Rise of the Tablet PC and the need for Extremely Modular Tablets

STRATEGIC
WHITE PAPER
Rise of the Tablet PC
and the need for TAKEAWAYS
Extremely Modular
• Reduced Technology
Tablets Obsolescence

• Lower Cost
Executive Overview
• Faster To Market

by Stephen Carpenter • Customized to End
and Patrick Seaman Users Needs
March 2013
• Maximizes Application
Software Features

Pepperwood Partners© All Rights Reserved February 2013 Page 1

Topics in this White Paper
 Introduction 3  Airline Use Case: Odem™ Core 21

 Death of the PC 4  Flight Crew 22
 Flight Attendants 23
 Rise of the Tablet Market 5
 In-Flight Entertainment 24
 Ticket Counter Check-In 25
 Consumer Market 9
 Gate Agents 26

 Ruggedized Market 10  Private Club 27
 Maintenance 28
 Rugged & Commercial 11  Ground Support 29

 Time to Market 14  Summary & Conclusions 30

 Modular: The Tablet Evolved 17  References 32

 Example Modules & Options 19  About the Authors 33

 Prospective Markets 20  About Pepperwood Partners 35

Pepperwood Partners© All Rights Reserved March 2013 Page 2

Introduction
This white paper discusses the fast growing Tablet
PC market and presents the case for a relatively
unexplored new market segment – that for an odem
Core
extremely modular Tablet PC design that can be
quickly augmented / upgraded / updated with
specialized features such as sensors, special
electronics, additional
processors, GPUs, memory, communications
devices, etc.

Included are both general industry background and
analysis, as well as speculative and forward
looking statements regarding market prospects for
the odem™ Extremely Modular Tablet PC from
Entegra Technologies.

Death of the PC
The much heralded “Death of the PC” has
been proclaimed by many analysts. IDC and
Gartner report that PC shipments fell in Q3
2012 more than 8% from a year earlier,1 and
4.9% in Q4.2 On the other hand, the industry
moved 350 million units in 2012.3

Many blame tablets, mobile and other factors.
Other factors include the success of the PC
platform itself – that even 5-7 year-old PC’s
are often “good enough” for casual consumers
who mostly browse the internet, do social Gordon Moore, Intel co-founder
postulated that the number of
media like Facebook or Pinterest and watch transistors on integrated circuits
default-resolution YouTube videos. doubles about every two years. This
is often generalized as “computing
power” doubles roughly every 18-24
Old processors are still OK for everyday use months.


Rise of the Tablet Market

While growth rate of traditional PC
sales have flatlined, Tablet sales
are rising fast.

The rapid growth of the consumer-
grade tablet market is led by Apple,
with a bevy of competitors running
versions of Microsoft Windows,
Google Chrome, Linux, Android
and other Operating systems.



Comparing tablet sales to
Notebooks, Business Insider
projects4 a 64% growth for
tablets -vs- a 5% decline
for notebooks.

NOTE: Growth in tablets has
also impacted sales of
printers and print media.
Morgan Stanley reports that
42% of tablet owners plan
to cancel subscriptions to
print newspapers.5 Figure 1: Global Tablet, Notebook & PC sales Forecast (IDC, Morgan Stanley) 6



Figure 2: Market share: Notebooks -vs- Tablets (NPD Displaysearch) 7


Forrester Research projects nearly 40 million tablet sales in the US in
2013, growing to 44 million by 2015.

Figure 3: Tablet Sales Forecast: 2010-2015 (Forrester Research) 8


Consumer Market
 Price range: $400 - $900+
 New models every 6 - 9 months
 Designed for consumers with some
crossover into commercial & military
applications
 Security risk using consumer grade
communications protocols
 Fragile – requires protective armored
cases
 Manufactured with specific features --
unable to repurpose to support business
or technology changes
 Mostly non-upgradable
 iOS, Android, Windows, Linux
 Weight 1.4 – 1.6 lbs


Ruggedized Market

 Price range: $2000 - $4000+
 New models every 12-18 months
after release of underlying
technology
 Ruggedized – MIL STD 810G;
IP65 & IP67
 High development costs to
configure to specific features
 Expensive to modify
 Android & Windows Operating
Systems
 Mostly non-upgradable core
 Weight 3.0 – 8.0 lbs


Rugged & Commercial

The “Rugged” or “Ruggedized”
market segment grew by 30.1%
over the year-ago-quarter,
experiencing double-digit growth
across all regions.9

Meanwhile, in 2012 there was
significant consolidation in the
more general category of “rugged
mobile” with Motorola Solution’s
acquisition of PSION10 and
Honeywell’s acquisition of
Intermec.11


Rugged & Commercial

The ruggedized market is under
pressure from the dramatic growth in
consumer tablets and their increasing
commoditization.

The availability of cheap consumer
tablets encourages experimentation
on the part of commercial / industrial
users.

While on the one hand this may
diminish demand for traditional
rugged products, it also has the effect
of validating the market for portable
hand held computing devices.


Rugged & Commercial
The fragility of consumer The growing
devices in a sophistication of users
commercial, industrial or pushes demand for more
military environments technologically up to
ultimately results in greater date, flexible and
demand for more rugged customizable designs.
devices.

DRS Technologies Xplore Technologiesd
Getac Multitouch


Time to Market

To build a Commercial-Grade and/or Ruggedized tablet, you generally
Start with “today’s” technology or technology standards, and engineer it
to become the desired product.

Sounds
great,
Testing Manufacturing
Off the shelf
is too fragile,
Go to the
drawing
Engineer the
design
Prototype
but….
doesn’t meet board, design
needs. new product


Time to Market

…but, this process takes 12-18 months. In today’s technology cycle, that
means the product that started-out being based on current technology is
a generation or two obsolete by the time the “New” ruggedized or
commercial version is available.

The
6-9 Months: 6-9 Months: PRODUCT IS
Engineering Design Verification 12-18
Validation & Test & Test MONTHS
OBSOLETE

Time to Market
The need for sturdy and even rugged tablets for commercial, industrial
and military purposes is clear. Fragile consumer-grade equipment may
be technologically advanced, but broken is broken.

12-18 MONTHS = TOO LONG.
There is a
growing need
Starting with
“today’s technology” to produce “New” Rugged / Custom Tablet
for a solution
a custom/rugged Tablet: Is based on 12-18 month-old tech:
with custom
6-9 Months: 6-9 Months: PRODUCT
Engineering Design 12-18
options &
Validation & Verification & MONTHS capabilities, is
Test Test OBSOLETE
sturdy enough,
upgradable, and
isn’t obsolete


Modular: The tablet evolved

New Market:
Modular

(Market size - Source: VDC Research Group)


Modular: The tablet evolved
A new approach is needed – a tablet suitable for commercial or military
and/or rugged use that is:
 Price range: $900 - $1,200+
(excluding modules)
 Shared Platform – leverage
technology across multiple use
cases
 Longer useful life – avoid early
obsolescence
 Designed for both commercial &
military users – Ruggedized IP66
 User upgradable / accessible
odem™ Extremely Modular Tablet PC
 Secure communications protocols Entegra Technologies

 Android & Windows
 Weight: 2.5 – 3.0 lbs.


Example Modules & Options
Modular tablets would typically Specialized modules & options
include standard options such as: desired include:
 Bar code / mag card readers  Custom / Military

 RFID / NFC  Secure Communications

 GPS / Location  Interchangeable
 Environmental Sensors
 Front and back cameras  Testing equipment
 Extended-life battery packs  Custom

 Bluetooth, WiFi, Cellular (LTE,  Integration with Enterprise Data
GSM, CDMA)
 Multiple operating system
options
 Multiple CPU options


Prospective Markets
The extremely modular
tablet is aimed at
markets where
consumer-grade or
simply rugged
equipment is
unsuitable, and a more
upgradable, updatable Airlines Restaurants
and expandable
solution is needed.

The slides that follow
describe a use case
for Airlines.

Healthcare CPG Retail

Airline Use Case: odem™ Core
Maintenance Flight Crew Check-In

Ground Support Gate Agents

odem

odem Core
Configured for each application

In-Flight Private Club Flight Attendants
Entertainment


FLIGHT CREW
FLIGHT CREW
Flight Crew
Tablet w/ Smart Dock & Desktop Dock
Functions:
• Reduce paper to one backup set per plane
• Pilot pre-flight check-in & planning
• Flight Plan, Flight Manual, Operating Manual
• Jeppesen and Luthansa Lido flight data Extra odem™ Features
• Controlled migration from Class 1 to Class 2
without equipment change • Wi-Fi, Cellular, GPS, Cyber
• Flight Deck Smart Dock Station Encryption
• Additional processing & memory for own
• NFC, Bar Code, Camera, CAC
ship real-time navigation (fast refresh)
Reader
• Virus Protection / Firewall
• Certified Interface Protection Device • Cockpit Smart Dock & Flight Ops
• Access to Gate Wi-Fi, ACARS, Iridium, 3G Docking Station
• Synchs tablet to multiple aircraft type
• M2M – Aircraft to Flight Ops – updates
tablet upon docking with aircraft

FLIGHT ATTENDANTS
Flight Attendants
FLIGHT ATTENDANTS
Tablet w/ Desktop Dock

Functions:

• Paperless Cabin – convert magazines &
catalogs to e-versions Extra odem™ Features
• Flight Crew / Passenger Interactions – • Wi-Fi, Cellular for
personalize the on-board experience with Supervisors
duty free, ordering meals, identifying VIP
& top tier passengers • GPS
• Bar Code
• Magnetic Card Swipe
• Camera


IN-FLIGHT ENT.

IN-FLIGHT ENTERTAINMENT In-Flight Entertainment
Tablet & Panel Mount

Functions:

• In-flight movies, web browsing, and other
customer interactions
• Place duty free orders, messages to/from flight
Extra odem™ Features
attendants
• Panel Mount – fixed in back of seat and can be • Wi-Fi
removable
• Bar Code
• Stand Alone – hand out tablets to premier
• Camera
customers
• Stylus


CHECK-IN
Check-In
TICKET COUNTER CHECK-IN
Tablet w/ Desktop Dock & Kiosk Panel Mount

Functions:

• Re-Invent Check-In Process (eliminate queues
and counters with roving agents) Extra odem™ Features
• Wi-Fi, GPS
• Enhanced CRM (identify VIPs and top tier flyers
• Cellular for Supervisors
and their preferences)
• 2D Bar Code
• Roving Agents (assist with bag track and trace)
• Passenger Re-accommodation • NFC
• Camera
• Desktop Dock at Counter
• Panel Mount – RJ45


GATE AGENTS
Gate Agents
GATE AGENTS
Functions:

• Re-Invent Boarding Process (eliminate queues
with roving agents) Extra odem™ Features
• Wi-Fi, GPS
• Enhanced CRM (identify VIPs and top tier flyers
and their preferences) • Cellular for Supervisors
• 2D Bar Code
• Roving Agents (assist with bag track and trace)
• Passenger Re-accommodation
• NFC
• Camera
• Desktop Dock at Counter
• Panel Mount – RJ45


PRIVATE CLUB
Private Club
PRIVATE CLUB

Functions:

• Watch movies, TV
• Internet Access
• Order food and drinks
• Wi-Fi
• Flight updates
• Stylus
• Tablet and/or Desktop Dock
• Magnetic Card Swipe, NFC
• Desktop Dock w/ keyboard
& mouse


MAINTENANCE
Maintenance
MAINTENANCE
Tablet w/ Mobile & Desktop Dock
Functions:

• Eliminate current paper logs and reports
• Real time reporting of aircraft maintenance
with ops and pilot

• Techs have complete maintenance manuals • Wi-Fi & Cellular Radios
and “how to” videos
• Bar Code, RFID, & NFC
• Use RFID and GPS to track
assets, location of tech, and status of repair • GPS

• Applies to line maintenance all the way up • Camera (front & back)
to heavy checks • Mobile Vehicle Mount
• Docking Station w/ keyboard & mouse

GROUND SUPPORT
Ground Support
GROUND SUPPORT
Tablet w/ Mobile Dock

Functions:

• Ground crews have instant access on where
and how to deploy around aircraft Extra odem™ Features
• Real time updates on baggage / cargo
loading – improves interaction with load • Wi-Fi & Cellular Radios
planning team • Bar Code, RFID, & NFC
• Use RFID and GPS to track assets (tugs), • GPS
ground crew, and other support equipment
• Camera (front & back)
• Mobile Vehicle Mount


Summary & Conclusions

 Extreme modularity is the new disruptive innovation that will
allow commercial and military users to transcend technology
advancements without having to replace the entire computing
device – Adaptable, Flexible, Upgradable

 Cost effective and rapid incremental end user specific
technology upgrades will now be possible with the modular
open hardware designs coming to market

 In the not too distant future, upgrading the processor in your
tablet computer will be as simple as replacing a postage stamp
size component on the main logic board


Summary & Conclusions

In the end, companies need a tablet that
fits in the undefined “white space” between
consumer and ruggedized tablets that
focuses on lower price, smaller size, less
weight, increased modularity, and longer
useful life.

Steve Carpenter, CEO
Entegra Technologies

References
1. http://online.wsj.com/article/SB10000872396390444657804578048981461803220.html
2. http://www.nextbigwhat.com/pc-sales-decline-tablets-soar-globally-297/
3. http://www.networkworld.com/news/2013/030513-why-moore39s-law-not-mobility-
267394.html?source=nww_rss
4. 4 - http://www.businessinsider.com/the-death-of-the-pc-tablet-sales-will-beat-notebook-sales-this-
year-2013-1
5. 5 - http://www.pcmag.com/article2/0,2817,2391553,00.asp
6. 6 - http://www.statista.com/statistics/183419/forecast-of-global-sales-of-pcs-by-category/
7. 7 - http://www.idc.com/getdoc.jsp?containerId=prUS23660312#.UQg4L-hNfo0
8. 8 - http://www.statista.com/statistics/200248/forecast-of-tablet-pc-sales-in-the-united-states-from-
2010-to-2015/
9. http://blog.vdcresearch.com/mobile_and_wireless/2012/09/growth-in-rugged-tablet-market-trying-to-
make-up-for-the-loss-in-others.html
10. http://finance.yahoo.com/news/motorola-solutions-completes-psion-acquisition-104317916--
finance.html
11. http://finance.yahoo.com/news/honeywell-acquire-intermec-600m-123622179.html


About the Authors

Steve Carpenter is President and CEO of
entegra technologies, with 36 years experience
building global organizations in information
technology services, healthcare technology
services, customer relationship management,
financial services, and retail media with
companies including Affiliated Computer
Services, ActionSystems, and MediaCart.
Contact Steve at steve@entegratec.com, and
www.linkedin.com/in/stephencarpenter.


About the Authors

Patrick Seaman is Chief Technology Advisor to
Pepperwood Partners and COO of the social
publishing platform company WhichBox Media.
Seaman is the former COO of the video
eCommerce company Cinsay, and former
Director of Technology at Broadcast.com. Patrick
serves on the Advisory Board of Kraftwurx Inc,
and Qples, Inc. and on the UT Dallas School of
Natural Sciences & Mathematics Advisory
Council, and is an IEEE member. Contact Patrick
at patrick@pepperwoodpartners.com,
patrick@patrickseaman.com and
www.linkedin.com/in/patrickseaman/.


About Pepperwood Partners

Pepperwood Partners is a boutique
investment banking advisory firm
headquartered in Dallas, Texas.
Pepperwood provides a suite of
investment banking advisory
services to businesses in the Two Lincoln Centre
technology, media, telecom, nanotec 5420 LBJ Freeway, Suite 535
hnology, energy and alternative Dallas, Texas 75240 USA
+1 214.442.6056
asset sectors. With a strong focus info@pepperwoodpartners.com
on institutional relationships in the
Russian, European, and CIS Learn more at:
regions, Pepperwood works with www.PepperwoodPartners.com
businesses to achieve capitalization
and growth objectives.


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