SRT in the News
12th February 2010 - Megabuyte
SRT navigating to commercial success
Latest company analysisSOFTWARE RADIO TECHNOLOGY PLC | PUBLISHED ON 12/02/10
SRT navigating to commercial success
We spent a pleasant, if choppy, hour with SRT’s CEO Simon Tucker on the Solent yesterday, receiving a first hand demonstration of the company’s AIS marine ID and tracking systems. The company made a big bet on AIS five years ago, which now looks likely to pay off as governments around the world increasingly require shipping to adopt AIS for safety reasons. SRT is a very exciting UK wireless technology company, with a potentially great future.
SRT (Software Radio Technology) was borne out of Securicor, and was initially focussed on exploiting TETRA private radio technology. The looming AIS opportunity was identified in 2005, with the company adding AIS R&D to its TETRA activities. The latter was abandoned at the end of 2008, as the company did not have the necessary funds to go the distance, and AIS was seen by that time as the better opportunity. This now looks to have been a wise decision.
AIS (Automatic Identification System) is an international standard that has been developed for maritime safety. It is based on VHF maritime frequencies and GPS, and basically enables ships and coastguards to track and identify nearby vehicles. It is a bit like having a satnav map in your car, and being able to identify every other vehicle by clicking on their icon, knowing what type of vehicle it is and their route. Radar, by comparison, will only show other ships, but not their type, route etc. Despite the choppy seas, visibility was good yesterday and we could see other ships from some distance, though it was still useful to know the route of the looming Isle of Wight ferry. Visibility is obviously a major issue at night-time or in bad weather.
The underlying wireless technology is relatively tricky, with each ship having a device that receives and transmits to all other ships and coastal base stations in the vicinity, effectively constantly creating mesh networks. SRT’s R&D focus has been on developing the most cost effective and minimal footprint modules, and the company believes it is the clear market leader. It only sells through major marine retailers, such as Raymarine, who either buy SRT modules and incorporate in their own devices, or buy an SRT OEM device. Either way, SRT gets to charge between $350 and $1,700 per unit, depending on whether it is Class A (for the largest ships) or Class B (for smaller ships), at a reasonable margin. The company employs just 35 people, mainly in R&D, so will benefit from scalability once sales start to come in in volume.
This is about to happen, with governments now mandating AIS to an increasing proportion of ships using their waters, including inland waters. Some of the numbers are staggering. For example, 20,000 vessels that use the Rhine will have to have AIS by November 2011, whilst China and India are issuing mandates covering 220,000 and 300,000 vessels respectively. In many cases, governments are subsidising AIS. Through its strong relationships with many of the major marine equipment suppliers, SRT is exposed to the full market opportunity, with the first major revenues likely to start flowing in early FY 2010/11.
SRT perceives opportunities beyond just selling AIS modules; like mobile telecoms, there is no reason why the functionality of AIS cannot be extended by ‘applications’. The company is also looking at developing lower cost devices, with more limited functionality, to drive take up among the smaller ship owners, currently not covered by mandates.
We are highly impressed by SRT; it identified the AIS opportunity long before anyone else, has developed world class wireless products, managed to survive the TETRA disappointment, and now looks well placed to sell into a fast growing global niche market, where demand is being driven by safety requirements and governments mandates. In short, a world class UK wireless technology company.
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