BLUETOOTH: Ericsson T39 Ericsson Bluetooth-Enabled Mobile Phones Tam Ho Ori Kanot Kathleen O’Connell Jim Wilson

AGENDA Goal of our Analysis Overview of Bluetooth Technology Process – Critical Issues Grid – Critical Issues Network – Costs/Payoffs from Development/Introduction of Product 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 Wireless linking technology 2.4 GHz Radio Frequency Connectivity radius of 30 feet Utilizes spread-spectrum frequency- hopping scheme (1600 hops per second) Supports data speeds of as much as 721 Kbps & three voice channels Cost per unit - initially $20; later $5

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

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

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

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

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

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

SENSITIVITY ANALYSIS Critical Factors – Technology attracting many/few users – Impact on infrastructure of other businesses – Value added from the technology DECISION (in millions) SCENARIO GoNo Go Most Likely Scenario $1,672$1, Best Case Scenario $2,949$0 Worst Case Scenario ($54)$97

SENSITIVITY ANALYSIS

RECOMMENDATION Ericsson should develop and launch the Bluetooth-enabled T39 phone Analysis dependent on assumptions

QUESTIONS?