2004-10K page. 9

COMPETITION

The competition is very strong in the field of portable digital music players.
The first MP3 player was brought to market in November 1998 by Diamond
Multimedia Systems, Inc. Other manufacturers, including Archos, Creative Labs,
Denon, Apple, Thompson Multimedia's RCA division, iRiver, LG Electronics,
Philips, Samsung, Sony, Sanyo, Toshiba, and others, have released or announced
plans to sell portable digital music players, most using the MP3 format. Other
manufacturers may announce products in the future.

The competition is also expected to be strong in the digital video player field.
Many large manufacturers currently market various forms of component or handheld
digital video players, including Panasonic, Sony, Samsung, Hitachi, RCA,
Audiovox, Philips, Daewoo, General Electric, and Toshiba. Other manufacturers
may announce products in the future. Although we are early adopters of the DivX
video compression technology, there can be no assurance that other manufacturers
will not create and introduce competing products also incorporating this video
compression technology.

Competition in the in-flight entertainment (IFE) industry comes from portable
DVD hardware manufactured by companies such as Sony, Samsung, Panasonic, or
Audiovox, who may sell such products to travelers or airlines. The airline
industry may also opt for embedded IFE systems, although the retrofitting costs
for an embedded system typically make our current IFE system a more attractive
option. Motion picture studios could contract competing hardware developers such
as Digital5, M-Systems or Datalight to create new portable products for the IFE
industry. Although our system has unique features and the support of content
providers, there can be no assurance that other manufacturers will not create
and introduce competing portable IFE products.

-iam