1. www.imdc.net Independent Analysis of In-Flight Portable Media Players Walé Adepoju – CEO Thursday 24th May 2007 www.imdc.net

2. 2 Contents Overview of Portable IFE Market Trends in consumer portable media players Outlook for portable media players in IFE 1 2 3

3. 3 Our Perspective on IFE Portable Media Players Airline assistance with IFE\PMP strategy & purchase Passenger Research Ancillary revenue analysis for airlines Technology Trend Analysis Corporate Finance Airline Research 360˚ Independent Perspective

4. 4 Overview of portable IFE market 1

5. 5 Market Overview IFE systems have been traditionally designed for twin-aisle, intercontinental market Today’s IFE systems fail to reach an audience 3 times bigger than the current market Portable Media Players can be an innovative solution on twin aisle aircraft Global commercial fleet Single 71% Twin 29%

6. 6 Portable Media Players (PMP) Technology profile Technically quite robust Delivered high percentage of initial promise Inflight portables can match the IFE experience provided by full interactive systems Content security 2 hardware approaches by vendors Customised units Consumer Off The Shelf (COTS) technology

7. 7 Portable Media Players (PMP) Technology profile “I gotta have it” phase” “I gotta have it” phase” Airlines scramble to get one & drive high requirements The idea phase - An idea is born from innovation, new technology, or... The “die trying” phase Some suppliers never make it and die trying The “I got it too” phase - suppliers all claim to have the new product…or one better The peak : The peak : goal is set very high from demands of airlines…or promises from suppliers, or... The plateau - The final result is a relaxation of the requirements... and a settling down to reality REED Theory Dan Reed

8. 8 Panasonic Airvod Mezzo Phantom Media Inflight portable device market Inflight portables are currently a very small market Less than 2% IFE expenditure in 2006 (excluding DVD players) Market is characterized by relatively low cost of entry Resulting in a high number of start-ups PanasonicThales LiveTVRockwell Collins Embedded IFE Established Inflight PMPs Developing 65% combined market share e.Digital IMS DigEcor

9. 9 Main portable IFE suppliers ManufacturerProductAirlines digEcorDigEplayer DigEplayer XT 30 Airlines including: Aeroflot, Alaska Airlines, American Airlines, Hawaiian Airlines, Icelandair, Independence Air, Jetair, Jetstar, KLM, L’Avion, MaxJet, Midwest Airlines, North Monarch, Pacific Blue, PIA, SilkAir, SN Brussels Airways, Virgin Blue IMSPEA PAV-704 PAV-604 American Airlines, VARIG, Jet Airways, EOS Airlines, SonAir, Excel, Air India, TAM Panasonic Avionics CorpeXpressANA eDigital CorpeVULufthansa, Alitalia, MAS MezzoeVUSilverjet, Jet2, Flyglobespan Airvod EntertainmentMACH5Tiger Airways Phantom MediaBluebox litebmi

10. 10 Trends in portable media 2

11. 11 Drivers of inflight PMP Technology advances Single aisle aircraft IFE & backlog of twins Provides alternative to embedded IFE Passenger expectations Differentiate airline product Inflight PMPs Airline product Consumer power Natural constraints of embedded IFE

12. 12 Consumer portable devices Consumer portables are increasing their: Prevalence Quality Importance As a result passengers expect more from IFE, but can provide their own content if enabled Smartphones iPod Sales up 70% from Q3 2006 to Q1 2007 Becoming thinner, more stylish and have more compelling features iPod sales up 24% to 10.5 million in Q1 2007

13. 13 Consumer portable devices Portable gaming devices Ultra Mobile Personal Computers UMPCs $10 billion industry in 2007 Nintendo DS at 40 million units worldwide Sony PSP at 20 million units worldwide Potential to add benefits of a PC to inflight PMP Bleeding edge / Immature technology Some inflight PMP suppliers are using UMPCs in a COTS approach to product development

14. 14 Outlook for portable media players in IFE 3

15. 15 Market trends Increasing demand for aircraft Need to extend life of older aircraft Increasing competition among airlines Declining yields Need for shorter product life cycle Increase in demand for more portable IFE devices Increase in demand for plug & play with passenger’s own device RISKS & ISSUES Safety issues relating to batteries onboard Perceived security risks to content are higher Full seat-back installation of PMPs incurs hidden costs that wipe out some of the advantage over existing embedded IFE systems. Cost per unit will continue to fall rapidly

16. 16 Getting the max return on PMP investment Providing a total solution, more than just a great product, is the key to success as a vendor Content supply chain solutions Unit distribution and maintenance logistics Business problem Business opportunity Solution Technology Software Process

17. 17 Getting the max return on PMP investment PMPs ‘fit’ as a business model in a number of markets Recently profitable US carriers looking to improve their product on an aging fleet European carriers seeking to differentiate themselves and gain ancillary revenues Premium only start-up carriers such as Silverjet and Eos Portable media has the potential to deliver a higher proportion of media revenues

18. www.imdc.net If we see Portable media players as hardware – it will struggle to provide sufficient value. However, if it is seen as a tool in the media content value chain, then it provides us with opportunities that we did not have before. Thank you Walé Adepoju www.imdc.net