I met with Bob Vogel, the Vice President and General Manager of Aeroflex Test Solutions’ Wireless Business Unit at the Hilton hotel just off London’s Edgware Road. It’s his regular base when he’s in the UK and he’s currently in the country two or three times a month.

Aeroflex Test Solutions describes itself as a ‘multi-faceted high technology company that designs, develops, manufactures and markets a diverse range of microelectronic and test and measurement products.’ Vogel is responsible for the design and manufacture of test and measurement equipment for the cellular and broadband telecommunications markets.

The last eighteen months have been ones of recession but despite a tough market Vogel has been able to pilot the business through some very choppy waters with great aplomb.

“While we’ve certainly experienced better quarters and years, we’ve certainly experience a lot worse,” he admits, “but today we’re seeing a significant improvement in both research and development spend and in manufacturing.”

In response Aeroflex announced at the end of last year that it was extending its facility at Donibristle in Scotland, which was been prompted by growth in sectors such as aerospace, defence, and wireless for test and measurement equipment.

At the time of the announcement Vogel said that the investment in the development centre represented an "outstanding opportunity for engineers” to develop their careers as part of a much bigger UK-based R&D team. In fact Aeroflex expects the expansion to be part of a longer term programme of growth designed to strengthen the company’s engineering resources in the UK.

“What with our Stevenage facility, which provides a wide range of test instrumentation, and following our decision to extend the Donibristle facility we have and can offer considerable expertise in signal generators, signal analyzers, microwave, ATE, systems, wireless/radio test and other areas.

“We’ve responded to the recession by focusing on our core business strategy. That is one based on our proven business and our product strategy. Our intention is to always be first to market with new products and to be the number one, or two, player in that segment.

“We’ve invested heavily in LTE, that’s not to say we haven’t addressed the needs of Wimax but we made the decision that LTE would prove to be the dominant technology in this market and, I think, we’ve guessed correctly. As a result we’ve come up with some compelling products. That sense of direction has underscored everything that we’ve done. It is our technology combined with our products which will drive continuing success in a tough market.”

Innovation is key

According to Vogel the company intends to launch two to three new products every year.

“We got a number of products to market last year, well ahead of the competition. And that is what has driven and will continue to drive our strategy.”

Last year saw the launch of additional support for new communications standards to the company’s very successful PXI 3000 series modular test platform in a move designed to address the needs of a variety of 2G and 3G wireless data standards.

It included a Bluetooth measurement suite along with new WLAN and CDMA2000/1xEVDO plug-ins for the PXI Studio software application together with a significant upgrade to the WiMAX, UMTS and GSM/EDGE measurement suites.

“In the mobile space the market starts with the infrastructure guys, the base station providers. You have to get you product out there quickly, or you will lose that market to your competitors - quickly and early is our mantra.

“This is the third generation of technology we’ve gone through with base station providers. We’ve seen 2G, 3G and now LTE. They’ve built a strategy in which our products are core to their strategy. In essence we’re an extension of their development team.

“We’ve become the incumbent in many respects, we are the installed base. The only thing that will happen if we can’t meet the needs of our customers is that we will harm ourselves. They’ll find an alternative solution, there is little loyalty. If we don’t deliver they’ll go to someone else or come up with their own unique solution.”

So, if you’re not number one or two in the test and measurement market success will be hard to come by?

“It’s very difficult to replace the incumbent. Certainly not impossible, though. There are perhaps two or three major players in this market. Most companies we deal with will have a relationship with more than one supplier, but that business doesn’t tend to be split fifty-fifty. The main supplier will be making far more money out of the arrangement then the number two company, which for all intents and purposes will be there to help the client barter on price. It’s tough for the number two company as they have to invest the same but don’t get the same return.

“The wireless market is a very competitive one and there are opportunities for niche players who will be able to compete from time to time, but there aren’t that many robust global competitors. For example, companies entering the LTE market will struggle. They will have to spend a lot to compete. But it’s not a lost cause. Markets can reset themselves and a leap forward in technology can open up the field.”

Today almost every major infrastructure vendor or femtocell manufacturer uses Aeroflex’s TM500 throughout the development cycle. It’s become the industry standard for 3GPP verification, validation and optimisation and has been designed to keep in step with the latest demands from the industry.

“If we screw up our customers will screw up. If that was to be on the base station side, we’d then harm the other side of the business. Bad news travels quickly, good news doesn’t.

“Ours is a vertical market strategy specific to the chip providers, handset developers, infrastructure developers and service providers. That allows us to offer a competitive and cohesive test solution portfolio.

“We offer complete and integrated test solutions to the marketplace whether that’s the TM500 test mobile, the PXI for manufacturing or the 7100 wireless test set.”

Mobile trends

With the Mobile World Congress in Barcelona fast approaching I ask Vogel what he sees happening in the marketplace over the coming 12-18 months.

“I think the roll-out in technology is very exciting at the moment. You’ll see a lot of new products coming to market with much greater functionality.

“I think everything will be content driven and the focus will be on video and video streaming and on online generated content. I also think security will be a big issue. A key differentiator in terms of platforms will be in their ability to multitask i.e will they be able to let you watch a video while receiving and sending texts. People will want a specific type of application and as a result will be forced to change their handsets, you’ll see a new wave of purchases.

“I think there are some mixed messages coming from the manufacturers as to when we’ll see the first LTE handset. It could be this year. There will be trials, but I think it’ll be more next year than this. The level of discussion that we’re having with manufacturers at the moment is not significant enough to support the idea that we’ll be seeing new handsets coming out in the next 6 months.”

Has the economic downturn changed the way consumers look at discretionary spending?

“Consumers seem a little more wary of spending, for sure. But that has varied from person to person, and it will depend on the individual’s economic status. Discretionary spending was cut back last year. When you’re worried about losing your job that will happen. Every month of slowdown it’ll take longer for a ramp up in demand to take effect.

“We’re doing a lot of work on smart phones and there’s a lot of interest in that part of the market.”

Joining Aeroflex

Vogel joined Aeroflex around eleven years ago. The company’s strategy of offering complete and integrated test solutions was born out of the original company’s desire to grow through acquisition.

“I was responsible for strategic marketing when I joined but I became increasingly involved with the corporate team as the company embarked on a period of expansion through acquisition.

“Heavily reliant on defence when I joined we looked to expand into more commercial markets, mainly in Europe. I was involved in working the plan and integrating the acquisitions. It was a challenging time.”

Challenging but enjoyable?

“It certainly put fire in your belly.”

And mistakes?

“Did we make mistakes? Of course! We overspend on some acquisitions, certainly. But, hey, I don’t make mistakes, it’s everyone else who does!” He laughs.

“Seriously, buying a company is like hiring, you can qualify all you like, ask all the questions, look at all the figures but….

“We’ve made a lot of acquisitions over the years and our approach hasn’t changed fundamentally. We as a company are far more confident to say no to a deal. As we’ve grown we’ve become more conservative. We’re not desperate to get into every market; we’ve gained confidence from both our successes and failures and we’ve learned how to avoid problems and avoid the same mistakes. We look at bigger deals now, the physics of an acquisition, whether large or small, is much the same.”

Aeroflex has bought operations from some famous UK companies, Marconi for example, and I ask him whether they have any future plans for further acquisitions.

“Down times in a market are a great time to buy,” he says. “We’re always looking.”

Background

Born in Philadelphia Vogel paid his own way through university where he studied electronic engineering. He graduated and went on to get a Masters and an MBA.

“I was the kid who took everything apart. My dad told me to ‘get a degree son and you’ll be able to put all this stuff you’ve taken apart back together again’. I wanted to be an integrated circuit designer.

“There wasn’t a lot of spare cash so I had to combine work with university. My course enabled me to work six months and study for the rest of the year and while I was there I worked at the naval and development centre.”

Vogel then tells me that while he was studying he set up an engineering consultancy with a couple of friends.

“It was a lifestyle business. I’d been working with other consultants and thought ‘if they can do it, so can I’.”

By the end of his first year his consultancy was making $2m and within five years that figure had topped $30m. He and his colleagues then decided to take the business public but within the year he had decided to leave.

“It just wasn’t what I had expected. It was very disappointing. Going public changed the business completely. We’d been surrounded by friends and family and we treated everyone slightly differently depending on their circumstances. In that respect we were well ahead of our time. You could say it was a boutique approach, but that all had to end when we went public.

“Interacting with Wall Street was an uncomfortable experience. Their view was very different from mine as to how the business should be run.”

Vogel has played a key role in developing the Aeroflex business over the past ten years but when I approached him about doing an interview he was keen that it didn’t just focus on him, but talked at length about the vital contribution of the team around him and I think that sums up his approach to business. 

As for the future?

“Well the wireless business is a dynamic one and a big enough challenge to be going on with. Let’s just say I’m not driven by taking on more responsibilities.

“We’ve had two very good years but you don’t tend to celebrate your good days. I always see the positive but tend to expect the worst.”

A very optimistic pessimist then.

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