NEWS FROM EDIGITAL JUST OUT.
(BSNS WIRE) e.Digital Corporation Issues Letter From the President
e.Digital Corporation Issues Letter From the President
Business Editors
SAN DIEGO--(BUSINESS WIRE)--March 14, 2000--e.Digital Corporation
(OTC: EDIG) In a letter to shareholders of e.Digital Corporation
issued today, President & CEO Fred Falk outlines the company's recent
progress.
The following is a direct communication from e.Digital president
and CEO Fred Falk:
Dear Shareholder:
This letter is to keep our shareholders informed of our recent
progress and answer some of the questions we are currently fielding
about e.Digital, its technology and its future.
NASDAQ Listing
Our application with NASDAQ is progressing. We have been assigned
a NASDAQ listing officer with whom we are exchanging information as a
normal part of the listing process. Although there is no set time
frame for the listing process, based on our familiarity with the
process and listing requirements, we expect it may take anywhere from
several weeks to a few months to complete. We strongly believe it is
in our best interest to move from the OTC Bulletin Board to NASDAQ.
Internet Music Player
It is an exciting time to be involved with the emerging Internet
music market. Where traditional music stores offer cassettes and CD's
-- physical objects -- the new distribution model for music will
involve delivery of music files over the Internet for a fee. Users can
then untether themselves from their desktops using portable Internet
music players like the one e.Digital has designed.
We have created a full menu of features and flexible options for
our customers. Our OEM (Original Equipment Manufacturer) customers and
licensees can select the options suitable to their customer base,
including the look and feel of the product, button layout, case
material and color, etc. We also offer industrial design (ID) services
and manufacturing services to our customers through our ID and
manufacturing partners, and as a result can deliver packaged, finished
goods bearing our customers' brand(s).
Our business model is to license our patented and proprietary
technology to OEM's for use in branded products which they will market
and distribute to the retail consumer. These licensing agreements
provide e.Digital licensing fees and/or royalty fees on each unit.
e.Digital's multi-codec, portable Internet music player design
supports the major music compression technologies (known as codecs)
and the most popular Digital Rights Management systems (DRMS's).
Knowing that the top five record labels most likely will not agree to
a single codec and DRMS, our engineers developed a design that is
highly flexible and field upgradeable. We continue to work closely
with the Recording Industry Association of America (RIAA), the Secure
Digital Music Initiative (SDMI), and the top five record labels to
ensure that our music player design will play prime content when it
becomes available online. The major record labels who control rights
to approximately 85% of the most popular music content are very
concerned with sound quality -- which we address by offering a design
that plays multiple formats without transcoding, or recompressing
files -- and they are concerned about piracy -- which we address by
supporting a number of DRMS's. We believe that multi-codec support and
multiple DRMS support will be crucial as the Internet music industry
becomes mainstream.
e.Digital/Maycom Agreement
On January 5, we announced Maycom as our first licensee for the
MicroOS(TM)-enabled portable Internet music player design. Maycom is
more than a licensee; they are also our partner in manufacturing and
marketing our music player design to various OEM customers. Their
record of success with branded MP3 players and other portable digital
devices is an asset in our efforts to promote and produce new designs
built around e.Digital's core technology.
Since the beginning of January, we have made swift progress
together on industrial design and prototype work for several
prospective name-brand OEM customers. Additional features have been
incorporated which add value and versatility to the
already-user-friendly design. This results in a very competitive,
unique Internet music player in a market that Forrester Research
expects to reach 32 million total units sold by 2003.
Let the Music Play
In the past two weeks, two major record labels have come forward
with announcements that their music will be available online for
download this Spring. Universal, the world's largest music label, and
EMI, one of the top five, have both announced plans to set up online
music distribution. This is exciting news for the entire Internet
music industry as it indicates a commitment to move forward this year
and meet the market demand for popular music. This is the news the
Internet music industry has been waiting for. We believe these
announcements and developments by the major record labels will trigger
consumer demand and significant OEM activity in this new market.
Voice Recording Technology
In addition to an Internet music player design, e.Digital has
portable voice recording technology which we license to OEM customers
for business and dictation use. Developments in the speech technology
industry continue to open doors for us. Advances in voice-to-text
programs and voice command recognition programs from third parties
(such as IBM, Lernout & Hauspie, and Dragon Systems) make new product
categories possible. Powerful systems connected to phone lines and/or
PC's, formerly the exclusive territory of huge conglomerates, are
becoming more accessible to smaller businesses and individuals. Our
portable digital voice recording technology is capable of interacting
with these systems so that consumers do not have to be out of touch
with their desktop speech technology even when they are away from
their desks.
As illustrated by Lernout & Hauspie's recent purchase of
Dictaphone, we are seeing important developments in the speech
technology industry. Hardware companies and software companies are
joining forces and combining technology to make the most of this
emerging market. We can add portable capability to these systems. We
continue to devote research, development, and marketing efforts to
applications for our technology in this area.
Most laptop and palmtop computers are still too complex for most
consumers. We expect future portable products to emerge with larger
screens, no keyboards or electronic "pens", using voice-prompted,
and/or voice-activated programs for storage, retrieval and playback of
data. These products will take advantage of technology to make the
user interface more natural and make products easier for non-technical
consumers to use. Our engineers are focusing their efforts in this
exciting new arena.
e.Digital's Future
Just as consumers demanded mobile telephony, consumers now demand
portable access to Internet content. Through our partnerships,
relationships and technology, we have positioned e.Digital to be a
premier OEM technology provider for the new Internet industry, in
creating and marketing portable wireless devices to retrieve and play
back the vast stores of information available now and in the future
via the Internet. We are working with global companies to build a
future of portable, Internet-compatible appliances using convergent
technologies to retrieve, store, and play back voice, text, still
images, music, and full-motion video.
As we move forward with our business plan in our daily operations
we do not lose sight of the bottom line. We appreciate our
shareholders and we value your feedback. We are making very important
progress in executing our key strategies. I am more excited than ever
about our business and future growth and success. The portable
Internet products industry and Internet music industry are just being
born and we believe that this is only the beginning of a new,
multi-billion-dollar industry.
Sincerely,
Alfred H. Falk
President and CEO
Safe Harbor statement under the Private Securities Litigation
Reform of 1995: This document contains forward-looking statements
relating to future performance, technology and product development
that may impact on future results and the future viability of the
company. Actual results could be affected or differ materially from
those projected in the forward-looking statements as a result of risk
factors such as: future products and results; technological shifts;
potential technical difficulties that could delay new products;
competition; general economic conditions in the markets in which the
company operates; the ability of the company, its customers, and
suppliers to solve latent Year 2000 compliance issues; pricing
pressures; and the uncertainty of market acceptance of new products by
OEM's and end-user customers.
Note: e.Digital and MicroOS are trademarks of e.Digital
Corporation. All other company, product, and service names are the
property of their respective owners.
--30--JS/sd*
CONTACT: e.Digital Corporation
Robert Putnam or Wendy Ravenel, 858/679-1504
robert@edig.com or wendy@edig.com
or
The MWW Group (for e.Digital)
Matt Messinger, Public Relations, 201/964-2377
mmessing@mww.com
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: INTERNET INTERACTIVE GAMES/MULTIMEDIA
COMPUTERS/ELECTRONICS SOFTWARE
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