The "Straight" on Magellan

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Navigating with a New Banner

For many of us, the name Magellan conjures up elementary school lessons of early navigators and skillful seafaring explorers who set out to claim new lands for a crown or discover new trade routes and passages to other continents. The Portuguese-born sailor Ferdinand Magellan, after a falling out with the king of Portugal, eventually persuaded the king of Spain to sponsor an expedition that would seek a new trade route west to the Spice Islands (the Moluccas, in present-day Indonesia). It is a tale of mutinies, hardship, brilliance and brute strength. Of the five ships that departed on the mission in 1519, only one returned to Spain in 1522. Although the sea captain himself did not survive the entire journey, Magellan’s name will be forever remembered as commander of the first crew to circumnavigate the globe.

Today, nearly 500 years later, another navigation giant has once again hoisted its sails. While the company name Magellan Professional may still sound new to surveyors in the precise community, its corporate predecessors, Ashtech and Thales, are easily recognized. Magellan Professional’s heritage comes from the original Magellan Systems Corp., Ashtech Corp, and Sercel. Magellan was founded in 1986 and Ashtech shortly after in 1987. Sercel was founded in 1965 and launched the first European-developed GPS receiver in 1985. After some indecisive years, I am happy to report that the languishing days are in the past, and this new division of Magellan is now poised to reclaim its position in the surveying industry.

To gather the information for this story, we made several visits: first, with François Erceau, General Manager of Magellan Professional, at Intergeo in Munich, and next, with team members at the Magellan facility in San Dimas, California. I first met Erceau several years ago when I interviewed him for an article about Thales, so it was a pleasure to meet up again.

The purchase of both the manufacturing and the management divisions of Thales by Shah Capital Partners (SCP) will help to ensure a long-term commitment to Magellan’s professional users. According to Erceau, not only has SCP shown its willingness to invest, but also to speed up investment (more about that later). The result will be more new products and more innovation.

I asked Erceau about the impact of Galileo. He acknowledged that the new constellation will be very important, but the question is, when? He said they were among the first — if not the first — to develop Galileo receiver prototypes but have not rushed to bring this expense to the customer because of the lack of usefulness at this point. The useable constellation could well be five years down the road, at which time many improvements will have been made in electronics, improvements that Magellan will incorporate into the Galileo-capable receiver it releases. Magellan will continue, as it has since the 1990s, to manufacture receivers that will work with both GPS and GLONASS signals.

The company has had great success with its ProMark series of GPS receivers. Not only do the units provide ease-of-use through simplicity and integration, the multiple applications onboard have helped many surveyors make an entry into the GIS market. (We reviewed the latest version — the ProMark3 — in our March issue.)

Magellan, a highly visible global company known mostly for its consumer products, is headquartered in Santa Clara, California. For now, the manufacturing and much of the R&D for the Magellan Professional business unit will remain at Magellan’s operation in Carquefou, France. A second R&D center is located in Moscow, Russia. Overall management of the company will remain in Santa Clara. Magellan’s testing facility in San Dimas is located approximately 35 miles east/northeast of Los Angeles. It was there that we met and spoke with several key personnel.

First was Stig Pedersen, a long-time player in the industry. Originally from Denmark, Pedersen has been the "GIS guy" at Thales for a long time, but his new role at Magellan will focus more on the consumer side. We learned that ongoing dual-frequency R&D efforts have continued for .Net and RTK. Pedersen said the use of single-frequency receivers is rapidly expanding. Interestingly, he told us that as the accuracy of GPS has steadily improved, manufacturers have kept their single-frequency receivers "dumbed-down" with software. Most recently, Pedersen has been involved with a large FedEx project that aims to brings data collection and navigation together.

We next met with Dr. Anatole Lokshin, Magellan’s "technology guru" since 1993. Originally from Russia, Lokshin played a vital role in the establishment of the GNSS scientist braintrust that exists in Moscow today. He earned his B.S. in Math and M.S. in Physics from the Leningrad Polytechnic Institute, followed by a PhD in Electrical Engineering from the University of Southern California. Lokshin began his career with JPL NASA in California where he specialized in algorithm and software development for space and research projects. Today, as Chief Technology Officer, he focuses on the research, design, and development of all digital content products for both the consumer and professional markets.

Lokshin has an interesting take on things. With its consumer products, Magellan has found that consumers expect, above all, reliability, and has learned that even though they expect accuracy to steadily improve, they are not willing to pay more for it; furthermore, the less something costs, the more they expect it to perform! He posed an interesting question: will the future be servicebased, where users will need their hands held, or will it focus on simple devices that need no support? In places like India, China and Viet Nam, Magellan is seeing its consumer products being used by professionals doing low-accuracy work.

According to Lokshin, the new L2C signals will be revolutionary, and will bring 1-cm consumer-grade products. For surveyors, the implications are obvious: when the time comes that anyone with a hand-held device can obtain centimeter-level positions, where will it leave the precise crowd? Such developments, of course, are still way off in the future, nevertheless they are coming. For professional users, Lokshin envisions a telematics-based network of smart wireless sensors and disposable monitoring devices. He also feels that location-based services we hear so much about are still five to ten years off. With numbers to back him up, Lokshin is very confident about the future of Magellan: while the market has been growing at 100 percent per year, Magellan’s growth has been 200 percent per year.

All Magellan products are manufactured overseas, while product development testing is performed here. In comparison to the many corporate testing facilities I’ve had the privilege to tour, I’ve never seen anything as extensive as the San Dimas facility. One room is used for ultra-sensitive RF transmission testing; radio waves from the outside world are completely blocked. (We checked, and sure enough, our cell phones didn’t work.) Whereas other labs I have visited might have had one or two ovens and freezers for hot and cold tests, Magellan has several of each. Vibration testing and water submersion to a one-meter depth were just two of the many stringent tests performed in the facility.

From San Dimas we drove about 360 miles north to the Santa Clara headquarters, where we met with Paul Mercadante from SCP, who was serving as interim CEO. SCP is a unique investment firm that focuses on technology companies and hands-on management, providing input where needed. When considering an acquisition, SCP asks two questions: Does the company have good growth characteristic
s? Is anything lacking? In 2001, SCP purchased TES, the Thales manufacturing operation in France.

After seeing the potential in location and positioning, and believing that Magellan would be a complementary fit, SCP purchased it in 2006. It was their sixth technology company acquisition. SCP acknowledged that survey/GIS is a good market, but that the growth of the company was being hampered and it couldn’t continue down the same road. For the consumer side, SCP feels that Magellan has a strong product mix, a well-known name, and is growing. For the professional side, SCP plans to make the product offering stronger, be more in control, and respond better to the market. They plan a significant R&D investment and, as Mercadante said, "to become more a part of the DNA of the company."

SCP intends to become more focused than Thales was, and to set up the organization to be more successful. They will focus on offering more value, distinguishing Magellan’s products from those of competitors, and entering more markets. In addition to consumer and professional products, Magellan will expand efforts in the OEM arena. The massive strength of Magellan’s consumer division will allow this, and SCP plans on leveraging the strengths of that division. SCP feels that the timing is still good, and the dealer base is still good, so it made sense to invest. All three divisions – consumer, professional and OEM – have good growth characteristics. Looking to the future, Paul said that SCP might take the company public, or it might sell it, but that short-term, it realizes that financial investments will have to be made to create new products.

We also chatted with Dr. Robert Snow. Snow has been with the company since the Ashtech days, and discussed the many products now being developed. Their latest surveying and mapping receivers are now part of the .Net generation. This refers to the ability of these products to connect to the Internet to obtain correction data instead of depending on a local base station set up by the user. This makes their equipment compatible with the explosion of RTK networks across the country. Snow said that rather than concentrate their efforts on network base stations, they believe it’s smarter and better for the customer to get their equipment to work with all types of existing networks. They have incorporated Bluetooth cell phone connectivity as well as ensuring that their receivers are compatible with the Ntrip protocol and RTCM 3.0. Snow mentioned that high-performance RTK would be coming to the ProMark3 in Q2 of 2007.

Just as we were ready to leave, out trotted an old friend of mine from Oklahoma, Phil Stevenson. Phil works in the tech support department and bills himself as "just a dirt surveyor". He got involved in GPS in the early 90s and has always been a true-blue Ashtech guy. If I look back in time, I’ve always lamented the fact that a major GPS manufacturer (Ashtech) dwindled over the years, even though it had many loyal customers. When Thales took over, it seemed to me that nothing happened, with the net result being a further erosion of the company. Now that SCP has taken over and has committed itself to not only making the right investments but the right decisions as well, I’m very encouraged about the future of the company. And even though Phil is a company employee, he’s always been a promoter of GPS, and has helped many people get started in GPS. It was clear that he, too, has a good feeling about the future of Magellan.

Subsequent to our visit, Magellan selected Nelson Chan as CEO to replace Mercadante on a permanent basis. Chan was most recently executive vice president and head of the consumer products business at SanDisk Corporation.

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