“Technology for peace of mind”
Business Plan
April 2003
Charles Assaf
assaf@mit.edu
Table of Contents
1. The Company ................................................................................................................ 3
1.1 Overview ................................................................................................................... 3
1.2 Business Model ......................................................................................................... 3
1.3 Product Description .................................................................................................. 4
1.4 Product Value............................................................................................................ 5
1.5 Market Entry and Growth Strategy ........................................................................... 5
2. Market Research and Analysis .................................................................................... 6
2.1 Research Methodology ............................................................................................. 6
2.2 Market Opportunity .................................................................................................. 6
A-Security ................................................................................................................... 6
B- “M-Commerce”...................................................................................................... 7
2.3 Marketing Strategy.................................................................................................... 8
2.4 Competitor Profile .................................................................................................... 8
2.5 Competitive Advantage ............................................................................................ 9
2.6 Marketing Plan ....................................................................................................... 11
3. Management Team ..................................................................................................... 12
4. Financial Statement .................................................................................................... 13
5. Design and Development Plans .................................................................................. 14
5.1 Development Status ................................................................................................ 14
5.2 Current design goals ............................................................................................... 14
5.3 The hardware .......................................................................................................... 14
5.4 The software system ............................................................................................... 14
5.5 Snapshot of the GUI (Version-1) ............................................................................ 15
2
1. The Company
1.1 Overview
i-Track Corporation is a privately held web services company founded by a group of
MIT students in engineering and business. i-Track is engaged in the development and
commercialization of proprietary technologies used to identify, locate and monitor people.
Through the integration and miniaturization into marketable products of two technologies
– wireless communication and position location technology including global positioning
systems (GPS), the company provides timely information services to clients anywhere in
the world. i-Track Corporation will build its solutions for two emerging markets:
Security and M-Commerce. We are currently working on the design of a prototype
system and consulting numerous academic and professional contacts for a feasibility,
utility, and business implementation of our product.
In June 2003, i-Track Corporation will have developed and tested the first fully
functional prototype model.
1.2 Business Model
Our business model is clear. Our value proposition is to provide an affordable,
comprehensive personal safety solution that allows for accurate immediate location
information through the internet anytime of the day. Our promotional proposition is to
sell through high-end retailers. Additionally, there would be direct sales over the Internet
through the company’s web site. We will improve the effectiveness of the supply chain
by working with other participants/allies such as Sharper Image and Brookstone. We aim
to generate profits by the subscription service, transacted and paid over the internet and
by sharing revenues with our allies. The suppliers will provide us with the wireless
network infrastructure. The figure below represents a complete picture of our business
model.
ii
Supplier
Supplier
ii
Resellers
and
Partners
Customer
Customer
Customer
Customer
Supplier
Supplier
ii
Flow of money
Flow of product
Flow of information
3
1.3 Product Description
Our product consists of a small module carried by the child. This module contains a GPS
receiver, a GPS antenna, a GSM/GPRS modem, a microprocessor and a stand-alone
power source. In order to hide the existence of the tracking device in an emergency, the
unit will be embedded into a watch or customized with other peripherals such as clothes
or shoes.
The tracking system will allow the parents to track the movement of their children over
the Internet from any web-enabled device anytime of the day. With modern GPS
equipment, it is now possible to calculate positions from any part of the world to within
centimeters. To utilize GPS technology in our product, a miniature GPS receiver and a
GPS antenna are needed to obtain raw data like time, latitude and longitude. GPS
technology itself is free and is readily available.
In order to transmit data collected from the GPS receiver wirelessly in a wide area, the
most feasible technology that is available today is GPRS cellular technology. GPRS
(General Packet Radio Service) is a new non-voice value-added service that allows data
to be sent and received across a mobile telephone network. The infrastructure, i.e. the
transmission towers for this technology has already been built and the cellular network
covers most parts of the United States. Using a GPRS-enabled modem, information about
the child’s location can be transmitted wirelessly to a central web server.
The latitude and the longitude of the child’s location will be stored in the database of the
company’s central server. When a customer logs on to the website of our company to
make location queries, a web service that can transform latitude and longitude
information into a graphical display will be used to generate a map of the unit-holder’s
location. Microsoft MapPoint.Net will be used to generate this graphical display. The
figure below clarifies the system architecture.
Since our product is based on emerging technologies, legal protection of intellectual
property is critical. Copyright will be used to protect our computer programs. The
copyright registration process is relatively straightforward and can be accomplished at a
modest cost. In addition, our product may be patentable.
4
1.4 Product Value
The value of any product is the functionality users derive from its use. Our customers
will have the capability of locating the position of the unit’s holder by a simple click on
the internet. The user interface will be comprehensible and will involve many features to
enhance and enrich the customer’s interaction with our system.
The rendered map will be accompanied by zoom-in/zoom-out capabilities as well as
browsing functionality to provide fully practical maps for customers with different tastes.
Moreover the Location Based Information is a feature that provides the user with the
option of displaying relevant addresses and geographic entities (Police station, Fire
department etc.) near the unit’s location.
The route service is another feature that allows you to generate routes, driving directions,
and calculated route representations (used to render a highlighted route on the map) based
on locations or waypoints.
Finally, to serve varying levels of needs we will introduce a messaging feature to
complement the user with geo-fencing capabilities. The user can set the geo-fence using
the client interface when connected to the Internet. The system proactively monitors the
unit’s position and automatically sends customer-defined messages when position
readings exceed pre-set ranges.
1.5 Market Entry and Growth Strategy
We intend initially to target household, with one or more children, willing to invest in a
product that will provide them with peace of mind. Dominance in this niche market will
lead to other niche markets through custom applications. Applications in which location
tracking is important will derive value from using our product/system. We see
applications ranging from remotely monitoring children to tracking lost pets and
endangered species, as well as managing the supply chain of certain products and
locating lost or stolen assets. Furthermore, our product may be used in big construction
projects for a more secure and efficient site management.
We plan to make available our product through major channels including retailers and
resellers as well as by creating alliances. Our initial plans include demonstrating our
prototype at major security-related social events. In addition, will stimulate demand and
attract buyers through aggressive advertising and promotional campaigns primarily on
www-based media channels. We plan to continually develop and promote new
compelling applications for our products to target new market segments.
5
2. Market Research and Analysis
2.1 Research Methodology
We reviewed several research data sources, including International Data Corporation
(IDC) and the FBI’s National Crime Information Center as well extensive on-line wwwbased searching, to determine the potential markets and sales for our product.
2.2 Market Opportunity
A-Security
Personal safety issues are becoming more important and industry spending in this
segment is rising. Two social trends support the demand for i-Track child safety
solutions in the United States: increasing concern about insecurity and working parents
with less time to dedicate to their children.
In the United States, there are 19 million children under the age of 5 and 39 million
between the ages of 5 and 14. As child kidnapping and abduction incidents continue
unabated with approximately 725,000 children missing each year, there is a growing
concern about children safety. This provides the company an opportunity to enter the
market providing personal safety and child tracking solutions.
We estimate a potential market of approximately 9.6 million households that have
children between 4 and 12 years old. About 44% (or 4.2M) households have an income
of over $60,000. We estimate that 80% of this segment lives in metropolitan areas and
that 70% of the targeted households, all having access to the internet, are concerned with
personal safety issues. This would total around 2.3 Million households.
The market of home safety products was taken as a proxy to assess the concern rate of
our target market. The technology penetration in this segment will have a growth similar
to mobile phones in their early stages.
6
(in thousands)
Families w/ one or more
children in the US (0-17 yrs)
Families w/children 4-12 yrs
old
Families w/income over
60,000$
Families living in
metropolitan areas
Families with Internet
connection
Families concerned with
personal
Assumptions
38,427
Source
US census 2002
9,607
0,25
US census 2002
4,227
0,44
US census 2002
3,386
80%
US census 2002
3,386
100%
US census 2002
2,370
70%
SDM/Interlogix
survey 2001
There is an additional potential market for personal tracking solutions related to people
suffering from Alzheimer’s disease. This attractive market was not incorporated into the
business plan but would eventually be an additional revenue source.
B- “M-Commerce”
It is not yet clear where and how fast M-Commerce will penetrate into the global markets.
Much of the promise of M-Commerce remains at the prototype stage. However, the move
towards M-Commerce is gathering pace. The usage of mobile phones is currently
mainstream and sales are soaring, outpacing existing and forecast PC sales. Right now,
the number of global wireless subscribers is growing, as shown in the forecast table
below. Positioning solutions can be used to let a business know when a mobile user is
nearby, so the store can send a message advertising sales and offering special deals. The
impact of this technology on M-Commerce is significant. However, this niche was not
included in the business plan because the market potential of these applications is still
uncertain.
Year
1999
2000
2001
2002
2003
2004
2005
Mobile Access
0.4
4.0
20.0
85.0
183.0
344.0
614.0
Fixed PC Access
241
373
496
571
624
671
740
7
2.3 Marketing Strategy
Our strategy is to develop leadership in several initial markets and leverage this
leadership to the mass market. Our initial target market as mentioned above is parents
whose children’s age range between 4 and 12 years old with an income exceeding
60000$US. We believe that this segment will constitute the early adopters of our products
since the security of their children is an important issue and they would be willing to
invest in a product that would guarantee them peace of mind.
Based on estimated production costs and focus groups, the i-Track device would have a
price of $499. There is also a flat monthly fee for the service at $29 per month. In the
medium to long run, the price of the device would be cross-subsidized using the same
model employed by mobile phone companies.
There are two main concerns in product adoption that would be mitigated through
partnerships and targeted advertising. First, concerns about privacy and security of the
information will be addressed by collaborating with public and non-profit organizations
including The Lost Children Network and The National Center for Missing and Exploited
Children's. Second, targeted advertising will help explain the simplicity of the product
operation and the reliability of the service through security testimonials.
Parents, being the decision makers, will be targeted as a whole by several communication
channels including social associations. Complete information about the product benefits
will be posted on the company’s web site and will host a community of parents to educate
them on their children safety. The communication will run extensively on the Internet,
where the main features of the product will be described. A demo will explain how to use
the device and the web-based services.
2.4 Competitor Profile
Due to advances in the GPS-receivers technology, there had been a proliferation in the
industry of various internet-tracking companies. Two companies “Wherify” and “Digital
Angel” constitute our direct competitors.
Wherify Wireless, Inc. (formerly World Tracking Technologies) is a privately-held
developer of patented wireless location products and services. Their products and
services are used specifically for child safety, parental supervision, personal protection,
law enforcement, animal identification and property asset tracking markets. The
company's proprietary integration of communication technologies will enable customers
to obtain real-time location information for individuals and property directly through the
internet or any phone. Wherify Wireless, founded in March 1998, is located in Redwood
Shores, California.
8
Digital Angel Corporation offers technology that represents a combination of advanced
sensors and Web-enabled wireless telecommunications linked to Global Positioning
Systems (GPS). By utilizing advanced sensor capabilities, Digital Angel will be able to
monitor key functions, such as temperature and physical movement, and transmit that
data, along with accurate emergency location information, to a ground station or
monitoring facility. The Company also invented, manufactures and markets implantable
identification microchips the size of a grain of rice for use in companion pets, fish and
livestock. Digital Angel owns patents for its inventions in all applications of the
microchip technology for animals and humans. The Company was formed on March 27,
2002 in a merger between Digital Angel Corporation and Medical Advisory Systems, Inc.,
a global telemedicine provider that operated an around-the-clock physician-staffed call
center in Owings, Maryland, for two decades.
2.5 Competitive Advantage
“i-Track” provides several differentiation advantages over competing products
Coverage
In order to transmit data collected from the GPS receiver wirelessly, i-track employs
GPRS (General Packet Radio Service) cellular technology. The infrastructure for this
technology has already been built and the cellular network covers most parts of the
United States. “Wherify” make use of the CDMA network, which is also a nationwide
network. On the other hand, “Digital Angel” only functions in areas providing network
service and strong CDPD (Cellular Digital Packet Data) wireless network coverage. In
areas with weak or no coverage, alerts cannot be sent from the wearer's monitor. Digital
Angel's services require the network service provided by AT&T Wireless.
Monthly Cost
While i-Track will have a flat monthly fee for all its services at $29 per month,
“Wherify” has developed a range of Service Plans to meet the different needs of families
across the country. Their prices range from $24.95 to $49.95. Finally, “Digital Angel”
applies a monthly service plan for $29.95, which allows unlimited access to information
via the “Digital Angel” Website.
Pricing
i-Track product will be sold at $499. This price exceeds both of our competitor’s retail
prices. We believe that our premium price is compensated by the assortment of features
that our customer will benefit from. “Wherify” and “Digital Angel” will sell their
products for $399.99.
9
Geo-Fencing
We will provide our customer the capability of setting a geo-fence using the client
interface when connected to the Internet. We believe that this feature may have numerous
applications in our potential target segments. None of our competitors provides this
feature.
Unlimited Usage
We will make available to our users an unlimited usage capability for all the services and
features of our system. “Digital Angel” will charge $3 for each call placed to their Alert
Call-Center. As for “Wherify” they will charge their customers based on the number of
times they would request to locate their units, in addition extra charges will be incurred
when the “Optional Live Operator Assistance” and “Emergency 911 Panic Alert”
features are used.
Leasing Option
Lease financing is another way for our customers to buy i-Track products. By paying
$49/month a one-year period, customers would avoid paying the premium cost up-front.
None of our competitors offers the leasing option.
Aesthetics
In an attempt to co-brand with kid friendly brands as Fisher-Price or Mattel we will
leverage their expertise to enhance the outward appearance of our product and diversify
the style to meet customer’s design needs. Size, portability and look will enable the iTrack product to reach a far broader market than its competitor’s products.
Legal Protection
i-Track’s core technology is patentable, we aim to leverage this core technology across a
wide product platform as new applications and uses arise.
10
Competitive Pricing
I-Track
Wherify
DigitalAn
gel
Coverage
2.6 Marketing Plan
Revenues will be derived by sales of the product and a subscription service. High-end
retailers such as Sharper Image and Brookstone will primarily commercialize the i-Track
device. Additionally, there would be direct sales over the Internet. The subscription
service would be transacted and paid over the internet.
We intend to offer promotional packages to extract more costumer surplus and introduce
new features based on the user’s interaction with our system. In addition, our product will
be available in key locations where parents would worry more about their children’s
whereabouts. Those locations could include parks and ski resorts where the i-Track
product will be offered for limited usage. This strategy will acquaint the users with
features and capabilities of our product.
11
3. Management Team
Charles Assaf will serve as Chief Executive Officer. He will lead the development of
appropriate financing strategies, financial projections and business plan development and
assist in the software development. Charles is a Masters of Engineering student doing
Information Technology at MIT. He worked with Merrill Lynch as a summer intern after
graduating from McGill University with a Bachelor’s in Mechanical Engineering.
Kwang Liang Yang will serve as Chief Technology Officer. He will be responsible for
the software and hardware development. He is a Masters of Engineering student doing
Information Technology at MIT. Prior to starting i-Track, he has done extensive work
dealing with wireless data transmission and integration of information systems. He holds
a Bachelor’s degree in Engineering from UC Berkeley and a Master’s degree in
Engineering from Stanford University.
Marie xxxxxxx will serve as a marketing director. She presently works as a product
manager at a major software company and has experience incorporating, founding, and
managing small technology companies. Her industry experience includes hardware and
software engineering as well as large project management. She holds an MBA from MIT
Sloan School of Management.
John xxxxxxx will serve as principal system architect. He brings an excellent mix of
hardware and software skills to our team. John’s current research involves implementing
Web-enabled software systems. He has a wide variety of industry programming
experience. John is a candidate for a Master’s degree in Electrical Engineering at MIT.
12
4. Financial Statement
Revenues are forecasted to start in the second quarter of 2003 and total $0.68MM for the
full year




Device costs are forecast to average 70% of the anticipated product selling prices.
Monthly costs per device for wireless connection will be negotiated with
nationwide carrier for $10 per month.
Indirect costs, consisting mainly of depreciation, advertising, salaries, and
administrative expenses are forecast to be $0.7MM in 2003 and $1MM in 2004.
Net income is forecast to be a loss of ($400,000) in 2003 and a profit of $1.1MM
in 2004.
i-Track is expected to achieve cash breakeven in the second quarter of 2004.
Operating Cash Flow;
In thousands of $US
2003
Q1
Q2
Sales
$
-
Operating Expenses
$
150
EBIT
Depreciation
Income Expenses
CAPEX
Working Capital
Income Tax
$
(150)
$
-
Operating Cash Flow
$
$
$
2004
(1,000)
$
-
$
-
(1,150)
$
Q3
Q4
Q1
Q2
Q3
Q4
-
$
232
$
452
$
781
$
1,079
$
1,471
$
1,943
$
70
$
370
$
480
$
670
$
790
$
961
$
1,139
$
(70)
$
(138)
$
(28)
$
111
$
289
$
510
$
804
-
$
25
$
25
$
25
$
25
$
$
-
$
$
-
$
$
-
$
-
$
$
(500)
$
(100)
$
(100)
$
(100)
$
$
(39)
$
(19)
$
(68)
$
(30)
-
$
(39)
$
(33)
$
$
-
(609)
$
$
-
(257)
$
$
(196)
-
$
(100)
$
$
(89)
$
(101)
$
24
-
$
-
(100)
$
(100)
$
(41)
$
(152)
$
(178)
$
(281)
$
216
$
296
13
5. Design and Development Plans
5.1 Development Status
The i-Track System is currently under development. The base design has been completed
The spiral model was chosen to align the work into a risk oriented lifecycle model; our
intention was to deliver a prototype in mid-May which will permit us to add features
while building up a better product on the second loop of the spiral. i-Track consists of
two main functional components: the unit or the hardware and the software system.
5.2 Current design goals
-
Evaluate prototype
Determine desired components specifications
Create subsystems for beta prototype
Individual testing and modifications of subsystems to meet specifications
Integrate subsystems into the beta prototype
Resolve system level issues.
5.3 The hardware
In order to have a wireless communication with the i-Track server, a microprocessor, a
Tri Band GSM-GPRS modem and a GPS receiver should all be integrated in the unit.
Those components constitute the main entities of our product and a precise integration is
essential for the overall performance of the system. The search for an appropriate GPS
receivers had proved to be one of the most challenging tasks of the hardware construction,
Specifications on available GPS receivers is often misleading or incomplete. The final
selection was made based on the performance in the areas of accuracy, size, and cost.
5.4 The software system
Users can access location-based information and retrieve maps showing the unit’s
location in real time. i-track incorporates a windows-based GUI (graphical user interface),
that is user-friendly and provides access to the main functions of the system by a simple
click of a mouse. Based in the system requirements, the user should be able to do the
following:
-
Access general information about our company: this includes a description of
the company and its products, the services it offers and their pricing.
Login to the website and locate the position of a unit by inputting the unit
product key.
14
-
-
-
-
Give the user a report containing all his units (in the case where the user will
possess more than one unit) along with a description of each unit and a locate
feature for each one of them.
Give our users zoom in/out capabilities as well as the ability to navigate
through the map that displays the unit’s location.
Provide the user with the nearest address relative to the unit position.
Allow the user to refresh the map for a continuous monitoring of the unit.
Provide the user with the option of displaying the unit’s position
corresponding to a certain time range. This would allow the user to have an
idea of the movement for a certain unit.
Allow the user to get driving directions with a map displaying the road to be
followed to reach the unit’s location along with a report on the distance and
the time required to get to the final destination.
Provide the user with the option of choosing between the shortest or the
quickest way to get driving directions to the location of the unit.
Access location based information relevant to the unit’s position.
Find particular point of interest in a specified range from the position of the
unit.
Provide the user with capability of updating personal information.
Allow the customer to create an account order the product and send feedback.
5.5 Snapshot of the GUI (Version-1)
15