Professional Documents
Culture Documents
3/7/01
Mission
The goal of Bounce Networks is to be the leading provider of complete personal digital media
platforms to consumers in the home and on the road.
Bounce Networks’ emphasis will be on providing a complete platform offering which will include:
• Reference designs for a simple and powerful digital media server/receiver architecture
• Optimized wireless entertainment networking based on existing standards
• Revolutionary digital rights management that provides unprecedented flexibility while
providing a secure environment
• A comprehensive consumer entertainment subscription service
Market Environment
The market for digital personal entertainment devices and services that leverage the Internet is
rapidly growing. It is expected that by 2005 there will be nearly 29 million US households with
broadband Internet connections, over 122 million broadband devices in US homes, and over 1
billion Bluetooth capable devices.
These market dynamics converge to deliver an estimated 10 million broadband digital music
subscribers by 2005. Digital music is just the beginning of the personal digital media revolution
that will occur over the next 5 years. Bounce Networks intends to exploit every digital media type,
delivering next generation platforms that enable practical consumer usage and innovative
services that deliver unparalleled entertainment enjoyment.
Customer Profile
The Bounce Service will rely on a broadband Internet connection for incremental updates to
content. So, the first defining characteristic of a Bounce customer is that they have broadband
Internet either via cable, DSL or satellite. The second defining characteristic is that they must use
digital content. Based on research by Jupiter and Forrester, Bounce estimates that 36% of
Broadband Internet users are using digital media in 2001. That number grows to 48% in 2005 as
services & solutions proliferate.
Key Constituents
Competitive Advantage
Intellectual Property
Bounce Networks will defend its market position and achieve sustainable advantage through swift
product execution and a simple/unique business model. This will be fortified by a powerful and
pertinent patent portfolio.
• EONSTM User-centric Digital Rights Management
• Multi-channel digital streaming & synchronization
• Bulk media load & update process
• Virtual home wireless backbone & local subnets
Leadership
Bounce Networks has attracted a world-class management team to lead its daily operations. By
capitalizing on the management team’s proven track records in consumer PC, wireless, and
Internet products and services, we will be able to draw upon a great talent pool of employees and
advisors to build this industry shaping business.
Bounce Networks board of directors has unparalleled PC, Consumer Electronics, Retail and
Consumer Services industry expertise.
Entry Timing
Bounce will be released with at least one OEM brand partner for the 2001 Holiday shopping
season. Additional partners will be added immediately following.
Result
By being an early entrant with a comprehensive solution for the Personal Digital Media market,
Bounce intends to gain a leading market share and become the preferred brand amongst
consumers and major CE/PC brand partners.
Bounce Networks’ projects the business will turn cash and earnings positive by the middle of
2003 with a sustainable EBIT rate in the 20% range by 2005.
The goal of Bounce Networks is to be the leading provider of complete personal digital media
platforms (defined as digital versions of commercial music, movies/programming, photos/art, and
digital versions of personal media such as family camcorder movies, family photos/art, etc.) to
consumers in the home and on the road. The company’s vision is to simplify and personalize the
acquisition and management of digital entertainment (media) in the home, car, and while mobile.
The first market proof of this need is the rapid emergence of the digital audio (MP3) industry from a
niche activity to a mainstream occurrence. This is substantiated by the growth of several
converging technologies:
• The growth of services like Napster, now reporting over 50 million users
• The mainstreaming of MP3 audio players with several million sold in 2000 and the
introduction of point-solution digital audio servers.
• The explosive projected growth of over 13 million broadband Internet connections in the
home by 2002, and nearly 30 million by 2005.
• Wireless technologies (Bluetooth, 802.11x) are receiving significant backing and are in
widespread use in the corporate environment and will be released in mass to consumers
over the next year. These technologies are expected to outpace all other home networking
solutions.
Consequently, Bounce Networks intends to fully capitalize on this rapidly developing market
discontinuity by providing a complete system to manage these activities and better integrate them
into existing consumer entertainment behaviors (see Appendix 1, Consumer Broadband, Digital
Audio Products and Services Growth Rates).
The Bounce Network vision is to create a seamless way for consumers to integrate their personal
entertainment content with on-demand capabilities for “rented” entertainment content.
• Music
• Video
• Images
• Video
Games
• Connects to • 1000 CD
Bounce Box over capacity
Wireless • Syncs with
• Displays on TV home system
or remote automatically
• The patent pending wireless technology that allows for high-bandwidth and automatic
discovery/configuration of network devices.
• The focus on the first killer app: “personalized digital media subscription services” that
seamlessly integrate into the consumer’s existing home and auto entertainment libraries
and equipment.
3) Management Team
Bounce Networks has attracted a world-class management team to lead its daily operations. By
capitalizing on the management team’s proven track records in consumer PC, wireless, and
Internet products and services, we will be able to draw upon a great talent pool of employees and
advisors to build this industry shaping business.
The team consists of senior executives from three main industries: Consumer Subscription and
Internet Services, Consumer Computer Hardware, and Consumer Electronics.
Bounce Networks has also started to build its board of directors with relevant industry leaders and
influencers. It is critical for Bounce to have advice on and access to key technology partners,
consumer hardware and media retailers, as well as entertainment content companies. The two
current board members provide an excellent start with complimentary additions expected as
Bounce Networks matures
Board of Directors
Page 2
The Bounce Solution
10/26/00 Bounce Company Proprietary & Confidential
Media-
optimized RF Bounce
Technologies Auto Server Enabling Technology
• Packaging of standard
Bridge technologies
• Optimized f or
Entertainment entertainment
PVR
Service
.b Enabling
Bounce Entertainment
Video Server
Technology Enhance- Service
ments
Personal • Owne d & managed by
Reference Player Bounce Networks
ingredient
Platforms
Home Data
Netw orking Phase 2
The company will not engage in the manufacture of hardware. Instead, it will provide reference
specifications to its OEM Brand partners. The OEM Brand partners have the choice to follow the
plans directly or to incorporate additional features for specialization and differentiation. In cases
where partners currently have designs for similar products, the Bounce proprietary enabling
hardware can be incorporated into existing designs.
Bounce Box Reference Design – The Bounce Box is the central unit in a Bounce Home
Entertainment Network. It is the size of standard audio/video components and is placed in the
entertainment equipment rack (with the user’s VCR, DVD player or similar units). It handles media
storage (Audio, Video, Images and at a later date, Video Games), recording and playback as well
as wireless networking.
Bounce Receiver Reference Design – The Bounce Receiver extends the capabilities of the
Bounce Box to other locations within the home. It takes digital media streamed wirelessly from the
Bounce Box and makes it available on additional TVs and audio systems.
Bounce Auto Receiver Reference Design – The Bounce Auto Receiver provides digital media
playback and storage in the car. It receives content over the Bounce Home Entertainment Network
whenever it’s in physical range of the Network and plays back stored content while out of range.
In order to have a quality entertainment experience over a wireless network, certain requirements
must be met. Bounce’s .b technology is a package of software and hardware (reference design)
that enables the following:
Smooth audio & video playback – The network has ample bandwidth and can prioritize content
flow to avoid interruptions.
Playback of multiple streams concurrently – Several locations within the home can be playing at
once.
Ability to access copyright protected content – The system provides protection to copyright
owners without any intrusion or complication to the user.
Bounce offers on demand access to the entire universe of media all through one simple system.
The service provides access to content with four different levels of availability:
Owned – Includes music from my CD collection, movies I’ve bought on DVD, etc. This content is
added via a process for which Bounce Networks is currently applying for patents.
Subscribed – Top 40 lists by genre, audio books by a specific author, all 8 “Rocky” movies, etc.
These can be enjoyed by paying a low monthly fee.
Pay-per-use – Customer only incurs charges when content is played. Pay-per-use charges can go
toward purchase.
8) Market Environment
The market for digital personal entertainment devices and services that leverage the Internet is
rapidly growing. It is expected that by 2005 there will be nearly 29 million US households with
broadband Internet connections, over 122 million broadband devices in US homes, and over 1
billion Bluetooth capable devices.
These market dynamics converge to deliver an estimated 10 million broadband digital music
subscribers by 2005. Digital music is just the beginning of the personal digital media revolution that
will occur over the next 5 years. Bounce Networks intends to exploit every digital media type,
delivering next generation platforms that enable practical consumer usage and innovative services
that deliver unparalleled entertainment enjoyment.
9) Market Orientation
Personal Media Networking is very different from Internet Radio or MP3 Jukeboxes. Neither offer
the user a solution to their unmet needs for 1) control of their entertainment, 2) convenience of
having access to whatever you want at a given time & 3) the simplicity of a single media interface &
not having to rip hundreds of CDs. Bounce offers all three by creating an entertainment platform.
10)Representative Competitors
ZapMedia Comparison
ZapMedia offers a multifunction point solution while Bounce offers a
platform for personal and networked digital entertainment
Bounce ZapMedia
Platform Orientation
• OEM model Yes Yes
• Platform-Orientation
Enables device proliferation Yes No
Enables service proliferation Yes No
• Proprietary enabling technology Yes No
Hardware
• Entertainment server architecture Yes No
• Wireless networking Yes No
• Additional receivers Yes No
• Auto solution Yes No
• Web browser No Yes
• CD/DVD player OEM Option Yes
Service
• Locker service/Web storage Yes No
• Content subscription & pay-per-listen/view Yes Unknown
• Multi-device playlist management Yes No
• Content Portal No Yes
ZapMedia has announced a jointly branded Digital Media Center with Harman Kardon to be
introduced in early 2001. There are several key differences between the Bounce Platform and
ZapMedia’s offering.
• Bounce is creating a next generation platform (hardware, common carrier, services) that is
NETWORK CENTRIC and optimized for consumer ease of use and OEM differentiation.
ZapMedia offers a multi-purpose device that is meant for a single room in the home and is
not extensible to a connected home platform
MP3.com is currently offered as a companion service to many audio devices. Bounce differs from
MP3.com and other audio services because:
• It creates an entertainment optimized wireless network within the home through hardware &
software.
Sony is in a unique position due to its ownership of both a Consumer Electronics business and a
major record label. This is not as threatening to Bounce Networks as it may appear. 1) Sony is
likely to have a significant challenge in striking deals with the 4 other recording labels in the short
term. 2) Sony Consumer Electronics would be a good OEM brand partner for the Bounce Platform.
AOL/Time Warner has a similar problem with respect to content. Their offering in this space is not
clear yet, but the AOLTV set-top platform is currently shipping. Time will tell if they can successfully
extend into the digital entertainment space.
The Bounce Service will rely on a broadband Internet connection for incremental updates to
content. So, the first defining characteristic of a Bounce customer is that they have broadband
Internet either via cable, DSL or satellite. Based on the Jupiter figures, there will be a total of ~29
Million users in 2005 with steady growth from now until then.
The second defining characteristic is that they must use digital content. Based on research by
Jupiter and Forrester, Bounce estimates that 36% of Broadband Internet users are using digital
media in 2001. That number grows to 48% in 2005 as services & solutions proliferate.
• Mid thirties
• Some college
12)Key Constituents
In addition to customers, there are three groups which are critical to Bounce Networks’ success.
OEM/ODM partners – Bounce will make preferred manufacturing partner(s) available to its major
CE/PC brand partners. Brand partners can chose whether to use them. The purpose is to provide
a cost and time efficient implementation path when needed.
Major CE/PC brand partners – These partners will have the primary branding on the Bounce
Enabled devices. They will share in the ongoing revenue generated by the Bounce service and will
carry the majority of the marketing/promotion expense.
Content sources – The 5 major record labels are the first key sources of content. As Bounce
expands to include movies, video and video games, additional partners will be added.
13)Entry Strategy
• Satisfy users unmet needs – By offering the most powerful non-pc based method for
managing entertainment, Bounce will offer unprecedented convenience and control of all
media types.
tro l:
Customization:
C on
Diff icult Reusable play lists
• “Fast-frog” the current offerings by including wireless networking into the platform – There
are many music hardware solutions emerging in the market but the market is still far from
mature. None of the competitive offerings provide a comprehensive media management
solution for both home and car. By offering a comprehensive solution, Bounce will be able
to bypass competition with its first release.
• Offer major CE/PC brands a source for annuity revenue – One key differentiator of the
Bounce solution is that it offers hardware manufacturers to derive predictable additional
revenue (margin) beyond the initial sale.
• Meet the content industry’s expectations for protection – Record labels and movie studios
expect a highly secure environment for their content. Through its proprietary Digital Rights
Management solution, Bounce Networks will provide a new, compelling model for managing
copyrighted material in a wireless, non-pc environment. This model provides security as
well as stimulating customer purchasing.
Entertainment
based
Yet to launch
PC--based
PC
Low High
14)Entry Timing
Bounce will be released with at least one major CE/PC brand partner for the 2001 Holiday
shopping season. Additional partners will be added immediately following.
15)Intellectual Property
Bounce Networks will defend its market position and achieve sustainable advantage through swift
product execution and a simple/unique business model. This will be fortified by a powerful and
pertinent patent portfolio.
There are risks inherent to starting a new company and entering into an emerging market.
• Noise in market from onslaught of competitors – As the space heats up there will be
more noise generated by competitors and substitutes. Success lies in focusing on the retail
channel & retail environment.
• Record labels – As the Napster case falls to the favor of the recording industry, there is
renewed effort to retain control of copyrighted content. Given that, it is possible that the
major record labels may choose a limited number of subscription outlets. If Bounce is a
chosen outlet, there is no issue. If Bounce does not secure distribution deals with each of
the 5 major labels, partnerships will need to be struck with distribution intermediaries.
17)Exit Strategy
It is the intention of Bounce Networks to build a strong, profitable company in the Personal
Entertainment Networking space. This document lays out the primary path, which we expect to
achieve with proper funding and moderately favorable market conditions.
In the event that Bounce must redefine its business objectives there are several alternate paths
within the space, all of which spring from the intellectual property currently under patent application.
FINANCIALS
18)Staging
By being an early entrant with a comprehensive solution for the Personal Digital Media market,
Bounce intends to gain a leading market share by becoming the preferred brand amongst
consumers and OEM partners.
1,800,000
$28/sub
1,600,000
1,000,000
$15/sub
53%
800,000
600,000
147%
400,000
200,000
0
2001 2002 2003 2004 2005
$700,000,000
37% GM
35% GM
$600,000,000 32% GM
29% GM
$500,000,000
71%
$400,000,000
Video Services
Added 2H ‘02
$300,000,000
$200,000,000 153%
$100,000,000
569%
$0
2001 2002 2003 2004 2005
Gross Margin
Annual Revenue
These activities should yield a tremendous return for shareholders. Bounce Networks’ post
profitability value should achieve a high multiple due to both its high future growth rates, as well as
its profitable and scalable business model.
20)Financial Details
(Following pages)