But what a difference a year makes. WENCOR now owns IMS, or is about to...as well as APS. I would venture a guess that the day of the free IFE device is just about over unless the airlines begin to revenue share in lieu of up front costs. I wonder which tact WENCOR will take as it moves to monopolize this market segment. It certainly can offer both models depending on the airline`s cash flow situations.

Knowing what we now know today, reread this article from last September to see how not only did the digEplayer have the largest market segment back then but continues to today...and notice how little progress IMS made this past year with market penetration. I would venture a guess that WENCOR got IMS on the cheap and now dominates the embedded systems market, if by nothing more than a elimination of the competition. Strategic move if nothing else...not to mention getting whatever technology/personnel IMS had to offer.

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Airlines to Offer Portable Entertainment

THE MIDDLE SEAT

By SCOTT MCCARTNEY

Anaheim, CA (September 28, 2004) - Airlines have a new strategy to make flying less boring. Instead of the huge expense of retrofitting planes with fancy satellite television systems and in-flight Internet access, cash-strapped airlines are pursuing a lower-tech entertainment option: portable devices that can play movies, TV shows, even books on tape.

In November, AMR Corp.`s American Airlines, the world`s largest carrier, will begin testing a device called the ``Pea`` -- Personal Entertainment Appliance -- that offers movies yet to be released in video stores and electronic versions of newspapers and magazines that will be updated daily. Virgin Atlantic Airways will offer a portable device called Yes -- Your Entertainment System -- on some of its 747s beginning next month. And several airlines are planning to roll out a device called the ``digEplayer`` after its successful launch by Alaska Airlines.

IMS ``PEA`` -- Personal Entertainment Appliance Who will use it: American Airlines

Not only are the portables cheaper to deploy than a cabin entertainment system or high-speed Internet access, but they also give airlines the chance to earn some extra money. Alaska has been selling digEplayer service for $10 a flight. Industry officials say the service has been both profitable and popular, and Alaska plans to expand the supply of portables on its planes.

Airlines will likely offer the ``Pea`` free to first-class and business-class passengers and charge $6 to $8 per flight for coach passengers, according to Michael Childers, a consultant to the device`s manufacturer, Integrated Media Solutions Inc. Some programming, particularly ``early window`` movies, available 60 to 90 days before their DVD release, will be offered on a pay-per-view basis. Those films will cost about $4 to $5, while older movies likely will be priced at $2 to $3, IMS says

But much of the other content, including music videos and games, will likely be free on the Pea. With newspapers and magazines, the airlines may test out both ways -- giving them for free and also charging for them -- to see which model makes better sense. In the case of books, one possibility is that the airlines will give passengers a sample -- the first five chapters, for instance -- and then have a link to an Amazon.com page where they can buy the whole book. With digEplayer, which doesn`t have a credit-card swipe built in, flight attendants collect a rental fee for the device and there`s no additional charge for content.

For airlines, the emergence of a new revenue source is a significant development, given the industry`s precarious financial state. Making customers pay directly for these features is a far safer option for the carriers than allocating scarce funds to overhaul an entire cabin at a time when the demand for these services is still untested.

APS digEplayer Who uses it: Alaska Airlines, KLM, Royal Dutch Airlines, Hawaiian Airlines, JetsGo, Ryanair

Wireless Cabins

The major airlines are under pressure to match the entertainment offering from the discount airlines, which have been buying new planes already fitted with satellite TV and radio systems. As a result, ``even in bankruptcy, a lot of airlines are still focused on the passenger experience,`` says Michael J. Tiffany of the Airshow Systems division of Rockwell Collins Inc.

Portable players, which offer travelers conveniences such as being able to pause programs for dinner, discussion or trips to the bathroom, may be the first step to wireless hot spots in the airplane cabin. Eventually, airplane cabins are expected to have wireless Internet access and large amounts of programming, including video-on-demand, radio and television. Passengers will be able to log in with their own laptops, or rent Internet-enabled devices from airlines.

Companies have been experimenting with some other entertainment services. American, for example, has given Panasonic DVD players to first-class customers on long flights. And airports in more than a dozen cities, including Seattle, Boston, Cleveland and Atlanta, have companies that will rent music players to passengers for their flight -- they drop off the machines when they reach their destination.

After bottoming out at $1.4 billion in 2002, annual airline spending on in-flight entertainment is growing sharply, up 28% to an estimated $1.8 billion this year, according to the World Airline Entertainment Association, a trade group of airlines, equipment manufacturers and Hollywood types.

American is looking specifically at portables as a way to put entertainment on its single-aisle planes that either don`t have any screens, or offer an overhead screen showing a single movie or taped TV program. Portables will be tested on MD-80 aircraft flying from Chicago to a West Coast city, said Mary McKee, American`s managing director of in-flight products.

Test Markets

``We realize we do have a deficiency`` with airplanes flying routes as long as four hours with no entertainment, she said. ``This can be an interim solution because it`s cost effective and you`re not modifying aircraft.``

General Dynamics ``Yes! Solo`` Who will use it: Virgin Atlantic Airways

American will put portables on an aircraft for a few weeks during the test, then move the devices to another plane flying in a different market. Customers won`t know in advance whether their plane will have the portables during the test period.

A test is also expected on Boeing 757 airplanes flying head-to-head against JetBlue Airways, which offers satellite-TV screens to each passenger, between New York and Long Beach, Calif.

Ironically, it`s been the low-cost airlines that have been leading the way on in-flight entertainment despite their cheap ticket prices. JetBlue started pressuring airlines by launching satellite television. Frontier Airlines followed, as has Delta Air Lines` low-fare unit, Song, and Canada`s biggest discounter, WestJet.

About a year ago, Alaska Airlines began offering the digEplayer, created by entrepreneur Bill Boyer who worked weekends as an Alaska baggage handler in Seattle. APS Inc., Mr. Boyer`s Tacoma, Wash., company, has expanded digEplayer to KLM Royal Dutch Airlines, Hawaiian Airlines and Jetsgo in Canada. Earlier this month, even barebones carrier Ryanair signed on, always looking for ways to sell something more to passengers.

The digEplayer has a 7-inch screen and updates its content every 30 to 60 days. The Pea, by contrast, has a 10.5-inch screen and the ability for overnight content updates. The Yes machine, built by General Dynamics Corp., has a bigger screen and more storage, but is more expensive, airline officials say.

With the Pea, the ports are sealed so users can`t steal content -- a major worry in Hollywood. The Pea, which has a built-in credit-card reader, holds 12 to 20 movies, plus TV shows, music videos audio programming such as music and electronic books.

IMS will let airlines have the portable devices for almost nothing. But most of the carriers talking to the company want to help cover up-front costs so they can get a piece of the revenue. They see it as a way to improve the finances of flying.