CLOUD GEL MARKET SEGMENTS

Windows are the least insulated part of a building's envelope. Consequently, after the 1974 energy crisis, window sizes shrunk from approximately 10% of floorspace to about 5%. However, after the market introduction in 1984 of Low-E windows, with three times the insulating value of previous double paned windows, window sizes grew back to their previous sizes. In 15 years, Low-E tripled the size of the entire U.S. window industry.(1)

As was the case with Low-E windows, most Cloud Gel market segments may be expected to grow rapidly due to the much greater utility and rapid payback of Cloud Gel-equipped skylights, sunrooms, atriums, non-view windows, and commercial greenhouses; and at not much incremental cost. As a conservative assumption in the marketing model, this growth of market segment sizes is ignored. The markets are sequenced based on ease of entry and growth potential.

MARKET SEGMENT
World Production, million/year
Part of Market that Benefits from Cloud Gel
Market Size for Cloud Gel, million/year
Market Size million/year (3)
Payback, months
Heating Weather Panel (2)
    9,200 sqft
       860 sqM
65%
     6,000 sqft
        480 sqM
     $ 18,000
     € 12,000
0 -- 12
Sunroom and Atrium
       200 sqft
         19 sqM
80%
        160 sqft
          15 sqM
     $ 540
     € 350
6 -- 12
Skylight
       105 sqft
         10 sqM
70%
          75 sqft
            7 sqM
     $ 220
     € 140
6 -- 12
Window, Non-View
     6,600 sqft
     4,610 sqM
10%
        660 sqft
          68 sqM
     $ 220
     € 140
9 -- 18
Commercial Greenhouse
        150 sqft
          14 sqM
70%
        105 sqft
          10 sqM
     $ 160
     € 100
2 -- 9
TOTAL          7,000 sqft
        650 sqM
     $ 21,000
     € 14,000
 

(1) see Section 19; (2) not included is the illuminating Weather Panel, with markets of approximately 1 billion square feet per year; (3) at $3.00/sqft ( €21/sqM ) wholesale price

Weather Panel

The Weather Panel is Suntek's next generation product. It is made by combining the previous product, Low-E, with Cloud Gel into a prefabricated roof panel which provides passive solar heat or illumination at no incremental cost over the conventional roof that it replaces . The Weather Panel is by far the largest market for Cloud Gel because it is designed to overcome for the first time the four blocks to market penetration by solar space heating and illumination: awkward building designs, slow payback, low efficiency, and climate limitations. The sales history of Low-E has shown that when multi-billion dollar companies marketed a product based on energy conservation, penetration was over 95%

in the U.S. in 15 years, even though the building industry is normally difficult to sell innovative technology to. Suntek has found that if the manufacturer, wholesaler, installer, and customer all profit, then technology.

Sunrooms and Atriums

Sunrooms are glazed enclosures, usually attached to the south side of a building, intended to be a pleasant year-round garden. They were popularized in the 70's and 80's by Chahroudi and others as a source of supplemental solar heat and food. 75 million square feet were produced each year in the United States 1996 and 225 million square feet (20 million square meters) were produced in world markets. In all climates, sunrooms typically become uncomfortably warm in the summer and prohibitively cold during the winter. Cloud Gel combined with Low-E glazings will prevent thermal extremes and eliminate solar glare, making sunrooms pleasantly inhabitable year round while reducing heating bills.

Atriums are the large scale, commercial version of sunrooms; as glamour items, they have high profit margins because they add prestige to, for example, hotel and conference hall lobbies. Although these volumes are currently small, they offer an up-scale image and the sizzle for media access for pull-type marketing. Sunrooms and atriums could, due to Cloud Gel, eventually become large markets.

Skylights

The skylight market is primarily commercial and residential single and double story buildings. It is estimated that 35 million square feet of skylights are manufactured each year in the United States and 105 million square feet (10 million square meters) are manufactured each year in world markets.(4) Cloud Gel will make skylights economically competitive with electrical illumination for the first time for two reasons: First, since light bulbs are only 10 to 20% efficient, they create a cooling load which is 5 to 10 times larger than the illumination they provide. In contrast, sunlight is 100% efficient as illumination. Secondly, the ratio of summer to winter illumination provided by a skylight is typically 10 to 1, making it impossible (without Cloud Gel) to size skylights correctly for sufficient winter illumination without creating excessive summer air conditioning costs. As well as modulating seasonal variations in sunlight, as the sun goes in and out behind clouds, the mount of light transmitted through a Cloud Gel skylight will stay the same, and always be pleasantly diffuse.

Businesses with large single story areas and low profit margins can increase their profits significantly by switching from electrical illumination to Cloud Gel skylights. These buildings' demand for illumination coincides well with daylight hours. For these reasons, both WalMart and Safeway have approached Suntek to install Cloud Gel skylights for free illumination in full size test buildings. Suntek has not yet responded to any of many such highly leveraged marketing opportunities for free product demonstrations and media exposure.

(4) Drucker Research

Non-View Windows

A common initial response to seeing a sample of Cloud Gel glazing turn white is that people do not want windows turning white of their own volition and blocking the view. While this is certainly true, many windows do not have a good view; they are for illumination. The benefits of Cloud Gel for non-view windows are the same as for the skylight market: reducing air conditioning costs and providing a constant level of diffuse natural illumination even while outdoor sunlight intensity varies greatly. Natural daylight is five to ten times as energy efficient as artificial light, and, for a segment of the population, help avoid

depression in the winter. As with skylights, Cloud Gel is expected to greatly increase the utility and thus the sales of non-view windows. The size of the window market segment was estimated in 1997 to be 1.6 billion square feet produced annually in the United States and 4.9 billion square feet (450 million square meters) produced annually for the world markets.(5) Because most windows are used mainly for view purposes, we conservatively assume that only 15% of window production is a market for Cloud Gel, or 729 million square feet per year. This market is larger than the combined markets of skylights, sunrooms, atriums, and greenhouses, but is not expected to grow to many times its size, as with skylights.

(5) Glass Magazine;

Greenhouses

This market segment includes commercial greenhouses used for growing commercial vegetables, fruits, and flowers. In 1996, 25 million square feet of greenhouse glazing were produced in the United States, and 75 million square feet (7 million square meters) were produced in world markets.(6) Cloud Gel benefits commercial greenhouse owners by modulating the climate so that crops are healthier and mature more predictably, which is essential for high value seasonal crops such as Easter lilies or Douglas fir seedlings. A field test by the University of Arizona's Agriculture Department showed that Cloud Gel made it possible to grow many commercial flowers in a hot, dry climate which severely damaged or killed them in conventional greenhouses. Since flower and specialty food crops, such as tomatoes and berries, produce in the order of $100 per square foot (€700 per square meter) wholesale of floor space per year , Cloud Gel pays for itself in a few months. Holland alone has approximately one billion square feet (90 million square meters) of greenhouses, which supply much of Europe's vegetables. One of the largest Dutch greenhouse builders has expressed an interest in Cloud Gel.

(6) National Greenhouse Manufacturers Association