RE: Unsolicited Response - Sunpoop
posted on
Oct 16, 2005 10:13AM
We must assume that Wencor/Digecor`s development contract with Triad specifies that all discoveries/innovations,/etc. derived through the efforts of that contract will be owned outright by Wencor/Digecor. For this, they will pay a premium. If Triad could see the possibility of such discoveries, releasing rights to same decreases their vested interest in the project (no ancillary income to be derived downstream). Thus, a premium. Their effort will be expensive, IMO, from this standpoint AND:
Unless Triad is extremely confident that it can produce the specified product/outcome (a device with all attributes of the digEplayer/prototype or envisioned digEsystem, which can be built for less than a designated cost) by a date certain, they wouldn`t perform under a firm-fixed-priced contract. It`s development work, with all associated risks to the performer. So I would strongly suspect that it would be a cost-plus-type contract with peformance milestone incentives (the ``plus`` being fees/profit to Triad). This fits with the above, as it is common that cost-type contracts grant ownership rights to the customer. So cost-plus....the most expensive (typically) form of contracting.
BTW, IF Wencor/Digecor AND Traid did not do exactly as stated above, they are novices in contracting and in doing business. JMHO.
All that being said, IF certain discoveries are made in this effort, and Wencor/Digecor does own them AND they manage to market (license) them to others, the up-front costs could be mitigated by this potential. However, I seriously doubt that Wencor/Digecor is thinking along these lines, or has any desire to attempt to market technology in this realm. I think they`re simply looking at the near term (though, at minimum, months away) carrot, and CONTROL.
Bottom Line IMO is that it`ll cost Wencor a lot more going this route than having just cooperated with EDIG. Not only is it possible (if not probable) that Triad will never meet the end item cost-to-produce objective, but, while all this is going on (tick-tock), competition is coming that`ll will steal significant (if not all) market share by coming to market first (talking digEsystem here, with digEplayer competition as well). So even if Triad is successful, even in a reasonably short time, it may be too late to capitalize (and, unfortunately, even if Wencor were to jump back to EDIG at this point in time, it`s probably too damn late, IMO). This series of mis-moves by control freak Wood will almost certainly be his undoing in IFE (nice try, but did he really try?).
Just exposing my background as a Contracts guy at a R&D company, and basic business knowledge.
BTW, as I`ve noted before, Triad`s manufacturing partner is here in the USA. Can they produce at a lower price than Asians? Does Triad have any experience contracting with non-USA entities? This is high tech. Do they have experience in compliance with the ITAR and EAR?
SGE