echelon inc.

echelon inc.
Anything is possible.
2006 Digital Safari eBizz Competition
CEO - Wei Zhong Yeh, CTO - John Pham, Marketing Director - Cosmas Njunge
http://digitalsafari.org/ebizz2006/echelon • 1(888)555-1234
echelon inc.
a digital safari eBizz company
Anything is possible.
Executive Summary
At Echelon Incorporated, we understand video is the most powerful form of communication in existence. Through video, we are able to entertain, inform, and bring about change. It is a highly effective
and flexible art through which we can convey whatever messages we want to put forth. However,
in today’s busy world, time is scarce, money is short, and good ideas are too often wasted. Video
production has become a very technical and difficult process. Let that be no longer.
As a pioneer in the digital imaging industry, Echelon Incorporated has found the solution to this problem. We have invented the Echelon Multi-Function Camera, a unique video camera able to capture
video in layers. By separating objects within the video into layers and importing the video into the
EchelonPro video editing software, editing and enhancing the video becomes virtually effortless. With
the Echelon MFC, realistic special effects can be synthesized with a few clicks of a mouse and editing
can become amazingly simple. This revolutionary technology is sure to bring about profound change
in the way video is produced.
Echelon Inc. is entering a $3.5 billion industry showing amazing growth. We have targeted prosumer
videographers to market the Echelon MFC. They take video seriously and will definitely discover our
video camera as their essential tool.
To enter the market at full force, we will need investor funding. We have carefully planned our operation budget and have calculated our projected revenue for the next five quarters. We are requesting
funding of $3.5 million from investors in order to cover initial advertising costs and the production
costs of the first production run of Echelon video cameras. This sum of money is vital for a powerful
start, explosive growth, and to ensure a high investment return.
2450 Grant Street • Concord, CA 94520
Phone: (888)555-1234 • Fax: (888)555-5678 • digitalsafari.org/ebizz2006/echelon
© Echelon Incorporated. All rights reserved.
Company Profile
echelon inc.
Mission Statement
Echelon Incorporated is prepared to take video processing and editing to the next level. As entrepreneurs of the 21st century, we envision an imminent future where video editing requires less
hassle and more imagination. We see a day when videographers effortlessly compose video beyond
contemporary conception. And now, it is possible, because Echelon will make it happen.There are no
limits; there are no boundaries. Anything is possible.
Company Description
Echelon Inc. is a start-up company located in Concord, CA. In 2002, three good friends with insuperable imaginations joined forces to develop a product that will revolutionize video production. After
nearly four years of research and development and many sleepless nights, we have finally invented
the technology of our dreams. In the Fall 2005, we formed Echelon Incorporated.
We have created the Echelon Multi-Function Camera, a one of a kind video camera capturing video
in layers. While shooting, our patented DigiLayer video technology allows the separation of objects
within the video into layers according to their depths. Combined with the EchelonPro video editing
software, these video layers can be edited, allowing for unprecedented video manipulation. Echelon
Inc.’s product will be very appealing to prosumer videographers. It will be looked upon as the truffle
of the digital imaging industry and will definitely be a great success.
We plan on expanding internationally and becoming a leader in video equipment and technology. We
strongly believe that our personnel and the technology we have developed will take us to the very
top. After the success of the Echelon MFC, we plan on developing similar video cameras to be sold
at the consumer and professional levels. Doing so will expand our market and allow more users to
experience the power of Echelon. Although we have far-reaching goals, we know that we can make
it happen. Because at Echelon, we believe that anything is possible.
Personnel
Wei Zhong Yeh is the Chief Executive Officer of Echelon Inc. After double majoring in computer
science and electrical engineering at UC Berkeley, Mr. Yeh teamed up with two high school friends
to revolutionize video technology. He has created many interesting things throughout his life, including a fully functioning lightsaber and a voice-controlled toy airplane. As a Berkeley engineer, Mr. Yeh
is very familiar with computer technology and electronics. With his education and experience, he is
confident that Echelon Inc. will be very successful.
John Pham is the Chief Technical Officer of Echelon Inc. Soon after receiving his degree in mathematics at San Francisco State University, Mr. Pham hoped to develop a product that would revolutionize
video technology. To develop this product, he had to collaborate with his old high school classmates.
Mr. Pham and his partners will take video technology to a new level.
Cosmas Njunge is the Marketing Director of Echelon Inc. At a young age, he attended Mt. Diablo
High School, graduating with a G.P.A of 3.9. After applying hard work throughout high school, he was
offered a scholarship to attend UCLA. After six years there, he received his Master’s degree in economics. Immediately after college, he was employed by a top electronics company, where he served
as a marketing director for one year. His dream since he was a teen was to invent his own product
and have his own business. Consequently, two years later, he teamed up with two high school friends
and came up with an idea of a new digital imaging technology.
The Product
echelon inc.
Opportunity Assessment
The need for easy video editing in the constantly evolving imaging industry becomes ever more
apparent. Video enthusiasts spend a large amount of time and money on cameras and software to
enhance their video. With the Echelon Multi-Function Camera, video is efficiently edited and stunning
visual effects are easily synthesized. Video layers containing objects can be easily removed or added,
saving both time and money. The Echelon MFC has a tremendous market exhibiting amazing growth.
There has been tremendous growth in the digital imaging industry in the past few years, and it does
not appear to be stopping anytime soon.
According to the Consumers Electronics Association (CEA), 54% of Americans own camcorders.
Sales of camcorder units in 2004 have increased by 12% as compared to 2003, and the dollars sales
have increased 4.4%.This shows that the Echelon MFC not only has the potential to sell very well, but
also has the possibility to increase sales within the industry by introducing our DigiLayer technology.
According to a study by the InfoTrend Research Group, revenue from digital camera sales will exceed
$30 million in 2009. The estimated number of digital cameras to be sold in 2005 is 53 million units
worldwide, and an annual growth rate of 15% for the next four years is expected. Currently, 90%
of all digital camera sales exist in the United States, Europe, and Japan. However, other parts of the
world, such as China and the rest of Asia, are expected to cover 27% of digital camera sales by 2008.
These statistics show extreme potential growth in the digital imaging industry. Because the Echelon
MFC is a product that offers amazing new features compared to traditional cameras and video cameras, it will undoubtedly sell very well in this growing industry.
Over 4,000 digital camera units were sold in the United States in the year 2000. According to the
CEA, this number increased by three and a half times in 2003. As of now, over 20,160 units have been
sold in 2005. In addition, instead of buying the basic camera, consumers are buying more expensive
cameras that offer better features and functions. In 2004, there was an increase in sales of 876%
2003 for digital cameras that cost between $500-$600. This shows that consumers are willing to
spend more money for higher quality cameras, and that more consumers are becoming prosumers.
Through these statistics, we can clearly see a growing trend in the digital imaging industry and that it is
not stopping any time soon. Such powerful and concrete statistics show that success for the Echelon
MFC is very high.
Digital Camera Unit Sales
25000
20000
15000
10000
5000
0
2000
2001
2002
2003
2004
2005
This graph shows that sales of digital camera units (in thousands) in the United States have increased tremendously over
the last five year.
Product Description
The Echelon Multi-Function Camera is a powerful video camera that captures videos in layers.
Through our patented DigiLayer video processing technology, objects within the video are separated
into and stored as individual layers according to their depths. Combined with the EchelonPro video
editing software, these video layers can be edited, allowing for unprecedented video manipulation.
This is an amazing advance in the digital imaging industry unmatched by any previous technology.
Summary of Features and Functions
The Echelon MFC is distinguished by its DigiLayer technology, which separates objects within a video
shot into video layers. While shooting, the Echelon Sensor sends out an infinite field of infrared
beams. Beams reflect back to the Echelon Sensor after objects are hit. With this information, the
Echelon Processor is able to distinguish the depths of the objects, which it then splits into as many
as five layers.
The video content is stored on the Echelon MFC’s removable, one terabyte hard drive, capable of
storing approximately fifty hours of high-quality video. From there, the video is uploaded into a computer through a FireWire port and imported into EchelonPro.
EchelonPro works intimately with the Echelon MFC to create top-quality video. Simple drag-anddrop functions allow for easy editing of the video layers. These video layers can be removed, added,
and individually modified to create special effects.This opens new doors to create visual effects never
before possible.
In addition to our amazing new technology, the Echelon MFC is capable of shooting high definition
video at a true 16:9 ratio. This feature further establishes the Echelon MFC as a top-of-the-line video
camera.
The Echelon MFC has three 2/3-inch CCDs, resulting in bright, vivid colors. It performs exceptionally
well in low-light situations, with little grain or noise. Its image stabilization system removes much of
the shakiness that may sometimes appear. High quality still images can be taken at up to 5 megapixels.
The controls are conveniently located on the video camera, and the 3-inch LCD screen will allow
users to clearly see everything in their shot.
Our video camera will be even more appealing to prosumers because it features adjustable focus,
exposure, shutter speed, and gain. Adjustable audio levels and a microphone input jack allow the user
to fully control sound recording.
The Echelon MFC and the EchelonPro are truly powerful video equipment and software. Together,
they save time and money. With Echelon, anything is possible.
Market Analysis
echelon inc.
Target Market
The Echelon MFC is targeted towards prosumer videographers. Prosumers (professional + consumers) are different from average consumers in that they demand some more out of the things
they buy. They are a target market in between normal consumers and advanced professionals. Prosumers are essentially highly skilled amateurs who are usually willing to spend a substantial amount of
money for the extra features they desire. Our target customers are prosumers because the Echelon
MFC is a video camera that has functions going beyond the typical video camera.
Specifically, we are targeting males between the ages of 25 and 45. This is because we surveyed
people between 20 and 50, of which around 95% found our product to be useful. These target
customers are well-educated, creative, and artistic people who take time to understand video and
photography at a greater depth than the average consumer. Because they are prosumers, they are
more knowledgeable than average consumers, so therefore, they are well-educated. This includes
a range of customers from a head of household who films precious family moments, to a person
shooting video for a minor sports event. Both of these prosumer types would enjoy the benefits of
the Echelon MFC. These people spend more time with their imaging equipment and enjoy editing
video and still shots. We are mostly targeting people who go beyond shooting video or taking photographs; our target customers actually have a need to edit what they have captured to enhance the
quality of their video or picture.
Additionally, our target customers should be interested in technology. We target people who are into
technology because the layering ability of the Echelon MFC is a new technology. Thus, to be interested in this specific technology, the target customers should be interested in technology in general.
They are the type of people who own the latest technological gadgets and constantly keep up with
the latest news on technology.They read magazines such as Wired Magazine and Popular Photography
& Imaging. Most importantly, we are targeting people who have previously used a video or still camera. Otherwise, they would not be considered prosumers.
Competitive Analysis
Panasonic
Panasonic, a subsidiary of Matsushita Electric Industrial Co., is one of the world’s leading producers
of consumer electronics. Always at the cutting-edge of technology, Panasonic was one of the first
companies to manufacture Laserdisc players and took part in the development of the DVD.
Panasonic has a line of video cameras and digital cameras that stands out among many other companies in its industry, so therefore, they are competition to Echelon. Take for example, Panasonic’s
new SDR-S100 camcorder. Like the Echelon MFC, it has three CCDs, allowing it to capture bright
and vivid video. It is amazingly small, yet produces amazingly crisp video. In addition, it has extensive
battery life. The SDR-S100 is small, yet packs a lot of power.
The Echelon MFC is a better video camera than any Panasonic video camera, including the SDR. Our
camera is relatively small, easily portable, and captures sharp and life-like video with three 2/3-inch
CCDs. Most importantly, the Echelon MFC is capable of splitting objects in video into layers according
to their depth within a shot, making the editing process much easier. No other camera can do that.
The Echelon MFC gives users much more than what a regular video camera offers, so they would
most likely choose our camera over a Panasonic.
Apple Computer
Apple Computer is a large company whose core business is computer technologies. It produces
well known products such as the iMac and iPod. Apple Computer is a leader in innovative computer
technologies and its products are used by professional designers.
Apple makes the Final Cut Pro, a high-end, professional video editing program. Final Cut Pro is one
of Echelon’s competitors because it is a powerful program that allows the user to easily do almost
anything to their video.The user can generate eye-catching effects, smooth transitions, and interesting
composites. Its interface is clean, its processes are fast, and the results are stunning, making video editing effective and easy. Currently, Final Cut Pro has a larger user base than any of the top video
editing software on the market (Avid‘s software and Adobe Premier are the other top-of-the-line
programs), making it a tough competitor.
Final Cut Pro may be a great piece of software, but the Echelon Pro Software has features far surpassing it. Echelon Pro also has a clean interface, fast processes, and yields stunning video, just like
Final Cut Pro. The interface is easily understood, and the drag-and-drop video layer functions can be
performed even by amateurs. Most importantly, the Echelon Pro has the ability to edit video layers,
allowing the composition of video like never before. It features unmatched technology that only limits
the possibilities to the users’ imagination.
Sony
Sony is a multi-billion dollar international corporation making all sorts of electronics, ranging from
video cameras to video games. It produces high quality video equipment and is widely recognized as
the top supplier of video cameras and digital cameras.
Sony’s HDR-HC1 is a high definition video camera that is able to capture clear, life-like video. It is one
of the few high definition video cameras on the market and, for this reason, highly attracts prosumer
videographers.
Like the Sony HDR-HC1, the Echelon MFC is also a high definition video camera.Though both video
cameras offer manual controls, the Echelon MFC has gain control, which the Sony camera lacks. This
quality, in addition to its DigiLayer technology, will prove to be much more attractive to prosumers
than Sony’s HDR-HC1.
Adobe
Adobe makes the Adobe Premiere Pro 1.5, which edits video and audio. Its software revolutionized
non-linear video editing. Adobe Premiere makes editing easier and allows users to generate special
effects. Users can also crop down video and move them around with ease. Built for exceptional performance on both Microsoft Windows XP and Mac OS operating systems, Adobe Premiere Pro 1.5
takes video production to an entirely new level, extending its support of high definition video
hardware to make video editing easier. Adobe Premiere Pro 1.5 improves positioning and editing of
audio clips and also adds two important new audio effects. Precise audio editing is made easier with
the addition of the Snap-on Sample option. With this option, the user can edit an audio file at the
individual sample level within a frame of video.
The EchelonPro allows the user to edit video layers, which is unheard of among video editing software
until now. The program is able to take away or add on objects in video, allowing for great flexibility.
This lets the user easily add special effects to enhance the video. The EchelonPro is more convenient
because if a user makes a mistake, the shot does not have to be retaken. With the EchelonPro, the
user can simply take out any mistakes.
Avid Technology
Avid Technology Inc. is an American company specializing in digital non-linear media creation, management and distribution of service. Its software allows editors to handle their film creations with
great ease. One of their most popular software is the Xpress Pro. Currently, most of the television
shows, commercials, and other media are created with Avid products.
Echelon Inc’s EchelonPro video editing software allows users to edit video much easier. It is able to
edit video layers, which are separate objects within a video shot. Such a function opens new doors
to video editing, making the EchelonPro much more appealing than Avid’s Xpress Pro.
Market Validation
Survey Satisfaction Ratings
0%
2%
26%
1
2
3
4
5
70%
This chart shows the ratings people gave to us after we told them about the Echelon MFC. 5 Represents that the product
is great, while 1 represents that the product is horrible.
SWOT Analysis
echelon inc.
Strengths
Echelon Inc.’s main strength is that we are a team of strong communicators able to effectively communicate our marketing message to target customers. We have the skills to give our target customers
a clear understanding of what they are buying and why they are buying it. Additionally, we are able to
meet the needs of customers who buy our product. Comprehensive research has allowed us to gain
a firm grasp on their needs and be able to develop a product that should satisfy most customers.
Weaknesses
Echelon Inc. is a small start-up company with minimal funds. Because of that, we are just beginning to
develop market presence and reputation. This makes it difficult for us to begin competing with large
corporations such as Sony or Panasonic. As a result, our Echelon MFC may sell very slowly when it
first comes to market. However, this is not a great concern, since customers will find the Echelon
MFC to be a very useful piece of equipment.
Opportunities
Echelon Inc. is part of the digital imaging industry, which has grown tremendously in the recent years.
The Echelon MFC is a video camera with unprecedented video layering technology. Our patented
technology ensures that we will be the only company producing such cameras. Although the Echelon
MFC is a prosumer video camera, we are planning to expand our target market by introducing video
cameras at the consumer and professional levels.
Threats
Because Echelon Inc. is a small start-up company, our main threat is that a large corporation can easily
drive us out of business. Large corporations may have hundreds of researchers who could possibly
come up with similar video layering technology. Their video cameras might then sell better than the
Echelon MFC due to their market presence and reputation. We could remedy this by constantly updating our technology so that no large corporation would be able to compete with us even if they
do discover similar technology.
Marketing Plan
echelon inc.
Product
The Echelon Multi-Functional Camera is a powerful video camera that captures videos in layers.
Through our patented DigiLayer video processing technology objects within the video are separated
into and stored as individual layers according to their depths. Combined with the EchelonPro video
editing software, these video layers can be conveniently edited, allowing for unprecedented video
manipulation. This is an amazing advance in the digital imaging industry unmatched by any previous
technology.
Price
The Echelon MFC costs approximately $2,500 per unit to manufacture. It will be packaged with
the EchelonPro and have a wholesale price of $5,000. The suggested retail price is $10,000. This is a
price that our target customers, prosumer videographers, will be able to afford. When we described
the Echelon MFC to American film director Robert Rodriguez, he responded with this: “The feature
set included in the Echelon MFC would streamline my pre-production process, allowing faster initial
compositing of test shots, saving my production company valuable time and money. At any price, the
Echelon MFC would be a bargain.”
Placement
The Echelon MFC’s marketing channels are professional video and photography stores, internet
catalogs, and our company website. Because the Echelon MFC is a rather expensive and an advanced
prosumer video camera, it will only be found in stores supplying professional video equipment such
as B&H and CDW. Such stores attract knowledgeable customers who expect to pay a fair price for
a good camera.
We will also be using our website to bring the Echelon MFC to market. Our website be user-friend-
and easily found, since it will be our other major marketing channel.
Promotion
In order to effectively reach our target customers, Echelon Inc. has developed a highly effective marketing strategy. Echelon Inc.’s message to our target customers is that with the Echelon MFC and
EchelonPro, they will be able to easily edit their video, saving valuable time and money. We want them
to understand that with our product, anything can be done to their video; the possibilities are only
limited to their imaginations.
Internet advertising is a major part of our advertising campaign since we plan on selling a large portion of our video cameras through our website. Our target customers are mostly all computer users
who use the internet for research and shopping. Thus, by including web advertising as part of our
strategy, we are able to attract a large amount of customers. We plan on using the Yahoo! and Google
AdWords advertising networks for internet advertising. Using these two networks we will be able
to display both text and image web advertisements through both relevant websites and search engine results. Both networks serve highly targeted ads, which means that we will be reaching only the
people we want to reach. This will maximize the chances of potential buyers viewing our ads, visiting
our website, and ultimately, buying our products.
Because our target customers read technology and imaging magazines, Echelon Inc. plans to advertise
our product there. We plan on advertising in Sound and Vision, and Popular Photography & Imaging, two
popular video and photography magazines. We also plan on advertising in Wired Magazine, since our
target customers always read about the latest technologies.
Also, we will demonstrate our Echelon MFC at the Consumer Electronics Show and MacWorld
Expo.This will allow potential buyers to get a hands-on experience of our product, and is an essential
part of our promotion plan.
Lastly, we have planned a few ways to get “free” advertising. By announcing press releases once the
Echelon MFC is released into the market, a variety of news sources from television to the internet
will be eager to make reports on our revolutionary DigiLayer technology. We will also send free
video cameras to a variety of sources (such as the Today Show and TechTV) so they will review our
product on their networks. By doing this, we are able to expand our advertising channels and effectively reach more target customers.
Financial Plan
echelon inc.
Operation Budget
Echelon Inc. plans to run efficiently by getting the most from the money we spend.To us, every dollar
must be spent wisely. Therefore, we try to save as much money as possible.
The founders of Echelon Inc., the CEO, CTO, and Marketing Director, are the only staff during the
first quarter. Because we are more interested in seeing our product succeed than in making a lot of
money at the very beginning, the three of us have decided to make certain monetary sacrifices that
we believe are necessary for the good of the company. We are not paid any money during the first
quarter since we are not yet making money. For the next year (Quarter 2 through Quarter 5), we
will be paid the lowest salary among the personnel at $8,000 per quarter. Our first raise comes during the fifth quarter, only after we have confirmed the success of our product. All the other staff will
be hired simultaneously beginning Quarter 2 and will be paid slightly more so we can attract highly
qualified people. Echelon Inc. will be giving them two raises within the next five quarters, which are
necessary to encourage our staff to work hard and stay loyal to the company.
Echelon Inc. has already put in a large sum of money for research and development. It cost us
$600,000 for prototype development and $20,000 to apply for the patent for the DigiLayer technology. This patent ensures that other companies will not copy our technology. We will have product
improvement and development costs during every quarter because we will constantly be striving to
improve our product. Beginning third quarter, this cost will increase from $50,000 to $250,000 per
quarter. This money will be used to develop Echelon MFC models at the consumer and professional
levels so that we can expand our target market after the sixth quarter.
Marketing expenses have been carefully calculated for optimum advertising returns. We will be advertising in Wired Magazine from Quarter 2 to Quarter 6, paying $154,200 per quarter. The same
strategy will be used for the Popular Photography and Imaging, and Sound & Vision magazines. To advertise in these magazines, we will be paying $194,535 and $100,935 per quarter, respectively. We
will be advertising online through the Yahoo! and Google AdWords networks starting Quarter 2. We
will spend $40,000 on Google AdWords and $50,000 for Yahoo! Advertising. The last of our marketing expenses will be spent on trade shows. Echelon Inc. plans to attend the Consumer Electronics
Show during Quarter 5 and will pay $150,000 for admission. In addition, we plan on attending the
MacWorld Expo for $100,000 during Quarter 6.
Cashflow Projections
The Echelon MFC, bundled with the EchelonPro video editing software, will cost $2,500 per unit to
produce. We will be receiving production revenue through selling at our wholesale price, $5,000, and
at our retail price, $10,000. Production of the first 1,100 Echelon MFC units begins during the second
quarter so we can bring it to market in the third quarter. We will be producing 10% more units than
what we expect to sell for warranty replacement and marketing purposes. In Quarter 3, out of the
1,000 video cameras we expect to sell, 75% will be sold to retailers at the wholesale price and 25%
will be sold directly to customers at the retail price through our website. By selling at retail price
through our website, we will make twice as much money as we would otherwise. The percentage
of video cameras sold through the Echelon website will increase by 5% each quarter as we become
better known. We expect sales of Echelon MFC to increase by 20% in Quarter 4, 30% in Quarter 5,
and 50% in Quarter 6. During the sixth quarter, we expect to sell 2,340 units, a growth of over 230%
from Quarter 3.
Break-Even Analysis
$10,000,000.00
$8,000,000.00
$6,000,000.00
Q1
$4,000,000.00
Q2
Q3
$2,000,000.00
Q4
Q5
$0.00
-$2,000,000.00
Q1
Q2
Q3
Q4
Q5
Q6
Q6
-$4,000,000.00
-$6,000,000.00
Although we will be around $4 million in debt by Quarter 2, we will break even during early Quarter 4. Afterwards, we
expect to have exponential growth in net income, reaching over $8 million in Quarter 6.
Sources and Uses of Funds
The founders of Echelon Inc. have already invested a significant amount of time and money. We took
nearly four years to research and develop the Echelon MFC and EchelonPro. Mr. Yeh, Mr. Pham, and
Mr. Njunge have already invested their life savings into the conception of our product. Although this
may seem like a drastic move, we feel that all the time and money put into Echelon was worth it
– that is because we strongly believe in the success of our product. Currently, Mr. Yeh earns around
$10,000 per month from a website of his and puts all the revenue into the Echelon budget. In addition, Mr. Pham and Mr. Njunge both have second jobs and also use the money they earn for our
company.
All of Echelon Inc.’s expenses have been precisely calculated. However, if we fail to meet our funding
needs, we will have to reduce our expenses if they exceed our $3.5 million funding request. If we become short on funding, we will produce fewer units of Echelon MFC. This is because producing our
video camera is highly expensive; in Quarter 2, it would cost us $2.7 million just to produce 1,100
units. Although we would be making less money, we would remedy that by attempting to sell a larger
percentage of our product through our website at retail price. In addition, we may need to put off
our advertising plan with Sound and Vision Magazine to a later quarter, after we have gained sufficient
funds. We may also have to lower the salaries of certain staff.