Alliances and acquisitions are the name of the game in the highly competitive in-flight entertainment (IFE) market, where companies have been scrapping for business in the wake of Sept. 11, 2001, and during a lingering airline recession. Although widebody aircraft continue to come off the production lines equipped with IFE, the IFE update and retrofit business has slumped, as commercial airlines focus on a higher priority–survival. At the same time, however, interest from narrowbody (single aisle) airline customers seems to be picking up.
IFE manufacturers, such as Thales Avionics Inflight Systems, have latched onto cabin surveillance systems to help weather the economic storm, while Rockwell Collins Passenger Systems is boosting its position in the business aviation market by acquiring Airshow. IFE equipment makers also are launching ventures into the software products and services side of the business, which they see as more profitable.
Connectivity Coming
A key driver in new IFE technology, along with VoD (video on demand), continues to be Internet connectivity (May 2002, page 27). Collins recently concluded an agreement with Airbus and Tenzing to provide passenger connectivity and future entertainment options to commercial airlines. As part of its commitment, Collins intends to invest $10 million in Tenzing and work with it "to develop and deliver next-generation passenger connectivity solutions," says a company official. Since Airbus owns 20 percent of Tenzing, the Collins move is seen as a way to increase its influence with the European original equipment manufacturer (OEM).
"The Tenzing agreement is to a certain degree a response to what Matsushita is doing with [broadband service provider] Connexion by Boeing, and it helps Rockwell Collins get in on the ground floor with Airbus," according to Jerry Weltsch, an IFE analyst with industry forecasters Frost & Sullivan. "They [Collins] already have a good relationship with Boeing," he says.
"It’s all about creating alliances, relationships with companies that can somewhat guarantee you a certain amount of market share," Weltsch adds. "If an airline buys an aircraft from Airbus, and they want Tenzing’s service, a Collins IFE system goes on that aircraft, based on that relationship." Likewise, if the customer wants Connexion by Boeing’s connectivity service, it probably will be accompanied by a Matsushita IFE system.
Working with Tenzing and Airbus, Collins says it will take a "phased approach" to pursuing connectivity, with the first phase including narrowband e-mail and other messaging capabilities. Future phases, says Collins, will include broadband connectivity "with Internet content, entertainment and live television, as well as airline operational applications."
Collins adds that it will build on its July 2000 agreement to provide an Aircraft Integrated Network System (AINS) for the A340-600 to support flight and maintenance personnel. This agreement was expanded to provide airline operational and passenger information for the entire A340 and A320 family. AINS will become basic equipment on all Airbus models, beginning in 2003, according to Collins.
"Initial limited e-mail messaging capability will use current satcom or telephony systems," says Mark Johnson, director of business development for Rockwell Collins Integrated Information Systems. But this capability will be expanded next year, with the installation of the Collins HST 9000 high-speed data terminal. Combined with existing satcom systems, the new terminal will access Inmarsat’s Swift64 service, providing up to 64-kilobit/sec connectivity rates to laptop PCs (September 2002, page 22).
Collins’ new IFE system, just coming on line, can be used in conjunction with Tenzing connectivity. "Obviously, we would love to sell it as a package with our TES (Total Entertainment System) or eTES, but it will work with other IFE systems for distribution," Johnson says.
Collins, which enjoys about 25 percent share of the IFE market, has established a strong position in the emerging IFE narrowbody market. Its acquisition of Transcom, a dominant player in the narrowbody market, and Airshow eliminates two strong competitors and enhances Collins’ position in IFE, Weltsch maintains.
Still the Leader
Despite Collins’ acquisitions, industry leader Matsushita appears unruffled. It has "more than 60 percent of the market in terms of installed IFE systems," according to Alan Pellegrini, senior vice president of marketing and operations for Matsushita Avionics Systems Corp. (MASC).
"Basically, MASC’s 3000E system [which includes VoD] got into the market before Collins’ eTES and before Thales’ i-Series," Weltsch explains. "This will keep them ahead of the game for now. However, competition will heat up in the next couple of years, when eTES and i-Series penetrate the market."
Matsushita also is updating the 3000 system with provisions for laptop connectivity, calling it the 3000-i. So far the company has signed on three launch customers for the system: Northwest Airlines, Emirates (United Arab Emirates) and EVA Airways (Taiwan). MASC is beginning to deliver equipment for these customers’ Boeing and Airbus aircraft.
At the same time, MASC is developing its new single-aisle IFE product, called eFX, designed to provide both entertainment and connectivity. MASC also is launching a new product from the software applications side of the business: its short messaging service (SMS). The interface, an IFE seatback display, replaces the laptop and allows passengers to call up a "soft" keyboard and type in and send short messages.
"It’s not e-mail in the pure sense, and you can’t access your corporate inbox, as with some services, but this [SMS messaging] can be done over existing communications that don’t require high-speed data bandwidths," says Pellegrini.
While not confirming a formal alliance with Connexion by Boeing, Pellegrini claims, "Connexion is focusing on being a broadband service provider and we are focused on being a broadband aircraft network provider. So our product aligns very closely with the services they wish to provide."
Playing Catch-up
Thales Avionics Inflight Systems (AIS) continues to run third in the market, with some 10 to 15 percent of the business–but understandably so. The French-based company has not had a new product to offer until recently. Its modular i-Series is just getting off the ground; the first installation was on an Airbus A318 in July. Japan Airlines (JAL) is a launch customer for the i-1000 version, a broadband Ethenet network that will update JAL’s older Thales M-Series.
The i-1000 provides laptop connectivity to a server. Content can be cached on board or be connected (to the Internet) via an Internet service provider (ISP) like Connexion or Tenzing.
Middle East Airlines recently has inked a contract for the i-3000 in-seat distributed audio/video version. The i-3000 system is targeted for the narrowbody market, which typically has been limited to overhead video.
Airbus is offering to install the i-Series on both twin- and single-aisle aircraft, and considers it the only IFE system designed and ready for its new A380 jumbo jet, Thales claims. "Thales has an ‘in’ with the Airbus market and will get some market share from that relationship," says Weltsch.
For Boeing aircraft, Thales is working on a technical services agreement to qualify its new system on new Boeing aircraft. Thales AIS also is concentrating on establishing a software products and services group.
Live TV
It appears that most major carriers are awaiting the advent of true broadband connectivity before making the leap to in-flight live television. Yet two smaller, pioneering U.S. carriers, JFK-based Jet Blue and Denver-based Frontier Airlines, have made the leap.
Jet Blue has used Live TV–a partnership of Hughes� Direct TV (content), Harris (antenna) and Thales (in-seat video display)–to distinguish itself from other major airlines that also use JFK as a hub, Weltsch explains. Frontier is following a similar strategy at the Denver hub, he adds.
Weltsch expects use of live television to grow and be adopted for transcontinental flights. But it probably will be confined initially to North and South America, where Direct TV satellites currently provide service. Although there are other TV providers, he feels that live TV coverage worldwide is limited.
TEAC: Narrowbodies and Retrofits
A major equipment supplier in the in-flight entertainment industry–TEAC America, a subsidiary of TEAC Corp. of Tokyo–is offering a way to upgrade IFE systems at less cost. TEAC, based in Montebello, Calif., is supplying its new digital audio and video file servers, which combine both DVD (digital video disc) and solid state memory for video playback on board All Nippon Boeing 747-400s.
This new line of file servers offers "fewer moving parts and greater reliability," according to Al McGowan, sales and marketing manager for the company, which pioneered Hi-8 mm video on commercial airliners. There are various configurations: DVD and solid state, or hard disc and DVD, or just hard disc drive applications. Customers wanting more capacity will opt for a hard disc drive, which holds up to 60 hours of video content. TEAC also claims that its new digital systems have mean time between failure (MTBF) rates two to four times greater than tape-based systems.
Requiring no aircraft modification, TEAC’s digital file servers are designed to upgrade tape-based IFE platforms. The system was designed for airlines that choose not to invest in new IFE systems, says McGowan. TEAC provides its servers directly to airline customers for retrofit, as well as to the IFE makers, Boeing or Airbus, or their integrators.
"Business had been all right up to the last couple of months…and then deliveries went down," says McGowan. "A lot of airline retrofit programs were pushed back, so we’ve seen a dip in Hi-8 mm orders, but we’re just now ramping up with the new digital product line."
McGowan sees TEAC’s concentration on new narrowbodies and retrofits as a market niche, as newer widebodies increasingly adopt video on demand. "Our product is for distributed systems, including in-seat," he says.
As of August, 2002, TEAC was scheduled to introduce a new moving map product–using computer-generated images linked to the aircraft’s flight management system–at the World Airline Entertainment Association (WAEA) show in Seattle in September.
Companies
Baker Electronics Inc. www.be-inc.com
BOSE Corp. www.bose.com
Demo Systems LLC www.demosystems.com
ECS www.ecsdirect .com
EMS Technologies www.ems-t.com
Hollingsead International www.hollingsead.com
Intro Corp. www.introcorp.com
Matsushita Avionics Systems Corp. www.mascorp.com
Autronics Corp. www.autronics.com
Rockwell Collins Passenger Systems www.rockwellcollins.com
Securaplane Technologies www.securaplane.com
Sennheiser Electronic www.sennheiser.com
TEAC America Inc. www.teac-recorders.com
Thales Avionics Inflight Systems www.thales-ifs.com
Universal Avionics Systems Corp. www.uasc.com