needed for the designed purpose of the smart odometer.

RNSE’s third product is an add-on to the basic Product Wrasse and is called the Product Damselfish.  Going back to the odometer example: If the company with the fleet of vehicles would like to be able, once a certain mileage had been reached, to tell the driver: “Time for an oil change,” then the Technology 2 device would need to have audio capability.  Some applications might even need a video screen and a keyboard (like an ATM) for user interface.  These capabilities are available through Product Damselfish.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

3.2 Competitive Comparison

OEMs who want to benefit from the trend toward Product Category One their products, typically outsource their needs.  This allows the OEMs to concentrate on the design and application of their specific appliance without having to worry about the Product Category One aspect.  Outsourcing this part saves the OEM in development costs, and more importantly, saves time in getting the appliance to the market.

The attached table is a schematic of the main recipients of this outsourcing and the major features of the Product Category One devices offered by each. 

1. Outsource Provider 1.  The processor used is somewhat slower and parts costs are higher than with Technology Manufacturer 1’s CPU chip.  This company, by virtue of its parent being a contract manufacturer-assembler of smart devices, is primarily hardware-focused.  It would not be easy for Outsource Provider 1 to switch from Technology Manufacturer 2’s chip to Technology Manufacturer 1’s. 
2. Outsource Provider 2.  This company seems to be market-segmenting to concentrate more on the multi-media market represented mainly by ATMs and kiosks (such as betting kiosks) which require a keyboard and a screen for user interface. 
3. Outsource Provider 3.  This company moved in the wrong direction from the start by using their own proprietary software which is built into their devices.  This puts them at a real disadvantage.  Their devices are the slowest, and the least flexible, but still fine for certain non-demanding purposes.  The company has done some work for the HVAC market.  Their lower price reflects their limitations. 
4. Outsource Provider 4.  This company, located in Vancouver, in close proximity to Software Manufacturer 1, is primarily a software company made up probably of ex-Software Manufacturer 1 people.  This explains their emphasis on the Technology 2 software.  Despite Software Manufacturer 1’s operating system dominance in one market, the Technology 2 market is different.  There are many widely-used Technology 2 operating systems.  This company buys their hardware from Outsource Provider 1. 
5. Outsource Provider 5.  Outsource Provider 5 is a European-based company.  Its products are distributed and supported in America by a separate corporation in California.  This extra layer may explain the added price.  Specs are similar to those of Outsource Provider 1. 
6. Rosafarbenes Nilpferd & Sons Engineering.  RNSE has made a considered effort to offer the fastest CPU chip and to build in the widest range of capacity (from low amounts of FLASH and SDRAM up to high amounts).  RNSE tries to make its units compatible with all the major top-tier Technology 2 world operating systems and will work with the second- and third-tiers as well.

*Note: Propriety and confidential information has been disguised or removed from this sample plan.

3.3 Sales Literature

See the appendices for product data sheets.

** Appendix materials omitted in this sample plan.

3.4 Sourcing

The chips and other basic building blocks used in Rosafarbenes Nilpferd & Sons Engineering’s Product Category One platforms can be purchased from a number of large distributors.  Sourcing is not a problem, but order scheduling must be given careful attention.  Shortages can occur, making it necessary to order well in advance and to stockpile in order to make certain that sales does not outstrip production.

3.5 Technology

Technology is moving at a rapid pace.  The first commercial computer in the early 1970’s had a speed, measured in megahertz, of only 0.1 Mhz.  Now computers are on the market that race at 1,000 Mhz.  Although the speed may still increase, a bigger area for growth involves Technology 2 systems, (rather than personal computers) and especially the Technology 1 use of those Technology 2 systems.  In a speech by Hewlett Packard CEO, Carly Fiolani, aired on television 4/18/2000, in the future nearly….”every appliance, yes, even the toaster, will be connected to the Internet.” Ms.  Fiolani’s vision includes an “Information Utility” which, in her opinion, would work in a similar manner to the gas company, the electric or the water and sewer utility.  For all of the 20th century, manufacturers have produced their appliances under a certain protocol of “assumed power.” They have taken it for granted that every consumer has a Power Service Provider (PSP) that supplies 110 AC to wall sockets all through the house.  The appliance makers simply include a power cord and an appropriately sized plug.  The consumer merely plugs the unit in and pays for whatever power he actually uses.  The emerging technology now refers to another protocol of “assumed communication.”

In the future, appliance makers will assume that everyone has an “Information Service Provider,” and will build in Technology 1 right into every Technology 2 component that goes into each appliance.  The consumer will expect it, just as he or she expects a 110AC power cord.  He will plug in the appliance and register it with that Information Utility referred to by Ms.  Fiolani.  Let’s say the appliance is a VCR.  Until now, we have had to program the VCR ourselves before we leave the house if we want it to record a program on TV that will air while we’re away.  We also have to hope we did it right and actually record the last round of the Masters Golf Tournament (and not end up with several hours of some home shopping channel).  However, with the new protocol, we will be able, from wherever we are, to simply contact our Information Utility (which will have all our appliance records) and say: “Record the Masters for me today.” It will all be arranged remotely by the service provider and it will be included in our monthly bill.  From any remote location, we’ll be able to turn our house lights on, turn down the heat, lock or unlock the house, turn off the hot water heater, sprinkle the lawn, etc.  According to Forrester Research, Inc.  of Cambridge, Ma., by the year 2002 7% of U.S. homes will have security systems, lights, heat, and appliances that can tap the Internet.  This will be a $1 billion market alone. 

Product Category One appliances are not going to be reserved for simple on/off features.  Now available on the market are many very sophisticated appliances such as a printer, a sewing machine with computerized embroidery capability, or data stream music.  At the moment these are PC-dependent.  Take a high-tech sewing machine like a Pfaff Model 7570.  This machine with its Technology 2 system can perform complex sequences of operations including executing pre-programmed patterns and monograms and fonts.  The difficult operations which are very user-interface intensive can be performed by the general-purpose PC into which the sewing machine (like a printer peripheral) is plugged instead of by the sewing machine’s Technology 2 system.  If this user-interface capability had to be built into the Technology 2 system of the sewing machine, the cost of that machine would skyrocket.  Likewise, the MP3 player (data stream music) is extremely CPU-intensive.  At the moment the encoding takes place on the general-purpose PC which allows the music player to have much lower requirements for CPU and memory.  These devices are essentially one step removed from the Internet.  Technology is moving quickly to remove the PC intermediary thus making the devices able to communicate directly with a content provider.  Those capabilities of the general-purpose PC will be replaced by the Internet itself thus making the appliances more flexible, more portable, and less expensive.  PCs themselves will metamorphose into very light-weight, very inexpensive units without hard disks and without extensive memory.  All these aspects will be provided by the Internet itself.

Need to use “Winword”? Just log onto the Internet and download the program or any other software you want.  And, it will always be the latest version.

Need file capacity? That too, can be provided by the Internet.  A user can move around the globe and access his/her files from a very portable laptop.  If the laptop is lost or damaged there will not be a crisis.  Simply buy another (for maybe $100).  All your files are safe, located elsewhere. 

Forrester Research predicts that by 2002 43% of all “smart” products will be non-PC devices.  According to International Data Corporation of Framingham, MA. by the year 2004 such appliances will exceed PCs.