CONFIDENTIAL 1

Android™ Adoption And its Economic Impacts to Software StrategyMark BensonDirector of Software Strategy

CONFIDENTIAL 2

About Logic PDHistory• 1960’s Founded as Polivka Logan• 1980’s Added Mechanical Eng• 1990’s Added Software, Electrical Eng• 2000’s Added Products, Manufacturing

Products and Services• Product Design• Product Engineering• Embedded Products• Manufacturing

Industries • Industrial, Medical, Aerospace, Military

Employees• 130 design consultants• 300 operations staff

Geographies• Minneapolis, Boston, San Diego

CONFIDENTIAL 3

> Android™ is now the most-used smartphone OS in the US*> 350,000 Android™ devices are activated each day (~4/sec)

* Source: http://money.cnn.com/2011/03/07/technology/android/index.htm, retrieved March 7th, 2011.

Android™ adoption

CONFIDENTIAL 4

How should the recent increased rate of Android™ adoption impact your software strategy?

Agenda:> Android™ Introduction – What’s so interesting?> Software Strategy – Organizing our thoughts> Industry Relevance – What does this mean for me?

Problem statement

CONFIDENTIAL 5

ANDROID™ INTRODUCTIONWhat’s so interesting?

CONFIDENTIAL 6

> A complete set of software for mobile devices:+ Operating system (Linux)+ Middleware (libraries, application framework, runtime)+ Key mobile apps (dialer, browser, contacts, calendar)+ Software Development Kit (SDK)

> Differentiators:+ Open platform (Kernel: GPL; User-space: Apache)+ Optimized for embedded use (CPU, Power, Memory)+ Enables fast application development (Eclipse)+ Includes remote debugger (ADB)+ Includes unit-test framework (Junit)+ Can develop with emulator on Windows, Mac, or Linux

What is Android™?

CONFIDENTIAL 7

> Many of us are not in the business of designing mobile phones for the high-volume consumer space (RIM, Microsoft, Apple, Nokia)

> What if we are in the Industrial, Medical, or Military industries?

> How should we react to news about the rapid adoption of Android™?

> First, some economics…

Why should I care?

CONFIDENTIAL 8

SOFTWARE STRATEGYOrganizing our thoughts

CONFIDENTIAL 9

> From economics, we know:+ Every product has substitutes and complements+ The Cross-Price Elasticity of Demand (XED) measures the

responsiveness of the demand for good X to change in the price for good Y

+ XED essentially measures how the supply and demand curve for one product reacts to changes in price for something else

> Examples:+ Hot dogs are a substitute for bratwurst+ Hot dog buns complement hot dogs+ Netflix is a substitute for Blockbuster+ Popcorn complements movie ticket sales

Substitutes and complements

CONFIDENTIAL 10

XED of product substitutes

> Two goods that are substitutes have a positive XED

> As the price of good Y (Py) rises, the demand for good X (Qx) rises

> Examples:+ Hot dogs / Bratwurst+ Netflix / Blockbuster+ iPhone / Blackberry

> Take-away: differentiate!

CONFIDENTIAL 11

XED of product complements

> Two goods that complement each other show a negative XED

> As the price of good Y (Py) rises, the demand for good X (Qx) falls

> Examples:+ Hot dogs / Hot dog buns+ Movie tickets / Popcorn+ iPhone / Apps

> Take-away: leverage!

CONFIDENTIAL 12

XED of independent products

> Two goods that are independent have a zero cross elasticity of demand

> As the price of good Y (Py) rises, the demand for good X (Qx) is constant

> Examples:+ Hot dogs / Caskets+ Netflix / Legal Services+ iPhone / Fish Food

> Take-away: ignore!

CONFIDENTIAL 13

> Taking the principles of XED into account, our primary goals should be to:+ Differentiate from substitutes+ Leverage complements where possible

Summary

CONFIDENTIAL 14

INDUSTRY RELEVANCEWhat does this mean for me?

CONFIDENTIAL 15

> What does all this have to do with Android™?> Questions you may be (or should be) asking yourself:

+ How can Android™ allow me to better differentiate my offering?+ How can Android™ allow me to leverage complements?

Back to reality

CONFIDENTIAL 16

Android™ SWOT analysis

Strengths> Differentiate with quicker time-

to-market> Differentiate with higher-quality

UI> Leverage access to growing

community> Leverage commoditization of

application development

Weaknesses> Platform popularity might

weaken ability to differentiate> Susceptibility to fragmentation

effects> High learning curve for

platform (kernel) development> Cost of change> Not real-time

CONFIDENTIAL 17

How should the recent increased rate of Android™ adoption impact your software strategy?

> Use Android™ if you want a nicely-packaged mobile software suite that enables fast application development and easy access to a rich developer community.

> Don’t use Android™ if you are worried about fragmentation effects, are designing a hard real-time system, or determine that the cost of change is too high.

Concluding remarks

CONFIDENTIAL 18

Thank you