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Touch screen technology developer N-trig Inc. made between $70-80 million in sales in 2011 and expects further strong growth in 2012. "2011 was an interesting year. We tripled our revenue over 2010, and we touched profitability for several months," N-trig CEO Amichai Ben-David told "Globes" in an exclusive interview.
"Regrettably, the fourth quarter was weak, in line with activity in the global consumer electronics business."
N-trig is one of the few Israeli high-tech companies to makes its mark in the global consumer electronics industry. It is not another a start-up that sells products to technology companies that are biigger than it. Its technology and products are embedded in 20% of non-Apple touch screen devices. In the past two years, it has launched a version for Google's Android, and it is being incorporated in Microsoft's Windows 8.
"We're riding a wave of global growth in sales of touch screen computers and tablets. On the other hand, we cannot escape macroeconomic events that affect the level of purchases of devices," Ben-David said.
Ben-David means that there are technology companies whose business is not necessarily linked to market conditions, and even in times of crisis, they continue to sell software. In the case of N-trig, its sales are derived from the number of sales of devices in which its technology is embedded. In other words, it is dependent on consumers.
Dr. Meir Morag founded N-trig in 2009. The company's DuoSense and Multitouch technologies operate computers and tablets by touch and a digital pen that enables users to write and draw on a screen as they would on paper. N-trig sells its digital pens to computer and tablet makers. The company has raised $90 million since it was founded from Plenus Venture Lending Fund, Evergreen Venture Partners, Aurum Ventures MKI Ltd., Spark Fund, Silicon Valley Bank, Canaan Partners, and Microsoft Corporation (Nasdaq: MSFT).
"Globes": What is your forecast for 2012?
Ben-David: "We expect a slowdown in the first quarter, which conforms with analysts' predictions, but we expect great success toward the end of the year. This isn't an exercise to divert attention for a few months. Barclays, which monitors the touch screen market, expects that the second, third, and fourth quarters will be good.
"Computer manufacturers plan new products 6-9 months in advance. Our challenge is the race to be installed in the new device. When it reaches the markets and is sold, we share in the profits. If the product is successful, we profit; and if it's a bad product, we won't profit. When the international market slows down or speeds up, our sales chart moves in tandem."
N-trig works with Dell Inc. (Nasdaq: DELL), Hewlett Packard Co. (NYSE: HPQ), HTC Corporation (TWSE: 2498), Toshiba Corporation (TSE: 6502; LSE: TOS), Fujitsu Corporation (TSE: 6702), and Lenovo Group Limited (HKSE: 0992, Bulletin Board: LNVGY). Ben-David says that the company has two new big customers, but declined to name them.
In the past, you've talked about an IPO. Where does that stand?
"Our market is too volatile. I don’t think that an IPO would be right now; we need to get stronger."
Stronger or richer?
"N-trig raises capital from its shareholders. They see the big opportunity in the company, and they help us as needed."
In addition to touch screen technology, Ben-David believes that N-trig's main advantage over its competitors, such as Cypress Semiconductor Inc. (Nasdaq: CY), Japan's Wacom Co. Ltd. (TSE: 6727), and Atmel Corporation (Nasdaq: ATML), is the company's digital pen. "The pen has penetrated a very small niche until now; it's embedded in a few hundred thousand devices. Today, everyone knows that it’s the next stage of touch screen technology. The pen is a convenient tool for creating content, and I know that it's the future, especially in education."
Why education?
"Because education demands graphics capability, and the pen can copy what's written on the blackboard. The teacher can correct pupils' work. There are endless applications. In addition, since the launch of the iBook 2, there have been 350,000 downloads of textbooks. This translates into $5 million, and signposts the tablet's road in education."
N-trig's R&D facility and corporate headquarters are in Kfar Saba, Israel; its sales, OEM and independent software vendor support are in Austin, Texas, and San Jose, California; and it has ODM, operations and supply chain support offices in Taipei, Tokyo, and Shanghai.
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