Tinroad's e.Digital Information For Technophobes:
What on earth are these people talking about?
For those who are bewildered by all the techno-babble being bantered about on this board, the following is a brief summary in layman's term of the technologies e.Digital and their partners are involved with.
A DSP is a Digital Signal Processor, a type of integrated circuit that processes digital data such as that recorded on a Compact Disk (CD) or computer hard drive, converting it (in this example) to an audio signal for playback through earphones or a hi-fi and speakers. The biggest player in DSP design is Texas Instruments (an e.Digital business partner), but Intel and others are also marketing DSP chips. Intel in particular is working with e.Digital to develop a VTT/TTV (Voice to Text/Text to Voice) hand-held device that may be able to record your voice, store it as a digital audio file or convert it to legible text for transfer to a PC, receive your e-mails or other text files (such as on-line newspapers, etc.) via wired (regular modem or cable modem) or wireless (cellular phone) internet access, convert the text to an audio format and read it aloud to you, etc.
Flash memory is rapidly gaining acceptance as the preferred form of mass storage for hand-held digital devices. Current cards store the equivalent of 25-100 floppy disks of data on a card less than 1/4 the size of a single 3 1/2" disk, with even higher capacity cards coming to market in the next 6-12 months. The cards are finding their way into Personal Digital Assistants (PDAs) like 3Coms Palm Pilot, state of the art cellular phones, palm-sized computers, and various other high-tech gizmos. One of EDIG's long-standing business partners is SanDisk (SNDK), a leading flash memory card manufacturer whose stock has quadrupled since May.
EDIG has done a lot of work in the area of voice recording in digital format, such as is found in digital answering machines, etc. They have also developed a superior, multi-patented software program (MicroOS), a very compact operating system for management of digital data stored in flash memory cards and other high-density storage devices. Flash memory is non-volatile, requiring no power for retention of data after it is initially stored (like a magnetic tape or computer hard drive), and is much faster in operation than hard drives (read/write times measured in micro or nanoseconds rather than milliseconds).
Lucent contracted e.Digital to develop a Walkman-type device for playback of digitally-recorded music stored in compressed form on flash memory cards. Lucent has spent over seven years developing EPAC (Enhanced Perceptual Audio Codec), a compression/decompression (codec) software program that reduces a typical CD album's 550 megabytes of data down to 50 megabytes. The compressed data files are much faster to download from the internet and require only 9-11% as much storage space; yet, when decompressed, yield sound quality virtually indistinguishable from the original, uncompressed music. e.Digital has produced numerous prototype devices for Lucent, and they are currently negotiating with various consumer electronics manufacturers interested in producing and/or selling the device under license from e.Digital, Lucent, and their technology partners.
MP3 (Motion Picture Expert's Group- Level 3) is currently the most popular (and free) codec software, but lacks the fidelity (especially in bass response) of EPAC and does not currently have features to allow watermarking (digital data akin to a serial number, buried within a compressed file to guarantee traceability) or copy protection (a feature similar to those VCR tapes that can't be copied without becoming distorted). Small, WalkMan-like MP3 players are currently available in stores, the Diamond "Rio" and Creative Lab's "Nomad" being prime examples.
The music industry here and abroad established the Secure Downloadable Music Initiative (SDMI) to set technical standards for watermarking and copy protection of digital music files to be distributed and sold (or rented) via the internet. With the ever-cheaper record-capable CD drives being sold with computers these days, it is possible to make a perfect copy of a CD. The SDMI is the music industry's plan for getting over this problem and protecting their products from piracy. SDMI recently selected Aris Corp. as the first approved watermark supplier. IBM and various music industry and technology partners are currently conducting trials in San Diego (the Madison Project) involving delivery of CD albums in EPAC-encoded format via secured downloads through RoadRunner's high speed (broadband) cablevision/internet access network.
Why the delay in releasing news about the EPAC player?:
Many years ago, pre-AT&T breakup, I worked for the Western Electric division of AT&T. Like IBM's "THINK!", we had a corporate credo. It was "Do it right the first time.", or words to that effect. This credo has survived Lucent's spin-off from AT&T. They may not be first to market, but you can bet that the EPAC technology will be the best ever seen, in a fully-integrated suite of products and vendors dedicated to providing the most efficient and highest quality digital music distribution anywhere. Bet on it, because Lucent won't have it any other way. True quality requires time, and LU/EDIG are putting in the time.
Why I am here:
I began investing in internet/high tech stocks last November. I did so for one reason; to maximize my returns. I'm not particularly inclined towards bragging, but the results of my stock picks have thus far yielded a return (pre-tax) of approximately 300%.
I don't attribute these gains to my wisdom in choosing particular equities; most of my picks have been a combination of tips, rigorous DD and blind luck. I do attribute it to the fact that virtually all of my positions are in internet "backbone" companies; those engaged in providing the hardware and software to satisfy the demands of an industry still in its infancy. Consider the simple fact that internet connections are doubling every 6 months. This sort of growth in an industry is quite rare, and many otherwise astute investors simply can't grasp the fact that we are in the early stages of a revolution, one that will affect the affairs of mankind even more than the development of agriculture. That statement might seem a bit grandiose, but in my opinion the next few years will prove it to be true.
With the foregoing as a premise, it becomes evident that any reasonably well-managed and visionary company, small or large, that can facilitate such a rapidly expanding technology will be in a position to reap tremendous rewards. One of my largest investments (~80% of my portfolio) is e.Digital. Although that proportion may seem to be tempting fate, I sleep quite well at night.
EDIG has a unique combination of engineering talent, prolific inventors (Woody Norris, our founder, is the inventor of the enabling technology for sonograms), excellent business relationships with technology giants like Intel, Lucent, Texas Instruments, IBM and others yet to be divulged, and iron-clad patents (5 issued, several others pending) protecting their MicroOS file management system and various applications thereof.
Many bashers are seizing upon the fact that EDIG is a tiny OTC/BB company (23 employees at last count) that can't possibly merit all the claims made for it. This is a bald-faced lie; the relationships with the aforementioned technology giants are an irrefutable and documented fact, as corroborated by press releases from the giants themselves. In point of fact, EDIG's size works in its favor and enables it to be extremely responsive to the needs of its partners, In today's rapidly evolving technologies such responsiveness is a valuable attribute, a fact which has not been overlooked by their partners and customers.
So where is this little aggregation of techies headed? One needs to study up a bit on the emerging technologies before speculating on our future. As mentioned before, the MicroOS operating system for flash memory applications is EDIG's premiere intellectual property. Protected via multiple patents, it cannot be duplicated by anyone else. Based upon my research, it will most likely become ubiquitous in the majority of digital hand-held devices employing flash memory.
If you are unaware of flash memory's rapid expansion, just take a look at Sandisk's (SNDK) charts over the past 6 months. The technology is mature, and scores of OEMs are developing products to take advantage of its attributes. First-generation products such as digital cameras and camcorders, digital voice recorders and music players, palm-sized computers and cellular phones will, over the coming years, be supplanted by a plethora of other compact devices; devices that will become as ubiquitous as wallets, purses and wristwatches. EDIG may not necessarily dominate the market, but being there "fustest with the mostest" can still be a rewarding strategy.
As far as predicting future valuations, the data simply is not yet available to make any sort of defensible projection. My gut feeling after watching this stock for months is that we are poised for a probable double or triple before Thanksgiving, a 5 bagger by next spring, and a NASDAQ listing in 6-8 months. If the latter occurs and all present contract negotiations come to fruition, this particular stock may make yours truly a millionaire, with enough pocket change left over to buy that Krogen trawler I often dream of.
A foolish dream? Possibly, but I am by nature a fairly reasonable person, seldom indulging in rash speculations. Is my time frame correct? Only time will tell. Nonetheless, I continue to accumulate EDIG and thank all the bashers currently spouting reams of unsubstantiated drivel for the buying opportunity they have provided for those of us who clearly see what lies ahead.
Re the future of MicroOS:
Someone asked what MicroOS's competitive edge really is, and if it might not be superseded by a better operating system for flash memory. I believe the answer lies in its elegant simplicity. Consider an example: Why haven't pneumatic tires been superseded in their century-old market domination? The answer is elegant simplicity. The patent has long since expired, but they still get the job done more efficiently and cheaply than anything else. Sure, there have been enhancements like better compounds of rubber, tubeless tires, etc. But the fundamental design remains the same.
In the case of MicroOS, its simplicity lies in its technique for storing large files in smaller segments wherever they may fit within a flash memory array, using highly compact code. This takes full advantage of flash memory's advantages, while minimizing its limitations. The elegant part is the header information attached to each of these smaller segments, allowing rapid retrieval of the original file, indexing of the file content, and labeling of the flash memory segment as free or in use. The patents protect this technology, as well as numerous applications of it. Elegant simplicity, which no one else can duplicate for the life of the patent. This will be the key element assuring MicroOS success. JMHO, of course.
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