Trade-off Workout Goal: Design a video Game Console using Morphological boxes Method: Write its Business Model and estimate the value from commercializing your innovation

Mismatch of Capabilities and Markets In the Mad Catz case we saw that Consumer Value (what consumers are willing to pay us) and Production Cost are often only loosely correlated Intelligent Design, then, requires that we give more weight to expenditures in some of the product Components than others

Your Task Design a game console using Morphological Boxes The next slide gives the features that your capabilities allow you to produce particular components (chosen from columns) with a given feature set (chosen from rows) Each adds some market value, and some production cost

Feature Choices Features Components Package Console Casing Electronics Screen Connectivity Features Recycled Paper Cheap Plastic Basic NTSC TV Wired Colored plastic Hard Plastic +Vibration PAL/multi Infrared Cloth case Lexan +Motion Sensor 1024x768 Wi-Fi Hard Shell Brushed Metal +Television 1280x1024 +Internet Metal with Velvet cushion Two-tone Clamshell +Body Suit 1080i (i.e., 1920 × 1080 / 2 interlaced) +Other Consoles

Unit Profit Your marketing department has determined your customers’ valuation of features (their Willingness to Pay or W-to-P) Your production department knows the cost of these features You need to choose the combination of features that will yield the greatest profit

Volume In addition, your accounting department has determined how overall price influences (reduces) sales volume Volume (units) = ($700 – Sales Price)*10,000

Feature Costs and Potential Revenue Following slide breaks a game console into its feature costs and potential revenue Represented as a Morphological Box Profit depends not just on unit profit, but volume of sales The more expensive the entire product, the lower the sales volume

Morphological Box The 5x5 box below gives For a particular feature Cost of providing, and Willingness-to-pay (i.e., maximum price) For a particular feature Mix and match features for the most profitable console

To Present What is the feature set of your most profitable product? What would you call this product? Is it high end, low end, or intermediate? Who are your competitors? What are substitute products for this one? How can you increase the volume of sales? (think of complements) Draw your Business Model with bubbles, arrows and boxes