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Buoyed by $13 million in new financing, Atsana Semiconductor
Corp. plans to strengthen customer relationships and
fine-tune production levels to survive in the explosive
photo cell phone market, says president and CEO Alex
Leupp.
For Atsana to provide mobile manufacturers with its
"media processors", the Ottawa startup must understand
how wireless products can be successful in the market,
says Leupp.
Atsana's chips enable multimedia applications in cell
phones, personal digital assistants and network cameras,
including multimedia messaging, DSC and camcorder functionality,
video conferencing, video streaming and 2D/3D gaming.
While innumerable models of mobile devices are developed
each year, relatively few hit the shelves and even fewer
take off, Leupp explains. As a result, he says, it's
critical for Atsana to put customer production cycles
under the microscope by meeting customers in person
as often as possible.
"From an operational point of view, we have to make
sure we're in a position to deliver the volumes that
these customers require," he says. "We must understand
the ramps."
Today's production forecasts are in the six- to 12-month
range, adds Leupp. "So we have a pretty good idea in
terms of what is coming."
But those production cycles are getting shorter as
manufacturers get better at designing phones. Faster
turnarounds will keep chip-makers such as Atsana on
their toes, Leupp says.
The other challenge is dissecting reams of market
research, the most promising of which comes from Boston-based
Strategy Analytics, which predicts that more than 170
million camera-enabled phones will be sold worldwide
by 2006.
Toronto-based market research firm NFO CFgroup also
found cell phone ownership among adult Canadian Internet
users grew between November 2001, at 57 per cent, and
February 2003, at 62 per cent.
While only one per cent of online Canadians reported
owning a photo-cell phone last February, one-third said
they were interested in acquiring one, the report said,
adding the devices hold the greatest appeal among young
adults ages 18 to 34.
If future predictions and current market research
are any indication, Atsana could be in a favourable
position, a point that hasn't been lost on Siemens Mobile
Acceleration of Munich, which contributed to last week's
$13-million (CDN) round of equity financing.
Gerald Brady, managing director at Siemens, points
to price, power management and image quality as top
features of Atsana's product. The company will also
benefit from strong management, he adds, referring to
the California-based CEO Leupp.
Perhaps one of the biggest tests for Atsana's product
will be in North America, where photo cell phones are
still relatively new compared to hotbed markets in Europe
and Asia. It's unclear whether photo cell phones will
have the necessary momentum to hook North American consumers,
analysts say.
"We all know that Asia has far and away more cellphone
usage than in North America," says Ken Charbonneau,
a partner at KPMG's Ottawa office. "So a cautionary
question might be, how quickly will users want to have
this functionality and make use of it?"
But some established overseas markets, such as Japan,
could be good indicators for what will happen here,
says Brady.
Leupp admits that, when he spoke with venture capitalists
last year, they asked him, "Why would anybody buy a
phone with a camera in it?"
But even if the numbers aren't as promising as analysts
predict, the market will still be an encouraging one,
says Brady.
"Let's say the market just doubles in the next three
years, that's still 100 million camera phones, which
is still a huge market. Even if the forecasts are wrong
and even if they're wrong by a fairly big margin, it's
still a big opportunity," Brady says.
Last week's announcement could push the company to
profitability by 2005, says Leupp. Other contributors
to the financing round included Greenstone Venture Partners
of Vancouver and Toronto firms GrowthWorks WV Funds
and Covington Capital Corp.
Prior to last week's announcement, the company
had secured US$16 million in financing since its founding
as Lumic Electronics in 1999.The company changed its
name to Atsana in April 2002.
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