They now have two of the leading IFE competitors under one roof now with the ability to meld and improve their offering....and all done in less than one year.

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IFE and connectivity markets to boom over next five years

From Jeau

PostID 411330 On Friday, July 08, 2005 (EST) at 7:14:52 AM

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Frost & Sullivan: ``IFE and connectivity markets to boom over next five years``

July 7, 2005 - ``THE airlines can now play the differentiation game better than ever,`` says Dr Binny Prabhakar of international consultancy Frost & Sullivan in the conclusion to her study In-Flight Entertainment and Connectivity - Shifts in Paradigm and Competitive Dynamics, to be published this month. ``The recent introduction of several new IFE and connectivity (IFE&C) hardware and software platforms has increased their ability to create distinctive offerings tailored by class, flight, region and other criteria.``

Dr Prabhakar expects this new flexibility to contribute to a near-trebling in the size of the IFE&C hardware and services market between now and 2010. She also identifies a trend towards a reduced financial burden on airlines as a result of outsourcing, risk-sharing arrangements, and lower capital and operating costs, as well as a proliferation of what she calls ``Personal IFE’’ aboard the aircraft.

Driven by the introduction of broadband and onboard cellular services, this would see passengers using either the aircraft’s own systems or personal wireless devices to download, organise and play back an individual choice of entertainment and information.

The study opens with a review of legacy IFE and communications, an analysis of the drivers and restraints in that market and forecasts of its value, a description of the industry’s structure, and a look at the competitive strengths and weaknesses of the contenders. ``Legacy IFE and communications means embedded proprietary hardware, stored content and phone service,`` comments Dr Prabhakar. ``The emerging model adds portable IFE players, satellite television, personal IFE, Internet and cellular connectivity, and next-generation embedded IFE systems.``

Dr Prabhakar sees always-on connectivity as a potentially revolutionary force. “Always-on connectivity will tend to supplement IFE in the short term,” she says. “But in the long run it could transform IFE&C by giving passengers the freedom to choose their own entertainment and information, downloading it from the Internet or from aircraft servers to the in-seat system or to their own devices.”

The study acknowledges the part played by the low-cost carriers in promoting two of the new elements in the IFE&C mix - the handheld IFE systems and inflight live television.

“After breaking new ground in the way airlines operate, the low-costs have now started addressing IFE&C,” writes Dr Prabhakar. “Alaska Airlines was the first to offer a handheld solution, while JetBlue pioneered live television. In doing so they have helped to increase the size of the overall market, to the benefit of the whole industry.”

There could be pitfalls attached to the new capabilities, however. “Airlines seeking a marketing advantage from IFE&C need to be sure that their offerings measure up to what the passenger is used to on the ground,” she warns. “Imagine the exasperation of a passenger trying to use a narrowband link to surf the Web, for example. If airlines want to trade on the IFE&C experience they offer, it’s imperative they do not create expectations they cannot satisfy.”

Similarly, the carriers must address the possibility that passengers with personal wireless devices will drift away entirely into managing their own entertainment, leaving the airline offering behind. “If the passenger’s attention is thus lost, IFE&C as a criterion affecting choice of airline will be nullified.”

Despite these potential hazards, the study sees the global IFE&C market growing at unprecedented rates - from today’s $2.0 billion to $5.5 billion five years from now.

Based on surveys across a spectrum of stakeholders in the aviation and telecoms industries, the study will be available through the Frost & Sullivan Website (www.frost.com) from next Monday.

http://www.shephard.co.uk/Inflight/Default.aspx?Action=-1000945703&ID=af1358d3-99a0-4945-a15d-449ed7f1b501