BLU:SENS History Blu:sens began its activities in the consumer electronics sector in 2002.

Its founders were Jose Ramon Garcia (29): General Manager of LKS Consultores in Galicia, with a degree in Economics and Business, a Masters in accounting auditing and a PHd and Miguel Silva (32) General Manager of Televs Middle East in Dubai. The first thing they did was to look for a dynamic sector, in which a small and agile company would have a good opportunity to succeed, so they thought the consumer electronics sector was good. They did a deep market analysis for more than a year, laying out a meticulously studied Strategy Plan. Neither of them had experience in the consumer electronics sector, but Jos had been carried out strategic plans, commercial and marketing plans, and international plans for other corporations for six years. Also Miguel had experience in Televs and he was an expert in matters of assembly and sourcing. In order to overcome with the geographic barriers Miguel took charge of the design planning and assembly of the product while Jos took on the distribution and the numbers. The name of the brand came about with the help of the creative team of a Galician publicity group BAP&Conde. They looked for a name associated with the senses related to the devices they sell audio and video. Beginning of activity The Strategic Plan they did for the period 2002-2006 included subcontracting of those processes which did not bring value but rather limited their structure. They would design and define the products, create them and acquire the necessary components. Three Chinese companies would develop the packing in China. They signed a joint venture with a Chinese Manufacturer to manufacture DVDs. Two other joint ventures were signed to assemble their audio and TV products. The Asian factories dont finance in 90 days like in Europe, for that reason the need minimum 1 million Euros. The banks asked for the accounts of the previous year but the business didnt have record due to the fact they were new. Also the banks demanded for guarantees or some property which could be mortgaged but they didnt have any. They were aware no bank was going to lend them the million Euros they needed, so their strategy centered on a Financial Guerilla which they intended to get the loans from various financial entities. For that reason they decided to start the company from the end: selling first, to then manufacture and finally get the money. The commercial plan to find the clients was focus on purchase centers and large commercial chains because these bought in large volumes and on the spot (en el acto). The founders had to sell the project even before they had it, also they said they had just arrived to Spain, the trick consisted on selling oneself well, selling the companys activity, its product, its innovation and grabbing the first business opportunities. Their first client was Activa group then, Accion and Redder groups followed them until they completed 6000 points of sale in a record time. THE BLU:SENS MIRACLE Slogan: Be different it is the only way of competing because cost-wise there will always be someone with a cheaper price than you. At the end of 2003 the company did its first physical investment 300m2 of offices- dedicated to general management. Later another investment in different industrial warehouses in Santiago, dedicated to the R&D&I center, technical support center, call center, purchases and distribution. Blu:sens manufactured products under their own brand name also they did for private brands and other companies which did not constitute direct competition. Aware of the importance of innovation in the sector, they dedicated 10% of the annual spending budget on technological development. After 2 years, a third of the 130 employees of Blue:sens formed part of the staff of R&D&i. The company also made numerous agreements with hardware and integrations spread throughout the world with the aim of reducing the time taken to develop the products. In 2007 they launched the new MP3 and MP4 in cooperation with Sigmatel, the worlds largest manufacturer of the chips used in MP3s and with Nanoradio, a company specialized in components for WIFI applications. Blu:sens became part of the capital of Opera

Wireless, a Spanish company expert in systems of localization by satellite and connectivity without cables. It was an alternative of investment and also they discovered that the combination of electronics and connectivity had a great differential value because together. The commitment to agility and speed was not limited to design and distributions, rather it was patent of all the other processes of the company, including logistics. The company had contracted planes which made direct deliveries from Asia to the Barcelona, every Wednesday and Saturday. The time factor was much more important than they paid for the deliveries. The average of age of the employees was not more than 31 because they have to support the dynamism, continual innovation and the rhythm of growth. They need creative and entrepreneurial people who are capable of reinventing themselves every day. They also provided after-sales and customer service through a Home Support Center in Santiago de Compostela. They decided to create their own platform, a call center situated in Santiago which helped the client to solve their problems online and which sent someone to their home and would return the repaired product within a maximum of one week. Marketing without limits: a spectacle to the customers taste The company had to wait until 2004 to initiate its publicity investment. Their strategy was that of being a bit crazy and above all, aggressive, it means to relate the electronic with fashion and make the most of celebrities. In the first electronics fair (SIMO 2002) they had the smallest stand but despite that they attracted attention by inviting singers of Operacin Triunfo. The following year was attracting well-known sports personalities and other people of media interest. The result was a huge media coverage, obtained almost for free, it attracted not only sport or economic press but also it attracted the tabloids, they were aware that this could damage the image of the company, the company decided on a 2nd stage of carrying out more traditional promotion events, through still related to the world of fashion and trends. more of a fashion accessory which has to be renewed when fashion changes. The main public was between 15 and 39 years old. In 2005 the company hired Miss and Mister Spain as the brands image. Other element of the marketing strategy was centered in the sponsoring of events related to the world of sport. The company sponsored 2 Galician sporting teams, Deportivo de la Corua in football and Liceo in hockey. The company presented a new catalogue every year in a grand social event. In 2008 they closed the hippodrome in Madrid to present their new image. All this represented investment in marketing, which represented 7% of the companys turnover. Blue:sens brand was becoming ever more familiar to Spanish customers. The Products The market was very brand oriented, mostly dominated by large multinationals which sold all over the world. On the other hand the smaller companies were beginning to introduce themselves in Spain which broke up the market based on prices. Blu:sens set itself a challenge: to beat the big brands with imagination and creativity. With this aim the company launched itself into manufacturing products including some innovative component. The MP3 was the star product of the company, but the company brought out a wide range of sound players, adapting to the demands of their list of clients in terms of capacity, and applications. In 2005 they sold the first MP3 preloaded with music. In 2006, they launched in SIMO fair, the G12 a novel MP3, it was the result of 1 and a half years of effort in R&D. It was the first player with built-in Bluetooth, with LCD screen with more than 260.000 colors. In January 2007, they launched its MP3 G14 model at the Consumer Electronic Show in Las Vegas, it was the first Wifi model with long range Bluetooth technology 2.0 EDR. Through 2007 the company did an agreement with Universal Music and it subsidiary Vale Music. Now the company sells the new MP3 with a 6 month subscription to the legal downloading service of Universal Music Spain. The access to the service was made via an ad hoc generated site, www.blugeneration.com a digital platform which the company created at the beginning of that

year. The users of portable multimedia devices always want to have the latest, both in terms of technology and design. The acquisition of Opera Wireless in 2007 by the Norwegian company opened new opportunities of diversification and innovation for the R&D team of Blu:sens. They launched the G01, the first navigator capable showing the route with a real image from aerial photography, making the identification of the journey instantaneous. The incorporation of pictometry (actual photos) was considered an authentic revolution, but also all these elements implied a higher price. Although sales of G01 were not spectacular, the brand strategy had worked: in the months following the launch the name of Blu:sens appeared everywhere, gaining even a few minutes on the main Spanish news. By that time the company had a consolidated position in the Spanish market with products such as the DVD, MP3 or LCD television. In 2008, the company became a music distributor and editor with the creation of Blu:sens Music. Towards the end of 2008, the company possessed a great global offer of Blu:sens products consumer electronics divided into three large areas: digital home, portability and communications. Production for other brands had been diminishing progressively and only represented the 10% of the total manufactures products. The product catalogue for 2009 presented in Madrid in October 2008 had important news both in terms of products and in service. The company also announced the first album of its record label Blu:sens Music. The album, of a Galician group called Cornelius which sang songs in English, could be downloaded from Blu:generation. Conquering the World The first step in the internationalization of the company was taken in October 2006 with the creation of a company in China. This first investment responded to the need to control the manufacturing of the Far East and all the sourcing process. The exterior market already counted for 25% of the companys turnover. The majority of the foreign turnover came from the sale of components manufactured by other brands. The objective of the company was to obtain the larger part of their turnover from foreign countries. The second Strategic Plan, in the period 2007-2010 was practically an internationalization plan. They were convinced that it was necessary to enter through the main door that is, investing in branding with trained salespersons, of a high level, with quality after-sales services. The philosophy of the company was to try to replicate the business model of Blu:sens in its subsidiaries that they began to create. The parent company was the oxygen for the subsidiary, it was going to cover all the costs related to its creation, but from there on, the hope was that the subsidiaries would become independent business units, capable of generating their own benefits with which they would cover the costs necessary for generating the brand image in the country. They started in Arab Emirates counting with Miguels experience. He was quite a veteran in the Middle East and he identified that area as one of the most dynamic economies of the 21 st century. After the subsidiary in Dubai came one in Hong Kong. The second expansion phase planned in the Strategic Plan was a clear commitment to the expansion in Europe. They opted for help of the Spanish Institute for Foreign Trade, which gave them market knowledge and also supported them in the launch of subsidiaries in other countries. They inaugurated the office in United Kingdom, the most important consumer electronics market of the area. The planned went as expected, and there seemed to be nothing to stop Blu:sens in their European conquest. However within a few months, the European economies began to experience one of the greatest economic crises since the Second World War. They immediately paralyzed all their investments in Europe only one month after the signing of an agreement with Iveravante managed by Manuel Jov Capelln. The Future In April 2008 Blu:sens announced the constitution of Blu:sens Global Corporation resulting from the merge of Blu:sens Technology with its subsidiaries Blu:sens Middle East and Blu:sens China, at the same time Inveravante acquired 47,5% of the new holding. The founder said we had made it to this point with huge financial help from the banks, but with a ridiculous business

capital. It was time to change this. The partners agreed that the pay out of the 16 million would be carried out in three phases: 10 million on the singing of the agreement, and another 3 million in each of the posterior phases, according to the degree of fulfillment of the strategic plan on by both parties. The entrance of Manuel Jov opened up the market where Inveravante did business, Latin America. Blu:sens Mexico was born in the final quarter of 2008, they also centered on the surroundings countries like Costa Rica, Panama and Colombia. They covered South America with the subsidiary in Uruguay towards the end of 2008. The choice if the tax-free area of Montevideo was due to its geographic location, ideal for conquering the Southern Cone (Argentina, Brazil, Paraguay and Chile), plus the fact that the company relied on a Galician partner introduced well in Latin America. Following this expansion came Blu:sens Canada, this didnt not represent a priority market, but it was to acquire preliminary knowledge of the United States market. The solidity which the new financial structure provided them led Blu:sens to design an aggressive internationalization plan for 2010, their plans are to be in more than 100 countries. Although Jos did not doubt that they would achieve it once again, he could not avoid feeling a certain worry each time news on the current situation of the sector came to his knowledge. They planned diversification of their line of business with the entrance in the sub segment of professional electronics. Their way into this business would be the Middle East, and in particular in the sector of luxury hotels. Miguel had insisted on continuing to commit to the sale of products online. If they wanted to achieve their objectives, they had to explore new forms of doing business, maintaining the motto Be Different which had given life to the company.