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Sandie Allen
Friday, June 5, 2009
Inside Hardware
Systems integration, telecom offer new hardware niche in New England
By Jim Schakenbach, Special to Mass High Tech
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There was a time not too long ago when computer giants ruled New England. Digital Equipment Corp., Wang Laboratories Inc., Data General Corp. and Prime Computer were just three of the names that anyone with even a passing knowledge of computers knew. But those days are gone, never to return. Right? Well, not so fast. There’s hope for the IT hardware industry in New England, you just have to know where to look. And the giants may be less giant than they were.
To be clear, the consensus among industry professionals and investors is that basic computer hardware manufacturing in New England as we knew it — the high-volume production of minicomputers and PCs — is dead, killed off in part by the high cost of labor and insurance and the low cost of offshore manufacturing. Today, arguably the only major IT hardware manufacturing company left in the area is EMC Corp. (NYSE:EMC), the Hopkinton-based storage and information infrastructure products giant.
“I’d be stunned to see the manufacturing of basic hardware return to the area,” said Steve Duplessie, senior analyst for Enterprise Strategy Group, a Milford-based technology industry analyst firm. “Intellectual property may be developed here, but the manufacturing will be done elsewhere.” According to Duplessie, “Computer hardware has simply become a delivery vehicle for a software function, and the manufacturing of basic hardware is now at the bottom of the food chain.”
So what is on the horizon for New England hardware manufacturers? Several things, according to Duplessie and others. “The only sustainable, long term hardware industry that can survive in New England will be purpose-built,” said Duplessie. “Products designed and built to perform highly specific, problematic tasks requiring unique solutions.”
One such company is Mercury Computer Systems Inc. of Chelmsford, specializing in powerful embedded computers. Mercury (Nasdaq: MRCY) product managers Tom Roberts and Ann Mascarin see systems integration as the future for computer manufacturers. “Combining hardware and software in novel ways to create valuable tools is what it’s all about,” said Roberts. For example, Mercury has developed a computing network for the military that combines layers of images — say, a radar image with a thermal image — to provide a single, enhanced image that conveys far more information for better battlefield intelligence than just one of the original images.
Unlike the old days of proprietary hardware and software jealously guarded by the manufacturer, today’s systems create value by their very openness and commerciality. “The Department of Defense mandates that all products it purchases have ‘commerciality’ and use off-the-shelf components that virtually any supplier can obtain, such as standard microprocessors,” said Mascarin. “DoD technology cannot be proprietary.”
But highly complex computing systems are not the only way to go for New England hardware manufacturers. Other industries, such as telecommunications, offer opportunity to hardware companies.
“There’s really not much difference between IT hardware and phones these days,” said Robert Crowley, president of the Massachusetts Technology Development Corp. According to Crowley, as New England computer giants such as DEC and Data General faded away in a haze of acquisitions and outright failures, some former personnel moved over into the growing telecommunications industry. Today’s smartphones such as Apple Inc.’s iPhone, T-Mobile USA’s G1, and the Research in Motion Ltd. Blackberry resemble nothing so much as tiny computers. Electronic medical device manufacturing is another area that’s alive and well, added Crowley, as the medical industry moves to wireless networking and electronic health records.
But the relatively brave new world of telecommunications isn’t necessarily a cakewalk for hardware manufacturers. Just ask Zoom Technologies Inc. president and CEO Frank Manning. Boston-based Zoom, which started out as a manufacturer of such telecom products as dial-up modems, is now attempting to transition into broadband with a new line of products — a move that’s proving to be difficult and expensive. “It’s hard to get new broadband products approved for use by the service providers because there are no real standards,” said Manning. And, the mobile marketplace is proving to be just as messy. “What we really need in this country is a major commitment and investment in 3G — Europe and China are pulling ahead of us.”
Despite all of this, there are areas of real progress and growth for hardware manufacturers. Just listen to David Orecchio, president and CEO of GateRocket Inc., a Bedford-based developer of optimization solutions for field-programmable gate arrays (FPGAs) — semiconductor devices that enable hardware to perform complex functions. “I don’t think the hardware market is gone in New England. We have the academic engine that continues to drive technology and innovation,” said Orecchio. “The future is in hardware that empowers the Internet and optimizes network performance.”
According to Orecchio, the lines are blurring between hardware and software as data processing software algorithm speeds are topping out. “Advances in data processing are all about speed,” said Orecchio. “As software algorithm speeds hit their limit, hardware engineers are coming up with ways to accelerate processor speeds.”
Orecchio points to several area companies, including Marlborough’s Netezza Corp. and IneoQuest Technologies Inc. in Mansfield, as poster children for hardware manufacturing growth and innovation. Netezza (NYSE: NZ), a manufacturer of data warehouse and analytic appliances, and IneoQuest, which produces video network monitoring, analysis and troubleshooting tools to optimize network performance “are both growing like crazy,” says Orecchio, who provides both with his FPGA optimizing tools.
So what’s the take-away on this? That IT hardware manufacturing in New England is not dead. It’s just evolving — moving away from manufacturing that has become commodity hardware to developing and producing advanced devices and systems that address new challenges in new ways. Sounds like innovation, doesn’t it? And that’s nothing new to New England.
Memories
With SiCortex Inc. of Marlborough closing down operations, the supercomputer maker joins the ranks of Digital Equipment Corp., Data General Corp. and others as a ghost of New England hardware manufacturers.
If you’ve been around the IT sector for a few decades, take a stroll down random-access memory lane, and see how many familiar and local names, including some software folks, you see on a Wikipedia.org page called “Defunct computer companies of the United States”. For example, how about these names?
Apollo
Centronics
Interleaf
Kendall Sq. Research
Lisp Machine
Thinking Machines
Who else is gone but not forgotten? Where is the New England hardware sector heading? Share your thoughts in the Comments section below.
Jim Schakenbach is a freelance writer in Jefferson, Mass.
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