Bill,
I think you're mistaken in your analysis and this is why: according to your analysis, TAVA's income from the license of their methodolgy/CD derives principally from the payment of a one-time license fee. I think you're wrong: I think that part is the "tail." However, I do not believe the "dog" attached to the tail are consulting fees/hourly rates charged for a small army of TAVA engineers, but rather are the incremental fees the licensee/customer pays to access the 30,000+ database at $200 or so a hit.
As I understand it, a single small factory may have 1500-3000 separate items that may need to be assessed for Y2K risk (for these purposes, I'm treating any number of such items that are identical as a single item). The licensee/customer, using the Plant Y2K methodology, gathers all the information necessary to distinguish similar but not identical items from each other; at the conclusion of that effort, which may be conducted by a TAVA engineer or by the licensee/customer's own engineer, the licensee/customer has a complete inventory of at-risk items, but still doesn't know which are at risk and which are at not. At that point, the licensee/customer can decide whether it will try to track down the information about each item's compliance status from the individual vendors of the items (who may or may not make it available or may not themselves even exist any longer) independently, or whether the licensee/customer will obtain the information they need by accessing the growing database, paying a "per hit" fee. If information about an item isn't at present included in the database, the licensee/customer can pay TAVA to obtain the information, either by researching or testing the item's compliance status, at an hourly rate.
It's my belief that the real profits will be experienced from licensees/customers per-hit payments to access the database because such revenue will not be constrained by TAVA's ability to hire more engineers and the growth of the database is, in essence, subsidized by existing customers who pay TAVA to research/test items not yet on the database. Consequently, I just don't see the analogy to Ardes 2K, nor do I see the categorization of TAVA as a "consulting business". As I see it, they are in the business of selling information, at least with respect to Y2K. They may -- in addition -- be retained to do resulting remediation (and the growth of remediation revenue would be dependent on their ability to deploy the troops), but I view that as largely follow-on business relating to their core business.
JMO. Best regards,
Cathleen |
