Military market one of opportunity for embedded COTS suppliersStory
September 12, 2014
Department of Defense (DoD) budget cuts and sequestration have slowed military sales up and down the supply chain, giving many up and down the defense supply chain cause to worry. Meanwhile in the defense electronics community some such as Eric Sivertson, Executive Vice President of ATD Business Unit, Kontron in San Diego, see the current economic environment as one of opportunity for suppliers of commercial off-the-shelf (COTS) embedded computing technology especially in areas such as unmanned systems and cyber security.
In this Q&A with Sivertson he tells Military Embedded Systems where he sees the defense electronics market heading, where the best bets for growth are, and how embedded COTS suppliers like Kontron can help manage obsolescence challenges and enable reduced size, weight, and power (SWaP) in military electronic systems.
MIL-EMBEDDED: Please provide a brief description of Kontron in North America and its role within Kontron globally – by listing markets, key technological areas, number of employees, etc.
SIVERTSON: I run Kontron’s Avionics, Transportation, and Defense (ATD) business unit, which covers all Kontron products used in commercial avionics, transportation (rail, auto, etc.), and defense applications. The unit was previously called Military, Avionics, and Rail or MAR, but we changed it to ATD to more accurately represent our broadened transportation scope. ATD has a global focus, while leveraging the Kontron America footprint of 200 plus employees.
A large portion of our business is in the defense segment with enhanced commercial off-the-shelf (COTS) computing platforms based on open standards such as CompactPCI, COM Express, VPX, VME, etc. We sell into the global defense market, with a heavy focus on the U.S. and Europe.
Aside from defense, Kontron ATD’s avionics side focuses predominantly on in-flight entertainment (IFE), where we provide both servers and cabin wireless access points (CWAPs) to major airline carriers around the world. On the transportation side our focus is on rail applications but we also have content on other forms of transport such as farm vehicles and long haul trucks.
MIL-EMBEDDED: Defense budget cuts and sequestration forced a change in procurement philosophy at the Department of Defense (DoD), with the government shifting research and development costs more onto the suppliers. As one general put it, “We don’t want power points anymore, we want something we can use right now.” How does this environment affect the embedded COTS market? Does it create cause for concern or is it an environment of opportunity?
SIVERTSON: It’s an environment of opportunity. I think it’s a great time to be in this market. The market is really moving toward COTS suppliers in terms of procurement. After Sept. 11, defense spending went up and then peaked globally in 2008. While we will not see those rates again anytime soon, all this infrastructure was built to work under that peak. That fact combined with current events – just turn on the news shows, the need for defense products is still high. DoD program managers are asking what can I get off the shelf to give me the protection I need now? They can’t afford to wait for costly development cycles to field equipment to keep pace with commercial technology. This drives them to COTS now more than ever.
For example, commanders want their warfighters to have the same capabilities on the battlefield that they get from their cell phones. The only way to do that is to piggy back off of commercial technology. Embedded computers are the heart of all of these systems and companies like Kontron are the perfect COTS partners for these customers. While we won’t see the massive growth of past, this trend promises a solid market.
MIL-EMBEDDED: It has been two decades since then-U.S. Defense Secretary William Perry issued his famous memo that required the use of COTS products wherever and whenever possible. The term COTS has taken on many meanings for different people. How do you define the role of COTS in the defense procurement culture today?
SIVERTSON: I think there is a small segment of defense market that will always do custom things, but the larger portion is riding on commercial technology because it doesn’t have a choice. COTS isn’t even a bad word anymore. It’s even gone the other way as the commercial world actually is using a lot more military specification requirements to develop rugged mobile devices and you will see many luxury automobiles of today have the same technology as military aircraft cockpits of only a few years back.
Today mobile and the Internet of Things (IoT) drives technology development. Military COTS procurement has become a matter of taking this commercial technology and figuring out how to make it work in a rugged, secure package. Companies that can deliver that mix on a trusted foundation will succeed in today’s defense electronics environment. The DoD wants COTS, but COTS with a strong pedigree of trust.
MIL-EMBEDDED: It is often said that military budget cuts drive commonality, creating a need for more flexibility and reuse of equipment across multiple platforms to save costs. How does embedded COTS computing technology enable commonality in military systems designs?
SIVERTSON: The trend I’ve seen in my career was a push toward open standards. For decades defense customers were locked into customized solutions produced by only one vendor. Today they want open standards and open platforms to drive competition and get the best price. If one vendor is not meeting their particular requirements they know there is a competitive solution available that will still work with their system. This need for commonality is driving the industry toward open platforms with hardware and software such as Android and Linux implementations. Regarding open standards for embedded hardware Kontron plays strongly with their offerings of VITA and PICMG standards-based products such as VPX and COM Express.
MIL-EMBEDDED: If you were to name three growth areas in the military embedded market what would they be and why?
SIVERTSON: Modernization efforts are a strong, steady market for embedded computing suppliers in the defense community – especially as the DoD continues to pass the development costs on the front end to defense contractors. Some amount of that modernization is taking place with form, fit, and function upgrades to leverage new capabilities in legacy tanks, ships, and aircraft. It is a huge investment and represents what I call the base market for defense technology. This solid base won’t go away and has moved a lot toward embedded COTS technology as the DoD can’t afford to spend a lot of money on upfront development costs but still needs the latest technology innovations.
A significant growth area is unmanned systems, particularly in unmanned ground vehicles (UGVs). These robots will be huge cost savers in the long run for the military, especially in personnel. I read an article that the U.S. Army will have up to 10 robots for every soldier by 2020. A huge chunk of the federal budget is spent on personnel. The amount spent on military weapons is small compared to personnel, as it has to cover lifetime pensions, medical benefits, etc. If you could replace every third soldier with a couple robots, you could really drop the federal budget footprint for the military. The success of unmanned aircraft in the military only bodes well for UGVs and other unmanned platforms. We have products in unmanned naval and ground applications and are absolutely looking at the potential of unmanned systems in the commercial market, as well.
Another area that is growing is cyber security. Trust is a foundational technology requirement for this. It is needed for everything around the defense space – a trusted supply chain, trusted data, trusted devices, etc. One element of such trust can be enabled in hardware solutions through continuous health monitoring in embedded computer boards. We offer trusted computing modules with built-in health monitoring and are investigating other technologies to bring into this sector of the market.
MIL-EMBEDDED: Disruptive technology is an often-used phrase to mark turning points in the high tech sectors. What are two or three disruptive technologies that have changed or will change the face of military embedded computing?
SIVERTSON: I think the iPhone has greatly impacted the military world. Military leaders want to know why they can’t have the same commercial technology for the battlespace that everyday consumers have at home. The DoD is already exploring and evaluating smart phone capability for use by the warfighter. The trick will be securing it to NSA level standards and in rugged packages for use in battlefield environments.
Unmanned vehicles have been a disruptive technology for the military with the entire unmanned market space promising to be truly disruptive when the technology reaches the commercial markets.
A third would be the speed of electronic connection through the Internet. The government gave us the Internet through DARPA – then called ARPA. The Internet was created as a protective tool during the nuclear era and now has turned around to be one of the biggest threats to the whole planet. Look at all the cyber attacks happening, such as Edward Snowden’s release of classified information. The cyber security realm is tied to this pervasiveness of the Internet.
MIL-EMBEDDED: Many on the embedded supplier side say the biggest challenge their engineers face is balancing power vs. performance requirements – putting as much performance as possible in small form factors at low power. Are you seeing the same trend? How do you deal with the thermal management challenges in small form factors?
SIVERTSON: We’ve seen SWaP becoming a big issue in the market – for the industrial space, communications space, etc. Each Kontron business unit is dealing with this problem. Moore’s law is still alive and well, so the race for performance in smaller packages is leading to some real challenges here. When you put a lot of stuff in a small space it is hard to get the heat out. We also need to deal with how to get heat out without air or fans. Conduction cooling in a rugged environment is a real challenge as electronics get smaller.
Wearables also represent a thermal management challenge. They require good conduction cooling rather than liquid cooling. It needs to be fanless to prevent the insides from being exposed to dust and environmental conditions while performing ever-greater tasks. This is also putting a real strain on power technologies like rechargeable batteries.
One trend that will enable more efficient management of SWaP is the use of 3D transistors. Working with companies such as Intel as they go to a 14-nanometer silicon process with 3D transistors enables an increase in processor speed at lower power – all critical to meeting the SWaP challenge.
MIL-EMBEDDED: Which of these standards will play the greatest role in military designs in the future and why: VPX, VME, CompactPCI, COM Express, or PC/104?
SIVERTSON: 3U VPX is trending right now. The xTCA form factor peaked about five years ago when there was a massive push to use it in lots of places. We’re seeing 3U VPX being the highest performer right now for military applications. COM Express has become a heavy lifter for many middle performance level applications and SMARC is taking off for small form factor solutions, such as wearables and disposables. Finally, there is still plenty of VME, CompactPCI, and PC/104 being used in legacy systems, too.
MIL-EMBEDDED: System integrators and prime contractors still say the biggest problem they have with COTS technology is obsolescence. Will that ever change? How does Kontron combat this problem?
SIVERTSON: It’s only going to get worse because commercial parts – such as processors from Intel – are driving the performance curve with new introduction life cycles now on the order of only six to eight months. For the military the best they can hope for leveraging many commercially targeted devices is 24-36 months peak market window. At Kontron we use long-term supply agreements as part of many contracts with our customers. We insure beyond the normal part life cycle by figuring out the quantities necessary for long-term support well past the manufacturer’s expected end-of-life (EOL) date and offer this as a service to our customers. They can purchase this at any time up until EOL. We buy enough product and put it in protective storage, keeping it on the shelf long past the life of the silicon, enabling as much as a 20-year life cycle on our end products if a customer so chooses to purchase this service.
On the other end you need to maintain a good relationship with the commercial part supplier. A good example is the one we have with Intel. As one of their premier partners, we have great insight to their roadmap. Knowing which products are best targeted to the defense customer needs and when their products are going EOL enables clear visibility and reduces risk to the main supply chain. This is a huge benefit to working with a COTS vendor such as ourselves.
MIL-EMBEDDED: How does the military market look outside the U.S. in Europe, Asia, etc.? Do the defense procurement strategies in these regions mirror that of the U.S. or are there programs or applications that are unique to one region or another?
SIVERTSON: EMEA (Europe, Middle-East, and Africa), especially Europe, is strong right now. Once again all you have to do is look at the news. Current events are going to dictate more defense modernization for allied nations in these regions. It is very similar to the U.S. market regarding the need for modernizing aging platforms. There is also a similar demand for better cyber security and more unmanned systems. EMEA is almost a microcosm of what happens in the U.S.
My sense of the defense market in APEC (Asia Pacific Economic Cooperation) is that there will be opportunities for embedded technology. Japan has a growing need for more defense capability to counter China and North Korea and I still see some strong activity in Australia and New Zealand.
MIL-EMBEDDED: Kontron has grown quite a bit over the last five to 10 years through internal development and mergers and acquisitions. What technology capability would you like to add to your military embedded portfolio that you currently do not have?
SIVERTSON: I’d like to see us expand our expertise in software integration. Today we are strong in hardware-based technology. We have all the open form factors and all the BIOS and board support technology necessary. Now we are getting more involved in what I consider to be the service architecture side of things, being able to provide middleware that takes away the integration pain from our customers, very similar to what happened in the enterprise space a decade or so ago.
For discrete hardware and software components, connectivity that is now more and more demanded is mostly via middleware and as a result customers are buying solutions as a system rather than trying to completely roll their own. Therefore they are not worried as much about the underlying piping mechanisms as much as they are worried about a solid [operating system] OS-agnostic, open, easily interfaced set of functions to rapidly build their applications upon. This relieves them of the non-value added lower level mechanics headaches and launch pains. There is more and more demand for middleware targeted for embedded. Kontron is investing more in developing and offering this to our customers.
MIL-EMBEDDED: Five years from now where do you see Kontron’s role in the military supplier world – as a hardware supplier, system supplier, or a full systems provider?
SIVERTSON: Yes and yes and yes. Kontron has a wide reach in the hardware space and understanding how to do things – from avionics to defense systems to medical devices to parking meters. That broad a base of hardware development is hard to do. You would never go to a venture capital firm wanting to build a company to compete with Kontron. There is too much evolutionary knowledge wrapped up inside the company. Going forward we will leverage a lot more of middleware technology in the commercial IoT space and perform a lot more integration for our customers, enabling them to get to market faster and be more competitive.
In today’s defense market the primes more and more will add value, gluing technology together to get fire control, missile defense, and other applications to run. Kontron will never be a defense prime contractor, but we will be doing more system integration to function as a single point of contact for these primes. We will be a one-stop shop and partner for the primes to take the pain out and enable them to focus on where they add value.
Eric Sivertson is Executive Vice President of Kontron’s Avionics, Transportation & Defense (ATD) Business Unit. He is an experienced entrepreneur, executive, engineer, and innovator with more than 25 years working in multiple companies, from startups to top tier global defense contractors. His focus is on technologies to enhance trust and security in embedded systems, wireless connectivity, and high performance and reconfigurable computing. He earned his electrical engineering degree from Virginia Tech.
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