Columbia firm grows as computers shrink

Revenue to nearly double this year, ADS expects

Small business

Howard Business

April 09, 2001|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

As appliances get smarter - interactive vending machines, voting machines, pay-by-credit-card public phones - so must the computers that run them.

That is why Applied Data Systems, a Columbia-based maker of embedded systems, has expanded its product line of tiny computers to include one the size of an index card and another that can be linked to printers and other peripheral devices.

The new product line is offered as the company is expanding. After three years of annually doubling in size, ADS hired a new chief financial officer last month to help prepare the company to go public. Executives say they expect ADS will nearly double its revenue this year with $10 million in sales. It is planning to add about 15 engineers at the company's design and manufacturing facility on Guilford Road. The company wants to train new workers and beef up its teams designing new products.

"We're not on the fast path; that's very planned and calculated growth for us," said Deborah Grenier, director of human resources. "We're trying to get more in research and development. You're limited in the amount of new product you can come out with if all you're doing is making sure the current product you put out every day is working."

ADS makes embedded systems, or miniature computers that go inside other machines. The entire minicomputer is a motherboard, as small as a 3-by-5-inch index card, with a Microsoft or Linux operating system programmed into it. The board is connected to a small touch-screen monitor that allows users to work with it.

The tiny computers come off the shelf ready for programming, which is supplied by the manufacturers that buy them for use in larger products. For example, John Deere uses the tiny computers in farm equipment to count field yields and determine how best to fertilize soil.

The systems also are used in hand-held devices that help keep track of fleets of trucks, and in medical equipment, said Sarah Pick, director of marketing communications.

"We do have a niche market in the way we put the product together, but not in the customers we serve," she said. "The concept of application-ready is really unique to us. The more diverse platforms ... make it easier to find off-the-shelf solutions."

According to Venture Development Corp., a technology-market-research group, the world market for embedded operating systems and development tools was more than $1.1 billion last year. The group is projecting that the market will rise to more than $2.6 billion by 2005, which would leave plenty of room for the 35-member ADS team to expand, company executives said.

Because of the high cost of devoting engineers to develop and make embedded systems, larger manufacturers are buying from companies such as ADS, Pick said. Companies can buy basic systems in bulk, with touch-screen monitor included, for less than $1,000 each.

"We have cost reduction for engineering development as well as getting the product to the marketplace faster," said Edward Liscio, manager of software and engineering development for Medrad, a maker of medical devices. "We certainly like their products. Medrad has gotten involved with ADS to develop our next generation of product."

One analyst warned that though the tiny company is growing, there could be treacherous days ahead. Board design manufacturers are slashing prices to compete, and only the largest companies buying in the greatest bulk can afford the losses.

"They are in a sector that has some limits," said Dr. Jerry Krasner, executive director of Electronics Market Forecasters, which tracks the embedded market. "There is a lot of opposition and a lot of threats."

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