|Robert, The Dow Jones newswire we posted last week ran TODAY in the WSJ. That's worthy of a repost. |
WSJ! Nice early Christmas present.
WSJ(12/18) Live Television Is Coming To The Highways
[ 17th December 2002 ]
By Michelle Rama
Dow Jones Newswires
NEW YORK -- Generations of parents who have dared to venture forth on the open road with kids and their short attention spans soon may be greeted with a new complaint: "We're there already?"
Early next year, KVH Industries Inc., Middletown, R.I., intends to go public with an entertainment medium new to American highways -- live, color television.
Although TV screens are popping up in vehicles everywhere, many are good only for playing videotapes or digital videodiscs. KVH plans to connect mobile TVs to 500 channels of live satellite TV and 400 kilobits-per-second data links for high-speed Internet access, Chief Executive Martin Kits van Heyningen said.
KVH and other companies have this service available for recreational vehicles, boats and planes. But the technology isn't practical for small cars and sport- utility vehicles. "There's no way to get a live picture into a [moving] car right now," Mr. Kits van Heyningen said.
Having found a way to direct a moving antenna at a satellite 22,000 miles above the Earth within one degree, KVH is working to make the technology small enough to fit on cars or SUVs.
The 23-year-old company has sacrificed about two years of profitability in order to develop its gyrostabilized antennas, which enable moving vehicles to lock onto satellites. The company also makes navigational devices and fiber- optic gyros, which are used by the U.S. military for gun-turret stabilization, among other things. Mr. Kits van Heyningen predicts satellite communications, which makes up 60% of KVH's business, will become the fastest-growing of the company's three businesses.
Observers aren't certain how much demand there will be for the antennas, but some have compared it with the satellite-radio industry, dominated by XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc., both of Washington, D.C. XM Satellite Radio, the largest broadcaster, has more than 200, 000 subscribers and Sirius has about 15,000 subscribers. XM Satellite charges $ 9.99 a month for its service, and Sirius Satellite subscribers pay $12.95 for the service, which launched nationwide in July.
"With 200 million cars on the road, and 40 million commuters that go at least 45 minutes each way on their commute, maybe [KVH] can complement the satellite radio -- we're seeing strong demand for satellite radio," said Robert Peck, an analyst who covers the industry for Bear Stearns Cos. in New York.
However, Jim Collins, vice president of corporate communications at Sirius Satellite, doesn't believe KVH's service will take away business from satellite radio. "I don't see how we would be looking at this as anything that would affect us," he said. "It's apples and oranges."
Pierre Maccagno, an analyst with Needham & Co. in New York, said the low- profile antennas should "significantly expand" KVH's market.
But Mr. Maccagno expressed concern about the release date, set for early next year, because the company has been pushing back the launch for several months. The company planned to begin marketing the antennas late this year.
Mr. Kits van Heyningen said the antennas will first be sold as an after-market product designed to mount "attractively" on vehicles' roof racks. As popularity rises, he said, the antennas may be built into the vehicles at the factory and made barely perceptible. "The issue isn't the antenna technology, it's building the business relationship" with auto makers.
Engineer and former satellite-industry analyst John Stone believes there is considerable room for growth in the market. "Potentially, this market can be much larger than the niche-market play toys of the rich," he said.
The same customers who are buying rear-seat entertainment systems could become KVH customers, Mr. Stone said. "This includes not just affluent enthusiasts, but families with SUVs and minivans who want video entertainment during family trips."
Although KVH has been selling antennas for boats for several years, its recreational-vehicle antennas, marketed as TracVision, have been rising in popularity since their introduction in 2001. In recent months, the company has received orders from several RV dealers who will offer TracVision as an option in 2003-model motor homes, including orders from Fleetwood Enterprises Inc., a Riverside, Calif., RV company. Featherlite Inc., Cresco, Iowa, in June said it would equip all its 2003 Vantare luxury coaches with KVH's satellite high-speed Internet and satellite telephone-and-TV technology.
If demand for the RV antennas KVH has on the market is any indication, then the smaller-sized antennas should be well-received, Mr. Maccagno said. And if the satellite antennas are as popular as hoped, KVH is prepared to boost capacity should it be flooded with orders once the antennas become available.