In case you slept thru the holidays you might be the last one in IFE to hear about the news: Zodiac has issued a letter of intent (LOI) to purchase seat-centric IFE system manufacturer, IMS. The deal should conclude by year-end, and from what we hear, Joe Renton is thrilled about the company and the agreement (Note: No purchase price was announced). The large French aerospace conglomerate has had a busy year and a financially rewarding one to boot. They recently purchased Heath Tecna and Contour (seating), and IFE is even more clearly in their sight as they have already put a system forward with Sicma, a previous acquisition. We understand that IMS will stay in Brea, California and present-day thinking is to keep the 250-person company intact. Further, we believe that the leadership team will remain unchanged. No doubt, naming and branding will come to the table as soon as the deal is done. We should also note that all IMS products and services (including the Northwest service operations) are included in the deal. IFExpress understands that the sales and marketing organizations will be the first to increase headcount (wink-wink, nudge-nudge). In these kinds of deals, a careful look is usually taken at the two products currently in production (RAVE & SiT) to determine a way forward and, as one insider told IFExpress, product manufacturing locations will be based upon what makes the most sense. We like the potential of a closer proximity and business relationship to Airbus too as the possibility of line-fit operations might be in the offing, not to mention early retrofit requirement knowledge.

While the IMS company spokesman was hesitant to provide much in the way of market detail, we see great value for existing and new customers based on the successful Zodiac history of acquisition and their strong balance sheet. This fiscal year, Zodiac increased sales revenue by almost 26% (Tot: 3.4 B Euros) while current operating income was also up 26.4%. If you think that growth might be an anomaly, Zodiac has had 9 straight quarters of double-digit growth! Can your IFE company say the same? It looks to us like Zodiac is majoring in single-aisle retrofit capability and may see a spurt coming in that business market. With airline employees spread thin, a package retrofit turnaround deal could be a winner for the airlines, especially with increased passenger traffic returning to the travel market.

On another note:
In case you got wind of a good size Lumexis headcount reduction… forget it! We called CEO Doug Cline and he vigorously rejected the rumor. “In fact, if anything, we have more going on today with new content services, Wi-Fi sales and marketing, new hardware installations, and ramped-up marketing efforts around the globe. Of course,” he noted, “with our founding strategy of outsourcing most engineering and manufacturing, it may look like reductions to some in the industry as we realign to current needs. But we have continuously maintained and grown our core of talented management since opening our doors.” Doug also told us to tell our readers that there may be a few announcements soon that will nail the door shut on these rumors. Nuff Sed!

When we asked IMS (of RAVE fame) if they would be interested in supplying a story for our Speakers’ Corner, at first, we were not quite prepared for the Tales of Yore their team submitted. We think you will find it interesting and entertaining, especially if you are a fan of Ye Ancient Texts – Hail King RAVE.

So You Want To Be An IFE Company? By the ‘Team’ at IMS

Since the IMS announcement that Lufthansa had chosen to install RAVE on a major portion of their fleet, it seems that RAVE is, well, “all the RAVE”. So I asked Joe Renton if he wanted to share some thoughts with our readers about their journey. What I got back was not what I expected; it appears that Joe’s team had a little fun with the assignment, which Joe admits is one of things that sets IMS apart. Enjoy!

Once upon a time in a land far, far, away… there lived a king named Joe… he had a small but prosperous kingdom where people lived and worked and generally life was good… but the king wasn’t satisfied, and as these things go, he started to expand his kingdom, first in small portable ways, but as time went on he decided he wanted a larger, more embedded kingdom. And that’s when things got really interesting, and that’s where our story really begins…

It all started nearly four years ago with a phone call from an airline executive. He was lamenting the fact that embedded IFE systems were unreliable, heavy, hard to maintain, difficult to use, and on top of that, they were incredibly expensive. Why couldn’t a new type of IFE system be designed that would provide the reliability of a portable player with the convenience of an embedded system? Why indeed… the question hung there, in a rather confrontational sort of way… daring us to take a bite.

King Joe tried to dismiss it, he tried to go around it, he tried to forget it, but no matter what he did the question kept coming back; how to make an embedded IFE system that was reliable, affordable and very easy. So King Joe decided to gather all of his wisest advisers together to get their advice.

Honestly, our first response was “we would be insane to attempt it”. Most of the team had suffered through the pain of developing IFE and had sworn never to do it again. Thankfully, because of the investment required, embedded AVOD was simply out of our reach. It would take $100+ million which, of course, wasn’t a reality for a small, self-funded, private company like IMS. In spite of that, we believed that things had changed over the years; technology had evolved and what was impossible just a few years ago was possible today. We also knew that it would take more than a good idea – many companies before us had had plenty of good ideas and still failed. It would also take the right company, one that had the courage to take on an industry dominated by two multi-billion dollar international corporations. IMS had not succeeded these last 16 years by playing it safe. We were opportunistic, innovative and yes, probably a little bit arrogant (OK, maybe a lot arrogant) in 2008 when we decided to jump in with both feet and take on the monster that was embedded IFE. Seriously, how hard could it be?

So King Joe gathered together his most trusted advisors and his most courageous knights to plan the battle. Day after day and night after night they met; sacrifices were offered (did we mention sacrifices were offered), battle plans were reviewed, strategies vetted and alliances were formed, until they were ready to move out.

We knew that the system had to be different enough that our potential customers would at least be curious enough to listen to what we had to say. We understood that our small company would not generate enough interest on its name: thus, the system would have to take a completely fresh approach, be exceptionally reliable, light weight, low-power and come with a price tag that forced airlines to take notice. The result was RAVE.

RAVE, the strategy and the vision, were the essence of its name; Reliable, Affordable and Very Easy (We’re still waiting for the “very easy” part). RAVE’s architecture was different; seat centric instead of a traditional server centric model. RAVE’s seat centric architecture had only a few LRU’s which, at its core, made it reliable, light weight and low-power. Additionally, in RAVE’s unique architecture, each seat display was a fully autonomous entertainment system providing all the features of much more complex, traditional server based systems. This allowed us to offer a system that met most of our must haves; it was scalable, simple, and affordable to buy and maintain. Those things gave us permission to play, but we knew that we needed more innovation, that we had to push our vision even further if we were going to be successful. So we leveraged our past experience with portable IFE and introduced the first dockable seat display unit that could be replaced by a flight attendant – in flight – in seconds – with a simple key. We also addressed the problem of content loading and distribution by choosing SD cards as the content medium.

We had the right vision and we had the right technology, but could we sell it, certify it and deploy it…

Those questions still plagued King Joe and his closest advisors. So the King sent out emissaries all across the land looking for allies that shared our vision. Several came and joined us; they believed in the vision, but they also were ready to join a growing RAVEOLUTION against the tyranny of the same old choices. We offered the appropriate sacrifices to the guardians of the air and we worked with our new allies to launch the giant metal birds back into the sky.

Our partners and potential partners reassured us that we were on the right track and to continue what we had started; that reliability was the key, price was a close second and that a spirit of partnering and listening was near the top as well. Standard LRU’s, subsystems and even software with a configurable, user friendly GUI made it possible for IMS to offer the unique benefits of RAVE to all of our airlines partners. Our journey has been littered with moments of “what were we thinking”, and “this is really hard”, and the classic “qualification shouldn’t take that long”. But we did bite, and at times the taste was sourer than we thought possible, but at other times it was wonderfully sweet.

Today RAVE has been flying for almost 12 months. We have had our share of issues, have taken our lumps, but we remain true to our guiding principles; Reliable, Affordable and Very Easy. By the end of the year, we will have over 35 RAVE equipped aircraft in the sky. We continue to work to make our product as reliable as possible. Over the past 24 months we have secured the commitment of over 160 aircraft with additional options. We have added three more airline partners which we will announce soon, bringing our aircraft count to nearly 200. We are keenly aware of our need to continue our relentless pursuit to make RAVE the most reliable and sustainable IFE system ever fielded, and we will do everything we need to in order to meet our current set of delivery commitments.

All kidding aside, we want to say that we are humbled by the responsibility and feel very grateful to our customers and partners for believing in IMS and the RAVE vision.

As the sun sets in the west, King Joe stands atop his castle and surveys the kingdom known as RAVE. He smiles to himself knowing that, in truth, their work has just begun; they have made a great start, but there are still many challenges to overcome and battles to be won… and beside, what’s a king to do except to start on RAVE 2.0. ☺.

Editor’s Note: Next week’s edition of IFExpress will feature a preview of some of the “must see” companies APEX EXPO 2012. As a result, we will be releasing IFExpress earlier than usual. You may anticipate it in your email ‘In-Box’ on Monday morning PST.

Recent news from Europe confirmed last week’s ‘Rumor’ and if you had not seen the IMS and Lufthansa news releases we have linked them for you here. From a round-up perspective, the Brea California company has secured 10 customers for its’ RAVE System, securing some 165+ planes with sales and options. The only popular plane missing is the A320 and we bet that is not far behind. This certainly validates the IMS design goal to put all the electronics and content at the seat (seat-centricity).  Moreover, RAVE continues to validate the concept of embedded IFE. No doubt most of the next generation of IFE will be influenced by this type of installation. Yes, there is still room for portables and Wi-Fi features, but for some time, pundits have been dissing the installed hardware and attendant cost, weight and installation challenges. After viewing the RAVE system at AIX, we could clearly see why airlines are excited about the product. The light-weight, removable seatback unit is the system! Since content is stored locally the probability of a single failure catastrophe is practically eliminated. If you want to dig deeper, here is a link to a recent RAVE presentation that should answer a lot of your questions regarding the system and installation.

The latest news pegs the Lufthansa deal at 80+ planes. With the acquisition of 10 new customers in the last 18 months, IMS is in the enviable position of only looking up to the two biggest IFE vendors, at least in terms of sales. This proves that good ideas result in sales popularity… the rumored 50% reduction in per seat unit price doesn’t hurt either. We can’t think of another IFE product company (past or present) that has accomplished what they have in the time they have had to do it –  concept development through production, as well as airline customer sign-ups – especially when you consider IMS is a relatively small company (size, revenue, personnel, etc.) as compared to the industry leaders. It goes without saying that airlines are attracted to this product and IMS for many reasons.  IMS Sales & Marketing Vice President, Harry Gray told IFExpress, “IMS has grown substantially over the past several months, with over 200 employees as well as over doubling the size of our facility – mostly to support RAVE.  We have a stable business, been around for 16 years, and are poised for future growth, yet we also remain nimble and customer friendly to meet the needs of the market.  Providing a premium product and shorter lead times – without the premium price – remains the mantra at IMS.”

Mr. Gray went on to say, “Our concept of ‘outbound support’ is really gaining popularity with airlines. Typically, airlines must have multiple outstations for spares and (3rd party contracted) line maintenance due to possible IFE system failures. Since the RAVE displays are dock-able, they can be replaced during flight with no need to have spares at outstations.” No doubt, airlines really latch on to this feature because there is now a way to keep passengers happy during a long flight where they would otherwise have to move to an empty seat (“if” it was available) or go without IFE at all because of a hardware failure. The RAVE feature-rich-environment doesn’t stop there, so be sure to check out the previously mentioned presentation. No doubt, tech-competent Lufthansa did their homework and the IMS team should take a bow. 

RAVE is flying on a Lufthansa B747-400 and expect to see it on their A330-300’s, A340-300’s, A340-600’s fleet. Installations will begin next year with full incorporation to be completed over some three years. We now wonder when Boeing and Airbus line fit installations of the RAVE product will be approved? You can bet the airlines will be talking RAVE in Seattle and Toulouse during their next visits. 

Finally, from an engineer’s point of view and what we have learned, RAVE is an installers dream. A full aircraft installation can be accomplished in 5 days (retrofit), there are no special test tools – they are built-in, the VCC hardware requires no cooling, all the SDU’s (of the same screen size) are interchangeable, and 6 gigabit seat loops are used for greater seat coverage and reliability. Hat’s off to Joe Renton (CEO) and his team, this is IFE history. When it is all said and done, RAVE will probably be better known as an airline and passenger centric product that just happens to be installed in a seat!