1. / 1 Charmed Technology Case Presentation Charmed Technology Case Presentation March 9, 2005 Jennifer Love Constance Chow Jackie Fisher Todd Nguyen

2. / 2 Charmed Technology Case Presentation Agenda Main Issues Recommendations based on Main Issue How Recommendation was derived Action plan for Launch Expected Results

3. / 3 Charmed Technology Case Presentation Problem: Whether or not to mainstream launch the CharmIT device Key Issues : Is the CharmIT wearable computer is ready for mainstream release Is the mainstream market ready for the CharmIT device If launched, how should the wearable computer be positioned, priced and promoted How should the company’s internal resources be allocated to ensure the greatest possible success for the CharmIT device

4. / 4 Charmed Technology Case Presentation Recommendations: Focus on product improvement and build credibility Expand Marketing and Sales team while reallocating Engineering staff Two Phase Product Launch — 1 st Generation limited launch targeted at Lead Users — 2 nd Generation mainstream launch targeted at New Economy Workers Position technology as a “Lifestyle Enhancing Device” and capitalize on Buzz marketing through unorthodox promotional events (ex: fashion shows) Launch 2 nd Generation in approximately 1 year — Create bundled CharmIT packages — Retail bundle for $2,500

5. / 5 Charmed Technology Case Presentation Interim Objective: Use 1 st Generation to improve technology, educate consumer and build credibility for the technology Benefits: Shortened Product Development Phase leading to a significantly improved product Provides time to expansion of application software Provides time for expansion of support networks Allows for reallocation of scarce resources Risks: May forfeit first mover advantage Product development make take longer Required Support networks will still have limited availability

6. / 6 Charmed Technology Case Presentation Final Objective Launch 2nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period Benefits: Leverage existing base of users and application programs Use of established and highly recognized software increases credibility of the technology and potential adaptation rate Rejected Alternative: Use of Nanix O/S and Applications Limited because device will only work with other Charmed devices No established user base of Nanix system (would have to create from scratch) Early adopters do not prefer the Nanix system

7. / 7 Charmed Technology Case Presentation Launch 2 nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period Benefits: Already positioned as a fashionable, trendy device in consumers minds Guerrilla and Buzz marketing for product have been successful in the past Unique point of differentiation – speaks to emotional instead of logical Easily relatable for consumer as a device which adds value through “enhancement” Rejected Alternative: Launched solely as a high technology oriented device Public adaptation curve would be greater Harder to educated consumer as they have to establish their own meaning/value for the product Final Objective

8. / 8 Charmed Technology Case Presentation Final Objective Launch 2 nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period Benefits: Disposable income to purchase the product More tolerant of ‘bugs’ in device Willing to provide valuable customer feedback to Charmed Rejected Alternative 1: Focus on Gamers Too much of a niche market to start and not trendy enough to stimulate critical mass purchasing Rejected Alternative 2: Focus on Wall Street People Will not tolerate any bugs in systems Rejected Alternative 3: Focus on University Students No disposable income for such purchase May not be able to completely replace a PC at this time in development

9. / 9 Charmed Technology Case Presentation Final Objective Launch 2 nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period Benefits: Provides time to alleviate product bugs and improve product offerings Opportunity for customer feedback Allows Re-engineering of technology and packaging based on feedback – increases likelihood of adoption Allows more time for the expansion of support networks Rejected Alternative: Immediate Mainstream Launch Serious issues concerns about bugs and limited application offerings Very little promotion on the product currently Environment is not ready to support a wireless device (very few blue tooth enabled devices)

10. / 10 Charmed Technology Case Presentation Implementation Short Term (next 3 months) Continue sale of 1st generation device and encourage customer feedback Restructure internal resources around product and application development Discontinue all investment in Nanix Medium Term (3- 12 months) Hire Marketing VP and Sales Director Test Windows compatible applications on system Invest in ensuring product’s wireless connectivity is functional Create partnership strategies with 3rd party peripheral device suppliers for an “all-in-one” product offering

11. / 11 Charmed Technology Case Presentation Implementation One Year and Beyond Launch sleek and trendy bluetooth enabled 2nd generation device targeting “new economy” workers Expand current promotions to include fashion as well as mainstream magazine. Use unorthodox promotional strategies that highlight product design and functionality ex: fashion shows Distribute via web and high-end electronic/computer stores Monitor sales and continue to improve functionality of product Launch “new and improved versions” annually and expand target segment to include “Wall Street” and “Gamers” segment

12. / 12 Charmed Technology Case Presentation 2 nd Generation Device Upon Launch Product Bundled product that includes all required (one stop shopping) Peripherals purchased in bulk from supplier at a discounted price and bundled with CharmIT device to be sold to consumer Small and Sleek and new age design Wireless connectivity and Bluetooth technology are standard features Product is highly compatible with Windows and most mainstream applications Price Retail price including peripherals should be $2,500 Competitive with other manufactures who create specialized products Positions product as a premium while managing consumer price/value expectations

13. / 13 Charmed Technology Case Presentation 2 nd Generation Device Upon Launch Promotion Promote as a fashionable device that enhances ones overall lifestyle Focus promotion on popular mainstream and fashion magazines ex: Times and G.Q. Distribution Discontinue 5 purchase unit minimum Continue to leverage the website and expand sales to high-end retail electronic and computer stores

14. / 14 Charmed Technology Case Presentation 2 nd Generation Device Upon Launch Market Position Sell a fashionable and technologically credible product that lives up to the performance claims stated by the organization i.e. enhances users lives Sales Volume Expected that 4,800 units will be sold at a retail value of $2,500 Expected volumes are lower than projected due to micro segmentation Revenue Revenue potential is expected to be $12 million in first year of launch

15. / 15 Charmed Technology Case Presentation Financial Projections