I believe the idea is still very viable and even easier to launch since local mobile device (smartphone and tablet) penetration is high and it is almost given for free by many operators bundled to their basic data/voice or broadband service. In 2009, biggest barrier I had was the device itself and all of its associated costs, which bloated the total investment amount and made me return back to corporate life. The model is very applicable in Middle East region and cost vs profit does not show linearity (scenario would be different in EU or US market but show similarity in Latin America market) if cloud only services model is preferred due to lack of device cost so it should be, revising the model would be rather trivial... In case edge device model is preferred, IoT connectivity model can be used, further simplifying device connectivity.
ORDER and DELIVERY CLOUD for BASIC GOODs and SERVICEs
1. mtilia, CONFIDENTIAL
ORDER and
DELIVERY CLOUD
for BASIC GOODs
and SERVICEs
Quick and simple way to provide basic services and goods to
households and businesses in a scalable, repeatable and cost
effective way
Mehmet Çetin
15-Aug-10
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Table of Contents
Executive Summary ....................................................................................... 5
Business Opportunity...................................................................................... 7
Overview.................................................................................................... 7
Benefits ..................................................................................................... 9
For Consumer:......................................................................................... 9
For Basic Goods and Services Providers....................................................... 9
For Banks and Financial Institutions............................................................ 9
For Telecom Operators.............................................................................. 9
For Advertisers....................................................................................... 10
How System Works ................................................................................... 10
Examples .............................................................................................. 11
Dedicated Device versus Web Only Presence or Smart Phone Application ...... 12
Technical Infrastructure ............................................................................. 14
Marketing and Sales Strategy ........................................................................ 14
Phased Approach for Signing in Good and Service Providers ........................... 16
Team, Resources and IP ............................................................................... 17
Sales ....................................................................................................... 17
Legal ....................................................................................................... 17
Finance.................................................................................................... 17
Operational and Administrative ................................................................... 17
Technical.................................................................................................. 17
Project Management.................................................................................. 17
Intellectual Property .................................................................................. 18
Operations .................................................................................................. 18
Business .................................................................................................. 18
Technical.................................................................................................. 18
Financial Forecast ........................................................................................ 19
Summary ................................................................................................. 19
Assumptions............................................................................................. 19
Cash Flow Summary.................................................................................. 20
Household Spending Survey Template ......................................................... 22
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Household Spending Forecast and Revenue Forecast ........................................ 23
Device Manufacturing Costs Estimation........................................................... 24
Competition ................................................................................................ 25
Concept Designs for Stationary Device............................................................ 26
References .................................................................................................. 31
Table of Figures
Fig.1 Simple Reach to Frequently Consumed Product and Services ..................... 10
Fig.2 Order Flow Examples ............................................................................ 12
Fig.3 Device Roadmap Example ..................................................................... 13
Fig.4 Revenue Comparison; 100K Vs 1Mio installed base .................................. 20
Fig.5 100K installed base Rev. Vs OPEX (loss model)........................................ 21
Fig.6 1Mio installed base Rev. Vs OPEX (fully subsidized) .................................. 21
Fig.7 Household Spending Estimation ............................................................. 23
Fig.8 Concept Design Model E2 [façade, back isometric and side]....................... 26
Fig.9 Concept Design Model E [façade isometric] ............................................. 27
Fig.10 Concept Design Model E [back isometric] .............................................. 27
Fig.11 Concept Design Model G [façade and back isometric].............................. 28
Fig.12 Concept Design Model G2 [façade, back isometric and side] .................... 28
Fig.13 Concept Design Model F [façade isometric]............................................ 29
Fig.14 Concept Design Model F [back isometric]............................................... 29
Fig.15 Concept Design Model D [façade, back isometric and side] ...................... 30
Fig.16 Concept Design Model H [façade isometric and side]............................... 30
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Executive Summary
One of the least understood developments in today‟s telecom and Internet world is
the transformation of broadband beyond Internet connectivity. This may seem
curious, since everybody wants it and there is an enormous surge in demand from
households and offices.
Research and analyst reports indicate the gap between the readily available
technology and moving beyond internet connectivity lies in the lack of a viable
business model or solution. Further, enough research points towards providing a
single or limited purpose connected device is one of the direct approaches for
services stickiness.
Our solution addresses this gap and has the potential to both change the economic
dynamics and become the reference model for the future.
We believe there are several ingredients necessary to take the next step with a
successful business model:
• Broadband availability
• Consumer readiness and habits (are they used to making purchases by
phone, internet or other remote channels and how frequently?)
• Service and goods provider readiness and habits (variety, coverage,
willingness to accept and deliver ¨micro orders¨)
• Critical mass of consumer (population fitting criteria)
• A simple and efficient platform that can bring consumers and vendors
together (in very simple terms a ¨toll bridge¨ for vendor and consumer)
In our opinion, unlike most of the world, all these ingredients are present in Turkey.
Our solution and business model provides the glue which brings it all together.
Countries in Western Europe or the United States have the infrastructure and
technology, and sometimes even the population critical mass but lack micro
delivery and service habits of Turkey.
Turkey on the other hand has all the ingredients, especially in highly populated
areas of large cities. We have our local ¨bakkal¨ where we do micro purchases, we
have our drinking water suppliers, our dry cleaners pick-up and return clothes from
our homes, even fast food chains like McDonalds and Burger King do home
delivery, our local supermarket chains like Migros and Carrefour Express delivers
home and so on.
The telecom infrastructure is available, local consumer and vendor habits are in
line, critical mass for both consumer and vendors is present. We are able to provide
the bridge which connects consumer to vendor with our solution.
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A simple and reliable environment for service creation, delivery and consumption –
a self evolving ecosystem – will ensure;
• Stickiness for underlying connectivity and access oriented services
• Allow us to toll pass through business
• Control customer relationship
• Win consumers‟ mindshare and loyalty
• Provide personalized advertisements, products and services
• Leverage household spending data
Our business model, explained in more detail in the following pages, relies on
providing a simple and efficient end-user experience, tolling pass through traffic
from subscribed services and goods providers.
Although we estimate break-even with small volume of active users in highly
populated areas such as Atasehir, the real opportunity lies in expanding the
installed base quickly to the tens of thousands and more.
We will try to explain in the following pages the difference between our solution and
business model compared to the more traditional internet models.
We look forward to discuss the solution and collaboration opportunities in more
detail at your convenience
Sincerely,
Mehmet Çetin
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Business Opportunity
Overview
As mentioned in the executive summary, one of the least understood developments
in today‟s telecom and Internet world is the transformation of broadband beyond
connectivity. This may seem curious, since everybody wants it and there is an
enormous surge in demand from households and offices. Further, enough research
points towards providing single or limited purpose connected devices is one of the
direct approaches for services stickiness.
To address this gap we are developing a cloud service, bridging consumers and
providers for purchasing basic goods and services. This will allow us to tap into vast
potential of the next generation broadband usage.
Utilizing existing mature Internet / telecommunication technologies and
infrastructure, we will be able to simplify consumers‟ lives.
With a focus on bringing simple, easy to use and efficient consumer reach for
enterprises of all sizes, we will enable and facilitate the expansion of their offerings
and geographic coverage in a sustainable way.
Our solution opens doors for financial institutions, telecom, Internet and alternative
operators to harvest the potential of this market.
The business model is based on tolling pass through traffic from subscribed services
and goods providers. Breakeven point can be reached with a relatively small
installed base, and will yield a healthy IRR. The solution is scalable, self
sustainable, has low operational costs and provides higher returns as the installed
base grows.
We predict increased usage adoption will be the result of a single or limited purpose
device coupled with a simple user interface, greatly increasing the addressable
market to non computer or smart phone owners.
Although our solution and business model does not rely on providing such a device;
being faster and simpler to use compared to versatile and conventional devices,
such as; a personal computer, a smart phone would yield higher adoption, usage
and coverage beyond owners of such devices.
It is obvious from advertisements and marketing spending of major telecom
operators today that their focus is still on providing faster and better connectivity.
While such improvements in broadband availability are positive, the lack of “killer”
applications and/or services is a major issue to catch and retain customer loyalty.
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In our opinion, the company that manages to launch such services and acquire a
solid installed base first, will not only be able to make very good returns on their
investment but will also become the market maker. If done correctly and early
enough, there is a good possibility that this company will “own” the market, much
like Google does in internet search and advertising.
A cloud of alternative services beyond faster, better and available connectivity will
become a major differentiator; an environment for such service creation, delivery
and consumption – a self evolving ecosystem – will ensure not only stickiness for
underlying connectivity and access oriented services but will also allow us to;
Toll pass through business,
Control customer relationship,
Win further consumers‟ mindshare and loyalty
Leverage household spending data
For the services and goods providers the model allows an efficient and direct way to
reach consumers while providing the necessary base to expand their businesses
both in terms of geographic coverage and offering portfolio.
Basic goods and services provided by the solution may span simple and frequent
products to more complex services.
Simple and frequently used goods and services:
Bottled water
Fast food
Groceries
Calling/reserving a taxi
Dry cleaning
Car wash
More complex and/or less frequently used goods and services
Maintenance/repair services (white goods, personal computer),
Plumber
Electrician
Dog walker
Baby sitter
Shopper assistant / assisted shopping
Banking
Utilities
E-Government
While the cloud services can be reached via alternative methods such as personal
computers or smart phones; market surveys suggest single or limited purpose
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device (a smart frame or a tablet device) would increase the frequency of
consumption while providing additional value.
One of the most valuable aspects of such a device, apart from the ease of use is the
increased barriers of entry for possible competition. Controlling the medium for
consumer access, together with a large installed base, will lead vendors of goods
and services to desire having a presence in the model. However, this will work best
if the route to consumer with such devices is not fragmented. Thus a good lead
time on competition and acquiring a large installed base is the key in achieving the
real potential of the solution.
Benefits
The benefits are multifold and have the potential to create multi win scenarios
For Consumer:
For end users there is clear value for quick finding and simple ordering consolidated
set of goods and services offerings via web presence, as a widget application or
bundled with an accompanying device.
For Basic Goods and Services Providers
For providers the effectiveness of this approach comes from basic comparison of
effectiveness of magnets and flyers versus a speed dial that bridges buyer and
seller at the convenience and comfort of each hence allowing efficient way to reach,
serve and provides the opportunity for coverage and reach expansion.
For Banks and Financial Institutions
The vast amount of household spending information can be leveraged as:
• Part of credit risk analysis in small and medium enterprise (SME) loans and
provide guidance for SMEs within the sector
• Allow financial organization to develop personalized offerings to attract and
retain consumers.
• When coupled with micro finance backend, revenue from large sums of
transactions provides returns with low OPEX, a key factor in generating micro
finance revenues.
• ATM like user interface allows wider usage of Internet banking services and
personalized reach for retail banking offerings to their clients.
For Telecom Operators
Depending on strategy, services bundled via mobile or stationary devices can
enable establishing a foot print within homes or can be leveraged in ensuring and
strengthening already existing foot print.
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The system utilizes existing voice and data infrastructure, which already exist both
in fixed line and mobile telecommunication operators hence eliminating the need for
such investment.
Integration with existing billing infrastructure would enable single billing. While
expected volume of transaction will be high, consumers‟ transaction amounts would
be within the limits set by telecommunications regulatory authority (BTK),
eliminating telecom taxing for non telecom related services consumption.
For Advertisers
The solution provides targeted and contextual advertisements delivery at the time
of ordering, greatly increasing impact for FMCG products and opportunity for
horizontal and vertical competition.
How System Works
System has been designed to be intuitive for non computer literates. This ensures
wide adoption, usage;
eliminating learning
curve; lowering
resistance for offering
consumption.
Edge device or UI
running on consumer
equipment (PC or
smart phone or
purpose device)
operates with simple
menus and leverages
voice communication
when necessary
hence it resembles an
intercom or a speaker
phone with a touch
enabled display.
Overall, solution utilizes Internet to bridge consumers and sellers, utilizing existing
and mature technologies. On consumer side edge connectivity can be summarized
as a large intercom system connecting both parties either via simple menu system
(where appropriate) and via voice (when necessary and preferred). On goods and
services provider side; solution leverages currently used technologies; whether it is
a call center, an ecommerce portal or a mobile and fixed line telephone to receive
orders.
Fig.1 Simple Reach to Frequently Consumed Product and Services
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Examples
Ordering Bottled Water
1. Consumer chooses (touches or clicks) bottled water order menu
2. Consumer chooses the vendor
3. Water order requests reaches provider (national call center, web order site or
individual resellers‟ mobile/fixed line phone as an SMS)
4. Provider responses via predefined method (SMS or response over web
application)
5. Confirmation that the order is received is sent back via predefined method
(email, SMS, etc) back to consumer
Calling a Taxi or Requesting Private Chauffeur
1. Consumer chooses a taxi station serving her area
2. Consumer initiates a call to taxi station and requests a taxi – depending on
taxi availability tells her location or identifies it via a single touch
3. Taxi station responds and either dispatches the taxi towards consumer or
rejects according to availability
Calling White Good Maintenance Services or Customer Support
1. Consumer chooses the vendor and product category accordingly
2. Depending on integration:
a. Either request is sent to vendor and confirmation is sent back to
consumer and vendor reaches consumer via predefined method
(phone, email)
b. Or a call to vendors‟ call center is initiated and system acts like a
speakerphone
Ordering Fast Food
1. Direct Approach:
a. Consumer chooses a fast food restaurant she would like to order food
from
b. Consumer browses restaurant‟s menu and selects items accordingly
and populates her basket
c. Chooses finalize to place her order
d. Order and delivery address is received by the restaurant and when
accepted (via an SMS or email) a confirmation is dispatched to
consumer via preset preferred method (such as SMS, email)
2. Indirect approach; leveraging existing Internet based food aggregator service
provider
a. Consumer chooses her favorite food from aggregators menu, choose
restaurant serving her geographic location and places her order as she
would from aggregators web site or widget application
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b. A confirmation is sent back to consumer once the aggregator confirms
the order
Although simple touch/click driven menu system is the preferred method where
possible and practical; in order to accommodate existing usage habits in every
scenario, the system has the option to function like an intercom/speakerphone
where menu driven ordering is not possible or not the preferred way to bridge
consumer with resellers and providers such as in case of ordering groceries from
local grocery store.
Fig.2 Order Flow Examples
Dedicated Device versus Web Only Presence or Smart Phone Application
Although additional device offering is not a must; there are competitive and value
advantages in offering a single purpose or limited purpose device, which shares
same underlying hardware and software technology, targeted for different user
segments; allowing low cost of ownership, increasing received value, which in
return enable reaching wider user base and therefore services consumption
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Device provided at cost or via a loss model offers more value to end user at a
fraction of the cost of any comparable device (device supporting top most
Internet usage trends1
; social network access, music/video
listening/watching, messaging (email, SMS2
, voice2
, IM) and provides glance-
able information (weather, news, traffic, transportation schedules, etc)
Expandable platform allowing consumption of additional services such
as banking, municipal/eGov, sports betting, retail catalog
browsing/shopping, price search services and local forum access, etc.
where additional advertisement and transaction based revenues can be
captured
Dedicated device provides tight control over services and products offered
and tougher barrier for entry for competition compare to expose via
application on smart phones and Internet only presence strategies alone
Quick boot, simple UI, light weight and long battery life, always ready and
connected compare to PC (netbook, notebook)
Larger screen and fraction of the cost of smart phones while sharing most of
features such as capacitive multi touch screen, high speed low power CPU in
similar design and form factors
Smartphone penetration although is in a rising trend in world wide mobile
handset market, still has low overall install base and fragmented
hardware/software configuration which hinders developing and maintaining
same application for each alternative platform (top local GSM operator
suggests they have sold total of 400k Apple‟s iPhone in 3 years; around 1%
penetration within the 34million subscriber base they currently have)
Fig.3 Device Roadmap Example
•Mid sized LCD
•Touch UI
•Voice capable GSM radio
•Out of box functionality
•OTA management and
remote updates
Stationary Home
Device
•Small to mid size screens
•Touch UI
•Battery powered
•Location and inertia aware
•OTA management
Handheld Device
•Targeted UIs and designs
for vertical segments;
elders, kids, tourists,
corporate users
•Public displays for
advertisement and „follow
me‟ function
Additional
Targeted Devices
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Technical Infrastructure
The solution leverages mature and existing technologies utilizing web services and
VOIP technologies. Whether VOIP telephony services used can be standalone or
part of fixed line or mobile telecommunication operator and whether it utilizes
wireless broadband (WIFI) or GSM based connectivity (2G, 3G) will depend on
partner business priorities. Leveraging an already existing infrastructure will lower
initial investments requirements and operational costs.
The solution assumes some kind of broadband access at target consumer home.
Marketing and Sales Strategy
Nowadays Internet access is a necessity rather than nice to have feature in our
daily lives.
Enterprises of all sizes are trying to find better and more efficient ways to reach us
in order to sell their services and products. This is not an easy task since we have
limited time, attention span and space. The same holds true for all types of
enterprises;
Large companies with big advertisement budgets flood the Internet and
traditional media with their commercials; catching consumers‟ attention and
differentiating their products and services is a never ending constant battle
Small and medium enterprises, with their more limited budgets can only
compete locally or in niche markets for consumer attention
The very small and local player such as grocery stores and restaurants tend
to have no budget or just enough to drop flyers and magnets in our mail
boxes
One of the key ingredients of our solution is to provide a means for even the
smallest enterprise, whether it is the local “bakkal”, dry cleaner, taxi or other, a
chance to reach our households effectively. We may not be creating a perfectly
level field, giving enterprises the means and additional tools like personalized
advertisements, but we will be opening doors for smaller players that they did not
have before.
As such, the marketing and sales strategy will differ based on several factors;
Target customers
Population concentration
Location
Tool(s) used to access solution (dedicated/limited device, smart
phone, personal computer)
Target vendors
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Goods and services offered at the location
Level of integration desired and/or possible by the vendor
Level of technology sophistication of vendor (for example a country
wide vendor most likely has a system, whether it be a call center or
on-line service for processing customer requests)
In concentrated populated areas with already high levels of ordering from home
(Atasehir district is a good example), we expect to attract a relatively high number
of local vendors along with regional or national players.
The key to success and attracting these vendors lies in having a large installed base
of consumers through the solution. To achieve this goal we have three alternative
approaches, in order of preference these are;
1. A limited or single purpose device would be offered for free to target
consumers
a. This approach lifts the cost barrier from the consumer and will allow
the fastest roll-out and growth in installed base, which in turn will
increase demand from vendors to be part of the system
b. As the consumption through the device will reach critical mass much
faster in this scenario, the revenues and possibly higher margins
generated from tolling will in turn allow quick returns on investment
c. Even aggregators such as Yemeksepeti3
or vendors with their Internet
based on-line ordering aggregation services would be attracted to the
large installed base and join the system
2. A limited or single purpose device would be offered at cost or loss, which
could be offered in installments or upfront purchase for the consumer
a. This approach, although it minimizes investment costs, would have the
disadvantage of having to sell the solution to both the consumer and
the vendors. There by greatly slowing down the adoption
b. The slower start will in turn reduce ROI time as consumption will be
much lower at start, reducing tolling revenues and margin
3. A limited or single purpose device would be offered for a profit, either as
part of ongoing services contract fee or direct purchase
a. This approach has the same disadvantages as offering the device at
cost or loss, but increases the difficulties even more
b. This approach will most likely limit the adoption and turn it in to a
niche service to large real estate compounds and communities
In all three above scenarios, a web interface and application widget would also be
made available allowing access using personal computers, smart phones and other
web enabled devices.
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As can be seen from our interpretation of the scenarios, we believe the device is
just an enabler to achieve the desired end of getting consumers and vendors to use
the solution. We believe the opportunity lies in being the gateway or market place
for consumer and vendor no matter what method they prefer to connect, whether it
be a through a phone, PC or our device does not matter.
Having our device in enough homes opens the door to become the gateway or
market place, attracting more consumers and vendors to join the system. As the
ecosystem grows, we expect additional consumers will want join with different
means (purpose designed devices, PC, smart phone or other web enabled devices).
The main reasons behind wanting to push a dedicated or limited purpose device
into as many homes as possible and as fast as possible are;
Such a device will lock in consumers and vendors
Allow a controlled environment for adding services
Lock out conventional Internet competition and force them to join the
system when the installed base reaches critical mass
Simpler and ready to use; allowing reach beyond PC and smart phone users
Our strategy for a successful launch would be to start with a few basic goods and
services that the majority of households in a target area will consume most
frequently.
For example before launching and announcing the solution, we would aim at getting
on board drinking water vendors, large fast food chains, dry cleaners and a few
other services in the area which will form the basic services available to consumers.
We would then expand and enhance the services available once the solution is
launched.
In the case an agreement is reached to launch the solution together with a bank, an
ATM like user interface of the bank and possibly a payment interface would also be
available from start.
The device could be available from the beginning with other services such as
messaging, weather, photo frame and so on.
Phased Approach for Signing in Good and Service Providers
Although it is technically possible to launch the solution nationwide, we believe a
phased approach focusing on highly populated areas of large cities first will yield
faster return on investment and reduce operational launch costs.
As the usage grows in target start locations and as nationwide goods and service
providers become more available, we will be able to invest in other less populated
locations and/or expand to other cities or offer our solution nationwide.
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Team, Resources and IP
Our goal is to focus on the business and technology of this venture, looking at ways
to expand the available services and maximize the potential of the model with new
ideas.
During the start up phase when transaction volumes are relatively low, it is likely
that a small in-house team will be needed for most operations. As the business
grows however, we aim to outsource all non-critical operations and focus the core
team on generating new ideas and growing the business.
Sales
Setting up tolling agreements for service and goods providers is the main goal for
the sales resources. The initial target is enrolling goods and service providers that
are strategic (nationwide coverage, brand names and localized key vendors;
depending on initial go to market strategy). Once a critical mass is reached, we
expect that the ecosystem will be able to attract additional vendors and local
aggregators (sub services and goods aggregators) by itself due to the consumer
reach and data we will be able to provide.
Legal
This will be an outsourced activity from start. With the main responsibility of
establishing and maintaining standard terms and conditions both for internal and
external contracts, consultation and IP related activities.
Finance
This activity will again be outsourced from start. When the business reaches certain
revenue targets, a financial officer will be added to the team to guide and manage
the outsourced activities.
Operational and Administrative
Again, an outsourced model from start where possible will be utilized.
Technical
We are currently using subcontractors during the conceptual design, testing and
trials for the majority of non-IP related activities. We intend to continue the same
approach during production ready development and operations.
The main focus of our in-house developers in later stages will be integration, quality
assurance and testing.
Project Management
A project manager and later a project management office will manage and monitor
both business and technology related in house and outsourced activities; ensuring
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success criteria are met on time as well as monitoring and managing SLAs (service
level agreements).
Intellectual Property
In order to protect our IP, a patent application has been submitted to the Turkish
Patent Institute (TPE) on 02.09.2009, #2009/06755, it is currently pending
approval. Submitted copy of the patent application can be shared if required after
signature of an NDA (Non Disclosure Agreement).
Operations
Business
The main focus is enrolling as many providers as possible. Enrollment will be
through an online portal but initially field sales team‟s assistance will be necessary
to ease the signup process.
We envisage that as more providers become part of the cloud, required sign up
process for “similar in nature” providers will take less effort and self service signups
will be initiated by providers themselves – hence required field sales effort and
therefore costs will decrease accordingly.
The fees or “toll” that will be collected from vendors will be based on per
transaction and/or flat subscription fees. Fee amounts can be percentage of the
transaction (preferred model), or a flat fee model based on forecasted volumes and
adjusted periodically where preferred model cannot be applied.
Technical
Technical operations will focus on operations and maintenance of the cloud
services. Device related operations will be kept separate; while there will be a small
in-house team for development and remote upgrade of consumer devices, the rest
of the activities are planned to be outsourced.
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Financial Forecast
Summary
Cash flow projections for 100,000 and 1,000,000 install base scenarios have
been provided. Although 1,000,000 install base projection suggests a series
of incremental install base, please consider it as multiple geographies in
parallel
Interest rate risk is set at 25% for first 3 years of operations and 15%
thereafter
Device development and manufacturing cost estimations are provided
separately
Assumptions
The preferred method for call termination where necessary or desired is
assumed to be already in place (VOIP/CIF gateway, data and voice
infrastructure)
100,000 installed base projections accounts for subsidized device offering –
loss model at 50% of cost – target installed base is projected to be reached
at the end of year three
Marketing costs are built in as part of field selling costs
Direct sales approach is assumed; channel distribution costs are not
forecasted
1,000,000 installed base projection accounts for fully subsidized device; cost
free for consumers; target installed base is estimated to be reached before
the end of year three
A subscription fee of 1 TL per device per month is forecasted as a cost
offset
Wireless broadband connectivity is assumed to be available;
The projection does not take into account additional cost impact on
device or required ongoing costs if mobile connectivity is used (i.e. 2G,
3G mobile connectivity costs)
Time and cost estimation for back-end services infrastructure requires
evaluation of already existing technologies and investments
Therefore it has not been included within the cash flow projection
provided
An estimate can be provided once the solution partners and going
forward model is established
Additional possible revenue streams such as targeted advertisement are not
included in the projection
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Cash Flow Summary
Below scenarios are annualized summary of monthly projections presented in cash
flow projection and does include subsidization cost (loss model or full) of single
purpose device; alternative scenarios‟ impact can be forecasted in provided
spreadsheet. Investment amounts stated in the spreadsheet does not take into
account initial development and integration costs and only accounts for ongoing
development costs; however one off cost estimations for device hardware and
firmware are stated in a separate worksheet. Additionally, according to
collaboration strategy and utilization level of already in place infrastructure, if
exists, initial investment requirements can be estimated.
Summary Cash Flow Scenarios, yearly
# of
users
1 2 3 4 5 …
100K 1,066,250 TL 2,872,730 TL 2,932,739 TL 2,932,739 TL 2,932,739 TL
…
1Mio 12,702,880 TL 22,990,873 TL 63,218,585 TL 63,218,585 TL 63,218,585 TL
…
Summary Firm Values
# of
users
IRR MIRR NPV Investment
3 year Gross
Cash Flow
Company Value
in 3rd
year
Simple
ROI in 3
years
100K 125% 92% 12,718,452 TL 3,948,599 TL 1,490,807 TL 38,765,350 TL 281%
1Mio 180% 120% 349,087,986 TL 36,740,439 TL 18,391,790 TL 730,643,333 TL 646%
Fig.4 Revenue Comparison; 100K Vs 1Mio installed base
30,000,000 TL
20,000,000 TL
10,000,000 TL
0 TL
10,000,000 TL
20,000,000 TL
30,000,000 TL
40,000,000 TL
50,000,000 TL
60,000,000 TL
70,000,000 TL
1 2 3 4 5
100K
1Mio
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Household Spending Survey Template
Survey template is used in projecting current and future household spending habit
and estimating
potential revenue
capture and
addressable market.
Initial research has
been conducted without
a targeted demographic
and geographic focus.
Preliminary results
suggests bottled water,
food and grocery
spending are frequently
used current services
while shoe polish, car
wash and movie ticket
purchasing services
would be the top three
sought after services if
available.
Further surveys will
target specific
geographies.
The template is
requested to be filled
by participants while
capturing as much
demographical data as possible; size of the family (including pets), ages, gender,
work status, etc.
Detailed analyses‟ results will be shared as more surveys are conducted.
Services Purchase Streams
Estimated
Transaction per
House per YEAR
Avg
Transaction
Value (TL)
Bottled Water 0 6
Food 0 20
Event/Movie Ticket 0 35
Dry Cleaner 0 25
Grocery 0 10
Courier, Cargo 0 12
Flower 0 35
Simit 0 3.75
Plumber 0 50
Electrician 0 50
Shoe Polish/Repair 0 20
PC Technician 0 50
Taxi 0 20
Vet 0 75
Car Wash 0 12
Carpet Cleaner 0 75
White Good Repair/Maintenance Services 0 50
Car Servicing 0 150
Kalayci/Bileyici 0 10
Bakery 0 15
Pharmacy 0 10
Personal Storage 0 15
LPG, Butane Cooking Cylinder 0 50
Tailor 0 15
Barber, Hairdresser, Beauty Salon 0 0.5
Hardware Store 0 5
Vacation, Holiday Planner 0 0.5
Recycler 0 0
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Device Manufacturing Cost Estimation
Estimation is based on minimum of 25,000 units and includes manufacturing and
component costs only.
Customer support cost is estimated
at @18.5% has been built into
cash flow (covering device
warranty, replacement, remote
customer support services) and is
planned to be an outsourced
activity.
Cost and time impact has to be
considered for any change in
quantity, form factor, broadband
connectivity and additional feature
requirements.
Components Est. Price
5" TFT LCD: 17.00$
MCU: 12.00$
Cap. Touch: 25.00$
Baseband+Transciever: -$
Misc Components+PCB Manu: 12.00$
Enclosure: 9.00$
Etc.: 4.00$
WIFI: 6.00$
Bluetooth: -$
GPS: -$
Battery: 3.50$
OS License: -$
UI License: -$
TOTAL: 88.50$
Support: -$
Packaging: 0.89$
Logistics, Customs: 20.36$
Unit Cost: 109.74$
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Competition
No direct competition in terms of scope and model exists today, however the
window of opportunity is rather small as global and local enterprises are looking for
ways to leverage the ever increasing Internet usage to reach individuals and SMEs
directly, bypassing most of the traditional channels.
There are multiple models on how the Internet is being leveraged as an alternative
to traditional channels; so far the most successful examples are in personalized and
direct advertisement delivery, internet banking and specialized aggregation sites
(music and video downloads, food ordering and so on).
The most successful internet company today is no secret; Google is the clear leader
in online search and advertisement market. As addressable revenue and therefore
potential profits flatten, companies like Google are looking into ways to increase
their revenues and profits from consumers and local SMEs by leveraging their
established channel in new ways.
Companies like Google, Amazon and others are gathering both consumer and
business data for free with new services. If we look at the Google‟s model and the
way they are expanding their services, it is obvious that Google is using its strength
to enter new markets.
Leveraging the Internet, a direct link with consumers and local SME‟s are
established quickly and cost effectively;
Google Places: free navigation, discount coupons, reviews and directory
services coupled with fee based subscription for enterprises that want to
stand out of the crowd
Google Voice: by providing VOIP services, Google relegates telecom
operators (fixed line and mobile) to broadband connectivity provider only and
reduces their voice revenues and profits
Google Checkout: offering a payment engine for shoppers and vendors;
placing Google in to the middle of every transaction and allows them to
collect additional key data about both consumers and vendors
With such services Google is trying to become the middle man or “toll bridge”
between the consumer and enterprises. Controlling consumer and market data
gives them an edge against even traditional institutions like banks or telecom
operators.
With this kind of data and involvement in local economies it is possible to influence
or take advantage of key market trends before others and play match maker to
enterprises and consumers, further strengthening Google‟s role in the middle;
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Controlling the data or business information repository is the key to their
strategy
While Google has currently focused on capturing a bigger piece of the worldwide
advertisement revenues, above described services indicate a more focused move in
to areas such as finance, telecommunications and on-line retail. This is no surprise
as their core business of on-line advertising is reaching a point where growth is
slowing down.
Although Google is the most significant global player pursuing this type of strategy,
it is not the only one. The battle for consumer loyalty and mind share will be played
around information and controlling the channel to the consumer. The question is
not if, but when these giants will make a move to take control of the Turkish
consumer and market.
What we propose is to pre-empt such a move and take such control ourselves.
Concept Designs for Stationary Device
Below are some the design work undertaken for stationary device.
Fig.8 Concept Design Model E2 [façade, back isometric and side]
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Fig.9 Concept Design Model E [façade isometric]
Fig.10 Concept Design Model E [back isometric]
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Fig.11 Concept Design Model G [façade and back isometric]
Fig.12 Concept Design Model G2 [façade, back isometric and side]
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Fig.13 Concept Design Model F [façade isometric]
Fig.14 Concept Design Model F [back isometric]
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Fig.15 Concept Design Model D [façade, back isometric and side]
Fig.16 Concept Design Model H [façade isometric and side]
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References
1. According to Mediascope 2010
2. Voice via VOIP, SMS via webSMS
3. Yemeksepeti.com