In Focus Systems, Inc. History

Address:
27700B SW Parkway Avenue
Wilsonville, Oregon 97070-9812
U.S.A.

Telephone: (503) 685-8888
Fax: (503) 685-8839

Website:
Public Company
Incorporated: 1986
Employees: 504
Sales: $258.5 million (1996)
Stock Exchanges: NASDAQ
SICs: 3679 Electronic Components, Not Elsewhere Classified

Company Perspectives:

In Focus Systems, Inc. was founded and incorporated in 1986 to develop, manufacture and market innovative multimedia projection products using flat-panel liquid crystal display (LCD) technology to present video, audio, graphics and data output from personal computers (PCs), workstations, VCRs, laser disc players and other electronic devices for use in businesses, schools and government agencies for training sessions, meetings, sales presentations, technical seminars and other applications involving the sharing of computer-generated and/or video information with an audience. The products are compatible with all major personal computers and most video sources used in business and education.

Company History:

In Focus Systems, Inc. was founded and incorporated in 1986 by Paul Gulick and Steven Hix as an information display system maker. Since that time, the two, who had previously worked together at Tektronix, Inc. and Planar Systems, Inc., have helped guide the company to become the world market leader in the development, manufacture, and marketing of innovative multimedia projection products using flat-panel liquid crystal display (LCD) technology.

The LCD Product Line and ESS Sales Network

LCD projection is much cheaper to produce and allows much more flexibility than slide presentations, enabling the user to present video, audio, graphics, and data output from personal computers, workstations, VCRs, laser disc players, and other electronic devices. LCD projection systems can be used in businesses, schools, and government agencies for training sessions, meetings, sales presentations, technical seminars, and other applications involving the sharing of computer-generated and/or video information with an audience. The products manufactured by In Focus are compatible with all major personal computers and most video sources used in business and education.

In Focus is headquartered in a 203,000-square-foot leased office and manufacturing space in Wilsonville, Oregon. The company's LitePro series makes up the projection system product line and its Smartview and PowerView series make up the color LCD projection panel product line. The company sells its brand name products through distributors, dealers, catalogs, governmental sales agencies, and over 165 audio/visual dealers, computer dealers, and presentation specialists. A two-tier distribution system has been set up with partners such as Ingram-Micro, Tech Data, Merisel, MicroAge, and Access Graphics to resell the company's products to value-added resellers throughout North America. Internationally, the company sells its products throughout the world via 70 international distributors in more than 60 countries. International sales managers in Miami, Singapore, and Amsterdam work with the international distributors to move the products. The company also has a private-label arrangement with Boxlight Corporation, which resells the company's color LCD projection panels and projectors under its own label. Major customers have included such companies as United Technologies, the U.S. Army, Tektronix, General Motors, IBM, and Hewlett-Packard.

Additional facilities are located in Atlanta, Georgia; Memphis, Tennessee; and the Netherlands, where, in addition to the headquarters, telephone support and technical training is provided. Hardware repair is conducted at the headquarters and through authorized agents in Singapore, Belgium, and throughout the world.

Powering Up, 1987--89

In 1987, a year after the startup, the company was shipping its first product, a CGA-compatible monochrome display panel which, when placed on an overhead projector, displayed the output of a personal computer onto the screen. In 1988, the company posted revenues of $8.5 million and a net income of $640,000. The following year the company created the industry's first true-color LCD projection panel and posted revenues of $11.5 million, but had a net loss of approximately $1 million. Since then, the company has expanded its product line to include an integrated unit that has its own light source, much like a slide projector, and can display prerecorded images from a PC and active matrix displays capable of displaying full-motion video.

Rather than focusing on just the high-tech, high-priced segments of the market, In Focus concentrated on all areas of the market, attempting to introduce the industry's lowest-priced color LCD. In 1984, when still working for Brown Boveri in Switzerland, In Focus scientist Terry Scheffer invented Super Twist Nematic (STN) technology. Most people in the industry claimed that STN technology would not run fast enough to respond to video rates. In 1989, Scheffer invented and In Focus patented Triple Super Twist Nematic (TSTN) technology, which applied monochrome LCD technology to color LCDs and allowed the company to create a lower-priced LCD projection product. The TSTN technology utilized three panels rather than the standard one panel utilized by normal projection panel systems. The company also developed Subtractive Birefringement Effect (SaBRE) technology to remove one of those panels.

Growth During the 1990s

In February 1990, the company formed In Focus Systems FSC, Inc. to provide creative presentation services to Fortune 500 and other companies. After posting first quarter revenues of $5.5 million with a net income of $850,000, things were looking much better for the company than at the end of the previous year.

However, later in the year, Advanced Display Manufacturers of America asked the U.S. Department of Commerce and the International Trade Commission to instigate an investigation into Japanese manufacturers who, they claimed, were dumping their flat panel displays into the marketplace. A 2.3 percent across-the-board tariff was imposed on all Japanese display manufacturers, including Kyocera, which manufactured LCD cells for In Focus. Competition began heating up as a company called nView arrived on the scene with a thin film transistor (TFT), or active matrix, product manufactured by Sharp, for $5,900. Rumors also began circulating at that time that Toshiba, Hitachi, and Hoseidon would soon announce similar products. Although the company had its own TFT product sitting on the shelf ready to go, it did not want to get into the market until an inexpensive model could be produced, as Telex, in conjunction with Hitachi, had already tried to enter the market with a product selling for $4,300 and had failed.

In Focus did release a new low-cost, 16-color PC Viewer targeted toward the educational marketplace, and LightPro LS, a portable, self-contained presentation system designed to replace the old-fashioned three-gun CRT projectors manufactured by such companies as Sony, Barco, and ElectroHome, at a fraction of the cost.

The company went public in December 1990, posting revenues of $11.4 million in the fourth quarter, with $1.8 million in net income, and a total of $36.7 million on the year, with net income of $5.5 million, a huge improvement over 1989. In January 1991, the company released a new product called LiteShow II and, with first quarter revenue at $13 million and net income of $2.1 million, the company posted its best-ever quarter results.

After determining that panels employing TFT technology were being produced in volumes too small and at too high a price to make the product viable, the company planned to introduce its own TFT products to the marketplace which, at the time, was dominated by nView. In Focus's stock soared when it was announced that Compaq had obtained the exclusive rights to the company's TSTN technology for use in portable computer displays in its battery-operated notebook-type machines, as well as AC-power computers. However, when Compaq proved unable to adapt the company's color LCD technology into its product line, the agreement was terminated.

As competitors began to make their entrance, the marketplace for LCD display panels and projectors grew to approximately $200 million and an expected growth rate of 20 percent per year, with the fastest-growing segments of the marketplace being color display panels and self-contained projectors, while the monochrome panel market began shrinking. But the company continued growing, posting revenues of $49.5 million on the year, with net income of $4.69 million.

In April 1992, John V. Harker, formerly executive vice-president of Genicom Corp., succeeded Steven Hix as president and CEO, freeing Hix to focus his attention on technology and long-range corporate strategy, as well as his role as chairman of the board. By June of that same year, In Focus and Sharp had emerged as the two leading competitors in the color LCD display market. A company called Proxima came in a close third. In Focus had already had a run-in with Proxima in court when the latter attempted to market a product based on the In Focus-patented TSTN technology. In Focus sued and won. The rest of the marketplace was fairly fragmented, with a number of smaller companies manufacturing TFT display panels. Speculation was rife in the industry and among investment houses that large companies, such as Sony, Matsushita, and Hitachi, would enter the marketplace, increasing competition.

That same year, in October, the company created and entered into an equal-partnership venture with Motorola Inc. called Motif Inc. The reason Motif was created was to jointly establish and develop a plant in the United States to manufacture and market low-cost, video-speed LCDs and to market and distribute controlling application specific integrated circuits (ASICs) embodying In Focus' Active Addressing technology and design of integrated circuits. The LCDs would be developed by In Focus and the ASICs by Motorola. This would allow both companies to access the wider marketplace offered by handheld computer games, personal digital assistants, pagers, and laptop computers. Motorola took a minority shareholder position in In Focus Systems Inc. (20 percent) by purchasing 2.2 million shares at $10 per share.

The company ended 1992 with revenues of $59.8 million and net income of $3.9 million. In 1993, the company introduced the portable PanelBook series, project display devices no larger than notebook computers and ended that year with $73.5 million in revenues and $6 million in net income.

In 1994, with only a dozen or so companies in the industry, primarily young and entrepreneurial in nature, the company was well ahead of the game in its technological development. That would all change over the next few years as the industry exploded with growth. That year, the company formed the subsidiary In Focus Services, Inc. and, in August, acquired certain assets and liabilities of Genigraphics Corporation and Genigraphics Service Corporation for $1.5 million, an acquisition which helped lead to a 67 percent increase in sales for 1994. The company also formed a strategic research and development relationship with office furniture giant Steelcase. New products included the PowerView 950 and the PanelBook 750 projection panels. In addition, the company formed an alliance with Electrohome to begin producing a large-screen LCD projector called Showstar in early 1995.

Due to yield problems and resulting increased investment requirements, October saw the restructuring of Motif. The plan to produce LCD panels was scrapped and the venture began providing greater focus on the development of its core Active Addressing chip technology. That month, Steven Hix also relinquished to Harker his post as chairman to continue devoting more time to strategy and technology, as well as a new joint venture with In Focus called Sarif, of which he became chairman and CEO.

Early in 1995, the company and Motorola scrapped plans for Motif Inc. to jointly build computer displays and the company bought back one million shares of its stock from Motorola for $18 million; Motorola sold the remaining 1.2 million shares and began exploring the possibility of using certain Motif technology in the design of integrated circuits. The breakup of this alliance, however, did not deter the company from pushing forward relationships with other companies and soon In Focus teamed up with Adobe Systems to market multimedia products. Meanwhile, Proxima overtook Sharp as the number two company in the industry.

The board of directors was increased to four seats when Peter Behrendt, chairman of Exabyte Corporation, was added. Revenues for 1995 were $202.8 million, a 65 percent increase over revenues from 1994, helped by an increase in sales of the LitePro 560, 570, and 580 series products, which were manufactured for the company by an outside source with lower margins. Net income was $10.4 million.

Adjusting to the Boom, 1996 and Beyond

Two short years prior, the company was one of only a dozen in the industry, but in 1996 there was a boom, and suddenly there were more than 40 manufacturers and distributors all vying for part of the market, including such established companies as Sharp Corporation, Hitachi, NEC, Epson, Sanyo, Sony, General Electric, Matsushita, Mitsubishi, Seiko, Panasonic, IBM, JVC, 3M, Toshiba, Polaroid, Proxima Corporation, ASK, Davis Liquid Crystals, Eastman Kodak, and Liesengang, as well as newcomers The Alpine Group, nView Corporation, Cree Research Inc., Kopin Corporation, OIS Optical Imaging Systems, Planar Systems, Photonics Imaging, Sayett Group Inc., SI Diamond Technology, and Three-Five Systems.

Facing increasing price competition in the VGA projection systems market as new competitors continued to enter, the company made codevelopment relationships with such companies as Texas Instruments and Hughes Elcan Optical Technologies, developed hot links in Microsoft's PowerPoint 97, and strengthened the company's board of directors by naming Jack D. Kuehler, former president of IBM, to the board, bringing the total number of directors to five.

Despite a 33 percent drop in the company's stock in mid-1996 amidst increasing encroachment and new projection products released at the Infocomm trade show that year by Sony, Sanyo, Panasonic, and Sharp, revenues for the company in 1996 reached $258.5 million, a 27 percent increase over the previous year, helped by an increase in unit sales of the company's complete line of LitePro projection products and a reduction in the company's workforce as a cost containment effort.

The company believed its ability to compete in the projection display market depended on certain key product characteristics, such as resolution, brightness, range and quality of colors, portability, display speed, power requirements, and price. With added competition--and expecting additional competition as new technologies, applications, and products were introduced--the company believed that technological change in the industry, and within its own doors, would continue to move forward at an incredible pace. An already proven leader in the industry, In Focus Systems was poised to remain on top of what analysts predicted would become a $38 billion worldwide industry by the year 2000.

Principal Subsidiaries: In Focus Services, Inc.

Further Reading:

  • Andrews, Walter, "Motif Funding Rise Eyes Consumer As First IC Slips," Electronic News, March 28, 1994, p. 8.
  • Bernard, Viki, "In Focus Unveils Color LCD Panels," PC Week, May 2, 1994, p. 33.
  • Chinnock, Chris B., "Au Revoir, Overheads," Byte, February 1996, p. 34.
  • "David Sarnoff Research Center in Princeton, N.J., and In Focus Systems Inc. of Wilsonville, Ore...," Electronics, October 24, 1994, p. 16.
  • DeTar, Jim, "Motorola Sale of In Focus Stock Raises Questions on Display ICs," Electronic News, April 3, 1995, p. 1.
  • ------, "Texas Instruments Inks Display Device Accords," Electronic News, April 24, 1995, p. 1.
  • DiCarlo, Lisa, "Projectors Let Users Take Show on the Road," PC Week, April 8, 1996, p. 34.
  • Dorsch, Jeff, and Carol Haber, "In Focus Revamps LCD Operations," Electronic News, October 17, 1994, p. 1.
  • "Earnings for In Focus Expected to Fall Short of Analysts' Estimates," Wall Street Journal, September 17, 1996, p. A9A(W)/A13C(E).
  • "Earnings to Trail Estimates Due to Production Delays," Wall Street Journal, April 3, 1997, p. B8(W)/A8(E).
  • Hamm, Steve, "A Sharper Image," PC Week, April 3, 1995, p. A9.
  • Hicks, Adam A., "Project High-Resolution Presentations Across the Room," PC Magazines, July 1994, p. 66.
  • "In Focus Buys Genigraphics Service Bureau," Business Journal-Portland, August 12, 1994, p. 6.
  • "In Focus LCD Projector Fares Well in Screen Tests," PC Week, April 28, 1997, p. 55.
  • "In Focus Shows Lightweight Projector," PC Week, March 24, 1997, p. 54.
  • "In Focus Systems," Television Digest, April 3, 1995, p. 15.
  • "In Focus Systems Stock Off on Competition Worry," New York Times, June 15, 1996, p. 15(N)/33(L).
  • Marcial, Gene G., "Small-Caps to Watch," Business Week, June 9, 1997, p. 102.
  • Poor, Alfred, "LCD Projectors Take the Next Step," PC Magazine, November 18, 1997, p. 45.
  • Poor, Alfred, Winn L. Rosch, and Denis Tom, "Lighter and Brighter: Portable Projectors," PC Magazine, August 1997, p. 258.
  • "Technology Brief--In Focus Systems Inc.: Firm Is to Buy One Million of Its Shares from Motorola," Wall Street Journal, March 28, 1995.
  • Yegyazarian, Anush, "Focusing on Brilliant Projects," PC Magazine, March 15, 1994, p. 62.

Source: International Directory of Company Histories, Vol. 22. St. James Press, 1998.