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www.imdc.net
Independent Analysis ofIn-Flight Portable Media Players
Walé Adepoju – CEO
Thursday 24th May 2007
www.imdc.net
2
Contents
Overview of Portable IFE Market
Trends in consumer portable media players
Outlook for portable media players in IFE
1
2
3
3
Our Perspective on IFE Portable Media Players
Airline assistance
with IFE\PMP strategy & purchase
Passenger Research
Ancillary revenue
analysis for airlines
Technology Trend Analysis
Corporate Finance
Airline Research
360˚Independent Perspective
4
Overview of portable IFE
market
1
5
Market Overview• IFE systems have been traditionally designed for twin-aisle, intercontinental market
• Today’s IFE systems fail to reach an audience 3 times bigger than the current market
• Portable Media Players can be an innovative solution on twin aisle aircraft
100
200
300
400
500
8 14 16
‘ULTRA LONG &
THIN’ e.g. A340-
600
124 62 10
MID-RANGE WIDE-
BODY e.g. 767,
A330
MID-RANGE
NARROW-BODY
e.g. 757 A321SHORT HAUL A320 &
737FEEDER &
HOPPER
e.g. CRJ,EMB
CORPORATE
0Length of flight (hours)
Aircraft size
(seats)
Twin-aisle
Wei
ght
cons
trai
nts
Logistics and passenger needs change
100
200
300
400
500
8 14 16124 62 10
MID- RANGE
NARROW-BODY
e.g. 757 A321SHORT HAUL A320 &
737FEEDER &
HOPPER
e.g. CRJ,EMB
CORPORATE
0Length of flight (hours)
(seats)
Wei
ght
cons
trai
nts
Logistics and passenger needs change
Aircraft market in terms of IFE
Ultra-long &Thin routese.g. A340-500
Mass inter-continental
Eg. 747-400, A380
777
Mid range
Twin-aisle
e.g. A330, 767
Global commercial fleet
Single71%
Twin29%
6
Portable Media Players (PMP) Technology profile
• Technically quite robust
• Delivered high percentage of initial promise
• Inflight portables can match the IFE experience provided by full interactive systems
• Content security
• 2 hardware approaches by vendors
• Customised units
• Consumer Off The Shelf (COTS) technology
7
Portable Media Players (PMP) Technology profile
““I gotta have it” I gotta have it” phase”phase” Airlines scramble to get one & drive high requirements
The idea phase -The idea phase -
An idea is born from innovation, new technology, or...
The “die trying” The “die trying” phasephase
Some suppliers never make it and die trying
The “I got it too” phase -The “I got it too” phase -
suppliers all claim to have the new product…or one better
The peak :The peak : goal is set very high from demands of airlines…or promises from suppliers, or...
The plateau -The plateau -
The final result is a relaxation of the requirements...
and a settling down to reality
REED TheoryDan Reed
8
Panasonic
Airvod
Mezzo
Phantom Media
Inflight portable device market
• Inflight portables are currently a very small market• Less than 2% IFE expenditure in 2006 (excluding DVD players)
• Market is characterized by relatively low cost of entry• Resulting in a high number of start-ups
Panasonic Thales
LiveTVRockwell Collins
Embedded IFEEstablished
Inflight PMPsDeveloping
65% combined market share
e.Digital
IMS
DigEcor
9
Main portable IFE suppliersManufacturer Product Airlines
digEcor DigEplayerDigEplayer XT
30 Airlines including: Aeroflot, Alaska Airlines, American Airlines, Hawaiian Airlines, Icelandair, Independence Air, Jetair, Jetstar, KLM, L’Avion,MaxJet, Midwest Airlines, North Monarch, Pacific Blue, PIA, SilkAir, SN Brussels Airways, Virgin Blue
IMS PEAPAV-704PAV-604
American Airlines, VARIG, Jet Airways, EOS Airlines, SonAir, Excel, Air India, TAM
Panasonic Avionics Corp eXpress ANA
eDigital Corp eVU Lufthansa, Alitalia, MAS
Mezzo eVU Silverjet, Jet2, Flyglobespan
Airvod Entertainment MACH5 Tiger Airways
Phantom Media Bluebox lite bmi
10
Trends in portable media2
11
Drivers of inflight PMP
Technology
advances
Single aisle aircraft IFE
& backlog of twins
Provides alternative
to embedded
IFE
Passenger expectation
s
Differentiate airline product
Inflight PMPs Airline product
Consumer power
Natural constraints of embedded IFE
12
Consumer portable devices
Consumer portables are increasing their:
• Prevalence• Quality• Importance
As a result passengers expect more from IFE, but can provide their own content if enabled
Smartphones
iPod
• Sales up 70% from Q3 2006 to Q1 2007• Becoming thinner, more stylish and have more
compelling features
• iPod sales up 24% to 10.5 million in Q1 2007
13
Consumer portable devices
Portable gaming devices
Ultra Mobile Personal Computers
UMPCs
• $10 billion industry in 2007• Nintendo DS at 40 million units worldwide• Sony PSP at 20 million units worldwide
• Potential to add benefits of a PC to inflight PMP• Bleeding edge / Immature technology• Some inflight PMP suppliers are using UMPCs in a
COTS approach to product development
14
Outlook for portable media players in
IFE
3
15
Market trends
• Increasing demand for aircraft
• Need to extend life of older aircraft
• Increasing competition among airlines
• Declining yields
• Need for shorter product life cycle
Increase in demand for more portable IFE devices
Increase in demand for plug & play with passenger’s own device
RISKS & ISSUES
Safety issues relating to batteries onboard
Perceived security risks to content are higher
Full seat-back installation of PMPs incurs hidden costs that wipe out some of the advantage over existing embedded IFE systems.
Cost per unit will continue to fall rapidly
16
Getting the max return on PMP investment
• Providing a total solution, more than just a great product, is the key to success as a vendor
• Content supply chain solutions
• Unit distribution and maintenance logistics
Business
problem
Business
opportunity
Solution
Technology
Software
Process
17
Getting the max return on PMP investment
• PMPs ‘fit’ as a business model in a number of markets
• Recently profitable US carriers looking to improve their product on an aging fleet
• European carriers seeking to differentiate themselves and gain ancillary revenues
• Premium only start-up carriers such as Silverjet and Eos
Portable media has the potential to deliver a higher proportion of media revenues
www.imdc.net
If we see Portable media players as hardware – it will struggle to provide sufficient value.
However, if it is seen as a tool in the media content value chain, then it provides us with opportunities that we did not have before.
Thank you
Walé Adepoju
www.imdc.net