SatMagazine (SM)
Good day, Mr. Magee. Thanks for taking the time from your busy schedule to talk with us and our readers. Having a great deal of experience within the commercial space in engaging the Department of Defense (DoD) and other government agencies for various projects, what would you say are the most challenging aspects of your business?
A few facts that define our business will help in appreciating my answer. First, Wavestream is a third tier component provider. We provide amplifier equipment to system integrators building satellite terminals. The integrators in turn provide equipment to those responsible for the overall system. As a result, it is often difficult to get the attention of, and communicate with, those who are initially defining requirements and making system level decisions. Second, we sell a commodity. There are many companies providing high powered amplifiers for satellite ground terminals. Despite the fact that we have invested in and apply very sophisticated technology to this market, it is not always obvious to the buyers of these systems that we can greatly outperform competitive products because of our basic technology. Third, we bundle our technology with a manufacturing focus based upon reliability, energy efficiency and survivability, which lowers total life cycle costs. Our products don’t break, they don’t fail. We design every product to operate over the full temperature range to meet all specifications. We then test every unit to insure it meets or exceeds those specifications. This approach is a significant factor in our customer pricing. Fourth, Wavestream is a relatively new company and we find many customers do not yet know about us and the value we bring to the market. We’ve missed opportunities because we haven’t communicated rapidly enough to introduce ourselves across the entire market spectrum. Wavestream is well known and I believe, well thought of in the military market. However, we are just beginning to open the door and enter the airborne and broadcast markets. As a result, we are often asked to participate in projects and programs where the initial vendor has failed. Naturally, this creates skeptics and is difficult to do. Our successes, however, are borne out by the fact that more than 15 percent of our revenue this year will come from programs where Wavestream was brought in after the initial failure of a competitor’s lower priced offering.
So, to answer your question, the single most challenging aspect of our business is “communications.” This includes communications with our customers in terms of learning and understanding their issues. Likewise, our customers communicating with us to understand the day to day issues we face in dealing with vendors and the market environment. A good example is life cycle costing. Wavestream needs to communicate with Government program managers concerning life cycle costs to insure cost savings factors are included in evaluation criteria. Wavestream needs to communicate to our customers how we can satisfy requirements, as well as with vendors and employees on the need to continuously improve our ability to save end-users costs over the entire system life cycle. Of course, there are many such examples, from information concerning flow down of Government budgets to requirements for new capabilities. We must continuously try to improve communications. It’s not always easy.
As you look at your efforts on behalf of Wavestream, what are the one or two most important projects, in your opinion, that you are most proud of completing? Why are these successes so exceptional?
Terry Magee
We have several areas where we have introduced new products or practices to change and grow our business.
� Prior to 2009, two to three customers accounted for over 90 percent of our business. Now, we have 20 customers that account for 90 percent of our business.
� To broaden the areas of application beyond the standard product, we introduced our embedded product line, which is now a primary component of our business and is sold into the COTM, UAV, and aircraft terminal markets. We have taken a standard product and repackaged it for one-off applications that apply to multiple industries and customers.
� We have added eight products applicable to the broadcast and international markets over the past year. This has generated significant growth outside of the DoD space and now accounts for over 20 percent of our business.
The significance of these efforts is they show we have expanded the use of our core technology via investments in product development, marketing and sales. Of key importance is the introduction of our broadcast amplifiers into customers such as HBO, demonstrating our concept of replacing tubes in teleport applications, and the growth of our COTM homeland security products into China. Wavestream has moved from being a “one-trick pony” into a thriving, growing entity within the worldwide satellite communications industry.
SM
When discussing amplifiers, one of the areas promoted by Wavestream is the Spatial Power Advantage™ technology. Would you please describe this technology and why such is an important part of Wavestream’s offerings?
Terry Magee
Wavestream uses spatial power combining to achieve industry-leading efficiency, high power output and a smaller product footprint. Our patented technology combines the outputs of many transistors in free space, yielding combining efficiencies which are double or triple those achieved using traditional means. Wavestream’s Spatial Power Advantage provides the ability to reach higher output powers without complex or costly combining, helping keep the size, weight and component costs down. It also results in reduced power loads and significantly reduced thermal loads, again minimizing size, weight and energy costs. For the first time, we have provided the market with significant improvements in high power SSPAs to effectively compete and replace TWTAs, which require costly and time-consuming tube replacements every four to seven years. Our SSPAs do not require replacement, can operate from a cold start, and are much lighter and more efficient to support the growing trend toward greater mobility and global reach. Going forward, our technology approach provides us with a flexible platform to apply to any device technology. This will be an extremely critical differentiator as technologies evolve, and more system applications with increasingly bandwidth-intensive demands continue to drive the need for products that offer greater efficiencies and significant cost savings.
SM
With conversations running rampant regarding how the commercial sector can aid the budget-slashing government agency and military segments, what role can, and will Wavestream play in assisting in this arena?
Terry Magee
These issues are not new. Wherever the Government can take advantage of commercially funded R&D, it saves money in development and production costs because unique products are not being built. The difficulty for the Government is differentiating from the policy and the practice. The practice of taking advantage of non-military designed products means there has to be a process of requirements rationalization, e.g. is 80 percent of the solution good enough to take advantage of commercial systems/products. If vendors have to significantly redesign, engineering and production costs will not be reduced. Sometimes the Government can take advantage of commercial equipment, sometimes requirements are such that there are no replacements, and sometimes, there is a mix. The key piece of the puzzle is Government practice needs to provide a means to make timing and quantity commitments to achieve the desired savings. IDIQ contracts will not necessarily achieve these goals.
What are your thoughts regarding the push for hosted payloads for military and government payloads aboard commercial vehicles?
Terry Magee
Good for everybody. I think the concept has merit and provides the ability to get proof-of-concept systems deployed quickly, helping get new capabilities to the war fighter sooner. This also enables the government to reduce costs via cost sharing.
SM
Without the necessary, reliable equipment to conduct MILSATCOM mission support, lives are in jeopardy... what role does Wavestream play in offsetting the lack of communication product release in a timely manner to ensure operational environments have the best equipment at hand?
Terry Magee
As mentioned earlier, our role as a third tier supplier is somewhat limited. We’ve been able to listen to customers who have plans, but not necessarily funding. We work with these customers to insure that when funding is available, we can provide the desired amplifiers in a timely manner. Of course, this involves risk. But to be a “partner” with a major customer, risk is often a major requirement.
SM
What products can we expect to see over the next year in both the commercial and the military/government space? What are your thoughts regarding Wavestream’s potential successes over the next year or so?
Terry Magee
One of the primary advantages of our spatial combining technology is it provides an architecture that is agnostic to the type of chips used to amplify the power. Specifically, as GaN or other chip technology matures to a level providing superiority over the GaAs technology we now use, Wavestream can deploy this new capability. Right now, we are waiting to see reliability and costing mature before we make the next investment in building these new products. We are, in the meantime, surveying and building multiple prototypical solutions. Ultimately, the goal of incorporating any new technology into our architecture is to permit our SSPAs to have greater and greater power levels while maintaining significant space and weight advantages.
SM
What are your main concerns regarding the global economy for our industry and, in particular, the business environment within the United States?
Terry Magee
Around the world, mobile communications applied to emergency situations, homeland security, military and Satellite News Gathering (SNG) continues to grow. Wavestream, in conjunction with our new parent, Gilat, is rapidly expanding our international presence and plans to be a major player in these emerging applications. As the dollar is weakened in relation to foreign currencies, our products also become less expensive to purchase. Low price and superior, field-proven technology provide a good combination for us internationally. Within the U.S., we continue to focus on the military market, and will increase our push into the SNG and other broadcast areas. Specifically, Wavestream is providing products that reduce operating costs for teleport operators. We are not expecting customers to have new money to spend due to growth, but because they have the need to maintain capability at lower cost to remain profitable. The biggest concern overall is on-going Government delays in making decisive financial decisions and the need to move forward with a consistent plan. Further procurement delays, continuing resolutions, and debt issues only cause further erosion of the industry base which is awaiting decisions.
SM
Lastly, a major concern in our industry is the lack of appropriate candidates to fill crucial positions to sustain and drive new products by our companies. What are your thoughts on how we can support and further STEM education for our youngsters? Is Wavestream engaged in any of these endeavors?
Terry Magee
In the late 50s and 60s, the space program captured the imaginations of young people around the country. As a person who grew up in this environment, I never imagined or even considered that I wouldn’t be part of this national effort. Today, I don’t see a strong national commitment to anything as large or encompassing as the space program from a technology standpoint. Without such a national focus, it is difficult to convince those not already leaning towards math and science to be interested in taking the steps necessary to be successful.
At Wavestream, we strive to foster an environment of leadership and commitment to innovation. The company’s founders came from academia, and commercialized solid state technology developed at Caltech to help build the successful Wavestream business you see today. We continue to maintain close ties with academia and when appropriate, recruit the best and brightest to support our growing engineering staff. Businesses such as ours can all help, but often other directions appear easier or more glamorous and interesting. It is an on-going challenge, and one not easily met without local and national commitments toward showcasing the opportunities for creativity and success individuals can avail themselves of, by engaging in the fields of mathematics, engineering and science. Wavestream is just one example of what can be achieved when individuals put their minds together and take a chance on an idea.