Sigma Wireless

2 . Background

2.1 Company Background

Sigma Wireless Technologies Ltd (Sigma Wireless) was established in 1991 for the purpose of designing and manufacturing antenna. Based in Dublin, Ireland, it is a member of the Sigma Wireless Group, which also includes Sigma Telecom and Sigma Wireless Communications and employs over 550 people throughout Ireland and the UK. Group turnover in 2000 exceeded 200 million dollars.

Sigma Wireless is a global provider of wireless infrastructure equipment to wireless communications carriers, such as Vodafone and Orange, and original equipment manufacturers (OEMs), such as Motorola, Nokia And Ericsson. The key product lines are: PMR (Professional Mobile Radio ), TETRA (Terrestrial Trunked Radio ) and 3G (3rd Generation Mobile ) antennas. Within each category they manufacture a comprehensive line of base station antennas. Around 90% of their business is export-based. The key overseas markets are the UK and Spain with France, Germany, Scandinavia and Asia following on. It is projected that the Asian market will become their largest market over the next twelve months.

Since 1998 the company has transformed itself from a niche PMR manufacturing feeder plant into a technology leader in the TETRA and 3G cellular antenna business. Newly emerging markets were targeted, and a complete re-engineering of product design and manufacturing processes has taken place, including the integration of IT systems. The company has embraced a quality ethos and is approved to ISO9001/2000 quality standards and has received quality approval by major OEM operators.

Sigma Wireless has invested in establishing outstanding Customer Relationship Management (CRM) capability. A key differentiator is the engineering support services they provide. These have proved essential for customer’s engineering staff involved in network design. Their eBusiness capability allows them to make this service available to core customers and sets a higher standard for engineering support.

2.1.1 Company capabilities

Sigma Wireless have established themselves as a world leader in the Antenna industry by developing leadership capabilities for the PMR, TETRA and Cellular product segments.

Manufacturing – The manufacturing facility in Dublin has been upgraded to double previous capacity for the TETRA market and to create 3G-antenna capacity for 1000 units per week. The workforce is cross-trained and highly skilled to work on any production line, ensuring flexibility across production lines and enabling project based volumes to be delivered quickly. A new ERP computer system has recently been introduced which ensures that modern business practices are used in all aspects of the business.

R&D – Approximately 40% of the company’s overheads are incurred in research & development, signifying a commitment to technology leadership in the selected application segments. Research activities include co-operation with academia and with overseas placement programmes.

Design – Sigma Wireless has two design teams, the largest being in Dublin for Digital PMR products and a smaller team in the UK for cellular development. Both sites are connected via Sigma’s Intranet and certain projects involve co-site design teamwork. There are currently 17 new product development programs in progress, using a common “structured development process” ensuring rigorous and timely product development.

The latest computer aided design, solid modelling and electrical simulation software is utilised to ensure innovative solutions and short cycle times. Rapid prototyping machinery is in place and used to accelerate the development cycle. As the company moves towards PCB-based antenna designs, the product development cycle will shorten even further.

Test & Measurement – There are extensive electrical, mechanical and environmental testing capabilities in both the Dublin and UK design/manufacturing sites.

2.2 Market Background

Mobile Communications

The mobile communications industry is on the brink of the next generation of service provision, transforming the existing cellular services from being a voice only to a voice and data communication service. The next generation of services will include Internet access while on the move and the ability of customers to access information in text and graphic form. The underlying enabler of this generation is the provision of sufficient spectrum plus the protocols available to application software writers. From an antenna manufacturer’s perspective this also means that the networks that are needed are different to those that exist and that the infrastructure required to deliver these types of services will be different too. They will differ because cell sizes will be smaller, and up to four times as many site/antennas will be required compared with conventional cellular networks. This presents a significant opportunity for Sigma Wireless. The market will require vast quantities of low gain antennas and the main players are in the process of selecting future suppliers.

Sigma Wireless’s analysis has led them to believe that first class products alone are insufficient to ensure success as OEM’s and network operators seek to reduce suppliers and require higher levels of support. Global support and manufacturing capacity is key to gaining supplier status with OEM’s while flexibility and customisation is crucial for operators as they deploy a differentiated network strategy.

The Antenna scene

The antenna business is divided between the very large and the small companies. The very large Kathrein and Decibel have developed to their current size either through organic growth over decades or through recent acquisition. The smaller companies, such as Jaybeam and Huber & Suhner have developed their businesses through skimming plus one/two strong markets. The small companies all have plans to participate in the 3G opportunity and all of the existing cellular players are trying to defend existing territory and hoping that developing the right products will allow them to steal market share.

Sigma Wireless’s analysis also highlighted that many of the smaller players had complementary products and product design capabilities to their own. (See the table below)

This was one of the factors that encouraged the thinking behind their strategy of establishing strategic alliances to develop a comprehensive Third Generation Cellular antenna subsystem solution offering.

Sigma Wireless’s analysis of the market suggested that the drive to provide subsystem solutions was coming from two areas:

• Customer demand – customers are increasingly looking for complete subsystem solutions, and are less likely to remain satisfied with having to build and maintain multiple relationships with multiple suppliers across what they would regard as being a single solution. Sigma Wireless RACAL Huber & Suhner Jaybeam Kathrein
• Competitive pressure – there have been a number of mergers and acquisitions in the sector recently as companies try to respond to operator demand for a complete solution. Competitors such as Andrews and RFS have launched web sites centred on a solutions sell. Tenders are less and less solely for components such as antennas but are trending towards ‘solution tenders’. A number of Sigma’s competitors had approached them in regard to providing antennas for larger project tenders.