For developers and manufacturers of millimeter wave technology, October was a pretty decent month due to the Transportation Security Administration’s (TSA) decision to acquire a limited number of portal and stand-off sensor systems made by L-3 Communications [LLL] and QinetiQ respectively (TR2, Oct. 17).
Whether the technology will achieve stronger, and wider, acceptance by TSA and other security agencies in the United States remains to be seen but OSI Systems’ [OSIS] agreement to distribute under its own label, and potentially contribute to the further development of, Brijot Imaging Systems’ BIS-WDS GEN2 stand-off millimeter wave system demonstrates that the security industry believes the market potential for this technology has improved. What follows is a question and answer with several officials from both companies: Peter Williamson, executive vice president for Worldwide Sales and Marketing with OSI’s Rapiscan division; Mitchel Laskey, president and CEO of Brijot; and Troy Techau, Brijot’s vice president for Business Development.
TR2: From Rapiscan’s end, why this agreement and why now? Is this being driven by customer interest or Rapiscan’s own vision?
Williamson: It’s probably a combination of the above. As you look at the Rapiscan mantra, layering of technology is critical. What we’ve always tried to do is package the product portfolio in a broad enough brush so that we’re not pigeonholing customers into a singular type of technology. Because we don’t necessarily feel that a given technology is right for all applications. So from a timing standpoint in terms of addition to the product portfolio we feel that it’s very appropriate and quite frankly we feel that Brijot is the best partner out there for us from a technological standpoint.
TR2: How about on the customer side? Brijot has had some success selling the GEN2 system.
Williamson: Well you’ve got a variety of different market segments looking at it. It’s not just aviation, it’s not just defense, it’s not just private sector commercial. You’ve had a groundswell of buildup of activity and interest in millimeter wave over the last couple of years. I think you’ve had a lot of people out there from a customer standpoint waiting to see how good the technology can be from an imaging standpoint, from a probability of detection standpoint. Is it the best imaging system in the world? Probably not. Is it adequate and more than capable of filling a variety of niche applications? Absolutely. It certainly eliminates a number of concerns that are brought to the forefront with the use of technology such as X-Ray on people. We still think there is a play in the marketplace for backscatter but it’s not the only play. And for those areas where throughput, privacy and other issues are a primary concern for the customer, this provides more than an adequate technological solution for them.
TR2: When you talk about consumer interest, can you define it in terms of domestic versus international?
Williamson: We’re seeing interest across all geographic segments and across multiple market segments. And to your earlier point, Brijot has had some real decent level of success in its early days and I think we’ve all felt the combination of Brijot’s technology coupled with Rapiscan’s product platform and distribution channel is really going to open up avenues to both of us where one plus one is greater than two.
TR2: You said the technology still has its limits. What color can you provide about what Rapiscan might like to do with the technology in terms of advancing it?
Laskey: The agreement does a few things for Brijot. First, Brijot is a small company that has a limited ability to reach out into the marketplace with a product. And part of our strategy has always been to look to channel partners to be able to help us expand and extend the reach of our distribution network and we think that when you look out at the marketplace at a leader like Rapiscan we think we’ve found at this point a partner that can take our technology, integrate it with some of their existing platforms and provide a true solution set for their customers in their markets. And that helps both companies. In terms of where do we go from here in development, it helps Brijot focus its resources on taking the millimeter wave technology that’s been developed to date and start to expand on multiple horizons in underlying sensor development as well as the extension of some of our technologies today to broaden our solution set. And then when you work with solutions providers like Rapiscan that have customer sets that have identified needs, we’re able to prospectively in the agreement sit down and develop future solutions that are complementary to each of our core competencies in terms of underlying technology–X-Ray and millimeter wave–and to the extent that we should cooperatively develop a solution that meets the customers needs I think that that is something that we will work toward and be very well received in the marketplace.
TR2: You talked about integration. Integration implies not just two or three standalone technologies but a way to fuse the information that’s coming off of those, as well as sometimes, the operation of those technologies. Can you better define integration?
Laskey: I think the real key, at least at the outset of this agreement, is you know there is a gap in capabilities. To the extent that we can help close that gap by being able to marry two complementary technologies in a layered environment I think provides the ability for customers to get a better return on their investment. I think as we look down the road there’s further integration of fusing of technologies and fusing of operation of those technologies [and that] will be something that is defined by the customers in the market. So this is like every other agreement. You have to start and then do discovery and then create some successes and I think those successes will beget the next generation of cooperation.
TR2: Is there a time length to the agreement?
Laskey: The agreement is for seven years with renewal options thereafter.
TR2: Rapiscan had a deal that didn’t last very long with Implant Sciences [IMX] to incorporate their trace detection into your X-Ray systems. The homeland security, homeland defense market space is still trying to figure out what are the right combinations for the market, what the customers want. Why another partnering deal for Rapiscan? How is this different than what you did with Implant?
Williamson: The two technologies and the two agreements are attacking different segments of the market. Implant Sciences was a trace detector deal and it was twofold. One we were looking at a potential marketing of their existing product line and two there was development funding proposed to come up with a trace portal and also an integrated trace detector coupled with a traditional X-Ray technology for parcel screening. The focus of that agreement wasn’t necessarily on people screening. The focus of the Brijot agreement is most assuredly on people screening. Additionally, the state of Brijot’s technology is at a point where we don’t view this necessarily as a development agreement. Although as Mitchel pointed out, we’ve got to demonstrate some success to each other collectively and in theory our joint success is going to dictate where we go from there in terms of product development. But the product is available today.
Techau: The opportunity here is to look from a process perspective what is it that a customer is trying to do at a facility. Screen people? Screen bags? And then you layer the technology to optimize that process. You have to have an idea in your head of what right looks like before you try to start gluing technology together and try to have one machine do multiple tasks because you have to understand how the users are going to operate it and that’s what this really gives us an opportunity to do is to look at the gap in the current capability and put in technology to fill that gap. And then as we walk the road together and learn from what our customers need, that will drive product development jointly.
TR2: Regarding the agreement, are there any non-competitive clauses?
Laskey: The agreement is non-exclusive and Brijot continues to have its direct and channel partners and now private label partner to help us achieve penetration in all the global markets.
TR2: Is there any money switching hands for the private label agreement?
Mitchel: That part’s confidential.
TR2: Again from Rapiscan’s vantage point, you said over the last couple of years the millimeter wave technology has improved and people have wanted to see what it can do. You can look at a lot of technologies in the homeland space and why they’ve been slow to take off either due to lack of standards, lack of customer knowledge about what one product can do versus another. Given that, is there a comfort level among the potential consumers here that makes you feel that this technology is right now for sales versus why it wasn’t right for sales say a year ago?
Williamson: Do the customers have a better comfort feel today pertinent to how well the technology can function? I think the answer is safely yes. I think that you only have to look some of the higher profile trials that have been conducted around the globe in various market segments. You’ve got what TSA is doing now and a number of comments that TSA Administrator Kip Hawley has come out with. You’ve got trials that have been ongoing in the United Kingdom in various mass transit types of environments, not just the aviation segment. And you’ve got a multitude of other opportunities and applications that have kind of sat back and waited and I think now people are realizing that this technology has matured, maybe more quickly than certain people that thought or hoped.
Laskey: Let me give you one more perspective from Brijot’s point of view. When you have new technology it’s always hard for that buyer to make a leap on new technology but more so on a small company who they don’t know has the viability to deliver and service. I think this agreement provides in a lot of cases the ability for the customers to make that leap of faith based on the technology and based on the financial stability and presence that Rapiscan has around the globe.
Williamson: On top of that, we’ve been around a while and we’ve introduced a lot of our own new technology over the last couple of years and I guess we’ve earned enough stripes to be able to say, ‘Trust me.’ And we’ve been very successfully launching new products over the last three to four years and we just all see that we’re going to have another opportunity and success in this endeavor.