An opinion.
eDigital has many talents within its doors.
At their core, they understand the importance of Wi-Fi, wireless solutions, and the consumers desire for personal independence, mobility in everyday goods. Be it information, or entertainment.
Here the Blackberry and other wireless systems are breaking new grounds, and the pace is beginning to quicken.
eDigital's problem was not one of talent... Its one of scale, and economics.
There is nothing in San Diego that doesn't already exist elsewhere, at a substantially lower costs.
Here, Atul is on the right track.
For example: Atul is relocating portions of the operation to India, where the people both read & right English, have very high academic scores (Not so for China or the orient in general, excluding the Philippines. Malaysia, and Singapore of course.) and will work for pennies on the dollar. He is to be applauded for this move.
I'm highly impressed with the universities over there, and the high academic standard. (Modified British System of Education)
Watch out, these chaps are capable, hungry and motivated.
One must possess a USA marketing team, and support in order to attract new customers & business.
So the San Diego Location makes sense.
The key is to move all development/engineering off shore.
This would appear to be happening as we speak.
EDigital must obtain the funds necessary to carry it through this transitory period.
Can the In-flight product carry the company... Perhaps, but its unlikely.
If one assumes this products development time was about a 1-year. eDigital had a burn rate of between $200~260K/month = $2.4M~3.1M for the cost of operations. If one further assumes this project absorbed about 33% of the resources of eDigital, one arrives at some figure between $800K~1M for dev, before tooling.
Amortization of Development/Tooling etc, over Projected Yield, plus, the true manufacturing costs, Plus G&A, Service Support Costs = the True Unit Price.
If one assumes an airlines pay something close to around $700 per unit, although I'm not to certain of this number. Anyway lets play with these assumptions for the time being.
Go with $1M Dev cost /1000 units = $1000 Dev fee /unit before actual unit cost. Or $200.00 for 5,000 units. This is just development money. Before tooling or manufacturing/labor/profit. Pretty daunting isn't it.
Now lets look at revenue stream.
Media Software Royalty Fee= $ (unspecified)?
Customer Rental fee per flight (Estimated at $10.00/Trip or $20.00 Round Trip)
Less Airline Costs (Cost of Goods/Support, G&A + profit, Royalty administration cost, Fuel, plus unit Depreciation/Refurbishment (Estimated at $700.00/3 yrs =230/year)
Income & recoup to eDigital is to the best of my knowledge $(unspecified) ?
Income then becomes the number of income producing units playing during any month, this defines eDigital's short term viability.
If the total units in the field is less that eDigitals G&A then expect trouble.
If the total units in operation exceed the G&A needs, then the prospects are amazing for eDigital.
So the key question is where are we...
EDigital's direction is sound. It is a dynamic company, highly innovative. So-far it lacked the to tools to survive with the big boys... Atul is changing this.
