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Technology Stocks : e.Digital Corporation(EDIG) - Embedded Digital Technology -- Ignore unavailable to you. Want to Upgrade?

To: PartyTime who wrote (13740)	8/2/2000 3:51:18 PM
From: Jon Tara	Read Replies (1) \| Respond to of 18366

PT, clearly there is SOME PRICE at which an OEM will go with third-party software rather than write their own. But I can tell you that the major manufacturers very rarely do so. They do contract-out software development work, but when they do so, it is on a fully-paid basis (no royalties) and they own the software when they are done. In fact, I worked on such a project that was undertaken on behalf of the largest Japanese electronics manufacturer. So I know of what I speak. These companies want to own it lock, stock, and barrel. No, I don't know about how EDIG might negotiate it's licensing fees. But I know this: the $10/unit figure that was tossed around here a few months ago will NOT fly. But you need that number to arrive at a valuation that will support the market cap. I have contended that the licensing fee would have to be $1/unit or less in order for major manufacturers to go with EDIG. As you may recall, this is the point on which I advanced my initial argument regarding licensing fees. You and others were defending the unrealistic $10/unit licensing fee that had been mentioned in some press release by the company. I believe that that a $10/unit licensing fee is only realistic under the scenario of small-quantity production and evaluation units. In fact, I have suggested that perhaps such a fee is the only revenue that EDIG will receive in relation to various evaluation and reference design deals they have done. Of course, I don't know this, as EDIG has never given any details about these details. But I think it plausible that they would accept a token payment of a $10/unit licensing fee in lieu of up-front fees because they are hoping that it will lead to further business. PT, what licensing fee do you feel would be acceptable to OEMs building products in large quantities? And how would you then adjust your revenue projections for EDIG, which had been based on the unrealistic $10 figure?