View from the Top

In the December 2010 issue of Microwave Product Digest (MPD), they ran a series of articles called “View from the Top” in which a cross-section of RF/Microwave industry executives were asked to comment on the current state of the business environment. Seeing as how MPD never called me for such an interview, I am graciously submitting my (slightly modified) version of the Q&A, since these are all topics I have either touched upon in the past, or have intended to address on this blog. Enjoy…

1.    What is your assessment of the currently global economic situation? How has your business fared through the economic downturn, and how do you see your business, and the industry as a whole, going forward?

In 2008 and 2009, it was evident that debt-free companies with strong cash flow would perform well while overly leveraged companies would face severe consequences. Our belief was that companies with strong manufacturing capabilities and a commitment to technological innovation would eventually benefit from the downturn since. At that time, Marki Microwave invested heavily in developing new product lines, both as a way of diversifying our revenue streams, and as a way of increasing our technological acumen. Our R&D efforts during the global Recession proved well advised because we have enjoyed more than 100% year-over-year growth in all three of our new product lines including Couplers, Filters and Power Dividers. We actually experienced an excellent 2010 on account of these new product lines, and the continued adoption of our high performance T3 mixer line. By many accounts, we are not alone in believing that the RF and Microwave industry is very active currently, and that there are many opportunities for many exciting technologies in 2011. We believe that small  companies with experience and specialized expertise will continue to prosper in an industry thirsty for technological advances. Let’s put it this way: I just finished writing Marki’s R&D timeline for 2011, and I can’t wait to announce the kinds of new gadgets and gizmos we have on the fire.

2.    How have social networking websites impacted your business? Do you believe that online communities like LinkedIn, Twitter and Facebook have a meaningful place in the RF/Microwave industry?

For an industry rife with scientific experts and technological sophistication, we are incredibly old-fashioned. Compared to other industries, we are one of the most conservative, and this translates into being slow adopters of new technology. For example, our company still sells a mixer my father designed in 1975, simply because the customer refuses to adopt the newer, better version. I understand that “if it ain’t broke, don’t fix it”, but sometimes change is good.

Since the day I began working at Marki, I have had the strong opinion that the internet is the single most important ally for our small business. For this reason, Marki cut back significantly on print advertising and the other “traditional” marketing tools. It is not that they don’t work, we simply believe that Marketing dollars and time are more efficiently spent on tools like Adwords and, obviously, online blogs. If I had the budget to advertise on every other page in the Journal I would, but not all us have the privilege. Therefore, Marki Microwave openly embraces all the social networking (marketing) forums, and we work hard to make this participation meaningful for our customers.

Make no mistake, though, the industry as a whole has been slow to adopt forums like Twitter and Facebook and the jury is still out on how the average RF engineer will use these avenues going forward. I would argue, however, that we are at the beginning of a very long adoption curve, so this will be a multi-year trend. To use a (poor) photonics analogy, the process will look less like stimulated emission of a photon and more like spontaneous emission of a photon—we can’t really control when, where or at what wavelength the photon will be emitted, we just know that over some measurable amount of time, the photon will eventually emit (our LED friends an CREE will appreciate that one). Look at the way the internet changed the way RF engineers design: vendors used to have pay sales reps in all the key geographic locations to, literally, walk into a customer’s building to hand them a (gasp!) printed catalog. Now, the customer goes online to find the most up to date information and has the option to request a quote within seconds. Advertising has followed a similar path, and it is no surprise that all of our trade journals are skinnier than they used to be. Don’t misunderstand, I still greatly enjoy trade journals and read them religiously, I am simply stating that we have more options today that go far beyond traditional print. We no longer have to publish papers in journals or in our printed catalogs, we simply post them online for all to freely download. And do you know how we announce these new papers and application notes to the industry? By posting about them on the Marki Microwave Twitter, Facebook, and blog websites. I encourage any and all of our customers, partners and readers to join us on the websites. This industry will look significantly different in 5 years, and Twitter, Facebook, LinkedIn and (possibly) RFblogger will have something to do with it.

3.    Many have argued that there is a shortage of RF/Microwave engineers. How do you see this problem unfolding in the short and long term, both as it pertains to your own business, and the industry as a whole?

The shortage of good RF engineers is a major problem. Forget about the RF industry, the shortage of American engineers is a major problem. Out of the 20 or so close friends I graduated with in undergrad in 2002, only 3 were engineers. Of those 3, I am the only practicing engineer. The other two jumped ship and went the MBA route. It seems that the engineering discipline is either too boring, too hard, or too unprofitable for most Americans.   I think it is all of the above.

In the near term, I doubt we will see significant fallout from this shortage on an industry or national level. The larger problem involves what will happen when all the engineers from my father’s generation retire in the coming 5 to 10 years. My father and  I talk to many companies, and we hear constantly that many larger RF/Microwave companies are forced to reconnect with former, retired employees in order to finish projects because the expertise is not passed on to the younger generation. Eventually, these RF wizards will not be around to bail us out and the entire industry will suffer as a result. It is essential that the companies in our industry pass on this engineering expertise to the next generation of engineers. At Marki Microwave, we have a clear chain of succession, and we pride ourselves of passing on all the hard-fought knowledge to our engineers. However, there are other, especially small, companies in the industry who are in danger of losing their technological edge if the founder’s expertise is not passed on. I hope that engineers in my generation surface in the next decade that can carry the torch of our predecessors. Currently, I am looking to hire such people, and I can testify that it is a difficult process.

4.    As a small business and an entrepreneur, what advice would you give to an RF/Microwave engineer looking to start a company?

Know what you are good at, know what you are not good at. Avoid the tendency of over-engineering your first generation of products. Give your customers what they want, not what you think they want. Don’t assume an idea is bad just because you think it is obvious. Don’t assume and idea is good just because it is devilishly complicated. Be patient, it usually takes 1 to 2 years before a new product becomes adopted by the industry….I could go on and on….

5.    What do you perceive as the hottest markets for the RF industry for the coming year?

If we are to use the stock market as a predictive tool, then the fiber optics market is set to explode in 2011. Granted, we have been waiting for this to happen for over a decade, but the smart phone/streaming Netflix era has consumed the available bandwidth, and people who make fiber optic hardware are finally going to make some money because of this. (Go look at JDSU or Finisar stock if you don’t believe me). I happen to agree with this premise, but I also believe that such speculation is always tenuous: the technical challenges tend to require state-of-the-art technology, but the customers demand commodity prices…that is a recipe for disaster if you actually want to make a profit. I have personally witnessed millions in venture capital be wasted because of these paradoxical requirements.

From a communication theory perspective, we are in the process of improving the spectral efficiency of optical fiber. Legacy systems usually use 10 Gb/s on-off keying to transmit data. This is Stone-Age technology compared to what we use in cell phones. Using the wireless industry as inspiration, photonics companies began solving the spectral efficiency problem. From what I understand, the price points and bandwidth demand are now justifying the network upgrades. Food for thought: I was told by a very reliable source that the pain is going to get worse (in terms of the network bandwidth shortage). If one looks at the exponential increase in required network bandwidth over the next decade and compares it to the average power consumption of running the servers, one finds that within the next decade or so, the fiber optic network will consume more power than the United States can produce, given current energy grid capacity projections. In other words, the US energy grid will not be able to support the optical network power consumption per bit. If I were a betting man, I’d say it is time to invest in technologies that will significantly lower the energy/bit in optical networking hardware, it is the only reasonable options since the energy grid capacity cannot be improved at a reasonable pace. If history is a guide, that means that the solution will come out of the electronics domain, not the optics domain. Take it from a former optics guy; electronics always wins.

One Response to View from the Top

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