1d: SwiftTech Communications – rugged phones
After team discussion, we decided to position the new product as an ethical and sustainable rugged phone. Thus, or SOM would be everyone who is an outdoor enthusiast and values tech ethics and sustainability. Expanding outwards, our SAM would be everyone who is considered as an outdoor enthusiast and demand a good quality rugged smartphone with newest relevant innovations and tech features. Lastly, our TAM would be everyone who is a smartphone user who may love the high quality phone with an affordable price.
TAM: all smartphone users * expected price of the rugged phone
Since the global population is around 8 billion, and the smartphone penetration rate is about 67.5%, the total number of global smartphone users is around 5.5 billion. And as an usual smartphone costs about $1000 dollars, we hope to price our rugged phone to 50% of that price to align with SwiftTech’s competitive advantage of offering high-quality and affordable products to its customers. If we assume the average lifetime of our high-quality rugged smartphone is about 5 years, then TAM would be $2.5 trillion/5 = $0.5 trillion or $500 billion annually.
SAM: TAM * percentage of outdoor enthusiasts
Say 10% of US pop considers themselves “very outdoorsy”, that’s about 37.5 million people. If we extrapolate that figure worldwide using the same metric of 5.5 billion smartphone users, we end up with a SAM of $50 billion annually.
SOM: SAM * percentage of people who value ethics and sustainability
The only reason we could see users choosing our brand over a big tech brand that has been well-established in the smartphone market (Apple, Google, etc.) is if we are more ethical and/or sustainable than those companies. We were thinking along the lines of why people would pick Patagonia over North Face: because the company is known to be more ethical and sustainable so it draws users even though the products are very similar. We believe that because big tech companies have reputations for being unethical, users who care about sustainability or ethics might be more willing to buy our product. Thus we believe a very solid and predictable SOM for this new product would be about $0.5-1 billion annually. The SOM is also reasonable if we benchmark this number with SwiftTech’s current annual revenue of $800 million.
