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 frequencyhopping 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
– 2000+ 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
COMPANY
(Ericsson)
POLITICAL
BEHAVIORAL



ECONOMIC


INDUSTRY/ECOSYSTEM
(Mobile Phone)
Will Ericsson be able to coordinate the
Bluetooth technology across product
lines?

Will there be complementary effects? (i.e.
if the phone is successful, will it impact
the sales of other products?)
Will this detract from the Ericsson’s core
competencies?
Can Ericsson get a first mover advantage?
If so, how sustainable is this advantage?
Will the technology attract new users to
Ericsson?



INFRASTRUCTURE
(Bluetooth Technology)
Will competing mobile companies favor
Bluetooth over competing wireless
technologies (e.g. WiFi 802.11B)?

Are people going to be able to eavesdrop
and listen in on the digital exchange of
information?
What is the value added? Is it worth it?

At what point will adding the technology
become economically beneficial to the
industry? What is the impact on the
revenue model?





SOCIAL


TECHNOLOGICAL

How will this impact Ericsson’s
reputation within the industry and/or with
consumers?
Will this impact their consortium
relationship (Bluetooth Special Interest
Group)? Can this relationship be
successfully managed?
What internal resources need to be
committed to developing this technology?



Will the standard stick?
Will the Bluetooth technology change
the infrastructure of businesses (e.g.
replacement of microphone for
Bluetooth headsets at McDonald’s)?

How vulnerable to viruses will
Bluetooth be or will the technology
provide new paths for viruses and
malicious code attempting to enter
corporate networks?




How compatible with the technology be
with laws for short range connectivity?
How well will cross-vendor
compatibility issues be handled?
How steep is the learning curve? What
sort of complexity does this technology
add to the lives of consumers? What
sort of change in consumer behavior is
required?
How long will it take for the price point
to drop to the targeted $5?
Once the price drops to $5, will the
technology become a commodity?
Will this technology diffuse into
complementary products quickly?
Who will contribute money to the
awareness campaign?
How much connectivity do consumers
really need?
To what extent will health concerns that
people have with wireless be an issue?
What sort of interruption with other
electronic devices will occur?
Will WiFi 802.11B, the competing
wireless network standard, or some other
technology emerge as the dominant
player in the industry?
What sort of limitations does the
technology have (e.g. transferring video,
etc.)?
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
Consumer needs/interests:
internal resources needed
Health Limitations
Develop Ericsson phone
Develop cost
Vulner. to viruses & privacy
First Mover Advantage sust
Will Wifi or other dominate
Price point drops
Time till econ. beneficial
Tech Limitations/interrup.
Techn attract New users
Commodity
Learning curve 4 consumer
Complementary Effects
Detract fr. core competenci
Coord. across product l
Impact on Ericsson
Amt of Value-added
Impact on reputati
Adoption favor Blueto
Standard Stick
Impact other bus. infra
Customer connectiv. pr
Value (mill)
Distrib of Awareness C
Impact on industry
Cross Vendor Compatib
Impact consortium relat
Current Laws
COSTS & EXPECTED VALUE

Estimation of costs resulting from go/no go
recommendation
 Development costs & expected values over threeyear basis
 COGS assumed to decrease to $5
 Impact of different scenarios on assumptions
SCENARIO
Very Bad
Bad
Average
Good
Very Good
3-YEAR EXPECTED VALUE ( in millions)
$97.28
$389.12
$2,099.2
$2,519.04
$3,148.8
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
STATES FOR DEVELOPMENT DECISION
Go
No Go
UTILITIES (in millions)
Most Likely Scenario: Go
Max Go
Max No Go
$1,672
$1,672
0
$1,172.43
0
$1,172.43
CHANCE NODES: STATE
Complementary Effects: Significant
Coordinate across product lines: Yes
Customer's preferences: Few
Impact on infrastructure of other bus: Significant
Impact on reputation: Positive
Technology attract new users: Few to none
Value added: Significant
PROBABILITIES
Most Likely Scenario: Go
Max Go
Max No Go
0.5397
0.6376
0.4419
0.6239
0.6825
0.5651
0.6011
0.4545
0.7478
0.4561
0.5818
0.3305
0.2769
0.3968
0.1570
0.6535
0.3071
1.0000
0.4270
0.6364
0.2175
RECOMMENDATION

Ericsson should develop and launch the
Bluetooth-enabled T39 phone
 Analysis dependent on assumptions
QUESTIONS?