1) Prices of the standalone Tronn server and the Atlantic Bundle based on Status Quo Pricing Strategy used

by Atlan
Charge for hardware (Server), PESA free. Comparable - 2 basic Tronn servers with PESA vs 4 basic servers
Status Quo pricing (Bundle)
Price/server $1,538 FC (R&D) $ 2,000,000.00
Number of servers 2 SP $ 2,000.00
Markup 30% VC $ 1,538.00
Total Cost of bundle $3,998.80 BEQ 4329

2) Cost plus price

Assumptions from pg 6 note 5. PESA R&D costs to be paid off over 3 years. 50% attach rate with PESA
Total market (units) 50000 70000 92000
Market share 4% 9% 14%
Sales 2000 6300 12880
Sales with PESA (50%) 1000 3150 6440 10590 Sales with PESA

Tronn plus PESA Standalone server Tronn

Cost plus pricing - assume 30% markup Cost plus pricing - assume 30% markup
PESA Software Dev costs $2,000,000
Cost of Tronn Server $1,538 Cost of Tronn Server $1,538

Cost of PESA/ server

Cost of PESA/ server (R&D cost/ expected
(R&D cost/ expected sales) $188.86 sales) $188.86
Tronn plus PESA $1,727
30% cost plus price markup $2,244.91 Price of single bundle 30% cost plus price $2,244.91

Basic comparable bundle

2 servers plus PESA $4,489.83

3) EVC
Assumption: 4 tron servers with PESA = 2 zinc servers. 50-50 savings sharing with customers
EVC=Reference+Value differential
Reference price (4*Zinc) $ 6,800.00

Let's look at per server savings for ZINC and Tronn (2 Zinc = 1 Tronn)

Costs ZINC Tronn Differential

Electric $ 500.00 $ 250.00 $ 250.00
Software licensing $ 1,500.00 $ 750.00 $ 750.00
Labor ($80000/40 servers) $ 4,000.00 $ 2,000.00 $ 2,000.00
Total $ 6,000.00 $ 3,000.00 $ 3,000.00
50-50 savings shared with
customer $ 1,500.00
EVC $ 8,300.00

10% gain with customers $ 2,700.00

EVC $ 9,500.00
Strategy used by Atlantic Computers
asic servers

les with PESA

me 30% markup

Do we assume PESA costs here?