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Technology Made in Spain

Wednesday, June 14, 2006

Technology, Made in Spain

[Translation of Tecnología 'made in Spain' by Tomas Delclos and Laia Reventos published in El País Semanal on 11-Jun-2006. (Tomás Delclós and Laia Reventós ).]

Although in Spain we still have a long way to go in the field of research, we are very prolific consumers. 1) In spite of this, some Spanish names enjoy well deserved recognition in world markets. 2) Our video games industry returns to world rankings. 3) The continuing avalanche of innovative products keeps satisfying the consumers who are eager for novelties.

Spain does not figure well in world rankings for industry and new technology. Trailing the developed nations, the need for companies to invest in R&D and innovation is now repeated as a mantra even by the politicians. Although the figures continue to be poor, a glance at the bird's eye view of the industrial map of Spain reveals some names with international reputations for new technology, who are in world markets showing off the rare label of 'made in Spain'.

There are some obvious examples, like Telefonica. Some other names are only known in specific locations, like Regina Llopis, general director of the group AIA, which sells programs in the United States and Mexico for energy control, detection of money laundering and the prediction of when a new song will be commercial hit.

In this report we tell some stories of success. These may be small or large companies but in each there is conviction, persistence and risk taking.

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Victor Gonzalez (González) and Ignacio Vargas are two young engineers, 32 and 34 years old, who decided to create a company in Madrid called Next Limit in 1998 with the idea of developing simulations of physical systems, such as waves or fluid turbulence, for the world of three dimensions. “We started with some ideas and little money, just enough to set up a company. We brought our computers from home. It was like a hobby and we turned it into a company,” remembers Victor. They called at a lot of doors for four years before they were noticed. “We went to show our system everywhere we knew it was needed. We attended the most important trade show in the United States at a stand of three by three metres and rucksacks on our backs. We were the only Spanish exhibitors in a hall that was visited by 50,000 professionals.” In spite of this they know how important the Internet is for marketing their product. Next Limit found its gap in the market and wasn't doing badly. “We were growing slowly until 2001 when we were joined by an investor. He brought enough money for us to expand from 6 to 16 employees and to step up to a new level. The company stopped being a plaything and started being something more serious. Now we have 20 staff,” says Ignatio.

But how could a company like this find a gap? “There were two basic reasons,” they say. “We had developed a unique tool that was independent of other programs and we customise it for clients so that it can integrate into the work flow of large companies like Disney, Dreamworks and Bluesky. Secondly, our solution simulates the movement of particles which brings advantages compared with the traditional models, giving more realistic results and being easier to use for graphic artists.”

Its star product is called Real Flow. “It's a simulation program for fluids. It's been used to create the seas of lava in The Lord of the Rings and the melting ice scenes in Ice Age 2. It has also been used for scenes in Harry Potter, Chicken Little and the forthcoming Poseidon. Wherever there is water involved, we are there,” confirms Victor with a smile. Now they are developing other tools. “We have a light simulator and we are working on other simulation concepts such as fractures and explosions, which are very difficult to create on the computer. Our export sales are 90% of our total and we feel proud of having recently won two IST (Information Society of Technology) prizes, the European Oscars for innovation.”

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Another name that is little known in the media world of major trademarks is DS2. Its founder, the telecommunications engineer Jorge Blasco, was enjoying a comfortable post in Brussels working for the European Union in 1992 after a brilliant career that had taken him to companies like Telefonica, ITT, Alcatel and IBM. His head was swimming with an idea: to use electric power lines to transmit information and to design and produce the microchips that could do it. A couple of industrial groups in the province of Castellon believed in his project and the company Diseno de Sistemas de Silicio (DS2) was born with its headquarters in Paterna near Valencia.

In 2000, Endesa became part of the company by buying 15% of DS2 and in September 2003, the Japanese company Itochu bought another 2%. Subsequently the company was valued at 255 million Euro. How had it got there? With determination and a product that makes it a world leader in the sector: chips for Internet access reaching 200 megabytes per second that have won prizes in the most important consumer electronics fairs.

Now they have expanded their production lines with processors that can convert domestic power lines into information transmission networks. At the beginning of this year, the company Opera put the DS2 designs at the heart of its expansion of this technology. This organisation is integrated into the Universal Powerline Association (UPA) which has also chosen the DS2 chips as its standard. “Spain is a country with a tremendous potential for training researchers capable of innovation, but its lacks the infrastructure necessary to release this talent,” comments Blasco. Their success has encouraged them to open offices in Tokyo and Santa Clara; its sales have reached 100 million dollars and it employs more than 130 staff at its headquarters in Paterna. Its influence extends throughout the world.

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Indra has recently been in the news because in just one month its was awarded the contracts for the ticketing for Mexican suburban trains, two simulation centres for helicopter pilots for the Turkish army and the setting up of the emergency centre in Madrid to speed up response times to emergencies. You can also find mention of Indra at the forefront of electronic voting and counting, in the technology for air traffic control and in the growing world of electronic government administration. It was founded in 1993 by the fusion of private and public Spanish companies. Its president Javier Monzon (Monzón) remembers that Indra picked up the baton from a number of companies that were working to emerge on to the international market place. After a period of internal re-organisation, the company renewed it efforts to enter the external market. “We wanted Indra to be an international company because this was the way to demonstrate the quality of our products and to diversify. Exporting was not something we did from time to time or as a complement to our domestic business. It was strategic.”

With its motto of being able to compete in every part of the world, Indra now has offices in more than 50 countries. And it works in demanding environments. Because its clients are demanding, “We are the only non-USA contractor for simulation systems for its navy.” It works on critical systems with no room for failures. As a world leader in air traffic control systems, for example, it cannot allow even the most insignificant error. On the other hand, when working on technological innovation, it is not sufficient to install the machine or the program; it is also necessary to define new work processes in order to obtain the maximum efficiency. For this reason the company also provides consultancy so that the client can gain maximum advantage from the technology.

With its headquarters in Madrid and more than 10,000 employees, its international businesses makes up 40% of total sales, with 70% of this in Europe but only 13% of its workforce is outside of Spain. This is the profile of an exporting company. “Now the fundamental challenge, apart from continuing to develop new products, is to remain a global company but with local connections. We are strengthening the identities of our local subsidiaries to benefit from their proximity to local markets.” Indra now has local presence in the United States (Orlando, Florida), Germany, Poland, China, Chile, Brazil, Argentina and Mexico.

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Indra is not alone in the field of electronic voting. The citizens of Neuchatel (Switzerland) vote over the Internet using Spanish technology. In the states of Mendoza (Argentina) and Victoria (Australia), the voters also choose their candidates using computers connected to the Internet. The company Scytl supplies the software that guarantees the security that the electoral process demands up to the final counting. Scytl is a company that spun off from the Universidad Autonoma of Barcelona in 1992 from a group who were investigating how to ensure security in electronic voting systems using encryption techniques. After the controversial elections in Florida that allowed George Bush to win the presidency of the United States, they saw their opportunity to “take the results of laboratory investigations into the marketplace,” explains its managing director Pere Valles (Vallès). Leading a team of six people was Andreu Riera, the author of one of the only two doctoral theses on security in electronic voting systems in Europe.

They had two objectives: to obtain finance and to turn into reality the software that they had been designing on the blackboard since 1994. The result is Pnyx, a family of computer applications that can be used to collect and count electronic votes in all kinds of elections with the same guarantees that are provided by the traditional electoral processes using paper. In addition, adds Valles, “our system offers the option of returning a receipt to the voter as confirmation that their vote has been counted.” The company has five patents that cover some hundred countries in the world, which cover electronic voting in person as well as remote voting using the Internet or mobile phones.

After a trial period they went off to conquer the international market place in the hands of Hewlett Packard and other commercial partners such as the consultancy Accenture in Spain, Oracle in the European Union and Telefonica in Latin America. In addition, they obtained recognition for their innovatory work with the award of the ICT Prize by the European Commission, where they competed with 400 other candidates. Their security standards have been adopted as best practice by European and American authorities for electronic voting.

Five years after its launch, Scytl continues to be an independent company. 80% of its 32 staff are telecommunication engineers, programmers, software developers and cryptographic experts and they practice “continuous innovation” following in the footsteps of their founder Andreu Riera, who died in a road traffic accident last March at 35. His legacy lives on.

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At 17, Xavi Marquez (Marquéz) developed his first computer program. It was 1989. “It was a system for the management of rabbit farms and it worked quite well.” It worked well enough for him to pay for his studies as an industrial engineer. Ten years later, in the middle of the technology bubble, he decided to set up his own dotcom and converted his simple program into a powerful data base capable of managing thousands of different variables. “We control everything, from insemination up to the death of the animal. We also control animal stress. The tool not only facilitates the planning of daily tasks, but also maximises the efficiency of a farm.”

Agritec Software exports its programs for the management of pigs, cows, sheep and rabbits using the Internet. Since its foundation in 2000 it has sold some 2500 commercial licences, especially in the United States and Canada. About a year and a half ago, Smithfield Foods in North America, which produces more than a million pigs each year for human consumption, chose the application Porcitec for installation into the most innovatory of its divisions. The program manages more than 300 variables for each female such as scan results, births, inseminations, feeding, cage number etc.

Agritec Software is a totally virtual company. It has no offices. Its nine collaborators, distributed around the world, communicate with each other using IP telephony. The programmers are distributed between Spain and India. The web page is designed in Argentina; the pig and sheep farming consultants live in the United States and the cattle consultants live in Spain. “The most interesting thing about this structure is working with talented people without worrying about where they are located. And I can be anywhere: I can be on holiday in Australia and no one will know or care.” The four programs cost between 300 and 3000 Euro, depending on the size of the farm, and can display in Catalan, Spanish, English, Arabic, Malay, Lithuanian, Italian, Hebrew, Polish, Rumanian, and both versions of Chinese (traditional and simplified).

Currently, Marquez, who is 34 and is the father of three children, has no intention of expanding the business, in spite of the “pressures that I receive to go further with it. My priorities in life are very clear, and I am not living to work. My current situation allows me to balance my family and professional lives, and I even have a bit of spare time for myself. Maybe in the future I will sell the company, but at the moment I enjoy my work. What more could I wish for?”

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The invention of a fractal aerial won the major prize of the Council of Europe for Applied Sciences in 1998. It was developed by a research group from the Universidad Politécnica de Cataluña led by Carlos Puente.

“A fractal object doesn't look any different, irrespective of the scale at it is examined. This feature is at the heart of multi-band aerials that are getting smaller all the time without sacrificing performance and at low production costs,” says Ruben (Rubén) Bonet, the managing director of Fractus, a company spun off from the university in 1999 with the aim of commercialising the research into applied technology in products for mobile phones, electronics and automobiles. In less than ten years, Fractus has specialised in the mobile phone sector and has a partner in South Korea. The company is the owner of 42 patent families that practically cover the globe.

At the beginning, Fractus had “four staff who had an eye on the international marketplace. Today we have 40 employees in the headquarters in Sant Cugat del Vallès, and more than 50% are working in R&D. If you want to be a leader in innovation, you can never stop.” While they were being recognized by the Economic Forum in Davos in 2005 for their technology, they continued to research how they could integrate the aerial into the chip. Now they have succeeded. “The aerial is so tiny, so microscopic, that it has disappeared as a component and is now integrated into the semiconductor.” This solution now makes it possible for any device, from a fridge to a television, to be controlled wirelessly.

On the way, they have a solution for the automotive sector too. This is now in the hands of the multinational Ficosa, which bought 50% share of Advanced Automotive Antennas (A3). This was a company created in 2002 producing aerials that can be integrated into rear view mirrors and rain sensors.

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When Panda Software in Bilbao created its first anti-virus product at the end of 1990, it was able to detect 62 viruses; there are now more than 120,000. Mikel Urizarbarrena, its founder, a technical mechanical engineer, had started a company three years before, the second in his short career, to develop software for car driving schools. It had 26 staff. “A programmer showed me a virus, ping-pong, and there was nothing we had at the time to combat it.” Together with his wife Berta he put 5000 Euro into starting Panda. Now the company has 700 staff in Spain and another 800 in more than 50 countries.

In the 1990s, viruses were nothing more than a local difficulty. The Internet was unknown and viruses travelled slowly on diskettes in executable programs. Anti-virus companies were also local. The big change came in 1995 with the popularisation of the Internet, electronic mail and malicious technical improvements in the design of viruses. “This was the moment in which to globalise. The logic for a local anti-virus product had evaporated. We saw that it was going to be complicated working with the Americans providing a global response to the danger that was also global. The answer was internationalisation. If we didn't reach out beyond our borders, we would be vulnerable.” They worked day and night to catalogue 6000 viruses and their antidotes, winning international quality certifications for the product.

In 1996, Panda attended the Cebit trade fair in Germany. “We went there with an inferiority complex. We thought that if we presented ourselves as Spanish we would be ignored. The surprise was that people didn't care where we came from; they were only interested in the product and how well it worked.” They went back the following year. “We hadn't made any progress in the international marketplace. We had just created a solid product, with a lot of background research, but our expansion was zero. What we did was to create franchises in every country. They set up the franchise and we gave them the trademark and the technology. Without being conscious of it, we had arrived at the formula of thinking locally and acting globally.”

In these last fifteen years, viruses have changed a lot and so has the culture around them. “Until the middle of the 1990s, neither individuals nor companies realised that they needed an anti-virus product.” But in 2000 the big epidemics started and since then no one has any more doubts. Equally, the virus authors have changed their strategy. “Earlier they were looking for notoriety with massive infestations. Viruses had names that quickly became popular.” Now, the authors of viruses are looking for profit. “They create viruses with combination technologies, very insidious, that quietly sneak into computers and once there steal passwords, send back files, etc.”

New viruses need be be fought with new concepts. These are the security suites, not only reacting when a new virus is discovered but also anticipating and detecting the threats, “To thwart the undiscovered.” The technology TruPrevent works by applying genetic algorithms and heuristics.

Mikel Urisarbarrena does not believe that the story has finished. “80% of the products that we are going to use in the next ten years haven't been invented yet.” It remains essential to research and to innovate. He believes that there are people in Spain who are ready for these challenges, but he is worried by the lack of entrepreneurial culture and risk taking.

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Although there is an impression that all hardware comes from the far east, there are important centres of assembly and design in Spain. There are names like Beep, Investronica (Investrónica), Supratech, Cofiman (UPI), ADL and Infinity System. Some specialise in the corporate marketplace; others make products for the end user. Some have a network of shops, and others don't. “In any case,” says Fernando Molera, one of the founding brothers of Infinity, “even Dell is [just] an assembly shop.”

“No one thinks about designing the processor or memory card any more.” The Molera brothers had a shop in Guadalajara, later they opened two more and decided to start production. Now, Affinity is a factory with more than 500 workers in Guadalajara, and curiously is a brand that doesn't have its own shops. “We knew what shops needed. We started as wholesalers and we opened the factory in 2001.” Five years later, the Airis brand is on laptops, MP3 players, flat screen displays... “We diversified because the marketplace for telecommunications and computing harware was very difficult.”

Where is R&D if the components come from third parties? “On the one hand, there is the technology in establishing the configurations that are most useful to the client; in our model that is 'on demand assembly'. On the other hand there is aesthetic design.” Airis has provided Angola with more than 3000 machines with finger print readers to prevent unauthorised access. It has also started a law suit in China because someone has pirated the trade mark.



 

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