E- Ink Analysis

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E-Ink Analysis

At an early stage, E Ink had a broad perspective and considered several market opportunities, both in emerging- and mature industries, as well as different business models, in which all leveraged their unique technology. In 1999, E Ink insured the protection of their technology by acquiring 26 patents, which protected them from other firms to replicate their technology. E-ink moved forward building up a team of high quality people and the rounds for fund-raise included investors with technology and media expertise beyond the financial corporate investors. (See Exhibit 2 from the case). E-ink partnership with Philips, which provided E Ink with the electronic expertise needed. Further on this partnership led to exploring new strategic partnerships, which led to an alliance with Toppan, which again led to the entry into the Japanese market and gave access to Sony as potential customer. In 2003, E Ink took action and restructured the company. E Ink shut down the IIM project and focused all their resources on delivering an acceptable product to Sony and their primary technological goal: the radio paper. This valuable experience made E Ink more carefully considered which project to keep up with, focusing on electronic ink production and development; tracking closer to main competitors and substitute products.

What did go wrong?

In 1999, E Ink made a wrong decision; to focus on three big market opportunities rather than focus all their effort in one. In 2000, E Ink decided to make an effort with an initial public offering, which was to late since the IPO window closed making the time for an alternative venture capital funding run out. Making the cash problems even worse: E Ink had estimated the market opportunities and potential profits too high and under-estimated the manufacturing time, difficulty and costs; making them run out of cash even faster as soon as problems started to occur rapidly. E Ink did not manage to prepare the manufacturing process for full production and accepted orders even if they where not ready. They focused only on the technological development and marketing in which made E Ink incapable to deliver orders the their customers. In 2003, E Ink could still not offer an approved technology and could not manage to sign contracts. This aspect, in addition to the aspects above, finally led E Ink to almost run out of cash and they went incapable of fund research and development costs for all the three market opportunities.

What might they have done differently?

E-Ink should have focused only on delivering an acceptable product to Sony at an earlier stage, rather than spreading their limited resources on three options. In order to avoid the financial problems E Ink should have focused their effort on venture capitalists rather than an IPO in order to close a deal before it was too late. E Ink should have taken worse outcomes into considerations rather than forecasting with the best possible outcomes of market share and profits to better predict the cash flows. E Ink should have raised money and invested in the manufacturing process before they launched the technology and accepted orders.

2) As a VC, would you invest in E Ink?

SWOT analysis

|Strengths: |Weaknesses: | |Leading edge technology |Financial credibility and limited cash | |Extensive supply chain |Minor technical challenges | |High profile partnerships |Cultural problems with Asian partnerships | |Protected technology by patents |Unfocused product development strategy...
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