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MKTG 762: OPPORTUNITY ANALYSIS FINAL REPORT

ESTIMATED SPECTRUM ADAPTIVE POSTFILTER ALGORITHM

PREPARED FOR:UNIVERSITY OF BALTIMORE MERRICK SCHOOL OF BUSINESS

&NASA GODDARD SPACE CENTER

PROFESSOR: DR. MICHAEL LARICINVENTOR: DR. IRVING LINARES

Lauren Chaney, Cathy Coreill, Phineas Deford, Nicholette Letersky

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EXECUTIVE SUMMARY

ESAP: RETAINS PHOTO (JPEG) & VIDEO (MPEG) IMAGE QUALITY DURING COMPRESSION

COMMERCIALIZATION POTENTIAL?....YES!!!

REQUIRED INITIAL INVESTMENT: $2M

TARGET ROI: 20%

AVG IRR YEARS 3-7: 70%

5-YEAR NPV: $7M

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WHAT IS ESAP?

INITIALLY DESIGNED BY NASA TO CLARIFY LOW BIT IMAGES OF FAR AWAY OBJECTS & OTHER ENVIRONMENTALLY CHALLENGING APPLICATIONS

ESAP IS AN ALGORITHM USED TO CLARIFY PHOTO (JPEG) AND VIDEO (MPEG) IMAGES THAT HAVE BEEN HIGHLY COMPRESSED IN ORDER TO CONSERVE MEMORY SPACE

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TAKING THIS…..

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AND TURNING IT INTO THIS…..

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ESTIMATED SPECTRUM ADAPTIVE POSTFILTER

INVENTOR: DR. IRVING LINARES, NASA

OWNERSHIP: U.S. GOVERNMENTPATENT# 6,760,487 B1 JULY 6, 2004

ADEQUACY OF IP PROTECTION & THE NEED FOR ADDITIONAL PATENTS AND/OR COPYRIGHTS

UB, NASA & TECHNOLOGY INCUBATION

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TRIADS (a.k.a. ideas for how the technology can be commercialized)

TOP 3 TRIADS SURVEILLANCE CAMERAS MAMMOGRAPHY SMART PHONES

SWOT ANALYSIS

RESULTS

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AND THE WINNER IS…..SMART PHONES!!!

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SMART PHONE S.W.O.T.

Strengths:•Immensely popular and growing fast•Gaining popularity as primary source for web access•Gaining popularity as substitute for cameras•Covers a wide range of demographics•Global market

Weaknesses:•Loss of image quality when uploaded from phone to web (email, Facebook, You Tube)•Operating speed of ESAP as firmware•Camera quality not necessarily a driver of smart phone sales•Difficult to determine cost of implementation

Opportunities:•Enhance quality of pictures and videos uploaded to the web from a smart phone•Poor quality camera in most phones; strong desire for improved camera•Firmware•App•Competitive advantage•Tablets

Threats:•Fast-cycle market•Diminished product life cycle•Competitor algorithms exist on a commercial basis•App market•Multiple manufacturers & operating systems•Low barriers to entry

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INTENT

PARTNERSHIP WITH A LEADING MANUFACTURER OF SMART PHONES

5 YEAR EXCLUSIVE LICENSING AGREEMENT

COMPETITIVE ADVANTAGE

ASIC

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FEASIBILITY

SUPERIORITY: COMPETITIVE ADVANTAGE

SECURITY: IS CURRENT PATENT GOOD ENOUGH?

SUBSTANTIATION: QUESTIONNAIRE

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O.A.T.S.

OVERALL MARKET: 5.3B MOBILE PHONE SUBSCRIPTIONS IN 2010, EQUIVALENT TO 76% OF WORLD’S POPULATION

ADDRESSABLE MARKET: APPROXIMATELY 18%, or 940M SUBSCRIBERS USE MOBILE BROADBAND. IN 2010, 22% OF ALL MOBILE PHONE SALES WERE SMART PHONES; A 74% INCREASE OVER 2009

TARGET MARKET: PERCENTAGE OF SMART PHONE USERS AGE 13+ WHO USE THEIR PHONE TO TAKE PICTURES IN 2010:

U.S. – 52.4%

EUROPE – 57.5%

JAPAN – 63.9%

SHARE OF MARKET: APPLE INC.

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APPLE INC.

IN 2010, IPHONE RANKED 3RD AMONG GLOBAL SALES OF SMART PHONES - 47.5 million units

2010 MARKET SHARE - 15.7%

2009-2010 SALES GROWTH - 89.2%

RECENTLY PARTNERED WITH VERIZON IN U.S.

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TARGET MARKET

CURRENT IPHONE USERS:

57% MALE, 43% FEMALE

91% WOULD RECOMMEND

50% PURCHASE AT LEAST 1 APP/MONTH

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TARGET MARKET

CURRENT AND POTENTIAL IPHONE USERS: 17 YEARS OR YOUNGER: 13% 18-24: 12% 25-34: 21% 35-44: 21% 45-54: 18% 55+: 14%

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QUESTIONNAIRE RESULTS

51 PEOPLE SURVEYED

100% OWNED A CAMERA PHONE

86% HAVE USED THEIR PHONE TO UPLOAD IMAGES TO THE WEB

80% WOULD BE INCLINED TO PURCHASE A PHONE THEY KNEW HAD A SUPERIOR CAMERA

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CAPITAL REQUIREMENTS & FINANCIALS

INITIAL INVESTMENT: $2M

SALE PRICE: $0.10/CHIP

VARIABLE COSTS: $0.03/CHIP

FIXED COSTS: $1.25M

TARGET ROI: 20%

AVG IRR YEARS 3-7: 70%

5-YEAR NPV: $7M

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ASSUMPTIONS

COSTS OF MANUFACTURING ASIC CHIP

CAPITALIZE ON APPLE’S PROMOTION

GROWTH PROJECTIONS NOT IN LINE WITH GROWTH TREND FOR IPHONE

FIGURES DO NOT TAKE INTO CONSIDERATION ESAP’s PRODUCT LIFE CYCLE AFTER EXPIRATION OF 5-YEAR EXCLUSIVE LICENSING AGREEMENT

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CONTINGENCY PLAN

OTHER MANUFACTURERS

OTHER OPERATING SYSTEMS

APP MARKET

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QUESTIONS??

THANK YOU!!!