Fasttrack

Snap Shot Advanced Recognition Technologies Inc. Year Founded: 1990 Core Business: Voice- and handwriting-recognition software for consumer electronics Revenue in 1996: $709,271 Revenue in 1998: $4.3 million Revenue in 1999: $10 million (projected) Employees in 1996: 22 Employees in 1999: 80 Top Executives: Dr. Meir Burstin, chairman and chief executive; Gabi Ilan, president Goal: To mass market company’s software in consumer electronics Driving Force: Demand for easier ways to activate and control electronic devices By CHRISTOPHER WOODARD Staff Reporter Imagine telling your television set to change channels or turn down the volume. Or commanding your microwave to nuke some popcorn, or your coffeemaker to whip up a fresh pot. It might sound like some futurist’s dream, but it isn’t. The technology is here and a Simi Valley company hopes to strike it rich by bringing it to the masses. Advanced Recognition Technologies Inc. makes voice- and handwriting-recognition programs that the company says take up substantially less memory and can operate on microprocessors found in most consumer electronics. ART’s voice-recognition software has gained increased acceptance by the cellular phone industry with its “smARTspeak” program, now available in a dozen brands by such makers as Samsung, Motorola and Lucky Gold Star. The cell phone market accounts for 80 percent of ART’s royalty payments. (ART generates revenues both by selling its software outright and through licensing deals with consumer electronics manufacturers, which pay royalty fees based on product sales.) “Voice activation is becoming a pretty standard feature on (cellular phone) handsets,” said Bryan Prohm, a senior analyst with Dataquest Inc., a San Jose-based market research company. “This alleviates the real or perceived dangers of using a cell phone in your car.” ART’s handwriting-recognition program has gained a foothold in the hand-held computer market, where its “smARTwriter” program can be found in Windows-based Casio and Phillips personal organizers. The company recently signed an agreement with silicon chip-maker Zilog Inc. to embed its voice- and handwriting-recognition codes in Zilog’s microprocessors. That means inexpensive computer chips with built-in voice and handwriting recognition will soon be making their way into the consumer electronics market, said Richard McCaskill, the company’s executive vice president and general manager. “These chips go into remote controls, TVs, microwave ovens, you name it,” McCaskill said. “You should start seeing (voice- and handwriting-recognition features) show up in the consumer home-entertainment market by the first of the year.” Now that electronics manufacturers are starting to see the practical applications for ART’s programs, revenue for the privately held company is taking off. Revenues have grown from $709,271 in 1996 to $4.3 million last year, a 588 percent increase. The company, which conducts its research and development in Tel Aviv and the bulk of its sales and marketing in Simi Valley, expects revenue to more than double to $10 million this year. Last week, Deloitte & Touche LLP ranked ART as the seventh-fastest growing company in greater Los Angeles. Last year the company was named software developer of the year by the Southern California Software Council. ART’s voice- and handwriting-recognition programs grew out of intelligence work that the company’s president and co-founder, Gabi Ilan, did for the Israeli government. Ilan, who is still a major in the Israeli Army reserves, discovered mathematical equations or algorithms that can be used to identify patterns in speech or handwriting. That information can then be developed into programs that enable computers to recognize the written or spoken word. While other voice-recognition programs (like the ones put out by IBM Corp.) memorize whole phrases and require up to 40 million bytes of storage space, ART’s codes recognize single words, requiring only 20,000 bytes of memory. “One of the advantages is that we have a very small footprint for our software,” said Dr. Meir Burstin, the company’s chairman and chief executive, in a telephone interview from Tel Aviv. “Until now, one needed high-end processors for voice recognition. Now you can implement it in a toaster or TV set.” The company, which closely guards its codes, holds six patents on the technology, with more pending. Burstin credits Israeli technical savvy and American sales and marketing know-how for the company’s success. About two-thirds of the company’s employees are based in Tel Aviv, while its sales and marketing office, headed McCaskill, is in Simi Valley. To attract talented people, ART has developed a close relationship with Tel Aviv University, a world-class center for engineering and math. The company located its office within walking distance of the campus to make it convenient for student employees. “We have a lot of students here, and we encourage our employees to go for second and third degrees while working here,” said Burstin, himself a professor at the university. ART was founded in 1990, but it wasn’t until 1997 that the company’s technology started penetrating a mass market, when Samsung and Lucky Gold Star included the software in a low-cost phone sold in Korea, said McCaskill. It enabled users to “phone home” or “call office” merely by speaking the words, rather than dialing. Samsung, which sells voice-activated phones directly and through Sprint Corp.’s Sprint PCS service, was so impressed by the consumers’ response, it has since incorporated the technology into its entire product line. McCaskill said the company plans to continue its push into the cellular phone and hand-held computer market, while also working to make its software a standard in the automotive industry, which is under pressure to simplify increasingly cluttered dashboards. This month in Frankfurt, Germany, Siemens Automotive is demonstrating a concept car that features voice and handwriting recognition using ART’s technology. Drivers will be able to control the radio, CD player, navigation system and other components through voice commands or by tracing a finger on a touch pad on the steering column. “There are a number of legislative bills in Europe that call for the reduction in dashboard knobs by 2003,” said McCaskill. “(Now) you have knobs for global satellite positioning, the radio, the heater, the trip computer and they’re finding people are spending more time pushing buttons than driving at 140 miles an hour.” Bruce Crocker, managing director at Hambrecht & Quist LLC, said ART’s biggest challenge will be to sell its software to large manufacturers that are attempting to produce voice- and handwriting-recognition programs in-house. ART’s technology has distinct advantages over other approaches, said Crocker, whose company bought a 25 percent stake in ART in the early ’90s for $3 million. (About 17 percent of the stock is held by company founders and managers, and the rest by smaller stakeholders, including Nomura International PLC.) “(ART’s software) doesn’t take a super computer to do the recognition aspect,” said Crocker. “It’s compact and efficient.”