Creative Technology (CT) has just pioneered a high-performance disk drive for engineering workstations. The market for this product is highly lucrative because very few companies have the technology to develop a competing product. Storage Technology (ST) has the needed design expertise and has decided to enter the market to compete with Creative Technology. After careful screening of different new product ideas, Storage Technology finds the following three product design options attractive: Strategy option I is a "revolutionary" strategy because it employs a technology that is new to the company and the industry. The strategy will develop a product that has a performance rating of 160 but it requires a long development cycle of 20 months. Strategy option III is an "evolutionary" design. Option III makes use of proven technology and requires 10 months to launch the product. The performance rating of the product is 80 (on a consumer satisfaction scale). Strategy option II is in between I and III in terms of performance and development time. Development expense includes capital and labor costs and increases with the development cycle as indicated. According to industry experts, Creative technology's current product has a performance rating of 100 . The company sells its product for $2,000. The demand window for this product is expected to last for another sixty months. Demand is assumed to be constant over the entire demand window and total market sales are estimated to be 2,000 units/month. Storage Technology also plans to sell its new product for $2,000. The unit production cost of the product excluding the development expense is $1,500 regardless of the development option selected. Assume that market share for Storage Technology is determined by the following function: Storage Technology Market Share =CTp+StpSTp STp = Storage Technology's Product Performance Rating CTp= Creative Technology's Product Performance Rating Thus, if Storage Technology adopts strategy option II, it will capture a market share of 160/(100+160)= 8/13 for a period of 40 months (6020) since 20 months has been spent in development. Assume that Creative Technology does not introduce a new product during the entire demand window and that both firms keep their prices at $2,000. 1. What is the most profitable strategy option for Storage Technology