ATLANTIC COMPUTERS

Submitted by: Saravana Kumar Riddhee Gosar Navin Todur Adil Naik Mohammed Oovais

Introduction
Atlantic Computer was the largest player in the computer industry It was the largest manufacturer of servers and high end products Its server division built a reputation for high quality and reliable products They developed the Atlantic Bundle (ie Tronn server and the PESA software tool)

 The software tool PESA would allow Tronn to perform upto four times faster than its standard speed It was specifically designed to make frequently requested information ie ( files and data) extremely accessible They catered to two main market segments: High Performance Servers for complex appliations like SCM and ERP Basic Servers to perform simple repetitive tasks like computing and showing websites info etc

Customers
Daytraderjournal.com Requirement: Web server Look Sharp Advertising Requirement: File Server HGIDMM Requirement: High performance server
Application High performance Graphic Applications Enterprise Applications E-Mail Applications File Sharing Web Servers Tronn with PESA 180 280 264 341 812 2222 Tron without PESA 187 281 254 300 404 542 Performance 96% 100% 104% 114% 201% 410%

Available options for pricing strategy

Status quo pricing Competition based pricing Cost plus pricing Value in use pricing

Status Quo
$2000 per server Profit 30% per serve Offer PESA free of charge Loss of $20,00,000 spent on developing PESA Product may seem equivalent to Ontarios Zink, and will have to compete for market share. Not a very good option.

Competition based
$3400 per server Profit 121% Too high price than that of competitors. Difficult to explain the increase in performance as compared to increase in cost Customers may not buy servers as per projection Not a very good option.

Cost plus pricing

$2246 per server PESA charged at $246 per server PESA development recovered Zink can reduce the price of its servers to compete

Value in use
$3200 per server Profit 108% Value to the customer Annual savings to customer $1200 Atlantic Bundle needs to be projected as a new product with high value addition one basic server with 4 times speed Additional savings can be shown to customers by comparing 4 Zink server costs with 1 Atlantic Bundle cost.

Pricing Adopted
Value based pricing for customers with file sharing and web server and email application needs only. High profit Savings to the customer in terms
Fewer servers purchased Savings $1400/server purchased Reduction in cost of applications savings $750/server Savings in power $250/server

We can reduce price to counter competition It should be released as a server which is 4 times faster rather than a server with a performance enhancement tool. Competition Based pricing method will generate more profit per unit than any other method; however, it will not allow Atlantic Computers to fully demonstrate, in monetary terms, the true value of the Atlantic Bundle

Which market should be targeted ?

Companies that do a lot of WEB HOSTING. It is when the Tronn Server is acting as a web-server and coupled with PESA that the Atlantic Bundle is capable of realizing its true potential of being 4 times as fast as the basic server.

Those companies who do a lot of FILE SHARING would also benefit from the Atlantic Bundle it would still enjoy an increase in performance equivalent to 2 basic servers

Cadenas sales force Reaction

Sales force to be trained for explaining the benefits to the customer and promote it as a separate product. Do not emphasis on the point of PESA as a performance booster given free rather promote it as a fast server 1 Tronn with PESA comparable to 2 Zinks for File Sharing Servers 4 Zinks for Web Servers

Customer Reaction
At first, customers are likely to question Atlantic Computers reasoning for deviating from the tradition of providing performance enhancing/monitoring tools for free. This may be one of the more difficult tasks associated with pricing the Atlantic Bundle. Atlantic Computers will have to demonstrate to customers that the PESA software tool essentially doubles and possible quadruples the number of basic Tronn servers. They will need to emphasize that not only are they saving on the number of servers they will need to purchase, but they will also save on other costs. Atlantic Computers will also need to emphasize that it will continue to provide excellent service after purchase and provide customers with peace of mind.

Zinks senior management reaction

Short run vs. Long Run After the first year, it is projected that the Atlantic Bundle will only take approximately 4% of the market share of the basic share market. It is unlikely that Ontario would be concerned at this time and would not take any steps to counter-act. It would take until at least the second year and likely the third year before Ontario would begin to take action. At this moment, Ontarios reaction would be to lower prices in order to stop market loss. Of course, Ontario will only be able to lower prices for a short period of time before such actions begin to drastically decrease their profits. Ontario will likely begin to copy the PESA software and begin to include it in their Zink server packages. At this time, Atlantic Computers will have recouped much of the research and development costs associated with PESA and can begin to include the software as part of the Atlantic Bundle at no charge.

THANK YOU