e.Digital Corporation (fka EDIG)

[Tinroad]

In response to requests from several longs, the following post from 'Spongebob1997' is being reinstated, sans some OT musings; draw your own conclusions as to its merit:

Posted by: SPONGEBOB1997
In reply to: sky56 who wrote msg# 28011 Date:1/27/2003 8:25:43 PM
Post #of 28012

Important DD on APS:

(Note: this is a bit long, but very worth it. It will surprise most of you).

On 10/23/02, e.Digital released the following PR about a partnership with "APS" to develop and market in-flight entertainment (IFE) systems:

http://www.edig.com/news/releases/pr102302.html

In the FAQ section of the EDIG website, management state (regarding this IFE relationship): "We view this as one of the major developments for e.Digital for this year and in years to come. Becoming part of the infrastructure that supports our IFE systems may generate multiple revenue streams for us." i.e., management is promoting this partnership as one if the major developments for the future.

However, when one reviews the PR, it is clear that it has very little information about APS and what is said is very ambiguous. No web site or contact information for APS was given.

As I previously pointed out, e.Digital erred in referring to Aircraft Protective Systems, Inc. (APS) as "APS, Inc." in its description of the company. However, in looking further into the situation, I believe that e.Digital has grossly exaggerated the potential revenue from this partnership and been very misleading in describing APS.

First of all what is APS and what does it do? The web site for APS is http://www.airprosys.com. The company has 3 products it seems to offer for sale (although no pricing or order information is given. These products are a (cargo) belt loader nose, a cargo door protector and a kevlar flight deck barrier. There is no mention about any IFE products or services.

APS is privately owned by William (Bill) Boyer, Jr. who also works for Alaska Air as a "Ramp Service Agent." The following is the Alaska Air job description:

Ramp Service Agent
-----------------------------------------
Ramp Service Agents at Alaska Airlines load and offload luggage and cargo. Duties also include working in the cargo area of the aircraft, transporting luggage and cargo to various airport locations, maintaining ramp and warehouse areas, and pushing-back and de-icing our aircraft.

The minimum requirements for the Ramp Service Agent position are as follows:
*Valid driver`s license and excellent driving record
*Ability to routinely lift 100 lbs
*Flexibility for shifts, including holidays and weekends
*Able to accept a starting wage of $9.10 per hour
*Must be a non user of nicotine products for the last six months
*High School diploma or equivalent

http://www.alaskasworld.com/Jobs/ASjobs/JobAlaskaDescr.asp?n_group=142&txtGroup=Airport+Jobs

Here is the article from the Alaska Air employee web site which describes how Boyer ended up marketing his design for a cargo door protector and making a prototype of the belt loader nose (designed by a VP at Alaska Air):

http://www.alaskasworld.com/news/2002/11/12_BeltBumper.asp

"The idea took wing when Bill Boyer, an enterprising ramp service agent based in Seattle, approached Prewitt, Alaska's vice president of safety, about an aircraft door protector he developed and hoped to market. Prewitt then described his bumper idea. After putting their heads together to refine the idea, Boyer went back to his shop and created a prototype.

So, the President of APS, e.Digital's partner in this major development, is employed as a cargo loader for Alaska Air. Now for more...

The EDIG PR quoted Boyer as saying:

Bill Boyer, Jr., President of APS, said, "As a certified airline service and equipment provider, we have established key relationships with major airlines. In our business dealings with these airlines we recognized the substantial cost they would have to incur to upgrade their fleets with embedded IFE systems. Beginning with a major U.S. airline, APS and e.Digital are providing the first portable IFE solution to the airline industry at a significantly reduced cost."

It has already been established that APS and EDIG are NOT providing "the first portable IFE solution to the airline industry" as a company called InMotion had been renting DVD Players and DVD movies to airline passengers at NO charge to the airlines long before this PR was release, so that statment is false.

Also, what is meant by the term "certified airline service and equipment provider?" EDIG also described APS with this phrase in its description of APS in the PR:

About APS, Inc.
APS, Inc. is a privately owned, Tacoma, Washington-based company. A certified airline equipment and service provider, APS provides solutions, industrial design, and manufacturing services for companies who have specialized product needs.

Forget that the description given seems to be a gross exagerration of what APS does, what certification does APS have? The web site makes no mention whatsoever about any kind of certification. If it were ISO 9000 or AS 9100 Certified both the PR and the web site would be expected to state that. So what "certification" does APS have?

I think I found the answer. I found a company called Shaw Aero which appears to be the real manufacturer of the belt loader nose sold by APS (See the photos):

http://www.shawaero.com/documents/New%20Devel-Apr.pdf

Home page: http://www.shawaero.com/devicehomepage.htm

Shaw Aero has a "Certified" Supplier Program that APS may be part of (it appears it would be the "non-inventory" type):

http://www.shawaero.com/documents/71602%20Certified%20Supplier.pdf

Is this the "certification" being touted?

Now, as for "IFE" - how did Boyer get involved in that?

According to the following article on the Alaska Air employee website that describes how employees were making suggestions for IFE systems, including live TV. Alaska found that live TV was not suitable for them and that passengers won't switch airlines due to IFE options.

Instead of outfitting their flights with embedded IFE systems, Alaska Air signed an agreement with InMotion to offer IFE to Alaska Air passengers at a 25% discount without any financial risk to the airline. Furthermore, Alaska Air management was quoted as saying:

"We don't want to get into the business of being our own supplier of equipment or videos for several reasons," Palmer says.

Among them are:

It's complicated. Transporting equipment, determining how many players are needed and what movies are offered can quickly become a logistical nightmare. Plus, equipment would need to be cleaned, recharged and possibly repaired after each flight. This would require additional staffing.

It's expensive. Players would first have to be purchased and contracts would need to be reached with various content providers--with slim hope of recovering direct costs.

http://www.alaskasworld.com/news/2002/09/30_entertainmentoptions.asp

Therefore, it does NOT appear that Alaska Air intends to buy any personal video devices directly from APS. In fact, an RB alias that popped up on the day of the PR who seemed to know a lot about Boyer and APS (was it Boyer himself?), seemed to indicate that the plan was for APS to offer the kind of service that InMotion does, talking the financial risk. See:

http://ragingbull.lycos.com/mboard/memalias.cgi?member=goldwingin

In summary, I believe that the APS partnership and e.Digital's potential revenue from the partnership has been grossly exaggerated by management.

=================================================================================

(My thoughts on the above - TR)

It can be directly inferred from the above info that a) an enterprising ramp service agent at Alaska Airlines has managed to partner with an AA VP in starting up a new company with a built-in customer; and b) EDIG has found a good connection to assist in funding development of a new product line. I find it very hard to see a downside in all this, unless EDIG throws too much of their own funds into the project.