Note from the Shareholders' Meeting:
Fred's presentation started with the Monty projects of the industry's potential. Basically there are a lot of devices out there that require monitoring. Some of them are not so sexy but probably exactly what DBSS's technology is set up for. Catoidic monitoring, (which I probably have spelled wrong. It is in the Monty report.) is a measurement of the resistance within a pipe metered by placing a magnetic field around the pipe and checking that field against a rod driven into the ground a given distance from the pipe. That measurement lets the pipe line owners know if it needs servicing. Pipes like the Alaskan oil pipeline, natural gas lines and water mains all use this type of monitoring. Not sexy, but as I recall the numbers there are more of these devices then cellular telephone opportunities in the world.
The chart showed 580 million potential uses and users within the U.S. and 986 million in the world excluding Asia. That does not mean that DBSS won't go there, it just was not included in the data.
Next Fred went to a chart on why DBSS will succeed. His chart points and some of the related comments are below:
Not an Aerospace Company:
The issue that he sees for DBSS competitors is that most of them have a need to keep a large manufacturing arm busy. Thus they make a lot of projects to keep the staffs busy. Many satellites, lots of overhead and all needing to be feed. DBSS is taking a functional approach and has no vested interest in defending a manufacturing process or overhead. Thus is more objective on what will work and more efficient in designing its payload to just get the job done in a very low overhead environment. Where it might cost the big boys $10,000 to turn on a light switch, DBSS is trying to insure its costs are much lower.
Specific Market Focus:
While some of the competition wants to be all things to all comers, DBSS has chosen to be very specific in its design to select the customers that DBSS can service very well. They are targeting "data that can wait and does not move". In the pipeline example, the pipe needs to be checked every of often but is not moving. At least we hope not. So it is data that is critical but can be monitored daily, weekly or monthly. Perfect for the DBSS design. Chasing tractors for their maintenance is possible, but the focus is on the easier to implement aspects of the technology. IMHO, this makes perfect sense. Generate a cashflow from the uses that are easier to execute and then go after the tougher projects. Given a half billion potential uses in the U.S., there should be plenty to achieve revenues on using this approach and it is less R&D intensive and lower risk.
Superior Technology:
These guys have thought this through in a lot of areas. They clearly have searched the world over to get the best technologies. The reason for selecting Eurockot was they are the only ones on the planet with a fireable third stage rocket. This is a Russian design that we don't have. What it does is it allows for precise placement of the satellite by having the firing and flight control that is not available on any of the other systems in the world today. Proper placement of the satellites is what will allow DBSS to service the system with fewer units in space. These guys are thinking efficiency, and looking the world over to get it.
The narrow band selected by competitors features a slightly different frequency for each transmitter to identify their signal. DBSS has chosen CDMA, which means each packet of data comes with an address attached to identify that data. CDMA is an out growth of the U.S.'s submarine efforts in monitoring the Soviets. Pushing a signal through the oceans to get back to the U.S. was difficult. The strategy that worked is what is now becoming _DSL and CDMA technologies. Just like _DSL will allow faster communications to your modem, CDMA has advantages in getting into space. Even though it was a cold war, ain't' it great we get new technology.
The benefit to DBSS is that the power required to transmit that signal is much lower. Rather then screaming to be heard, the address is read and it tells the system who it was that was talking. The current design of the transmitter for DBSS is credit card sized, and requires 1.6 watts to operate. The narrow band approach requires 9 to 12 watts of transmission power. The battery efficiency alone causes this to be superior technology. All thanks to selecting CDMA as its communication protocol, of which DBSS is the only licensee in the world.
Proper Strategic Partners:
I mentioned in my earlier post the ALA importance and their lead in satellites. My notes show that France started in this area in 1989, we started in 1992. Three years is a significant lead in a new market. And the landing rights in the French territories are not insignificant.
The Eurockot advantages were explained above.
SSTL, Surrey, is a great innovator in micro technology on satellites. Fred reported that the 6 satellites will be completed and ready for launch in Q4 of 2000, and that their construction is proceeding today. This too is a significant strategic partner. Visit their website to see what they have done:
sstl.co.uk
You will probably be impressed.
Lowest Cost Supplier:
The design of the current transmitter is a cost of $50 per site and will be given to major clients to duplicate for signing up on their service. The low power usage and the low cost of a transmitter allows the focus of price to be on what benefits the company and shareholders the most, the price of the systems use. Which can be lower to accommodate market demand because the design of the system is more efficient.
From there the meeting went to questions which I covered in the prior post.
All of these two posts are based on my impressions and understandings are subject to interpretations and my bias in opinion. I am long the stock at approximately $4.50, and it represents 50% of my current holding.
Later, Dennis
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