Invisible computers, visibile profits

DN Staff

February 1, 1999

6 Min Read
Invisible computers, visibile profits

In 1987, three Intel employees decided to follow their silicon dreams by founding their own company, RadiSys.

All three--Glen Myers (CEO), Dave Budde (VP, Engineering), and Bob Patterson (VP, Marketing)--had worked on the i960 microprocessor project for Intel. Not many OEMs had experience with the i960 because at the time it was brand new, so the three decided to leverage their expertise by designing industrial single-board computers around the new processor.

Unfortunately, the processor was too new--Intel hadn't announced it yet. Myers had also been involved in the 386 processor design, so they decided to use the 386 instead.

They dreamed up a board, did a block diagram, and created a plan for the EPC1--an embedded PC using the VMEbus form factor. Then the founders called on some potential customers, who liked seeing the 386 because that meant the board could run Windows and DOS.

Myers, Budde, and Patterson were dumbfounded--why would anyone want to run DOS or Windows in an industrial environment? The customers said, that's weird, why would you put a 386 on the board and not run Windows? That would be the big advantage, right?

"By about the third sales call they finally figured out that this was a feature, not a problem," says Steve Verleye, vice president and general manager of RadiSys Corp.'s automation equipment division.

By listening to their first customers and giving them what they wanted, RadiSys came up with a viable product: an Intel 386-based PC on a VMEbus board that gave OEM customers a PC-compatible option in an industrial control environment. At the time, embedded computers were still mostly microcontrollers and Motorola 68000-family-type processors, says Verleye. RadiSys's business became designing Intel-processor-based boards for embedded applications to take advantage of the various Windows operating systems and compatible applications.

It worked. RadiSys embedded PCs are in test and measurement equipment, robots, SMT equipment, semiconductor manufacturing equipment, patient monitors, blood analyzers, cellular wireless base stations, PBX switches, and slot machines. Customers include: Nokia, Nortel, ABB Robotics, Rockwell Automation, Applied Materials, Hewlett-Packard, Siemens Medical, Philips Medical, and International Game Technology.

In November of last year, Deloitte & Touche named RadiSys to its Technology Fast 500 list, which ranks the 500 fastest growing technology companies in the U.S. based on percentage growth in revenues from 1993 to 1997. Ranked 396, RadiSys saw revenues rocket from $15 million to $125 million during that period--a 717% increase.

"Over the last several years the company has been aggressive in the embedded computer space," says Steve Lidberg, an industry analyst with Charter Investments (Portland, OR). Lidberg estimates that the average annual growth rate of RadiSys has been about 50% since 1993. He adds that the company has distinguished itself by establishing close ties with customers and by the fact that 90% of the work it does is custom.

The RTDS-200 Pentium II board and chassis support both front and rear I/O. The CompactPCI bus provides eight slots; the desktop PCI bus is limited to four.

Although it started out offering standard, off-the-shelf products, RadiSys evolved into a company that does mostly semi-custom and custom designs and claims it can usually develop them faster and less expensively than OEMs can. The computers incorporate Intel processors in a variety of form factors as well as such complementary technologies as core logic chips, real-time system software, and DSP subsystems.

One of RadiSys' most recent products helps speed time to market by letting telecom customers prototype a system and develop software while RadiSys is designing and manufacturing their custom CompactPCI board. The RadiSys Telecom Development System (RTDS) 200 consists of an Intel mobile Pentium II, an 8-slot CompactPCI chassis with Hot Swap/Hot Plug capability, one or two power supplies, and Windows NT.

"The RTDS-200 lets customers begin code development so they can demonstrate to management as quickly as possible that they have a system that works," says Terry Furtado, an applications consultant with the telecom division. "A software developer can development code on his desktop PC while we're developing the CompactPCI board. The software is transportable across platforms, so there's a real time-to-market advantage to using CompactPCI."

RadiSys has two main competitors, says Verleye: Motorola Computer Group, which two years ago started using Intel chips at the board level, and the customer itself. "Most large OEMs could design their own embedded computers in house," he says. "But outsourcing the job to us speeds time to market, and frees up engineering resources.

Motorola Computer Group's Jerry Gipper, director of business development and planning, says RadiSys has a good reputation in the embedded-computer market and competes well for customers. "At times, we both have been up for the same design," he says. "Sometimes we win; sometimes they win." RadiSys has recruited heavily out of Motorola Computer Group, says Gipper--something he doesn't seem particularly pleased about.

Something RadiSys hasn't been pleased about is the downturn in the semiconductor market because its customers include semiconductor equipment manufacturers. RadiSys reported 1998 third quarter revenues of $24.6 million, a 22% decrease from revenues of 31.6 million for the third quarter in 1997.

But Charter Investments' Lidberg predicts that RadiSys will probably reaccelerate the business, growing it at the overall industry rate of 25% heading into the second half of 1999. And as PC technology continues to get less expensive and more manufacturers want to add Windows-based intelligence and compatibility to their equipment, RadiSys' future looks solid.


RadiSys at a glance

Year founded: 1987
Headquarters: Hillsboro, OR
CEO: Glen Myers
Business: Designs and manufactures embedded PCs, and software
Application areas: Telecom, robotics, medical, gaming, automation, transportation, test and measurement
1997 revenues: $125 million
Employees: 500+
Job prospects: Good, visit www.radisys.com/corporate/employment/index.asp


Question & Answer

Q: What is an embedded computer?

A: An embedded computer is basically a PC on a board or in a module that an OEM uses in an end product. It may be in a patient heart monitor or controlling a robotic arm or part of a telecom switch.

More than 90% of the world's microprocessors are in these embedded applications--not desktop PCs, according to RadiSys. Industry analyst Steve Lidberg estimates that demand for embedded PCs is increasing about 25% per year.

Q: What is CompactPCI?

A: CompactPCI is a specification for PCI-based high-performance industrial computers. Electrically, it is a superset of desktop PCI and uses the Eurocard physical form factor. The spec supports x86-type architectures, as well as PowerPC and Alpha.

Unlike desktop PCI, CompactPCI boards use a 2-mm pin-and-socket connector and have eight PCI slots. Boards load into the front of a chassis, and I/O can break out to the front or through the back.

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