EXECUTIVE SUMMARY

Feeding what is now a multimillion dollar industry, the tablet pc, or tablet, has been

around since the 1990’s. Only recently, however, has the market shown such incredible

potential. As professional and recreational demand for tablets grows it is apparent the legal

industry is critically lacking in technological advancements. Tabula Rasa is interested in bridging

this gap in the legal industry by providing a legal-industry based tablet designed to provide

digital, wireless access to the immense amount of critical information available to the legal

professional; such as Magistrate Benchbooks. Our tablet will not only allow benchbook access,

it will have many tablet-optimized features to keep the legal profession informed during travel.

Tabula Rasa (“blank slate”) is a 4G (fastest wireless data network currently available),

dynamic, mobile tablet that will fill the void for the legal and judicial markets, where

competition has yet to take hold. We propose that our company take advantage of this

opportunity by developing the Tabula Rasa tablet. We are estimating project costs to total

$484,877 (including overhead). The project team recommends beginning production of this

exciting new legal tablet and hit the market while others are napping in accordance with this

proposal.

Tabula Rasa expects to sell tablets with a retail price of $700 per tablet. Production cost

is estimated at approximately $450 each. We are expecting Tabula Rasa to have about 1 million

buyers over a three year period, and thus have a $250 million return on investment. With an

increasing demand for a more dynamic approach to accessing legal information and the

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continued need for technological growth in the judicial system, Tabula Rasa is sure to be the #1

resource for the legal and judicial profession’s digital needs.

MARKET EVALUATION

After careful consideration of the steps required for this project, the Tabula Rasa project

team has assembled and prepared all of their findings on the industry, consumer research,

market trends, competition, project planning, and financial analysis for market feasibility. The

Tabula Rasa team believes the time is ripe for taking this project from conceptual design to the

market place in as timely a manner as possible. The legal and judicial device market is primed

for profession-specific, technologically advanced tablets and the team expects to make great

strides in bridging this critical gap for the specified professions.

For this product, Tabula Rasa is focusing on the customer. We have personnel

dedicated to performing data analysis on what the customer wants and what we anticipate

they might need. We have selectively approached attorneys’ offices in several large

metropolitan cities, outlining what we anticipate offering, and factoring in their critiques. In

addition, we intend to provide post-sales surveys to customers and hope to capture and

implement their ideas for improvement, thereby making our products better and more

marketable for the future.

The tablet industry has been around since the 1990s. However, there are few

competitors in this multi-million dollar a year industry. In the final three months of 2010, Apple

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recorded sales of 7.3 million iPads for $4.61 billion in revenue (Long, 2011). Apple’s iPad, iOS

(formerly known as iPhone), and iPod Touch have revolutionized the way people do business.

The anticipated future market potential is staggering as people working in the legal

industry exist in nearly every city, county, and state within the US and Canada; and they have

vast amounts of information to reference. Any tool that speeds that process is highly valuable

to what is largely a wealthy market mostly unaffected by economic swings. In addition, the

company can capitalize on the untapped international market once the product is established.

According to the American Bar Association, the total number of lawyers alone in America is now

about 1.14 million (Karni, 2007); factor in the number of supporting legal staff and judicial

employees and the significant market opportunity is readily apparent.

PROJECT DESCRIPTION

The project is broken down into 5 major phases over 34 weeks: Market Feasibility,

Hardware Design, Software Design, Legal Industry Specifics, and Accessories. The Market

Feasibility portion is designed to provide the project stakeholders with the detailed critical

information they need to approve going forward with the project without risking significant

costs. Once the decision is made to move forward with the project, all other phases continue in

near parallel execution. See Appendix 1 for the complete WBS and Appendix 2 for the schedule.

The Tabula Rasa project envisions a dynamic, mobile tablet device based on the Android

OS, similar to the multi-faceted iPad. Our product differentiates from competing offerings by

focusing on the legal and judicial markets. Target users will be paralegals, attorneys, judges,

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and other legal system personnel. This project is expected to transform current Magistrate

Benchbooks from electronically formatted documents to an application accessible via our tablet

with functionality beyond what is available today. Tabula Rasa will fill the current void in the

legal market. The project will develop and host a Customized User Interface and server

technologies to include, at minimum, benchbook table of contents, basic search capability,

remembered historical searches and customized searches, plus all the other capabilities

expected of a tablet: email, Internet, word processing, instant communications, and more.

Beyond access to legal benchbooks, Tabula Rasa customers should expect one-touch

access to perform application (aka “app”) multi-tasking to a variety of iPad-like favorite apps by

taking advantage of the Android operating system and the existing Android market. Access to

these Apps is expected to allow attorneys on the road to remain connected to the rest of the

world and their desired legal information with what must prove to be a state-of-the-art tablet.

Naturally, corporate controls will be implemented to allow IT department control over user

permissions in larger corporate environments. We anticipate designing, testing, and developing

our own hardware, applications, and accessories to make this project successful. Based on

initial market feasibility analysis, there is little competition in the legal tablet marketplace and

initial indications from third-party analysts point to a profitable return on investment.

COST ESTIMATE

Table 1 shows the breakdown of the costs on the project for each of the 44 bottom-level

tasks included in this project. As the majority of product costs are determined by an

outsourced manufacturer, the project costs listed are primarily labor costs. See the Advanced

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Cost Estimate section for detail on the manufacturer’s quote. See Appendix 1 for the complete

task structure and Appendix 2 files for complete resource listing and assumptions. All tasks are

assumed to be labor costs unless denoted otherwise. Total Project Cost is currently estimated

at $484,877.

Table 1 – Bottom Level Task CostsTask Cost

1.1.1.1 Perform Data Analysis $4,0001.1.1.2 Interview Potential Customers – 60% Material $10,0001.1.2.1 Perform Trend Analysis $6,0001.1.2.2 Compile Findings $1,0001.1.3.1 Execute Internet Searches $2,0001.1.3.2 Document Results $1,0001.1.4.1 Calculate Projected Costs $1,0001.1.4.2 Calculate Expected ROI $2,0001.1.5.1 Assemble All Findings $4,2501.1.5.2 Prepare Findings $4,2501.3.1.1 Consumer Ergonomic Evaluation – 82% Material $15,8001.3.1.2 Ergonomic Design Recommendations $1,8001.3.1.3 Form Factor Design – 30% Material $24,7001.3.1.4 Feature Selection $4,0001.3.2.1.1.1 Core Components Selection $28,0001.3.2.1.1.2 Connectivity Solutions $8,8001.3.2.1.2 Motherboard Integration – 22% Material $21,8001.3.2.2 Final Design Review $8,1001.3.3 Manufacturing Plant Selection – 33% Travel $15,0001.4.1.1 Brainstorm Desired Applications $16,9201.4.1.2 Create Applications $84,6001.4.1.3 Test Applications – 3% Material $29,2001.4.2.1 Integrate All Applications and CUI $13,2001.4.2.2 Load Testing – 6% Material $17,4001.4.3 Final Integration & Testing – 6% Material $15,8001.5.1 Software licensing – 99% Material $5,0601.5.2.1 Develop CUI Requirements $7,1001.5.2.2 Develop CUI $6,0001.5.2.3 CUI Hosting $5,2001.5.2.4 CUI Testing $11,2001.5.3.1 Convert files $5,2001.5.3.2 Hyperlinking citations $5,2001.5.3.3 HTML Formatting $1,7601.5.4 CUI Maintenance $3301.6.1.1 Device Protection $4,0001.6.1.2.1 Power Adapters $4,0001.6.1.2.2 Interface Adapters $4,0001.6.1.3 Device Docking $4,0001.6.1.4 Creative Accessories $4,0001.6.2 Invite/Poll Accessory Manufacturers $8,0001.6.3 Consumer Reviews $4,0001.6.4 Marketability $4,000

Project Cost before Overhead: $423,670

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Overhead costs are calculated using the

company’s expected overall overhead for the

year, prorating for the portion of the year

consumed by the project, and dividing according

to the overhead responsibility in relation to the

other projects underway in the company. Estimated overhead for the entire company for the

year is $150,000. Factoring in project duration of 34 weeks produces $98,077 and factoring a

25% overhead responsibility rate (based on company resource usage) yields $0.16 per dollar of

labor. The resulting overhead cost for $374,440 of projected labor is $61,207. Therefore, total

project cost spread over the project lifetime is $484,877. With expected sales of 1 million units,

project cost per unit is $0.48 Refer to Table 2 for specifics. See the next section for production

cost details.

ADVANCED COST ESTIMATE

Project costs are forecasted with current employee salary rates and estimates based on

prior projects. As the end-product will be manufactured by an outsourced manufacturer, the

majority of overall production cost estimates are determined by the quote provided by the

manufacturer based on the initial specifications determined by the project team. Included with

the manufacturer’s product cost is a breakdown of major components and their sensitivity to

market forces. The contingency estimates are shown below. In essence, this method illustrates

which elements of the project are subject to price fluctuations and uses a standardized

contingency methodology to estimate the worst-case estimate of price increases. Table 3

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Table 2 – Overhead Impact on Project CostAnnual Overhead: $150,000

34 of 52 Weeks: $98,07725% of Overhead Rate: $0.16

Total Project Overhead: $61,207Project Cost: $423,670

Total Project Cost: $484,877Total Project Cost Per Unit: $0.48

illustrates the specific materials that have price fluctuations and Table 4 illustrates how much

each category is expected to fluctuate. Table 5 summarizes the differences between expected

costs and worst-case costs. The highest price sensitivity is in the IPS (In-Plane Switching) screen,

copper, and silicon. IPS is the latest screen technology and as such, availability fluctuates

significantly. Bottom line, expected profit remains at $250 million while worst case profit is at a

still sizeable $115.15 million.

Table 3 – Advanced Cost Estimate Categories (Contingency Estimation)

Item Quote Cost Category

IPS Screen $ 120.00 Order of Magnitude (market price)

Copper $ 75.00 Order of Magnitude (market price)

Silicon $ 12.00 Order of Magnitude (market price)

Processor $ 50.00 Budget (existing supplier)

Memory (RAM) $ 45.00 Budget (existing supplier)

Fixed Memory (DRAM) $ 14.00 Budget (existing supplier)

Other Parts $ 3.00 Definitive (market standards)

Case $ 6.00 Budget (existing supplier)

Labor $ 100.00 Definitive (based on current personnel rates)

Packing and shipping $ 25.00 Definitive (fixed cost based on shipping rates)

Total cost for 1 tablet $ 450.00  Manufacturer’s Quote

Table 4 – Adjustment Rates for Contingency Categories

Category Adjustment Base Cost Adjusted

Order of Magnitude -25%, +50% $ 207.00 $ 310.50Budget -10%, +20% $ 128.00 $ 153.60

Definitive -5%, +5% $ 115.00 $ 120.75Total $ 450.00 $ 584.85

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Table 5 – Expected Cost vs Worst Case CostsExpected Worst Case

Sale Price: $ 700.00 $ 700.00Adjusted Total*: $ 450.48 $ 584.93Per Tablet Profit: $ 249.52 $ 115.15

Total 3-year Profit: $250M $115.15M*-includes Total Project Cost Per Unit

COST ASSUMPTIONS

This documents the assumptions used to quantify materials and unit costs for the

Preliminary Cost Estimate prepared for the Tabula Rasa Legal Industry Tablet Project.

Costs are assumed for manufacturing 1,000,000 tablets.

Each customer would purchase a maintenance package to accompany the benchbook

material annually and has been priced accordingly in our estimates.

Customers who purchase the Tabula Rasa would be required to gain access to the

internet through one of the recommended providers at their own cost.

Only data included in the benchbook will be converted to the CUI on the Tablet, no

additional legislative material, cases, or other legal material is included in the

conversion costs.

Overhead is estimated based on $150,000 per year for the entire organization. Our

project will consume 25% of the overhead for a time period of 34 weeks, and is

therefore estimated at $61,207. (Detailed calculations can be found in the Cost

Estimate section of this document)

Current manufacturer’s price has been assumed for the IPS (In-Plane switching) unit

within the Tablet.

Copper and Silicon are also assumed to be valued at current market price.

GENERAL ASSUMPTIONS:

Market Feasibility assumes a strong desire by the legal community to find a way to use

electronically available features to increase effectiveness. Our assumptions would include the

assumption that our lower price point of Tabula Rasa will inspire the legal community and

generate demand.

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Hardware Design assumptions would consider that the tablet is manufactured to include

wireless adapter for Internet and local network connection necessary for this type of

equipment. The design would use the same hardware as other tablets. It would include the

minimum hardware requirements included in the systems requirements documentation. This

includes processors, memory, screen resolution and other particulars.

Software Design assumes that the tablet is running on the Android operating system and

meets all the minimum software requirements included in the system requirements

documentation.

Legal Industry Design Assumptions include that the data received for the particular

benchbook to be converted is inclusive and in a readable format. Each request for a different

benchbook would be a separate add-on to the tablet.

FINANCIAL ANALYSIS

The categories in the financial breakdown are salaries, material parts, travel, and

overhead. These four main categories comprise the costs of the entire project. The company

expects to spend $450.48 to build one tablet with the

assumption of 1 million tablets sold. At a $700 price point, we

estimate 1 million people will purchase our product over a

period of three years for total revenue of $700 million, or

$233.3 million annually. Estimated cost to produce one tablet is $450, or $450 million for 1

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Table 6 – Project Costs

Category PriceLabor $374,440

Material $35,730Travel $13,500

Overhead $61,207Total: $484,877

million tablets. Thus, the projected gain on investment is approximately $250 million over a 3

year period, or a 55.6% return on investment.

Table 7 – Return on Investment Calculator

Return on Investment Calculator

Original Investment ($) $450 MInvestment Start Date 4/1/2011

Returned Value ($) $700 M

Investment End Date 4/1/2014

Calculator Results:

Gain or Loss on Investment ($) $250 M

Investment Term (Years) 3.0

Return on Investment (%) 55.6%

Simple Annualized ROI (%) 18.5%

The project team cost planning is based on the Product Cost Planning process to

understand the cost of supplies, parts, and

suppliers. An operating cycle for a company

must also consider the purchasing of raw

materials if starting a new product,

investing in inventory, and creating

accounts receivables with extended

credit. Examples of tracing and

displaying different requirements are: using standard cost estimate that has been released for

material valuation and to calculate the costs of sales that have been reconciled with financial

accounting for the goods issue key day; they calculate the contribution margins for group

production costs and then valuate sold products using group costing. To the right is Figure 1

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Figure 1 - Product Cost Planning

highlighting the process in which the project uses the combination of the costing key and the

assignment of the costing key to characteristics (Valuation).

The Net Present Value (or NPV) as calculated using the formula in

Figure 2) of the Tabula Rasa project, assuming an 8% discount rate

produces results as shown in Table 8 for the next 3 years. This means that

in today’s value of money, the Tabula Rasa project would yield $214.2M over the course of the

next three years (Anthes). Table 9 illustrates the NPV for the same period assuming worst case

revenues from the contingency estimates results in profit of $98.4M.

Table 8 - Net Present Value per Year of OperationsYears

ElapsedCash Inflow Cash Outflow Cash Flow Discount

RatePresent Value

0 $0 $484,877 -$484,877 8% $ (484,877)

1 $233,333,333 $150,000,000 $83,333,333

8% $ 77,160,494

2 $233,333,333 $150,000,000 $83,333,333

8% $ 71,444,902

3 $233,333,333 $150,000,000 $83,333,333

8% $ 66,152,687

Based on $450M annual cost NPV: $ 214,273,238

Table 9 - Net Present Value per Year of Operations (Worst Case)Years

ElapsedCash Inflow Cash Outflow Cash Flow Discount

RatePresent Value

0 $0 $484,877 -$484,877 8% $ (484,877)1 $233,333,333 $194,950,000 $38,383,333 8% $ 35,540,1232 $233,333,333 $194,950,000 $38,383,333 8% $ 32,907,5223 $233,333,333 $194,950,000 $38,383,333 8% $ 30,469,928

Based on $584.4M annual cost NPV: $ 98,432,729

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Figure 1 - NPV Formula

CONCLUSION

Tabula Rasa will make a name for the company by capitalizing on an untapped industry

worth millions by serving the needs of legal and judicial professionals around the world.

Cost/Benefit analysis indicates that the project will produce significant corporate profit and fuel

future growth. Contingency costing makes clear that even worst case market prices would still

yield a sizeable profit. Bottom line: clearly, the Tabula Rasa project would be good for the

health of the company.

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APPENDIX 1 - WORK BREAKDOWN STRUCTURE

1. Tabula Rasa – Legal Industry Tablet1.1. Market Feasibility

1.1.1. Establish Market Feasibility1.1.1.1. Perform Data Analysis1.1.1.2. Interview Potential Customers

1.1.2. Review Market Trends1.1.2.1. Perform Trend Analysis1.1.2.2. Compile Findings

1.1.3. Research Competition1.1.3.1. Execute Internet Searches1.1.3.2. Document Results

1.1.4. Profitability Analysis1.1.4.1. Calculate Costs1.1.4.2. Calculate Expected ROI

1.1.5. Market Evaluation1.1.5.1. Assemble All Findings1.1.5.2. Prepare Findings1.1.5.3. Submit Market Feasibility (Milestone)

1.2. Project Approval Decision1.3. Hardware Design

1.3.1. Consumer Experience1.3.1.1. Consumer Ergonomic Evaluation1.3.1.2. Ergonomic Design Recommendations 1.3.1.3. Form Factor Design1.3.1.4. Feature Selection

1.3.2. Specifications1.3.2.1. Internal Design/Integration

1.3.2.1.1. Component/Supplier Selection1.3.2.1.1.1. Core Components Selection1.3.2.1.1.2. Connectivity Solutions

1.3.2.1.2. Motherboard Integration1.3.2.2. Final Design Review

1.3.3. Manufacturing Plant Selection1.4. Software Design

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1.4.1. Custom Software Design1.4.1.1. Brainstorm Desired Applications1.4.1.2. Create Applications1.4.1.3. Test Applications

1.4.2. Application Integration1.4.2.1. Integrate All Applications and CUI1.4.2.2. Load Testing

1.4.3. Final Integration & Testing1.5. Legal industry Design Particulars

1.5.1. Software licensing1.5.2. Develop Custom User Interface (CUI)

1.5.2.1. Develop CUI Requirements1.5.2.2. Develop CUI1.5.2.3. CUI Hosting1.5.2.4. CUI Testing

1.5.3. Document Conversion1.5.3.1. Converting files1.5.3.2. Hyperlinking citations1.5.3.3. HTML Formatting

1.5.4. CUI Maintenance1.6. Accessories

1.6.1. Determine Accessory Product Lines1.6.1.1. Device Protection1.6.1.2. Device Connectivity/Compatibility

1.6.1.2.1. Power Adapters1.6.1.2.2. Interface Adapters

1.6.1.3. Device Docking 1.6.1.4. Creative Accessories

1.6.2. Invite/Poll Accessory Manufacturers1.6.3. Consumer Reviews1.6.4. Marketability

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APPENDIX 2

Tabula Rasa MS Project File (2010 version)

Tabula Rasa MS Project File (2007 version)

Tabula Rasa WBS Drawing (Visio 2010)

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REFERENCES

Anthes, Gary. (2003). Computer World, “ROI Guide: Net Present Value”, Retrieved from

http://www.computerworld.com/s/article/78530/ROI_Guide_Net_Present_Value

Karni, Annie. 2007. The New York Sun. “Tidal Wave of Lawyers nears, Bar Data Forewarn”.

Retrieved from http://www.nysun.com/new-york/tidal-wave-of-lawyers-nears-bar-data-

forewarn/67423/

Long, M. (2011). Strong iPad Sales Drive Apple’s Huge Revenue Gain. Yahoo! News. Retrieved

from http://news.yahoo.com/s/nf/20110119/tc_nf/76970

Kimley-Hom and Associates, Inc. (2010) Intelligent Transportation System Strategic Deployment

Plan update, “Final Cost Estimate Report,”

SAP Library Profitability Analysis; “Valuation Using Material Cost Estimates,” found at

http://helps.sap.com/saphelp_46C/helpdata/en7a

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