14 Aug 2002, 10:58 PM EDT Msg. 20017 of 20040
Eyenx presentation
Eyenx is a small company. The old company Eyelink Technology has disbanded after a disagreement with a management person. Essentially the same management team is there. The technology used before was called NetPhone. The compression technology used was developed by some PhDs in California, and it's not something we know of. The technology was somewhat well received by the consumers which tried it. They distributed the software via Zdnet and Download.com. They also had a 6 month marketing trial with two large telcos. These telcos are two of the biggest ones. The telcos were very happy with the results of the trial, and they said they wanted to distribute the videoconferencing software along with a camera and microphone to new DSL subscribers. According to the Eyenx people, this is the "killer app" that the DSL companies wanted. They did not mention any cable companies. Eyenx plans to retail the product for $39.95 via mainly downloading from an e-commerce website or the free download sites I mentioned earlier. There will be a trial period of approximately 2 weeks. If the telcos distribute the software along with the DSL subscription, the fee revenue per software package will be discounted. From what I see, the business model works if the software is accepted by the mainstream public. The Eyenx management was trying to raise $500,000 in private equity at that meeting for a 5% piece of the company. All vendor services are now compensated with common stock which means On2's engineering services are paid with stock in the company. During the Q & A session, I brought up the question of how recent issues concerning the continued existence of the On2 would impact Eyenx. The CEO said the compression technology is like a part in a machine, and that the codec can be replaced with another codec. Keep in mind that this was in front of whole bunch of potential investors. The previous videoconferencing product they had was shelved due to poor video quality. A couple of minutes later, one of the development persons there said the On2 VP5 codec is the "heart and soul" of the SeeNx product. Some guy in the room commented on whether or not the videoconferencing product will be able to be watched full-screen. He said he enjoys watching video at full-screen. Management said the old product had video in a 4x6 window, but the new one would have the ability to go full-screen. They showed a demo of an On2 clip recorded in real-time. Put this in your Truecast player truecast7.on2.com/greetings.vp5 It's an On2 engineer demonstrating the ability of VP5 realtime encoding at 128kbps. The quality was bad ass at such a low bit-rate. I knew at that point a couple of the heavy hitting investors in the room were convinced of the viability. I was going to raise my hand and tell them to stream the Beautiful Mind trailer, but I decided not to since I don't think they want people to invest in On2 but rather Eyenx. They went about demonstrating the interface which was plain and simple in order to appeal to all breadths of consumers from little kids to elderly folk who don't understand computers too well. They are focusing on the average broadband consumer.
On the drive home, I was thinking about the financial aspect of investing in On2 or Eyenx. At full capitalization, Eyenx would be $20 million. Currently, On2 is below $10 million. Most of the technical work is going on in New York with On2's staff basically creating the engine for the videoconferencing product while the GUI shell is created in Dallas with Eyenx's staff. Talking to Abbas, I asked him what makes Eyenx a better investment than On2. He said marketing strength. He acknowledges that On2 has some of the smartest technical people in the field, but revenues are not there. It brings me back to what the heck is going on at On2? I talked to a couple of people there, and they said they were amazed at the quality of the movie trailers at the On2 website. I agreed and told them that it makes me crazy thinking all this great technology is going to waste.
I asked a lot of questions, and there are some facts I can't disclose due to NDAs. However, that is the gist of the presentation, and what Eyenx is about. I did ask the CEO what if On2 goes bankruptcy, they said would be first in the bidders line for VP5. Eyenx initiated communications with On2 and not the other way around. I really do believe VP5 is well-known to be the best compression technology out there. My question I ask of everyone is whether management is cutting the mustard. What Abbas did tell me is that their management is up to the task.
AI
