The Opportunity Confronting E Ink - Assignment Example

a) What is the nature of the opportunity confronting E Ink? Answer: E Ink was a revolutionary idea, which once made into reality could turn around the entire US publishing industry. Though there was a severe competition that was brewing from the internet as well as other digital mediums, still the publishing industry and advertising had a very strong presence. The traditional method of publishing which was through the print media used to cost the publishing industry billions of dollars annually.

This was the real opportunity that could be utilized by E Ink since its technology would make the whole publishing and distribution process totally cost-free. The US newspaper industry and Books were other forms of the publishing industry, which could very well provide a large market for marketing the E Ink technology. There was a huge scope that was present in the book segment since this technology could really provide the consumers with a single book, that was made of paper, and updations of this book could very well be done by means of a wireless network.

Apart from this, the electronic display boards which could cover only a small surface area as well as the electronic consumer market of flat-screen displays was another opportunity that could be thoroughly be utilized by the E Ink technology. Thus these were the opportunities that the E Ink technology was confronted with in the world, which brightened the prospects of entry into such markets which were dominated by other inferior types of technologies. b) What do you think of their three-stage approach to achieving their long-term goal?

Answer: E Ink had proposed a three-phase approach for meeting their long-term goals. The first of the three phases was to make an entry into the large area display market. The E Ink developers felt that there was no existing giant in this field and we're sure that they could easily and rapidly make progress in this segment and achieve their long-term goal. The effectiveness of E Ink in this field was that, it was lightweight and at the same time could be easily spread over large areas and the display could be centrally controlled.

This would attract consumers and also the business firms alike since they are always are on the lookout for cost-effective display technologies. The next step was in the development of the Radio paper, which could be well enabled by means of the development of the flat panel displays. E Ink found this market also to be a huge one since most of the consumer electronic equipment in the modern world like computers, cell phones, and many others mostly used this type of technology. Though the current market for such products was totally dominated by LCDs, the E Ink was found to be a much superior technology, since it had many advantages like flexibility, lightwieghtedness, sunlight readability, and many others which were shortcomings of LCD.

The third phase of E Ink was to make a foray into the field of publishing with the development of the Radio Paper, which was the dream and final goal to be achieved. Indeed E Ink very well knew that developing such a technology would result in huge profits for the company, which could very well run into more than a hundred billion dollars yearly. Thus this three-stage process of E Ink Company for the launch of their technology is really a commendable one since it is a well-planned approach to penetrate the market in various phases and finally dominate each market, which would be helpful for achieving their long term goal of developing the radio paper. c) How much money should the company raise?

From whom? On what terms? Answer: The projected amount that was needed for the E Ink company’s progress would be more than $16 million for the corresponding five fiscal quarters, which will be in the short term. In the long term when it comes to the launch of the flat panel displays, it would need funds within a range of $30 to $50 million. The E Ink company in order to achieve its goal for the development of the Radio paper required a large capital very badly, that too within a short span of time.

The current investors were considered to be very valuable by the company since they were the ones who helped to kick start the project. But their investments were considered to be very low so as to satisfy the long-term goals of the company. The company could very well go in for getting the required funds from venture capitalists but the number of funds could be quite negligible from them when compared to the company’s funding requirements. The other option would be to go in for the corporate investors who could provide a larger amount of funds but the only problem was that on one hand, they will have a cautious approach and on the other, will require the rights as well as restrictions from the E Ink company that would make it to be less flexible.

Thus the company went in for equity investors like Applied Technology, Atlas Venture, Creavis GmbH, The Hearst Corporation, Motorola, Solstice Capital, Interpublic Group of Companies Inc all of whom helped in getting $15.8 million of first-round funds for E Ink. This type of funding helped the company to keep the rights of its products for itself and gave it more flexibility since the equity investors were not allowed any right towards the intellectual properties of the firms.