CASE STUDY: BARCO PROJECTIONS SYSTEMS

THE ISSUE Barco Projection Systems (BPS/Barco), a strong player in the Projection Systems business and the market leader in graphic projectors, were taken by surprise by competitor Sony’s offering of a superior graphics projector likely to be launched at a lower price. Barco needs to counter the new model by launching new and superior models quickly and re-pricing existing models. Team A’s rationale takes shape over the following pages. THE MAIN PLAYERS * Barco Projector Systems * Sony 5’ C’s ANALYSIS: Customers / Context / Company / Collaborators and Complementers / Competitors ANALYZING CUSTOMERS Customer for projection systems ranged across industry. Projection systems were used in training rooms and boards, in entertainment centres, in the gaming industry, and in airplanes and flight simulation rooms. Customers were sourced from a wide cross-section of industries. So the customer pool was huge, but also demanding. The products needed to keep up with constant improvements in computer and video technology. Customers typically bought a new projector every 5 years, and purchased more performance than needed because of the ever increasing computer scan rates. Focus needed to be on delighting customers and providing good after sales support because the repeat customers were important – for replacements every 5 years but more importantly as these customers expanded their business their demand for projectors also increased. ANALYZING THE CONTEXT Market opportunity In the 1980’s with the advancement of computers in every sphere of life, and in every market, new uses for projectors were being discovered. The market for video projectors (63% of all projector units sold) was very large but had already hit its peak and was growing very slowly at 0.8% predicted growth rate. Data projectors which were a big segment (33% of the projector market) were growing at a healthy 12.3%. Graphic projectors were the big opportunity with predicted growth rates of 40.2% but on a small base of 4% of the industry. The United States was the biggest geographic market (50%) followed by Western Europe (36%) and then Asia at only 12% but with the highest growth opportunity at 18%. Technological environment BPS main differentiator between usage of products was their scan rate. BPS had 3 lines of projectors – 1) Video 2) Data 3) Graphics 1) Video (TV & VCR compatible) – Scan rate 16 kHz or 16,000/- lines per second 2) Data (PC & video sources) – Scan rate 16 to 45 kHz 3) Graphic (CAD/CAM Sources, PC & video sources) – 16 to 64 kHz BPS projectors were currently not compatible with computers scanning over 65 kHz. 1987 BG 400 introduced – scan rate up to 72 kHz Sept 1989 – BD700 (first digitally controlled Projector field test) – slated for launch in Oct 1989 Components 9 ( I think this is unnccessary – If anyone has a suggestion it can go into another place 1985 – Sony’s first video projector 1020 was slower than Barco video projector – but it had a sharper focus. Sony 1020 used a better tube than Barco’s supplied from Sony Components. Barco sourced from Clintons a US based supplier. Barco switched to Sony for its Barco Data 3 (BD3) projector and achieved better brightness than Sony Projectors using the same tube. 1989 – Barco not successful in their search for other suppliers of tube. Barco, Sony Projectors & Electrohome sourced tubes from Sony Components. New Component – Sony Component - 8” tube (Feb 1989) BPS rejects Sony’s high quality 8” tube since it was costlier and would entail a design change in the BD 700 data projector. Siggraph Boston – Aug 1989 – Sony 1270 Data Projector – Scan rate 75 kHz using Sony Components 8” tube and at a rumoured cheaper rate by 20-40%. (USD 15,000 to 20,000) Sony new 1270 projector could affect 75% of BPS projected profits for 1990. Infocomm Jan 1990 – BPS could focus on BG800 – to be designed to surpass Sony 1270 is performance with a scan rate of 90 kHz. Would require 80 person months if it had to be ready by Jan 1990 for Infocomm.

ANALYSIS OF THE COMPANY: Barco Projection Systems (BPS) * 350 Employees * Turnover of $35 million BPS’s strength was in electronics and was able to achieve measurably better performance than its competition for the same lens and tube combination. Higher Scan Rate gave it an edge over competitors BPS was well established in a variety of entertainment, training and presentation markets. BPS was also pursuing number of specialized markets such as process control and simulation. BPS Situation as September1989: * BD600 is the principal data projector priced at $12000 * Sony had demonstrated its superior 1270 projector in August 1989 * Infocomm show was upcoming in January 1990 * Sony’s market share (49%) in “data” segment was more than double that of BPS (23%) globally * Sony has no market share in Graphics segment; Barco has 55% share globally * BPS is almost ready with a digital upgrade of the current BD600 i.e. the BD700, a planned to be introduced by October 1989 * Price of BD700 - $16,000, Scanning frequency to be 64 kHz * 180 person months of efforts have already gone in production of BD700; 27 person months more efforts require. Assuming that only 1 month of time remaining for the launch date, it will need 27 engineers to work on it & take BD700 to completion * 4 other projector related projects already in progress ANALYZING COLLABORATORS AND COMPLEMENTERS The main collaborators are the distributors of the projectors. Barco was an advantage because 80 of its distributors were systems distributors who had the knowledge to integrate and install equipment packages tailored to end-user needs. Dealers processed information from manufacturers, held vendor fairs and training sessions, and recruited customers. Barco’s dealers were well trained and attended sales and technical courses. They also received price protection for unsold units when prices dropped and stable pricing between first customer quote to final order. However, Sony had captive commercial video distributors and sold through 1500 deals. Because of the higher volumes of Sony products they sold, the dealers could not do without Sony’s volumes. ANALYZING COMPETITION AT –A- GLANCE COMPETITIVE TABLE | Barco | Sony | Mother company | One of the top 3 global mfrs of automated production control systems, graphic arts, computer-aided design, industrial projection Turnover expected to grow 50% in that year 2400 employees, Based in Europe Several awards, R&D strength, High quality, focused on top of the line products in niche markets, industrial market focus | Global Manufacturer of consumer electronics, Based in Japan | Barco Strategy | 1) To become a leader in a variety of distinct, but complementary, niche markets Entered only if it had indepth knowledge of the mkt and tech, and if it could be top 3 2) Committed to R&D Spent 8-10% of turnover 15% of employees | To move away from its reputation as mass manufacturer of low-end products and move to an image of a high quality, superior technological company while keeping its prices moderate. | | BPS | Sony Projectors Division | | Pioneer in projection | Late entry 1985 | Turnover | 1.39 bn brf 23% of Barco turnover | 4.6bn bfr 1% of Sony corp turnover | Market position | Leader in graphics (55%) Data 23% | Leader in video 50% Leader in data 49% | Distribution | 45 distributors (4 owned did 61% of sales, rev, 59% margin; 57% vid-61% data-75%graphics 41 barco exclusive); 400 dealers (20% box, 80% systems) Preferred by dealers who received a higher price, higher % of that price 100 dealers | Captive commercial video distributors 1500 dealers (50% box dealers, 50% system) hence low street price Higher volumes. Dealers couldn’t do with these volumes 500 dealers | Pricing | 15% more than Barco | 15% less than Barco | Discounts | 10% disc by dealer | 15% disc by dealer | Reputation among dealers | Highest quality final image, excellent reliability once installed Machines unnecessarily complex, not user friendly Complications when installing | Lower than Barco and EHM performance, lower price Reliable | Tubes | Currently using 7” tube 8” tube significantly costlier; Square lens required. Projector chassis shape to change | Advantage of home manufacturer Used in 1270 and gained significant quality advantage | Service | Superior service with 80% system dealers | 50% box dealers without the expertise of systems dealers | PLANNED | Digital/remote controlled in DATA projectors BD700 $16k ready for delivery in 1 mth Oct89 @ same $24k Late 1990 digital BG800 | SONY 1270 Better than BG400 in performance Scan 75khz 8 inch tube Rumoured price of $15k-20k | The main competitors for Barco in data and graphic segments are Sony, Electro-home and NECO In 1988, Sony held 45% of the total global projector market, with Barco at 35%, followed by E.H 14%, NEC 8% and others at 8% In Data Projection Sony (45%) is the leader followed by Barco (25%), Electro home(14%) and NEC (8%) Sony Projectors Division * Sony products were not in the same range in terms of performance with Barco’s projectors and were 15% cheaper (Though performance will now change with the launch of Sony 1270 with a scan rate of 75 kHz). * Global Market leader in Video projectors - 50% of devices sold and in Data projectors 49%. * Most powerful scanner in 1988 was model 1031 which had a scan rate of 35 kHz * Sony has wider 1500+ dealer network with 50% of these box dealer. (80% to 90% of audiovisual dealers globally stock Sony products) * Sony has better penetration in US market than Barco thus resulting in low street price also Sony products get better discounts than Barco * Sony Components manufactures the superior tube, and supplies the same to Barco. Also this is the only source for supply to Barco * Sony has been a pioneer in producing the tubes in terms of quality which is better than the one manufactured by Hitachi,Toshiba,Thomson and Philips . * All the main competitors i.e Sony, Barco, Electro-Home source the tubes from sony Components * Sony using 8” tube which was offered to Barco for BD700 but didn’t opt for it Electrohome * Electrohome (E.H) - biggest competitor for Barco in the graphic projector market (44% of the global projector market in 1988) * E.H was the 3rd biggest player in the market after Barco & Sony. ( 1585 units sold – 73% data & 27% graphics) * Dealership comparable with Barco’s (100 dealers in the USA , 80% of dealers were system specialists) * 1988 turnover of $139.8 mn. Industrial projectors turnover being $62.5 million * Third largest player in units behind Sony and Barco sold 1585 units out of which 73% were data. * Distribution network is comparable with Barco and 80% of dealer were system specialist * Very rarely Electrohome distributors stocked Barco projectors * Price just below Barco and were considered higher quality than Sony NEC * NEC pioneered digital convergence technology in the market. It sells video & data projectors with a product mix divided between 48% & 52% between the two. * Turnover of $ 21.9 billion * Pioneered digital convergence technology in market place and introduced digital projector in 1987 that became market standard * Due to inefficient distribution network , company couldn’t capture the market share * Were sold on OEM agreement with GE and were able to sell 1200 units and has 9% of data market.

Porter’s 5 Forces : Industry competitors / Potential Entrants / Availability of substitutes / Buyer Power / Supplier Power INDUSTRY COMPETITOR ANALYSIS Main competitor for Barco in data and graphic segment are Sony, Electro-home and NEC In 1988, Sony held 45% of the total global projector market, with Barco at 35%, followed by E.H 14%, NEC 8% and others at 8% In Data Projection Sony (45%) is the leader followed by Barco (25%), Electro home(14%) and NEC (8%) The competition is restricted to these 4 players because these projectors require specialized technology and knowhow. It requires big investments in R&D, and specialist R&D personnel. The technology also gets outdated quite quickly because of rapid strides in computer technology. The market is split between Barco, Sony and Electrohome . NEC is a much smaller player. The market is not very price sensitive because the buyers are primarily governments and large corporates. This means that Barco is able to maintain its 15% price premium to date. Distributors earn a good 30% margin. There is more competition at the dealer level who often offer big discounts. There is also competitor on the features of the product. With constant advancement in computer technology, the projectors also need to upgrade their scan frequency rates.

POTENTIAL ENTRANTS * Apart from the existing players that dominate the global projector (Barco, Sony, E.H & NEC) – the share of other players are insignificant. * Projector space is technology intensive, 15% of Barco (Barco N.V) staff are engaged in R&D and 8% to 10% of its annual turnover. * Due to the high cost barrier & technology involved there no potential entrants to challenge the market share on the dominant players like Barco, Sony, EH etc. AVAILABILITY OF SUBSTITUTES * Low availability of substitutes outside of established competitors due to technological barriers * Barco BG400 was the most advanced graphic projector in the market (till August 1989) with a scan rate up to 72 kHz. * Sony now reveals its 1270 “super-data” projector (Siggraph trade show) with a superior scan of 75kHz (reportedly 15%-20% cheaper than BG400) and is projected to affect Barco’s profits for 1990. * In Europe and North America, for Graphics, apart from Barco & Sony, customers had Electro Home as another substitute. For Data, there was NEC as well as Electro Home.

BUYER POWER * Barco customers were mostly Corporates or Govt organizations, were not very price sensitive * Barco customers were also not organized into collective buying units * Barco projectors commanded a premium in the market because of their high image quality and reliability * Buyers of Barco products needed to buy from Barco’s systems dealers because they had the training and offer much required installation, and after sales support. * Barco has a 2 step distribution process – 45 distributors and approximately 400 dealers worldwide. 4 company controlled (61% of Barco revenues, 61% of total unit sales and 59% of its margins) and 41 independent distributors. * With ever increasing scan rates – customers tended to purchase more performance in a projector than they needed. – Barco was the industry leader in high performance projectors. * Until the announcement of Sony 1270 was introduced, Barco customers did not have many substitutes available. Thus, overall, the Buying Power was quite low.

* But with Sony 1270, Barco feared that its customers would get a superior quality substitute, possibly at a much cheaper price, and hus a low switching cost. Thus, Barco realized that in order to retain their customers and attract new ones they need to provide more value to its buyers at a more competitive price. SUPPLIER POWER A big component of the projectors is the tube. Sony Components is one of the best producers of tubes. Sony Components is the sole supplier of tubes to all the projector companies including Barco. While Sony Components is a separate division from Sony Projectors division and is run independently, it is still part of the bigger Sony entity. And thus this is a sword hanging over Barco’s head. * Barco sourced its tubes from Sony Components although it is a sister concern of their competitor Sony Projection Systems because they superior in quality and less expensive that other suppliers. Many firms manufactured tubes suited to consumer video applications, including Hitachi, Toshiba, Thomson and Philips, but only Sony Components has the high quality tubes required by Barco * The quality of the output of Barco’s projectors was dependent on the quality of the tubes. * In short, Barco had no easy substitute to SC. This developed a high dependency on SC which was high risk, with low negotiating ability. Thus, Barco faced a high cost of switching supplier. Because of this, when Sony introduced 1270, Barco found that it had no negotiating ability. Relying on Sony Components for an important part of their scanner makes Barco vulnerable. * Secondly, to obtain tubes to suit Barco’s requirements, they had to divulge certain amount of technical and developmental information to SC. Again, a risky proposition. * On the other hand, Barco is a valuable customer for SC who valued their business as it helped to reduce their manufacturing costs. * However, Barco ran the risk of SC either stopping supply to them or raising their prices. * Sony’s new 1020 video projector contains the superior 8” tube with superior performance than Clinton which was BPS’s US based supplier * Relationship Benefits:- * Sony Components | * BPS | * Gets certain technical and developmental information from BPS * Relationship with Barco brings the manufacturing costs down. | * Gets updates about the latest developments * Gets a source of superior tubes which improves the quality of its products | * In 1987,Sony introduces BD600 with a tube that Barco had not seen * In 1989, BPS seeks other suppliers Hitachi,Toshiba,Thomson,Philips . But quality of tubes is inferior to Sony. Barco is 100% dependent on Sony Components for Supply of Tubes. * BPS Strategy to protect from sudden supply freeze 3 Month supply of tubes in-house and 2 months of orders in transit from Sony. * BPS expenditure for Tubes:- * $2.25 To $2.5 Million 1/5th of Sony Component’s Projector Tube Business * In February 1989, Sony informs Barco about new 8” tube but it would involve too many changes for Barco to incorporate the new tube * The new 8” tube required special lens which Sony sourced from Fujinon. Earlier Sony and Barco sourced lenses from the same supplier USPL. But now Barco was not sure about supply from Fujinon.

BARCO PROJECTOR SYSTEM: SWOT ANALYSIS Strengths * Market position: Leading player in the projector industry. Designed, manufactured and marketed sophisticated projectors for industrial applications. * Strong market share: Leader in graphic projectors (55%) and 2nd largest in data (23%) * Full Product range: presence is video, data and graphic projectors * Manufacturing Prowess: R&D strength, spending 8-10% of its turnover on RD, 15% staff dedicated to R&D. * Strong financials: High gross margins of 59% * Global footprint: 3 International acquisitions expanded their global presence in sales, product development and production. Opened up new markets for BPS. Particularly in the high-growth markets of Asia which has the biggest growth opportunity at18%. * Width and reach of distribution: Ability to influence distributors since the company owned 4 distributors who contributed the bulk of their sales and margins at around 60% each. * Wide customer base: across diverse industries – from entertainment and discotheques to board rooms, training centres and even airplanes. * Preferred by dealers who received a higher price and a higher % of that price * Product reputation: Excellent reputation with customers and consumers alike. Well accepted as the product with the highest quality final image with highest scan rates, and excellent reliability once installed * Recipient of several awards that reinforced brand and corporate reputation

Weaknesses * Weak market intelligence. Did not get early warning of a competitor launch. * Machines were user-unfriendly. Difficulty during installation. * Dependency on single supplier for Tubes who is also a competitor * Necessity to always stock 2 months of tubes, thus in case of any design changes they will be left with 2 months of unusable attic stock. * Does not have the width of distribution of Sony’s * Currently the teams are fully stretched working on BD 700 and can’t shift focus to work on BG 800 * Missed opportunity: Current products do not use the 8” tube offered by Sony which produce superior quality. Opportunities * They can produce and launch a digital upgrade of their existing product i.e. the BD 700 within a month’s time and meet their commitments, and they maintain their reputation * Post BD 700 launch, dedicate the complete R&D team to BG 800 and disseminate the news of a superior projector by disclosing the details during Infocomm so as to have new customers wait for their product to be launched. Threats * Launch of Sony 1270, a superior product, rumored to be cheaper by 20-38% is likely to drastically affect the sale of BG 400 and other models of BPS thus affecting profit margins by 75%. * The launch of the 1270 would likely transform competitor Sony’s market image from a mass producer of low-end products into a producer of high-quality yet competitively priced products. Sony’s ultimate game was not the smaller graphics market, but the huge data market. * They have to develop a product to counter Sony 1270, Thus they will lose their first mover advantage and be ‘catching up’ * At Infocomm in Jan’90 – BPS would be outshone by Sony in the presence of customers, industry analysts and dealers. This would affect sales for the rest of the year, and dent their reputation. * Sony could stop supply of tubes to BPS or not offer them the 8” tubes THE OPTIONS FOR BARCO TO RETAIN THEIR MARKET POSITION

Option 1: Continuing development of BD700 Opportunity for BD700: * A digital projector like BD700 would score over current manual projector. * Forecast revenue in 1990 would be $17.2 mn (BD700 is supposed to make incremental revenue of 25% which is equivalent to $4.3 mn, hence total revenue would be $17.2 mn) * By September 1989, German distributors had booked orders @ $16,000 Risks in suspending plans of BD700: * Completing BD700 on time was important for Engineers’ morale as well as Customers’ morale. Suspending BD700 project carried a risk of demoralized workforce and disappointed customers * It was clear that BD700 would not beat Sony 1270’s performance during Infocomm show. Hence discontinuing BD700 production plans for BG700 or 800 would not meet the objectives Conclusion: Barco should continue with its original plans of producing BD700 by committed date of October 1989. Reasons: 1. Revenue-wise as well as margin-wise, “data” segment contributed much more to Barco than Graphics segment. Hence it makes sense staying on track with pre-decided BD700 production plan [Revenue: Data = 54%, Graphic = 23%. Margins: Data = 51%, Graphic = 29%] 2. Barco holds 2nd position, globally as well as within each region, in “data” segment (first being Sony). And it is predicted that from 1989 to 1994, maximum growth is going to be in “data” segment. [Note: Growth prediction for Graphics segment is 40.2% while that of “data” segment is only 12.3%. However, in general as well as for Barco, total sale of “data” segment is more than that of Graphics. Resultantly, in absolute terms, growth for “data” segment would be more than that of Graphics]. Hence it makes sense continuing with BD700 production, as planned 3. The concerns raised about the success of Sony 1270 as well 1270’s price concerns were more from Distributors, than anybody else. But since 61% of Barco’s sale & revenue was through it’s own, fully owned Distributors, Barco need not come under pressure generated by other Distributors. [61% of data and 75% of Graphics sale of Barco was via their fully-owned Distributors] 4. Even if BD700’s production plans were suspended for the sake of proposed BG700 production, BG700 would not match the performance of Sony 1270 5. Sony’s declaration of launching 1270 by November 1989 was only an announcement with no surety them would launch on time. Hence, it was not appropriate for Barco to suspend its plans of BD700 when 86% of production was over and when Barco was only 1 calendar month away from its completion. 6. Suspending BD700 plans for the sake of BG700 or BG800 was risking commitments made to customers. It also meant risking distributor relations. Option 2 – BG 700 (23rd Sept 1989) BPS has an option of developing BG700 Graphics Projector as a stop-gap product to compete with Sony’s 1270. Pros 1. BPS could develop the product in 2 to 3 months as they could use their advances in the BD700 to develop this product by December 1989 – just in time for Infocomm 1990. 2. They could use the same chassis, lens and tubes as intended for the BD 700, thus reducing additional input costs. 3. BG700 can be a strategically priced product which minimizes the impact of Sony 1270 launch. 4. BG700 will give BPS management time to analyse the market reaction to Sony 1270 against a competitively priced BG700 with performance almost within the range of Sony 1270 (although inferior). 5. Ample time to fine tune and launch BG 800 as a superior product in late 1990 as originally planned. Cons 1. BPS would be launch an inferior product into the market and would have to compete on price rather than performance – not great for brand reputation. 2. BPS development team would have to divert their focus from BD700 3. Orders for BD700 had already been placed by major distributions – any change would hit both employee and customer morale. 4. Pricing for BG 700 not factored into company revenue projection for 1989 & 1990. Option 3 - BG800 (Introduction in late 1990) Details about the proposed BG800 Projector * Graphics Projector * Lens to be sourced from Fujinon who is not regular supplier. No Surety about supply. * Only 40% chance of making the Infocomm deadline * Planned to be a digital upgrade of BG400 * Scanning Frequency – 90 Khz ; Usage of Sony 8” tube * Would require 80 person months. All focus should be put on BG800 which endangers the other products. Indefinite postponement of BD700 project which is a big risk * Overtime needs to be given to employees and the also need to give up their vacation days * Also the entire product development lifecycle would not be followed which will end up compromising the product quality. Existing BG400 projector:- BG400 was priced at $24000. Resolution unmatched by any of the three competitors viz. Sony,Electrohome,NEC 1270 was expected to be priced between $15000 and $20000 If launched at $15000 – Would eat up 30% of BG400’s market share If launched at $15000 – Would eat up 30% of BG400’s market share. Given the fact that BG400 was sold at $24000 it would be obvious that BG800 could not be competitively priced with Sony’s 1270 Conclusion:- It would a high risk strategy if BG800 would have to launch by Infocomm deadline. It would also jeopardize the existing products. So best decision would be to continue research and development on BG800 and follow the entire product development lifecycle to deliver a quality product even though it is a bit late. In the meantime company can try to sustain in the market using the other products BD700 and BG700 . The Dilemma and Evaluating the Options: BPS’s development plans had been prepared in early 1989 based on the expectations that data segment market will become more competitive. Hence digital version of data projector (BD700) was planned to be introduced in October 1989 and by September, 85% development of BD700 was already complete. A graphic projector BG800 was planned to be introduced in late 1990. However, in August 1989, Sony previewed a graphic projector 1270 that was far superior in performance than any of Barco’s projectors and rumors were that 1270 was priced the lowest (for that performance). The launch of 1270 challenged the very position of Barco as a leader in Graphics segment and this challenge was thrown by Sony who was already a leader, globally, in Data segment. The dilemma before Barco was: 1. Whether to continue with BD700 production (as it was 85% complete and pre-orders already booked) 2. Suspend developments of BD700 for time being and make full attempts to introduce new graphics projector BG800 as early as possible, hoping that it will surpass quality and price levels of Sony 1270 One option can be selected over another by carefully analyzing options and available information, as follows: Year 1988 Units sold of BPS | % Units | Actual Units | % Revenue | Revenue Figures ($) | Projected Annual
Growth | 1989 Units | 1989 Revenue | 1990 Units | Video | 35% | 1540 | 23% | $8,050,000 | 1.40% | 1562 | $8,162,700 | 1583 | Data | 53% | 2332 | 54% | $18,900,000 | 12.30% | 2619 | $21,224,700 | 618 | % BD600 of total Data | 79% | 1842 | 67% | $12,663,000 | | 2069 | $14,220,549 | 2586 | Graphics | 12% | 528 | 23% | $8,050,000 | 25% | 660 | $10,670,000 | 825 | % BG400 of total Graphics | 85% | 449 | 80% | $6,440,000 | | 561 | $8,050,000 | 701 | Total | 264% | 4400 | | $35,000,000 | | | $40,057,400 | 6313 | Now, after establishing 1989 revenue & deriving prices of BD600, BD700, BG400, BG800 and video projectors from the revenue and # of units sold, we can calculate projected figures of 1990 for Option 1 (BD700 development) against Option 2 (BG800 development): Option 1 - Continuing with BD700 | | | | 1990 Revenue Projection | Units | Price | Revenue | Video | 1583 | $5,227 | $8,276,978 | Data | | | | Data - BD600 | 2069 | $6,874 | $14,220,549 | Data - BD700 (based on projection) | 581 | $10,063 | $5,844,913 | Data - other than BD600 or 700 | 687 | $12,736 | $8,755,189 | Graphics | | | | BG400 | 701 | $14,349 | $10,062,500 | Other | 124 | $20,328 | $2,515,625 | Total | | | $49,675,753 | Opportunity loss @30% | | | $3,850,000 | Total Revenue for 1990 | | | $45,825,753 | Or | | | | Opportunity loss @60% | | | $7,690,000 | Total Revenue for 1990 | | | $41,985,753 | Option 2 - Producing BG800 | | | | 1990 Revenue Projection | Units | Price | Revenue | Video | 1583 | $5,227 | $8,276,978 | Data | | | | Data - BD600 | 2323 | $6,874 | $15,969,677 | Data - BD700 (based on projection) | 232 | $10,063 | $2,337,965 | Data - other than BD700 | 687 | $12,736 | $8,755,189 | Graphics | | | | BG400 (Reduced price after launch of BG800) | 175 | $10,063 | $1,764,151 | BG800 | 526 | $12,579 | $6,615,566.04 | Other | 124 | $20,328 | $2,515,625 | Total Revenue for 1990 | | | $46,235,150 |

PGPMX TEAM A’s SUGGESTED WAY FORWARD FOR BARCO: