Opportunity Execution Project

Interim Report 2

Can FREeM make money?A Customer 'Use Case' surveyby Tim Team FREeM

2 Market Operating Environment

What is FREeM?FREeM is a cloud based electromagnetic (em) simulator. Traditional simulation tools are very expensive and it is well known within the industry that many consultancy and SME based companies cannot afford these tools.

The basic premise of this product is hence to permit greater accessibility to traditionally very expensive simulation tools by on-the-fly licensing and the rapid scalability of hardware that the cloud can provide.

With a sizable growth market established (see OEP interim report 1) the question remains as to whether FREeM can be profitable? Naturally, due to 'cost leadership' position of the product there is a sensitive price point that has been revealed during extensive customer interviews in our opportunity analysis project. The final information required is to determine the usage frequency of the software - how many designs will our customers perform per year? And the maturity of the market to ensure that we minimise team and financial risk in project execution.

Survey of the EDA Market MaturityThe electronic design automation (eda) market is the larger design simulation software arena within which the em simulator market operates. A quick review of the number of eda vendors listed on wikepedia [1](although not exhaustive we assume it is representative) reveals that there are presently 41 large eda companies in operation. 15 Of these were formed in the last decade. 9 in the last decade no longer exist as they have been acquired.

So the evidence appears to support a kind of elastic mature growth, with new technologies encouraging the acquisition and assimilation of upcoming technology rather than precipitating the downfall of the incumbent players. The image below [2] illustrates this phenomenon of technological market maturity. Here though, the larger players apparently acquire the most innovative younger companies to prevent ever entering phase D or E.

Customer SurveyWith a basic interpretation of the market's maturity, the second important point for consideration in minimising financial risk, is the customer use case for our software, specifically amount of usage.

Given that FREeM will be charged per unit time of usage – it is important to understand how much time it will be used for. The difficulty faced in such a scenario is that technical design contacts are required at the customer site, amongst the hardest people to reach in an organisation to protect them from head-hunting. Nonetheless seven such contacts were interviewed and posed the following questions.

1) How many radio products do you design per year?

2) How many antenna designs do you perform per year?

3) Do you have em simualtion software?

Survey Results Interviewee No. Radio Designs No. Antenna Design Simulator?

1 6 4 Yes

2 3 1 No

3 4 0 No

4 1 2 No

5 6 2 No

6 4 2 No

7 4 1 No

The following broad conclusion may hence be drawn:

• Our typical customer produces roughly 2 antenna designs per year.

Conclusion and Outcome• A typical antenna design in this domain will take a relatively well known period

of time to execute.

• The price-point that customers are prepared to pay per unit time was established in the OAP.

With this baseline income information we can then go on to calculate our operating expenses and express the break even point as a number of average customers.

References[1] http://en.wikipedia.org/wiki/List_of_EDA_companies

[2]http://www.academicearth.org/lectures/market-maturity-life-cycle/