S.W, SEVU: Transcript of the Wall Street Reporter Interview...
2/17/00
SeaView Underwater Research, Inc.
OTC BB:SEVU
Richard L. McBride
Chairman, President and
Chief Executive Officer
SeaView Underwater Research, Inc. manufactures a complete line of multi-purpose underwater camera probes, and video technology for home and business security, material handling, and inspection for a variety of industries. URL: www.seaviewresearch.com. Phone: 727-866-3660.
Richard L. McBride, Chairman and Chief Executive Officer, spoke with Wall Street Reporter Magazine.
WSR: Before we discuss some of the growth strategies for SeaView and product development, could you give an overview of the Company?
SEVU: We started in the underwater video camera business. We are now the largest manufacturer in the world of underwater video systems. In developing that technology, we found that there was a niche for our product above the water as well as below the water. So approximately a year ago we started looking into the home and business security market and that led us to SecureView. And as we went down that road, we developed additional marine products outside of video. For example, we have a simple product called Sea Lite(R), which we call “the fish magnet” -- which is a bright light that attracts bait fish and predator fish under water.
So we have just evolved on a natural course, maybe a little faster than most companies, creating new products and constantly working on R&D. We handle concept here -- we have our own video production studio; we have our own graphics studio; our own electronic engineers and designers on staff; our own warehousing in the building, as well as shipping and receiving. So we are a unique company, in that we can function within rather than out-sourcing many jobs. However, we do job production out, obviously. We are not in a position to produce the quantities the market requires.
But as far as development, marketing, strategy and control, we are what we call a lean consumer marketing machine. My background is twenty-some years in direct consumer marketing and successfully getting products into mass merchandising. It fits our niche here to make things happen and make those things happen in short time periods.
WSR: The company recently announced the development of SecureView. How is this an improvement over your existing technologies?
SEVU: What we have developed is a method of transmitting a video signal over electrical wires. It works on 12 volts DC, 110 volts AC, and 220. We just have the new 220-volt European PAL system up and working. It's complicated technology to explain, but to think of it in simple terms, we build different sizes of light bulbs that have video transmitters in them. You simply screw a light bulb into a socket, and it begins to transmit clear, high-quality video -- we even have color and audio -- back to any TV set or VCR in your home or office. You are limited by the breaker panel, in that you can't cross over into, let's say, your neighbor's house or the adjacent apartment. All this simplicity allows a homeowner or businessperson to simply add security cameras simply by screwing in a light bulb. It is one-twentieth the cost of a fixed security system where you have to do the wiring and run the cables, and your cameras are very limited as they are securely mounted. Our SecureView cameras also use technology we developed for our underwater cameras, in that they use infrared, and specially modified camera boards. So now what you have is a light bulb that sees in total darkness. It does not emit any light, but it can see what we can't see. In basic terms, that is what we have done, and that has never been accomplished before. That is our claim to fame.
WSR: What kinds of things did you do to test the product?
SEVU: We do the standard procedures. Obviously, we do duration tests. We had to qualify the FCC testing, which is called the block test, UL testing. And the difference between our technology and what is readily available in the marketplace is, everyone else is transmitting video as a radio signal. In other words, they are transmitting in the 2.4 gigahertz band, or the 900 megahertz band, which is like your portable phone; and they are transmitting through the air. That system is very limited in distance; sometimes as little as 50-60 feet, and the quality is very poor. So what we have been able to do by using the electrical wiring is increase power, and the signal tends to lock around the wiring. You end up having a very high-quality picture that is not disturbed by normal electrical functions -- refrigerators, air conditioners, and so forth -- and you have the ability to travel large distances such as a half mile. Naturally, in the testing of these things, we do duration tests and weather tests, and power tests, and everything in between to see what the variables are, and surprisingly it turned out to be remarkably successful -- way above what we estimated it would be. And the other thing is, we are also able to transmit full color now, and we have audio capability, so eventually we will do two-way communication, out to the porch, or the pool, or wherever. It has really evolved.
Our real niche is, we have taken existing technology -- infrared is not new, obviously; transmitting video over the wiring is of course brand new -- but we take a lot of existing technology and we modify it to do new jobs. It is not a question of reinventing the wheel; it is just modernizing the wheel.
WSR: When you look at the product today, what is the marketing strategy behind it?
SEVU: We've sold approximately $2 million of our underwater cameras since we started, and 90 percent of that was phone order, outbound and inbound; the inbound from magazine advertising, the outbound from calling people. You are actually selling a product that averages $900 over the phone, and we did quite well with that. In our underwater division now we are setting up dealers. As we have advertised the product for two years, we find about 30 percent of the marine consumers are aware of the SeaView brand. And now, we are setting up dealers so you can walk into your local tackle shop or marine electronics shop, and there is a SeaView camera that you can pick up and hold and show. We learned from doing boat shows... when people can see them and feel them and see the quality of the picture, the difference is just unbelievable. Given a qualified prospect and a live demonstration, we can close about 80 percent. We are projecting somewhere around 20,000 unit sales in our underwater camera division this year.
With SecureView, we are going to utilize direct response television, so we will start putting the product on the air on TV. Consumers will be able to buy a single camera to monitor their child's room, their pool, wherever in their house. With SecureView, you can move the camera anyplace you want to keep an eye on. Pricing will be in the $399 range; four easy payments of $99.99 on a credit card. And then obviously we are in discussions with major retail buyers, and it is a natural market to evolve into -- walking into your favorite electronics store or hardware store and buying SecureView right off the shelf. The flip side, of course, is the contract security industry. We are now putting together some bids for the government, for security camera systems. There are also many security systems integrators that are interested, many installers and different providers of security services, that are very much interested in the SecureView because of the huge installation savings over a fixed wire system. We have a couple of Sheraton hotels that we are going to be wiring... I use the term wiring, but it is really a matter of putting light bulbs in sockets. We have some banks -- we found that banks gave us the most attention because they want them for watching their ATMs. In many cases these banks can put $300,000 in a video system -- and we've all seen the pictures in the newspaper, where you can't tell who the person is from the bank camera. With the video resolution we have, and the detail and quality, SecureView turns out to be a much better system, plus you are talking about a huge savings in installation.
We have a short interview here, but you could probably tell we could talk for hours. That is where we are going, and the word of mouth is unbelievable, because it is the type of subject that people like to talk about -- new technology. Every day hundreds of new people get involved, and our phone call volume increases daily.
WRS: Your Company has plans for a new consumer division. Why the decision to go in that direction? What kinds of products will you be testing?
SEVU: We are working on a couple of new products, and I can't disclose too much information, but essentially one product is a pad you can put in your pool, that will absorb sunlight during the day, and pass a soft glow or pool lighting at night. We also have a product that, working with existing equipment already in your home, will allow you to find your remote control or your keys relatively simply.
We felt that these products were not related to the underwater marine industry and the security industry, and I felt it might be a good idea to spin these off. Certainly, to start them in a separate division, and then at some point in time, perhaps spin them into their own entity and then allow current SeaView investors to have a piece of the pie. Also, to break it out a little bit... just because they are the type of products that really need to be in their own marketing environment. When you start marketing six or seven or eight products under one roof, it can get very confusing. So I think that is the direction we are going to go with that, in its own division.
WSR: The Company is well known in the marine industry and unknown in the security industry. As a result of this, what kinds of things can you do to raise the consciousness of the Company there?
SEVU: Naturally what will happen-- I'll refer back to the direct response television campaign we are going to do -- when you think of a company marketing a product on television, you think: consumer, consumer, consumer. But you have to remember that among people watching television are buyers from major retail chains, presidents of banks, owners of large security monitoring companies, and security installation companies. So the side benefit you get from television is that you reach all facets of the business world, as well as John Q. Public who wants one just to watch his newborn baby. So we feel that television will do an excellent job. We found just from brief mentions on our Web site and in our national magazine advertising for the underwater products, that that has fed the interest in security. Also, all our new full-page color magazine ads in Motorboating and Sailing, Yachting, and Saltwater Sportsman, and in fact, all the major publications, have approximately one-eighth of the total ad space devoted to SecureView. Because, when you analyze, you find that boaters also tend to be business people. So I think we are going to cover it that way. We are also going to be doing some advertising in The Wall Street Journal and U.S.A. Today, and naturally, additional PR in terms of the stock itself.
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