APTs Exporting Strategy

1
APTs Exporting Strategy

• Noel McKenna
• Managing Director
• 12th October 2004

2
Presentation Overview

• Who is APT origins / history
• What do we export
• Where are our major markets
• Routes to market cost of exporting
• Distribution chain
• Export successes
• Export opportunities 2005 - 2008

Hear the difference
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Origins/History of APT

• Founded in 1988, Spin-out from QUB
• Corporate HQ in Belfast, Northern Ireland
• Started selling apt-X to OEMs in 1990
• Developed LL and ISDN Codecs in 1992
• Wholly owned subsidiary of SSL, 1996
• Launched Enhanced apt-X in 2000
• Introduced licensing to portfolio in 2001

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Digital Audio Data Compression

• Digital PCM audio _at_48K sampling and 16 Bit
  resolution requires 1.536 MB/s
• Reduction for Transmission or Storage
• Two main types, Time Domain and Perceptual
• ADPCM algorithms such as apt-X and G722

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Digital Audio Data Compression
Compressed Data _at_ 384kB/s for Transmission or
Storage
PCM audio _at_ 16 Bits 48K Samp 1536kB/s
PCM audio _at_ 16 Bits 48K Samp 1536kB/s
apt-X Compression 41
apt-X Decompression 14
6
Audio Sub-bands
60
LF Sub-band 1
Sub-band 2
3
4
Audible Sounds
dBs
40
Hearing
Inaudible Sounds
Threshold
but not to PCM or apt-X
20
0
20K
1K
10K
40
100
Frequency
7
Apt-X encode process 16Bits
16 bits
7 bits
Q


-
Bit
QMF
1/Q
apt-X Data O/P
Sub-band 1
PCM Data I/P
P

Stream
Filter
Tree
Formatter
4 bits
16 bits
3 bits
Sub-bands 2, 3 and 4
16 bits
2 bits
16 bits
Aux Data
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USPs of apt-X

• Very high quality respected by industry
• Very low delay ideal for live applications
• Modest compression ratio of 41
• Transparent to other coding technologies
• Based on ADPCM techniques instead of
  psychoacoustic principles
• Established market player since 1990

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What do we export

• Hardware solutions 60
• OEM system level solutions / JV 25
• Intellectual property licensing 15

10
Electronic h/w WorldNet Series

• Studio to transmitter links (Digital STL) Rio,
  Ohio
• ISDN contributions, Tokyo, Milano,
• Multi channel broadcast solutions, Oslo,
• Multi channel post production solutions for Film,
  Skylink

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OEM Electronic Sub assemblies

• OEM solutions for Wireless audio
• Evaluation solutions for developers
• Telco Audio cards

12
Intellectual property licensing apt-X

• Compression algorithms for professional audio
  products in the broadcast chain
• Codecs (compression - decompression links)
• Radio automation playout systems
• Wireless audio solutions (RF Microwave links)
• Audio solutions for security applications
• Bluetooth audio - Consumer audio solutions

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APTs Export Markets

• 1st world countries with good digital
  infrastructure
• Developing countries with improving telecoms
  network
• Europe, North America, Asia
• 100 outside N. Ireland
• 82 outside UK
• 58 outside EEC

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APT Export Sales 2003
15
APT Export Sales 2004 YTD
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Routes to market

• H/w distribution network in 28 countries
• Equipment supply in agreed territory
• Typically operate on 20 30 margin
• IP and OEM sales direct from Belfast
• 3 H/w Sales Engineers and 1 OEM sales
• J/V with Pulsecom in Wash DC for USA
• 5 6 International trade shows per year

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Trade Shows for Audio industry

• PSDB Police Security, Feb, London, 2K
• NAB Broadcast, Apr, Las Vegas, 100K
• AES Europe Audio, May, Berlin, 10K
• Broadcast Asia June, Singapore, 30K
• IBC Broadcast, Sept, Amsterdam, 40K
• AES USA Audio, Oct, San Fran, 3K
• SBES Broadcast, Nov, Birmingham, 2K

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Cost of Exporting - Travel

• In 2003 for each 1 spent on travel we received
  21 in export sales
• In 2004 YTD for each 1 spent on travel we
  received 22 in export sales
• DTI suggests that you should receive 15 - 30
  for each 1 spent on sales travel
• 2003 each day out of office 9.5K sales
• 2004 each day out of office 10K sales

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Export Assistance

• InvestNI Trade Partners UK Trade Missions 50
  flights 100 hotel
• Return to territory within 6 months TM
• DTI Trade show assistance (UK Pavilion)
• Compete Phase 1 market research
• IRC Relay centres travel assistance

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Worldwide Distribution Network
North America San Fran, NY, Toronto, Wash DC
Asia India, Singapore, Malaysia, Thailand, HK,
Taiwan, China, Korea, Japan, Australia, New
Zealand
Europe Ireland, UK, Holland, Germany Austria,
Belgium, Poland, Denmark Sweden, Finland,
Italy, Spain, Greece, Russia, Israel, South Africa
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Carlsberg dont do Distributors

• but if they did they would-
• have a good technical knowledge of market /
  products
• hold stock be exclusive APT codec products
• pay 100 in advance or on LOC
• be well connected with the key players in market
• have strong English language skills
• attend international trade shows with customers
• promote APT products in local press

22
Getting more from Distributors

• 30 Distributors 12 good, 10 OK, 8 poor
• Each distributor should be bringing in 1/20th of
  APTs projected h/w sales each year
• actively replacing underperformers
• appoint 6 new distributors per annum using
  Explorers programme, P,G,CR,Th,NZ,Au
• Commitment with demo stock and distributor
  agreement with annual sales target

23
APT systems overseas

• 1000 studios use WorldNet codec
• 700 ML1 audio codecs supplied to BT
• 400 Rio audio codecs supplies FBI
• 500 WorldNet units installed in Japan
• 350 Rios installed with YLE in Finland
• H/w for Skywalker sound George Lucas
• Worlds first 5.1 Radio Broadcast in Austria

24
APTs OEM Licensing partners

• DTS gt22K cinemas worldwide using apt-X
• 10K radio stations using apt-X playout systems,
  Scott Studios, Computer Concepts
• Pulsecom apt-X program audio to US Telcos,
  SBC, Verision, Bellsouth,
• 22 Licensing agreements with professional audio
  companies
• gt 1M channels apt-X sold in last 15 years

25
APTs Licensing Partners
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Export Growth opportunities for APT

• Increased product portfolio more access to
  larger international tenders
• Strong reputation for quality products working
  with key organisations such as BBC, ORF, YLE,
  CRI, SABC, KBS, ABC
• Large audio projects such as
• 5.1 radio rollout in Europe continuation of DAB
  rollout
• Olympics in Beijing multiple channels between
  venues
• World Cup in Germany multi lingual

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Exporting success from NI

• Appoint reputable dealers/ distributors
• Dont tolerate underperforming distributors
• Know the customer visit territory often
• Translate marketing material for region
• Have presence at international trade shows
• Make travel s work harder
• Spend s on press releases have PR agent
• Use grants where possible

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Many thanks for your time

• Noel McKenna
• Managing Director
• Audio Processing Technology LTD.
• T 02890 371110
• nmckenna_at_aptx.com
• www.aptx.com