ARCHOS. Strategic positioning & perspectives

Transcription

1 ARCHOS Strategic positioning & perspectives

2 1. Positioning. Mobile Audio/Video TV-centric. Mobile Audio/Video PC-centric. Mobile Audio/Video IP-centric 2. Competitive advantage 3. Unique opportunities 3. Financials

3 ARCHOS makes the best portable entertainment devices, period.

4 Positioning 1. Mobile Audio/Video TV-centric a. Mobile DVR b. Digital Link to STB c. Autosync with STB d. DVB-T Recorder 2. Mobile Audio/Video PC-centric 3. Mobile Audio/Video IP-centric Competitive advantage Opportunities Financials

5 a. Mobile DVR (Digital Video Recorder) TV is by far the 1 st source of media content An American spends 4h/day in front of his TV set DVRs allow very easy recording of any show in DVD quality Strong growth pulled by DVRs and portable DVD players ARCHOS is the market leader Technology leadership resulting from 4 years of sustained R&D effort Now, 4 th product generation of Archos Mobile DVRs AV100 in 2002, AV300 in 2003, AV400 in 2004, AV700 in April 2005

6 Strong growth pulled by DVR Set-Top Boxes (Digital Video Recorder) Dual tuners to receive and record 2 channels simultaneously 1 st tuner for the current channel played back while being recorded on internal hard drive 2 nd tuner to record simultaneously a second channel as a background task Inside the box are stored in digital encrypted form: all the TV you have watched lately as well as the TV you have planned to watch EchoStar/ARCHOS joint venture: transfer directly the digital encrypted content from STB to Mobile A/V Players

7 b. Digital Link to STB Range of 3 DishPods developed for EchoStar Commercialized by EchoStar with the ARCHOS brand Ultra-fast direct transfer of encrypted media content from STB to AV Player Automatic Synchronization 1 full movie transferred in 1 or 2 minutes 2/3 d of STBs are now with DVR functionality Introduction in Q High volume anticipated in 2006

8 c. AutoSync with STB STB directly controls DVR Utterly simple: Using STB s remote control, select recordings from STB s online EPG (Electronic Programming Guide) STB will automatically switch to programmed channel and set AV400 or AV700 to start/stop recording on schedule Using one STB remote control: 1 remote control of STB 1 channel guide of STB 200 million STBs: Potential of 200+ millions STBs worldwide Guide TV en ligne STB AV500 AV700

9 d. Mobile DVB-T Receivers & Recorders (Digital Video Broadcasting Terrestrial) Adapted from ARCHOS range of Mobile DVRs Dual DVB-T tuner and antennas built in Mobile AV Player Viewing of live or recorded video Automatic recording scheduler using online TV guide Reception possible inside buildings Reception possible inside moving vehicles (car, bus train )

10 Positioning 1. Mobile Audio/Video TV-centric 2. Mobile Audio/Video PC-centric a. Mobile Audio/Video Players b. Mobile Audio Players 3. Mobile Audio/Video IP-centric Competitive advantage Unique opportunities Financials

11 a. Mobile Audio/Video Players 3 technological breakthroughs that no one competitor can align: 1. Full compatibility with Microsoft s Windows Media Technology: AutoSync with Windows Media Player 10, Windows Media Video 9, Windows Media Digital Right Management 2. Compatibility with MPEG-4 / DivX in full DVD resolution (720x566) 3. USB Host to connect digital cameras (direct transfer of photos) Only credible competitor against ipod Video Full range with 2.2, 4.3 & 7 LCd ipod 2.5 DVD playback resolution, 4 times better D1(720x566) QVGA(320x240) Compatible with MS WMV and DivX Supports digital cameras Camcorder Video Recording

12 b. Mobile Audio Players Highly competitive market, high volume, very low margins 20% price drop by Apple recently Evolution of functionalities towards more Photo & Video Lead by Microsoft s Windows Media Technology ARCHOS Positioning Price fighter players at entry level (start from 3GB) Audio/Video players like Gmini 400 in the high end

13 Positioning 1. Mobile Audio/Video TV-centric 2. Mobile Audio/Video PC-centric 3. Mobile Audio/Video IP-centric - Pocket Media Assistant Competitive advantage Unique opportunities Financials

14 Pocket Media Assistant ARCHOS launches the PMA with direct connection to Internet Built-in WiFi Direct connexion to new video services: Video Streaming, Video Download, TV over IP At home, direct connection to Internet through ADSL router (Livebox, Freebox, ), no need for a PC On the move, from any hot spot: airport, train station, cyber cafes

15 1. Strategy 2. Competitive advantage. Technology leadership. Intellectual Property build-up. Strategic partnerships 3. Unique opportunities 4. Financials

16 Technology leadership 2000: 1 st HD-based MP3 player, over 1 year before Apple 2002: 1 st mobile video player in : 1 st mobile video recorder in 2003 Now, 4 th product generation of Archos Mobile DVRs AV100 in 2002, AV300 in 2003, AV400 in 2004, AV700 in April : 1 st Wifi IP-Centric mobile video recorder (PMA400) 2005: 1 st Digital transfer from STB with satellite TV encryption 2005: 1 st Direct control of Mobile DVR from STB (EchoStar, CANAL+ ) 2005: 1 st Mobile DVB-T Recorder & Receiver

17 Intellectual Property Build-up Key IP in TV-Centric Mobile DVRs Several patents about TV Cradles: digital link to STB, recording circuitry inside TV cradle, connections to TV and STB, control from STB AVOS: proprietary multimedia OS for Mobile DVRs developed over 5 years AVUX: AVOS multimedia engine ported onto Linux Key IP in TV-Centric DVB-T receivers and recorders Patent pending on dual antenna for diversity reception inside buildings or vehicles 1 st mobile DVB-T DVR Key IP in DRM technology TV through partnership with EchoStar, CANAL+, Nagra, NDS PC through partnership Microsoft

18 Strategic partnerships Strong commercial & capitalistic partnership with EchoStar EchoStar: 26% of ARCHOS (convertibles) EchoStar to commercialize DishPods with ARCHOS brand 35 Million active STBs retailers in the US Encrypted data exchange between mobile player and STB Partnership with EchoStar: range of 3 mobile video players Partnership with Nagra and NDS: adapting STB encryption to Mobile Player Direct control of Mobile DVR from STB Partnership with CANAL+: control of DVR through serial port Partnership with EchoStar: control of DVR from data packet inserted in video signal Partnership with Microsoft Full porting of Windows Media Technology: Media Transport Protocol, Windows Media Player Autosync, Windows Media Video, Windows Media Audio, Windows Media DRM, Windows Media Connect

19 1. Strategy 2. Competitive advantage 3. Unique opportunities. TV partnerships. VOD partnerships 4. Financials

20 TV partnerships Leverage technology leadership and partnerships with EchoStar and CANAL+ to Multiply partnerships with TV operators to offer mobile video players to take away your TV content everywhere with you. VOD partnerships Apple with the ipod Video has opened wide a new era for video download Content Creator Content Publisher Content Agregator Service Provider Search Engine Access Provider End user Every link in the content distribution chain now wants to open its own video download web site to compete against Apple ARCHOS range of portable video players if the only credible alternative to the ipod video

21 1. Strategy 2. Competitive advantage 3. Unique opportunities 4. Financials trend - 3-year projection

22 2005: Worldwide presence (w/o EchoStar) ASIA 8% USA 26% + 41% % USA EUROPE ASIA 40 EUROPE 66% % 10 % 2005 Turnover by region 0 USA EUROPE ASIA 2005 growth by region

23 2005 TV & PC «Centric»: growth drivers (w/o EchoStar) + 89% % N/A -100% 10 0 TV Centric PC Centric IP Centric Misc

24 Key figures (w/o EchoStar) 2004 Turnover 60 M Gross Margin 26.5% Operating Expenses 21M EBIT (5M ) Break even Turnover 85 M Gross Margin 26% Operating Expenses 22M EBIT 0M 2005 Turnover 90 M Gross Margin 2 26% + Operating Expenses 22.7M EBIT +0.5M Expansion Structure Planification

25 Strong P&L improvement 2005 versus 2004 Archos Consolidated Reporting w/o EchoStar in 000' EUR S Q Q S FY2005 Revenue Total 32,147 24,077 33,776 57,853 90,000 Gross Margin 7,997 6,395 8,972 15,367 23,364 % of revenue 24.9% 27% 27% 26.6% 26% Total operating expens 9,821 6,313 6,570 12,884 22,705 % of revenue 31% 26% 19% 22% 25% EBIT (1,824) 82 2,402 2, % of revenue -6% 0% 7% 4% 1% Revenue expected to growth by over 50% for year 2005 Gross margin improvement thanks to product portfolio upgrade Stabilized and controlled operating expenses EchoStar revenue estimated round 6 M for Q4

26 2005: a year of transition Reviewed sub-contracting model Diversified, best in class quality, best in class flexibility Improved working capital Canon agreement, turnkey Strengthened finance structure EchoStar cash injection, banking relation ship, share price Balanced mix & product range margin XS line, Gmini & AV line Focused on operational improvement Returns management, Excess and Obsolescence & logistic

27 Middle term plan (w/o EchoStar & other partnerships) Continuing diversification & reducing risks whilst sustaining profitable growth Develop Product Portofolio Enrich Distribution Network Turnover EBIT 5% 8% 11% 6% Improve Customers Paretto > 0% 1% Balance Geographical Coverage % Build up Finance Structure Balance Production Balance Sourcing Panel % «A managed growth, below the market trend will result in twofold increase in turnover over two years allowing ARCHOS to reach 8% EBIT versus revenue w/o EchoStar contribution» M -9%

28 Middle Term ARCHOS business Model (w/o EchoStar & other partnerships) Net Revenue 100% Gross Margin 26 / 28% R & D / Quality ( 6 % ) Sales & Marketing ( 8 / 10% ) G&A ( 5% ) (20%) Operating Margin 8%

29 Forward looking statement This presentation contains forward-looking statements, including the statements regarding expected gross margin, operating and net income, and tax rate range for Fiscal 2005, our long term financial business model, expected product introductions for Fiscal 2005, the continuing demand for our retail products, and for retail and OEM sales. These forward-looking statements involve risks and uncertainties that could cause ARCHOS performance to differ materially from that anticipated in these forward looking statements. Factors that could cause actual results to differ materially include: Our ability to timely introduce successful products The effect of pricing, product, marketing and other initiatives by our competitors and our reaction to them on our sales, gross margins and profitability Our ability to match production to demand and to coordinate the worldwide manufacturing and distribution of our products in a timely and cost-effective manner Our operations in China being adversely impacted by strains on Chinese energy, transportation, or other infrastructures Changes in consumer purchasing trends Changes in financing strategies Fluctuations in exchange rates