AirGlow Mobile Phone - Case Study Example

Running Head: AIRGLOW MOBILE PHONE: PRELIMINARY BUSINESS PLAN AirGlow Mobile Phone: Preliminary Business Plan (your name) (course) Executive Summary The AirGlow mobile phone represents a bold new concept in mobile technology by harnessing the scientific principle of ambient energy – electromagnetic energy in the form of radio waves in the atmosphere – to provide a part of the unit’s electrical power requirements. The unique AirGlow system means longer battery life, greatly reduced environmental impact, and less cost to the user, all while providing the features and benefits consumers have come to expect from their mobile phones. The system that powers the AirGlow works in the same way as a crystal radio or an RFID chip, although at a much higher power level. An antenna/collector circuit gathers electromagnetic waves from the atmosphere, while a second circuit converts these emissions to an electrical charge to be stored in the phone’s battery. Under typical usage, the phone will draw more power from the battery than can be replaced by the ambient charging system and so battery life will simply be extended. In stand-by mode when the phone is not in use, however, the system will continue to function and can fully recharge the battery without the need for an external electrical connection. In terms of features and capabilities, the AirGlow phone is competitively-equipped. Besides 3G network compatibility, the AirGlow also has Wi-Fi and Bluetooth connectivity, dual cameras for video-calling, audio and video players, and includes a standard charger for fast, conventional recharging. Apart from the ambient charging system, the AirGlow compares favourably to the Sony Ericsson G900i, as a frame of reference. The business plan for the AirGlow Company envisions manufacturing to be accomplished on a contract basis with factories in Asia, with primary management and R & D operations located in the UK and distribution facilities located in strategic regions throughout the world. Marketing of the AirGlow phone will proceed along two pathways: first, by co-operative arrangements with mobile service providers to offer the AirGlow on a subsidised basis as part of the service packages to customers, and second through direct sales to consumers through electronic and general retailers. Financing for the development and production of the AirGlow phone can be accomplished in a number of different ways. Venture capital investment will be most useful for the start-up of R & D facilities, while manufacturing and distribution infrastructure requirements can be met through co-operative financing arrangements with AirGlow’s manufacturing partners. The initial support of mobile service providers through the first of the marketing pathways described above will provide resources for AirGlow’s direct-to-customer marketing activities. Provided sufficient financial resources are secured, a one-year timeline is envisioned from the formation of the company to the introduction to market of the AirGlow phone, with design, testing and initial production of the unit anticipated to take approximately eight months. What is AirGlow? In nature, airglow is the faint light emission from the atmosphere visible at night or from space, a natural reminder of the energy that fills the air around us. The AirGlow mobile phone harnesses this power in the form of radio energy for constant, convenient, no-plug-needed charging, always ready to go at the touch of a button. The unique AirGlow system means longer battery life, greatly reduced environmental impact, and less cost to the user, all while providing the features and benefits consumers have come to expect from their mobile phones. The Innovative Opportunity The innovative opportunity that sets the AirGlow phone apart from any other mobile phone is the ability to use what is called ambient energy, electromagnetic energy produced by the countless radio transmissions passing through the atmosphere, for a significant proportion of its electrical power requirements. This has a number of benefits: Convenience: The AirGlow phone needs much less conventional plug-in charging than an ordinary mobile phone. Reduced Environmental Impact: Mobile phones, and especially mobile phone batteries, generate large amounts of highly-toxic waste when discarded. (“Mobile Phones and the Environment”, 2007) With the AirGlow system, battery life is virtually infinite, saving not only the environment but also saving customers from the costs that are levied for battery disposal. (Canning, 2006) Ideally, the battery from an older AirGlow phone could be used for a newer model when the customer decides to upgrade; avoiding the regulations and fees used by the government to discourage battery disposal or at least strongly encourage recycling can be a good selling point for the AirGlow phone. Energy Savings: The electrical power usage of a single mobile phone when it is being recharged is of course very small. However, when the sheer number of mobile phones owned by the public is considered – a number in the hundreds of millions worldwide – the impact is significant. Every AirGlow phone sold helps to reduce energy reliance. How the Technology Works The technology that helps to power the AirGlow is based on the scientific principle of ambient energy. Electromagnetic energy in the form of radio waves fills the air around us. The Earth itself is a significant source of natural radio emissions (Gurnett, 1976), and human activity produces an enormous amount of radio energy, if only it could be harnessed and put to use. The concept is not a new one; famous scientist Nikola Tesla experimented with the wireless transmission of electrical energy on a large scale in the last years of the 19th century, and in the decades after crystal radios, which are entirely powered by the energy derived from incoming radio waves, became commonplace. (Peterson, 2008) In the modern world, devices such as RFID’s (radio frequency identification chips) and electronic cards such as the Oyster card used by London commuters gather the small amounts of electrical energy they need in the same way. (Curty & Declerq, 2005) Of course, it is one thing to power a tiny transmitter in an ID card for the fraction of a second needed for it to send a weak signal across a very short distance, and quite another to draw enough power from the air to recharge a high-capacity mobile phone battery. Nevertheless, the peculiar physics of radio waves make this possible because an antenna circuit of the proper configuration can actually amplify and gather radio signals far beyond the frequencies for which it is physically designed, if it emits or reflects electromagnetic radiation at a specific energy level. (Peterson, 2008) Essentially all that is required is a carefully-designed antenna circuit to gather the ambient radio energy, and a type of transforming capacitor to convert the radio waves into electrical energy. These two small components are the important difference between the AirGlow phone and any other kind of mobile phone currently on the market. Under ordinary use the ambient charging system does not provide enough power to supply the full electrical requirement of the AirGlow phone, but rather continuously adds a small amount of electricity to the battery. Because of the way the system functions, using the phone actually increases the amount of electromagnetic energy the antenna circuit can capture, although most of this is immediately used. The net effect is that the energy stored in the battery is used at a much slower rate, greatly extending battery life. When the phone is not in use and is stored in “stand-by” mode, energy is continuously drawn from the environment, and is greater than what is needed to power the phone’s minimal stand-by functions, and thus the extra energy is used to re-charge the battery. Other Features of the AirGlow Phone The AirGlow phone will have standard features comparable to the most popular competing mobile phones currently on the market, such as: 3G network capabilities: can operate on GPRS, GSM, and UMTS service networks at 900/1800/1900 MHz frequencies. Additional connectivity: Wi-Fi (Wireless LAN) and Bluetooth. These alternative signal transmissions can also be used by the ambient charging system to gather electrical energy. Colour LCD. External memory slot for additional memory capacity. High-capacity lithium ion battery. Mobile phone battery life is expressed in terms of “talk time” and “standby time.” The precise figure for the AirGlow battery’s “talk time” is not yet available; a survey of Sony Ericsson and Nokia phones with similar overall features suggests a range of 6 to 12 hours without taking into account the extra time that will be provided by the AirGlow’s unique charging system. And of course, because of the charging system, “standby time” for the AirGlow is for all intents and purposes infinite. 5-megapixel rear-mounted camera with digital zoom for snapshots and short videos (limited only by the amount of memory installed in the phone), plus a small front-mounted VGA camera for video-calling. SMS, MMS, and e-mail messaging functions. Internet browsing capability. Audio entertainment with standard capabilities: AAC, eAAC, and MP3 audio player, plus FM radio. Video player (3GP and MPEG4). Poly-tone and MP3 ringtones included, with customisable ringtone capability. Voice dialling, memo, and hands-free functions. Standard voltage transformer/battery charger for conventional charging. General Description of the AirGlow Company AirGlow corporate headquarters including the primary research and development facilities are located in the UK. Component manufacture and product assembly is accomplished in Asia, and secondary research and testing facilities are located nearby or within these factories. Distribution origin points are also located in Asia, with secondary distribution centres serving other regions located in the UK (Europe, Africa, and the Middle East), US (North and Central America), Brazil (South America), and Australia (Australia and New Zealand). The AirGlow Company is patterned in a very general way on the organisation of the successful Vodafone Group. (Dodourova, 2003) Only the corporate management, marketing, and research & development (which include product testing and quality-control responsibilities) are handled directly by AirGlow, with manufacture, distribution, and co-operative arrangements for the offering of telecom services being managed on a contract basis. This greatly reduces the investment required for infrastructure and human resources, although it does add a degree of complexity to management requirements. Table of Organisation & Key Personnel Apart from the Board of Directors, which will of course be selected by the shareholders, the following chart summarises the key organisation and personnel roles of the AirGlow Company: While most of these positions are quite conventional and need no explanation a few of the roles do require some further clarification: Vice President of Production & Development: This executive role encompasses the responsibilities for all production, design and development of new products, and quality control and testing. It is important that the production and development areas are aligned in this way, to ensure efficient correction of any product problems that arise and to move new developments into production as quickly as possible. Director of Production: This person will be responsible for overseeing and co-ordinating the activities of the component production and assembly facilities. These contract facilities will be responsible for their own management and operations, but in order to assist them and ensure quality standards for the manufacture of AirGlow phones are being maintained, production will be reviewed by the Director of Production, with assistance from on-site co-ordinators located at each facility. Director of Product Development: As noted earlier, both the research and development and quality control responsibilities will be combined in one division. The rationale for this is that the infrastructure required for quality control in terms of facilities and equipment is already available in the R & D operations, and that the product design and development team is in the best position to assess product quality and make corrections if needed. The secondary testing and research facilities located in or near the production locations will have a limited development role, and will concentrate on quality control activities; R & D will centralised as much as possible in AirGlow’s UK facility. Research has shown that this approach to R & D, as opposed to a global, geographically-distributed approach, permits faster development and deployment of new products. (Singh, 2008) Telecom Programs Director: A key part of AirGlow’s strategy will be to form partnerships with mobile service providers, which is a common arrangement in the industry. Because of their importance, a dedicated senior manager and support staff will be detailed to manage these partnerships. Production Facilities Logistics Liaison: In the horizontal, partnership model such as the one being conceived for AirGlow, close oversight and support of manufacturing logistical needs is necessary to prevent inefficiencies in the supply chain being reflected in the flow of finished products to the consumer. (Zander & Anderson, 2008) While the production facilities are responsible for managing their own operations, it will be critical that they are properly supplied with the materials they need to manufacture AirGlow phones according to customer demand. The Production Facilities Logistics Liaison and the On-Site Logistics Co-ordinators will assist AirGlow’s production partners in managing their supply chains for maximum efficiency and economy. General Operation and Production Plan There are three phases to the operation and production plan: the development phase, the production phase, and the distribution phase: In the development phase, new product designs and upgrades are developed in AirGlow’s primary R & D facility located in the UK. The designs are then passed along to the secondary R & D facilities near the manufacturing locations to assess production requirements. For example, changes in components or assembly techniques might require some reconfiguration of the manufacturing process, or if this is not possible, then design changes may have to be made in order to accommodate manufacturing capabilities. Once this production testing is completed and any modifications to the design incorporated, the production phase can begin. In order to facilitate the development phase between R & D and manufacturing facilities located in different parts of the world, product lifecycle management (PLM) and collaborative commerce solutions will be used to create virtual workplaces via the Internet, great increasing AirGlow’s speed-to-market. (Sääksvuori, & Immonen, 2008) The production phase will be largely determined by the outcome of the development phase that precedes it, the quality control functions that will be applied while production is on-going, and the product volume needs determined by customer demand. Quality control will be a continuous process, with phone components and completed units being selected at random from the manufacturing process to be subjected to rigorous testing. The testing requirements and procedures will be developed by the primary R & D facility, but carried out by the secondary facilities. This will enable them to initiate corrections to any problems discovered very quickly, and provide feedback with a greater relevance to the manufacturing process about the quality testing program. Again, the use of a sound PLM system will be a great advantage in reducing delays to production because of quality-control issues. Empowering the secondary R & D facilities to make corrections as the need for them is discovered also avoids a situation in which a relatively localised problem – such as a bad batch of components for assembly in a single factory – delays all production due to a requirement for management approval from the other side of the world. The distribution phase proceeds along two pathways. The first pathway is the co-operative tie-up of AirGlow phones with mobile service providers, and the second is direct sales to consumers. These two pathways should be given equal attention. Pre-paid mobile service, which applies to the direct sales pathway, has been quickly overtaking traditional, contract-based post-paid service in most parts of the world except North America for the past couple years, but even in the US, the last bastion of the traditional post-paid service providers, pre-paid service is beginning to have an impact on the industry. (Reardon, 2009) While this might suggest direct sales are more important for AirGlow, the mobile service providers have responded by offering attractive, more competitive post-paid plans and have recovered a bit of their market position. This is a benefit to AirGlow because an innovative and unique phone model will be an attractive proposition to service providers for inclusion in their post-paid programs, and sales of the phone units through service providers will most likely be a risk-reduced matter of contracted quantities. Thus, at least until a clear winner emerges in the pre-paid versus post-paid battle, both distribution pathways should receive equal attention and effort on AirGlow’s part. Financing and Venture Capital Requirements Because this is a preliminary business plan, specific financial requirements are subject to further research and planning. The financing pathways for the different parts of AirGlow’s business can be described, however, and focus the search for funding: Continuing development of the ambient charging system and start-up of R & D operations: This is probably the most attractive area for venture capital investors. Financing will be needed for continuing development of the ambient charging system, working towards an eventual goal of a unit that requires no external charging. Development of the main R & D facility, whether in a new building or modification of a suitable existing structure, will have to be undertaken. In terms of establishing the secondary R & D facilities near the manufacturing operations, one possible solution is to secure funding from the contracted manufacturers themselves, under an agreement which would make the facilities available for their use in other parts of their businesses. Recruiting the management team: This would also be a part of the venture capital package. Key personnel would need to be in place from the very beginning of operations; further study will be needed to develop competitive compensation packages and develop a complete personnel budget. Initial investment for manufacturing infrastructure and supply chains: Since the AirGlow phone will be manufactured on a contract basis, financing required for raw materials, components, and equipment or modification of manufacturing facilities will be the primary responsibility of the manufacturers. AirGlow is willing, however, to serve as a guarantor on financing for these purposes. Budget for sales and marketing activities: At this point, it is believed that much of this funding can be obtained by financing agreements with the mobile service providers who will offer the AirGlow phone as part of their service packages. Funding from venture capital investments or an IPO can certainly be used for part of this requirement, but it is a secondary source in this case. Timeline for the Introduction of the AirGlow Phone Because of the highly-competitive nature of the mobile phone market, the AirGlow phone must be developed and introduced as quickly as can be managed while still maintaining excellent product quality and performance. The AirGlow features a unique technology different from any other phone on the market or planned for introduction in the near future, and so is perhaps not as time-critical as it otherwise might be. Complacency, however, would be deadly; the primary goal is for the AirGlow to be the very first ambient-charging phone on the market, and for it to be superior to any subsequent similar models from competing manufacturers. Overall, a 12-month timeline is envisioned for the delivery of the AirGlow phone to the market. Months 1 through 4 will be dedicated to the securing of funding, recruiting the management team and key personnel, initial discussions with manufacturing and mobile service partners, and start-up of the primary R & D operation. Beginning in Month 5, actual design will take place with the first three stages of the development process – industrial design, mechanical design, and hardware design (Jiang, 2009) – operating concurrently and in close co-ordination. This is proposed to take about three months, and be completed by the beginning of Month 8. Software design, the fourth stage of the process, can be done in the latter stages of this three-month period. Stages five and six of the process, project management development and resource development, will occur from Month 8 through Month 10 in close co-operation with AirGlow’s manufacturing partners. The development and opening of the secondary R & D facilities can be completed during this time as well. Months 11 and 12 will be devoted to Quality Assurance and market testing with small production numbers, with needed adjustments being incorporated “on-the-fly” into the manufacturing processes. The target is for the first regular production models of the AirGlow phone to be delivered at the end of Month 12. Addressing Some Potential Risks The AirGlow phone presents unique and useful new technology, and there is a high degree of confidence that this is a feasible and economically-sound business plan. Nevertheless, any venture carries with a variety of risks and it would be foolish to assume that the development and introduction of the AirGlow phone will not encounter some problems along the way. Funding may be difficult to obtain: This is the most obvious potential problem, and the one with the greatest impact. Possible solutions include reducing the scale of the project, such as limiting the initial introduction of the phone to just one or two geographical regions, or delaying the direct-to-customer sales of the AirGlow phone for a period of time. The ambient charging technology may under-perform: While the system works on a fairly simple principle and does not present insurmountable engineering challenges, it may not, at least in the introductory design, provide as much electrical power as anticipated. (Curthy & Declerq, 2005) As long as the system works as conceived, if even at a lower initial level, it will still be a success in terms of presenting a new technology that no other mobile phone has. And of course most of AirGlow’s R & D effort will be devoted to improving the system, regardless of its initial performance. Marketing efforts in any case will be directed toward ‘early-adopter’ customers, who are most likely to appreciate the technology. There is a risk of patent infringement/piracy of the ambient charging technology: While the scientific principle is fairly common knowledge, the engineering to make it work must be carefully guarded. Security measures to ensure that AirGlow’s proprietary technology is not leaked to potential competitors must be enforced, but in such a way as to not stifle creativity and development. Conclusion While much more research and planning needs to be done before the objective of bringing the AirGlow phone to market can be achieved, this preliminary business plan represents a sound fundamental beginning. With its cutting-edge ambient charging technology, the AirGlow phone represents the next wave in mobile technology, one that is more economical, convenient, and environmentally-friendly than anything which has come before. References Canning, Louise. (2006) “Rethinking Market Connections: Mobile Phone Recovery, Reuse and Recycling in the UK”. Journal of Business & Industrial Marketing, 21.5, pp. 320-329. Available from Emerald: www.emeraldinsight.com/10.1108/08858620610681623. Curty, J-P., and Declerq, M. (2005) “Analysis and optimization of passive UHF RFID systems”. Ph.D. Thesis, École Polytechnique Fédérale de Lausanne, November 2005. Available from Infoscience: http://infoscience.epfl.ch/record/62743. Dodourova, M. (2003) “Industry Dynamics and Strategic Positioning in the Wireless Telecommunications Industry: the Case of Vodafone Group plc”. Management Decision, 41.9, pp. 859-870. Available from Emerald: www.emeraldinsight.com/10.1108/00251740310495919. Gurnett, D.A. (1976) “The Earth as a Radio Source”. In: Magnetospheric particles and fields; Proceedings of the Summer Advanced Study School, Graz, Austria, August 4-15, 1975. (A77-21901 08-46) Dordrecht, D. Reidel Publishing Co., 1976, p. 197-208. Jiang, Steven. (2009) “The process of mobile phone design and manufacture”. Articlesbase [Internet], 13 September 2009. Available from: http://www.articlesbase.com/communication-articles/the-process-of-mobile-phone-design-and-manufacture-1225591.html. “Mobile Phones and the Environment”. (2007) Information sheet. Clean Up Australia, 2007. Available from: http://www.cleanup.org.au/PDF/au/additional-info-sheet_mobilephones-the-environment.pdf. Peterson, Gary L. (2008) “Rediscovering the Zenneck Surface Wave”. [Internet] Twenty-first Century Books, 8 February 2008. Available from: http://www.tfcbooks.com/articles/tws4.htm. Reardon, Marguerite. (2009) “Prepaid wireless service could spur price war”. CNet News [Internet], 6 May 2009. Available from: http://news.cnet.com/8301-1035_3-10234062-94.html. Sääksvuori, A., and Immonen, A. (2008) Product Lifecycle Management. London: Springer. Singh, Jasjit. (2008) “Distributed R & D, Cross-Regional Knowledge Integration and Quality of Innovative Output”. Research Policy, 37.1, pp. 77-96. Available from SSRN: http://ssrn.com/abstract=953707. Zander, M., and Anderson, J. (2008) “Breaking up Mobile: Implications for Firm Strategy”. info, 10.4, pp. 3-12. Available from Emerald: www.emeraldinsight.com/10.1108/14636690810887508. Read More