Atlantic Computers Case Analysis

Perspective 1 1. Stick with company tradition by charging only for hardware and give the PESA software tool away for free. As can be seen in Exhibit 2, there is a noticeable difference between basic servers running with and without the PESA software. This difference would cater directly to those customers in the file-sharing application and web-server segments of the market. Currently, as the Tronn would be competing directly with the rival company’s Zink server, which is priced at $1,700 as opposed to the Tronn’s $2,000, customer’s would assume that the Zink is better value as it costs less, despite the fact that the price shows a 40% mark-up over Tronn’s 30% mark-up. By offering the PESA software tool as part of the overall package, Tronn could add a value advantage over Zink, as they do not offer a software tool which enhances the performance of the server. However, as aforementioned, the customers using the basic servers would benefit most from the PESA software, rather than the high-performance servers. According to Exhibit 1, the majority of units sold are those of the high-performance servers. 2. Charge a price equal to what the customer would pay for four Ontario Zink servers. The case states that Ontario’s Zink servers dominate the basic server segment, and therefore the introduction of the Tronn server would mean that the two companies would be competing directly against one another. Further, Ontario holds a supply-chain advantage over Atlantic, in that they ensure that their products are widely available to all consumers, e.g. the majority of their sales are generated online. However, when loaded with the PESA software, Tronn’s servers run at an efficiency of 4 times faster than their standard speed. The option suggests that the Tronn, when loaded with the PESA software, should be valued at four times as much as the Zink server, as it would be performing at the same standard. This would price the Tronn at $6,800. While a price this