Mr. Duffy was not prepared to elaborate on these figures, beyond stating that revenue forecasts are based upon Net Insight's own forecast data. The company expects to reach breakeven point during 2004, "based on gross margins of fifty percent".

Net Insight is a provider of switches designed for video transport, Internet and data networks, targeting the professional media industry and the 'triple play' market - where broadband connections deliver voice, Internet and broadcast services such as television, video-on-demand and near video-on-demand, and interactive gaming. The company currently addresses solely the European and U.S. markets, but is about to commence activities in South America and is planning to address the Asia-Pacific region in the near future.

Remarking on the merits or otherwise of having the headquarters in Sweden, Mr. Duffy said that it is considered an advantage from a brand image perspective, as the Swedish name carries a perception within the industry of technical and product quality. The main factor promoting a base in the country is the Swedish nationality of the founders, and also a number of the engineering team.

Within Europe Net Insight addresses the entire region from its base in Stockholm. However, the company does also have a presence in the U.S., where five staff are located. Mr. Duffy noted that this team may be augmented by a further three personnel as and when required. Net Insight primarily works through partners and resellers and hence does not need a large number of staff to support a specific market.

The company's products also support interfaces specific to the media industry, notably SDI and ASI. The SDI interface, offering 270 Mbit/s channels and the ASI interface, providing capacity of between 2 Mbit/s and 220 Mbit/s, remain important within the industry. According to Mr. Duffy, Net Insight produces and supplies one 'box', which is configured to meet the requirements of the different market sectors and individual customers, although a system is also offered to enable aggregation of traffic streams to higher speeds.

Net Insight's products utilise Dynamic synchronous Transfer Mode or DTM technology, an ETSI (European Telecommunications Standards Institute) standard. Mr. Duffy stated that an objective for the company, from the system architecture standpoint, is the gaining of GMPLS compliance - he added that much of the functionality associated with GMPLS is already offered by the solution. It was noted that Net Insight is fully committed to compliance with international industry standards.

Commenting on the triple play market, Mr. Duffy said that Net Insight's systems allow service providers to deliver new services and thus generate new revenue streams - seen as a key factor for fixed-line carriers in the present market environment. Mr. Duffy emphasised that the company's products are deployed and operating in live networks, and additionally, have been proven in a number of trials with service providers:

"The reaction to our products from customers has been extremely positive, and we have received a very good response from the industry press in the U.S."

Discussing the technical challenges that Net Insight has overcome in developing its product, Mr. Duffy said that the transmission of video traffic demands a number of factors be addressed, particularly relating to signal 'delay' and 'jitter'.

Traditionally, packet networks are designed to simply drop what are defined to be the lowest priority packets in a transmission if the network becomes congested. Applied to video traffic, this factor results in a degraded signal at the far end of the network. The usual solution to this shortcoming when carrying video traffic is to operate the network at very low utilisation levels - inefficiently. However, the problem is compounded by the number of 'hops' present in the packet network - as the number of hops increases this will result in insurmountable difficulties that cannot be compensated by lower network utilisation levels.

Mr. Duffy commented that companies independent of Net Insight have trialled transmission of video over MPLS networks, but have so far found the solution is not scaleable. These issues lead Net Insight to believe that it currently holds a significant competitive advantage in the transmission of video traffic. Additionally, the company's products are able to handle data and voice traffic effectively - Mr. Duffy noted as an example that VoIP works very well over Net Insight equipment.

Summing up the capabilities and strengths of the product, it was stated that there is a belief within the company that the technology developed gives Net Insight a window of around two years before the competition is able to effectively address the video transmission market. Further, Net Insight believes it offers the best triple play transport solution available on the market, one that is proving increasingly attractive to carriers:

"The market is now beginning to recover, we are seeing a gradual improvement in the situation generally, although starting from a very low base after the collapse of the past two years. Carriers are now once more seeking to offer new services to their customers, and considering adopting new technologies to achieve that end."

Fellow Swedish company Transmode AB is employed by Net Insight as a sub-contractor in certain network implementations, generally where efficient utilisation of optical fibre in the access network is required. Mr. Duffy said this partner is seen as a 'good fit' due to the overall quality, capabilities and competitive pricing of its products, in particular its CWDM system. It was emphasised that Net Insight's agreement with Transmode is non-exclusive, and in no measure affects the company's ongoing search for partners.

In Europe, notable customers included Carrier1, a group that filed for administration in 2002, although a part of its network utilising Net Insight equipment survives in the Netherlands. Mr. Duffy noted that various network assets of Carrier1 were acquired by other carriers when the company was liquidated.

Telia International Carrier announced a partnership with Net Insight regarding the professional media market in the U.S. and Europe approximately one year ago. The U.S. portion and large parts of the European networks were subsequently shutdown, although the carrier continues to offer services over the extant European network.

Commenting on the Swedish market, in particular the national government's push for the rollout of broadband services in the country, Mr. Duffy said that Net Insight does not currently supply equipment to any government institutions; further, the company does not, and has never, received government funding or support of any kind.

Mr. Duffy explained that potential customers are identified based on two core criteria, one, possession of the requisite fibre infrastructure, and second, the financial stability to allow investment in new technology in order to develop new business opportunities. Mr. Duffy said that the surviving carriers are now beginning to accept that the worst of the downturn is over, and realising that they need to invest once more to develop new business opportunities and new revenue streams.

In contrast, it was noted that the triple play market sector continues to attract a great deal of attention, with numerous system vendors moving into this space - a situation that is expected to continue and accelerate. Mr. Duffy said present competitors include Occam Networks and Calix, in addition to major vendors, most notably Alcatel, which has stated the view that Video-over-DSL is a market opportunity set for rapid growth.

"Net Insight is not worried with regards to the competition, I have confidence in the abilities of the company, stemming both from its secure, established presence in the market, and the quality and capabilities of the product."

"There are some very interesting opportunities arising in this region, and I see South America as an important market for Net Insight. We have conducted trials with TV Globo, but I am not prepared to disclose details of wider activities or plans for the region."

The Asia-Pacific market has been ignored by Net Insight thus far because of the conscious decision to control costs. The U.S. and European regions were assessed to be the initial priority for the company, markets where a solid base of key customers could first be built up before casting the net wider. Mr. Duffy commented that the former objective has now largely been achieved, and that the company feels comfortable with its position in these markets. As such, the Asia-Pacific market is now being assessed, with a view to addressing the region shortly. Mr. Duffy added:

"There is no fundamental issue preventing Net Insight moving into the Asian market, beyond the limitations imposed by resources. It has to be borne in mind that developing relationships with customers, and supporting those customers, demands a great deal of commitment in terms of time and resources. It is all too easy to underestimate the demands resulting from expanding into a new market - many companies made this mistake during the market boom. From a product standpoint there are no changes that would need to be made before selling into the Asian market."

The split of revenues by geographic region is currently reported to be approximately 40% Europe, including Sweden, and 60% in the U.S. These proportions are expected to remain broadly the same in the medium-term, even after rolling up developing business in South America with that in the U.S.

Commenting on the development of the professional media market, Mr. Duffy explained that where carriers provide services to the media companies, currently transmission via satellite is the 'standard' method. Along with Scientific-Atlanta, Net Insight is aiming to take at least a part of this business, by enabling carriers to deliver the same services over optical fibre on the ground. It was noted that Cisco Systems has a small presence in this market, although it concentrates on the cable TV sector.

Net Insight believes that within the media market sector, itself and Scientific-Atlanta possess a unique position. Whereas other vendors do address this market, their solutions are basically point-to-point systems, lacking many of the capabilities of Net Insight's specialised product.

Discussing in more detail the positioning of Net Insight's product, Mr. Duffy said that when serving media customers, the equipment generally fits into the pre-production phase of the broadcasting process. For example, where a sports event is being covered the images are transported back to the studio for editing and the addition of advertising slots, before distribution to viewers. Currently this role is largely fulfilled with the use of satellite links.

In the triple play market, Net Insight's product generally provides the distribution side of transmission, delivering services such as television, video-on-demand and interactive gaming to subscribers.

The company believes that each of these markets will display major growth in the near future. Mr. Duffy added that, on both sides of the Atlantic, the major broadcasting companies are planning to 'go digital'.

With regards to the issue of service quality, Mr. Duffy explained that Net Insight's solution provides higher bandwidth than is available using satellite links:

"In Europe a standard television signal requires 270 Mbit/s of bandwidth prior to compression, satellite links typically offer 32 Mbit/s - therefore necessitating compression of the signal. Each time a signal is compressed and decompressed quality is lost. By using Net Insight's solution, operating over optical fibre, no compression is required."

"This capability brings a number of advantages to the broadcasting company: a key reason that mobile outside broadcast facilities are necessary is to allow editing of coverage prior to transmission back to the central studio, as traditionally this transmission means compression of the signal, which makes the editing process far more difficult. Employing our solution removes the need for compression, and so removes one of the main reasons for deploying those mobile facilities - the editing process can be performed without difficulty at the central studio."

In addition to the quality and cost advantages already cited, Mr. Duffy stated that transmission via land-based fibre is cheaper, on a per-megabit basis, than transport by satellite.

Beyond the current climate, Mr. Duffy believes that the other important factor slowing market development is the generally conservative nature of the media industry. This reticence is strengthened by the fact that many broadcasting companies are tied in to long contracts with the satellite operators. As with any novel technology, the balance of opinion must shift from satisfaction with the safe, 'traditional', mode of operation to confidence in the new.

Mr. Duffy added that it is a matter of convincing the industry that, despite the fact that present methods work effectively, there is a better way of working:

"There is naturally a reluctance to move to a completely new way of working. The media companies have to be absolutely certain that, first, the new technology will work reliably, and second, that it will deliver an improvement on the old system and provide benefits to them."

Commenting on the size of the market that Net Insight's customers are addressing, Mr. Duffy said that, currently, the total annual turnover deriving from all satellite transmission services stands at between $6 and $7 billion. While not all of this can be transferred to terrestrial networks, even a fraction of this total represents a massive opportunity for the carriers.

Mr. Duffy noted that a number of network operators have expressed an interest in pursuing this market. In the U.S. Vyvx Inc, part of WilTel, focuses exclusively on providing services to the media sector, realising annual revenues of over $30 million. In Europe, BT is one of the main providers of services to the media industry, via both satellite and fixed network solutions. It is estimated that over the next five years approximately 10% of satellite traffic will move to fibre.

The key factor driving growth in the medium-term is believed to lie in the development of successful partnerships for effective sales and distribution. Mr. Duffy stated that Net Insight has no plans to build a global sales organisation of its own, hence partnering agreements are essential. Expanding on this theme, Mr. Duffy said the telecom industry has to some extent been 'spoilt' as a result of the recent boom:

"A few years ago, a company could pretty much go from an operation in a garage to global multinational system vendor within a few years - and perhaps, with the crash, subsequently vanish even faster."

Mr. Duffy believes that partnerships with companies offering strong global brands represent the best route to building a presence in the global market, and the best path to success for a small company such as Net Insight. There is perceived to be a place in the market for a service provider to act globally for the professional media sector, and it is to such a provider that Net Insight would hope to act as supplier.

In the short-term, Net Insight is planning to expand its horizons beyond Europe and the U.S., to South America and Asia-Pacific, and the development of partnerships to achieve this, and cater to anticipated increase in demand for products, will fully occupy the company's resources.