Brand Valuation for IOT (Internet of Things)
Based on the annual report for 2013, the Internet of Things (IOT) accounts for only 4% of Intel's total revenue. Being in the infancy stage cycle, this segment of the business is set to grow immensely over the next few years. In 2013, Intel registered a 12.5% revenue growth in the IOT segment. Based on the amount of R&D they are putting to grow the business, we have conservatively forecasted a CAGR of 16% for the next 5 years.
Manufacturing - We gave an RBI of 90% for this segment because the Intel brand justifies quality, performance and reliability - the three most desirable characteristics required to operate successfully in a supply chain and/or software manufacturing company. Furthermore, Intel has for many years operated in the manufacturing sector as a market leader and is the biggest segment in Intel portfolio.
Medical - We gave an RBI of 80% for this segment because the Intel brand justifies responsiveness, stability and performance, which is a desirable factor to have to operate in the healthcare industry either in medical equipment or medical software.
Retail - We gave an RBI of 70% for this segment because the Intel brand justifies connectivity between businesses and consumers and the reliability of having Intel operate as a software of the payment solutions for example adds to the shopping experience of the retailers.
For the purpose of the calculation, we have used the same discount rate at 7.68% as the valuation exercise we did in assignment 3 to evaluate the IOT valuations.
Based on the DCF method of valuation and using the above factors, we managed to obtain the final valuation of the IOT business segment in the Singapore market at $427.2 Million.
*Marketing Costs - Based on the annual report for the past 5 years, marketing costs have came up to approximately around 20% of Intel's earnings. If we are to take a similar percentage to come up with a marketing budget for the IoT, we would have a total of $85 million budget for our marketing campaign.
