E Ink Case Preparation Questions

E Ink Case Preparation Questions

1. What did E Ink do right? What did it do wrong?

E Ink's decision to abandon its multi-product focus and to bundle all efforts to meet the quality expectation of Sony was a very smart move. This strategy not only provided E Ink with a first considerable economic success, but also allowed the company to gain wide-spread publicity in the media, and, as a result, various new potential customers as well as general interest in E Ink's technology. Another smart decision was the acceptance of government funding, given E Ink's cash flow problems at the time.

Considering the company's history, one disadvantageous aspect is E Ink's tendency to spread its development efforts too thin - both initially and after its first commercial success. In both instances, there were too many "open threads", preventing the company from focusing on a single application, and thus from capitalizing / establishing a sustainable competitive advantage within a single product field. Furthermore, I personally believe that E Ink current setup does not allow for enough control over the final product itself: without controlling the display production process completely, E Ink is exposed to the risk of another company creating a bad product, which would ultimately reflect poorly on the E Ink brand.

2. As a VC, would you invest? Why or why not?

At the current point in time, for a variety of reasons, I would not invest in E Ink. Firstly, I believe that there are too many investors as well as too many stakeholders already, resulting in too much uncertainty. For example, the company started a joint venture with Toppan, a company active in the printing market. This relationship could potentially result in conflict of interest, depending on the future directions of E Ink and the publishing industry. Secondly, it appears to be unclear where the company is going next, as it is currently considering both a focus on the eBook industry as well as an entrance of the segmented display market. Both seem feasible, however, given the low and predictable margins of the segmented market, I, as a VC, would be more interested in the eBook industry. Finally, as mentioned before, there is also the consideration as to whether or not an "E Ink" brand can be established, given the current delivery structure. Unless the company takes control and is able to "brand" the entire process of the display manufacturing process as "E Ink", I would not be confident in the establishment of the brand in the medium- to long-run, given all the uncertainty that comes along with collaborating with 3rd parties.

3. Which markets should the execs focus on?

As always in life, it depends. If funding, i.e. the survival of the company can be assured to additional