Rakon

Infobox Company
name = Rakon Limited

type = Electronics Manufacturer
foundation = April 4, 1967
founder = Warren Robinson
location = Auckland, New Zealand
locations = New Zealand, United Kingdom, France
area_served = Global
industry = Frequency Control, Quartz Crystal, Electronics, GPS, Wireless
products = TCXO, OCXO, VCXO, Quartz Crystal, Crystal Oscillator
revenue = NZ$174.3m (April, 2008)
owner = Public (NZX: RAK)
num_employees = aprox. 800 (August, 2007)
homepage = [http://www.rakon.com www.rakon.com]

Rakon Limited is a New Zealand based manufacturer of frequency timing solutions, primarily quartz crystals and temperature compensated crystal oscillators (TCXO). Since 1990 Rakon has specialised in supplying frequency control products to the GPS industry. Rakon considers its self the leading supplier to this market and claims to supply over 50% of all the frequency control products used in GPS.

In March 2007 Rakon acquired the frequency control products division of C-MAC MicroTechnology. This expanded Rakon's product range greatly to include oven controlled crystal oscillators (OCXO), voltage controlled crystal oscillators (VCXO), the Pluto ASIC and a range of low performance commodity products.

History

Rakon was officially founded on 4 April 1967 by Warren Robinson. Robinson had previously operated a business manufacturing marine radios', Marlin Electronics. These marine radios' required between 6-12 quartz crystals with each region within New Zealand requiring a different set of frequencies.

The only source for these crystals was the NZPO (New Zealand Post Office) and delivery times were often measured in months which was an ongoing problem for Robinson in his ability to supply his radios. Warren Robinson realising there was an opportunity to compete with the NZPO sold Marlin Electronics to Autocrat Radio and went on to found Rakon Industries (RIL) a few years later (1967). Initially the New Zealand government blocked Robinsons application to import crystal manufacturing equipment as they didn't wish there to be undue competition to the post office, however by 1967 Robinson was able to secure an import license for the equipment and started manufacturing quartz crystals in his garage to supply the local radio market.

Early growth

By supplying quality crystals on short lead-times Rakon grew quickly, riding the wave of growth in the radio communications industry. By 1971 Rakon had moved into its own premises and employed over 30 staff, it had also begun exporting the crystals to Australia and South East Asia. In 1972 Warren Robinson set up a second manufacturing plant in Singapore to supply the growing markets of Thailand, Malaysia, Philippines and Taiwan.

Crystal crash

Around 1980 Warren Robinson's eldest son, Brent Robinson, joined Rakon as Managing Director. Brent was made responsible for the crystal manufacturing business while Warren focussed on his other expanding business Rakon Computers, which at the time owned the distribution rights for Unix in Australia and New Zealand.

Around this time a new technology began being widely adopted in radio designs, synthesization. This meant that rather than a radio requiring a pair of crystals for every frequency band (one for transmit and a second for receive) only one single crystal was required. The impact of this was that Rakons core crystal business was in rapid decline, with the total market size shrinking to a mere 10% of its previous size.

TCXO development

Brent Robinson immediately started looking for new related technologies that Rakon could adopt to turn around the rapidly falling sales. In the mid-1980s Brent came across a product type called temperature compensated oscillators. These were mainly being manufactured in Japan at the time and were used, in particular, in cellular phones. With NEC in Australia looking for a local supplier of TCXOs Brent committed Rakon to developing a product of equivalent performance to anything that could be sourced out of Japan.

By the late 1980s Rakon was supplying TCXOs to NEC Australia's Melbourne factory. The supply of these products became the main focus of Rakon's operations and the entire manufacturing process for quartz crystals was revamped in order to support this new technology. The early TCXOs that Rakon supplied were imitations of the Japanese products but Rakon was unable to replicate the highly automated manufacturing processes that existed in Japan. Also the performance of these early products, although good enough, was not satisfactory to the young Brent Robinson.

In order to increase the manufacturing volume, reduce the cost and improve the performance of the products Rakon developed unique manufacturing processes unlike anything that existed elsewhere in the world. This was largely due to the fact that there was no local industry to teach the Rakon engineers how to do things and all manufacturing developments had to be done from a blank sheet of paper.

By 1990 Rakon had nearly perfected their TCXO product and released a product with an, at the time, unprecedented frequency stability of 1 part per million (1ppm) in a miniature package (~20x10mm).

GPS market

In 1990 Brent's younger brother Darren Robinson joined the company as head of marketing. Darren had been working in Australia in the computer industry and came on board in part to find new customers for the 1ppm TCXO. At around the same time NEC Australia halted its mobile phone manufacturing and moved its operations back to Japan, dropping Rakon in preference of a local Japanese supplier at the same time.

Initially Darren Robinson canvased all the emerging cellular phone manufacturers in order to find a new customer for their TCXO. It soon became apparent that although the Rakon product out performed anything else on the market it was too expensive for any of the high volume applications Rakon was set up to support.

In 1991 the Robinson brothers came across an advertisement for a hand held GPS unit from a company called Magellan. After making contact with Magellan the Robinsons were quickly made aware that the emerging GPS market was seeking for a high stability frequency reference, in a small package available in volume (which at the time was tens of thousands of units).

Initial samples were approved and volume orders placed in a short afterwards. Encouraged by their initial success Rakon immediately began approaching all the major GPS suppliers in North America and within a couple of years dominated the supply of frequency references to the GPS industry.

Key to gaining market acceptance was acceptance of Rakon product by Rockwell. Rockwell had been instrumental in the development and deployment of the GPS system and were the technology leaders at the time. Acceptance and approval of Rakon parts by Rockwell enabled Rakon to quickly gain acceptance in the emerging consumer GPS market.

Public listing

Rakon continued to focus on developing products for the GPS market. In 2006 they claimed to still hold over 50% market share in the autonomous GPS market (GPS which functions without assistance from the CDMA phone network). Which is quite impressive given the massive growth in the number of GPS devices available between 1990 and 2006.

In early 2006 Rakon announced they would list on the New Zealand stock exchange and on the 13th of April released their IPO prospectus. The IPO generated a lot of interest in the New Zealand market and although no official numbers were released the listing was heavily over subscribed. The IPO price was $1.60 and shares commenced trading on the 16th of May at $2.30 per share. On 16 May 2007 the share price opened at $5.30 and reached a high a few days later of $5.80. Rakon is often referred to in media as the share market darling, although some commentators point to the lack of other high growth stocks on the NZX as a reason for Rakon's popularity.

Overseas expansion

In March 2007 Rakon acquired the frequency control products division of C-MAC Microtechnology. This acquisition gave Rakon a European based operations, including 2 factories located in the UK and France respectively. The new business unit specialised in other forms of wireless communications and allowed Rakon to become less dependent on the GPS market.

Future

Rakon does not offer much speculation in the public about its future, however it claims it is focussed on developing frequency control solutions for GPS and wireless applications.

Controversy

Since 2005 Rakon has been the subject a number of allegations relating to the use of their products in military applications. Rakon has never denied that they supply products into military applications and have at various times stated this accounts for 1% of their output, or 10% of their revenue.

In August 2005 the "New Zealand Herald" quoted Rakon Marketing Director, Darren Robinson, as saying [http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10342322 that the company's technology went into "smart bombs and missiles" used by the US military.] Rakon denied the claims, stating [http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10342322 the company was not privy to the "end-use systems, equipment or applications used by its customers] .

In May 2006 the "New Zealand Herald" [http://www.nzherald.co.nz/feature/index.cfm?c_id=1501071 ran a large expose around Rakon products being supplied to Rockwell] for incorporation in United States Military 'smart bombs'. The claims were based around the facts that Rakon had known of the end use of their products since 1994 and may in fact be in breach of New Zealand export restrictions.

In July 2006 Rakon was the target of [http://www.newstalkzb.co.nz/newsdetail1.asp?storyID=99298 protests] by [http://www.gpja.org.nz Global Peace and Justice Auckland] (GPJA). During the Israeli attacks on Lebanon in July 2006, GPJA issued a media release [http://www.scoop.co.nz/stories/PO0607/S00365.htm appealing] "to the Prime Minister to close the loophole which allows New Zealand's Rakon Industries to export parts for Israeli bombs being dropped on Lebanon and Palestine.".

Rakon continued to maintain that their products had not been designed for military use and the question of where they were used was up to their customers to answer. Rakon lists Rockwell Collins as a customer in their IPO Prospectus. In June 2006 the New Zealand Ministry for Foreign Affairs and Trade [http://www.nzherald.co.nz/feature/story.cfm?c_id=1501071&objectid=10386803 cleared Rakon products for export. Stating that they were unlikely to have been specifically designed for military use] .

Most media commentators, and public [http://computerworld.co.nz/news.nsf/news/6FE07A4AFB092369CC25718000808015 sided with Rakon over the story] . The Rakon share price saw a significant rise after the Herald story went to press. However various peace activist groups have [http://www.greens.org.nz/searchdocs/PR9903.html maintained calls for Rakon to be prohibited from supplying any products to companies involved in the manufacture of weapons or weapons related systems] .

Rakon has been trying to copy Japanese crystal resonators such as Epson-Toyocom. However, it was not very successful. Since there are many problems in making its own crystal resonators, Rakon has to buy crystal resonators from Japan. Quality has always been an issue for Rakon.

World's smallest GPS

In January 2006 Rakon hit the headlines with the announcement of the world's smallest GPS. Rakon actually released the worlds smallest GPS RF Front End Module, which is a component in a GPS system, however various media sources slightly misrepresented the title of the release.

This GPS module allows systems designers to connect an antenna and GPS baseband to the Rakon module and create a small, simple GPS receiver. The concept is that all the 'difficult' radio frequency design is done by Rakon and the equipment manufacturer can focus on their application, rather than designing GPS. Rakon has not reported any specific sales of the GPS module but claims there is still significant interest in it.