ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the June 2004 issue


The Lid is off!


At the recently held First International Homeland Security (HLS) Conference the lid was blown off. There are no fewer than 210 Israeli companies active in the Homeland Security sector. Until recently, this has been one of the most closely guarded secrets in this small country. The Conference, held at Tel-Aviv University, brought together a mixed audience including members of the armed forces, Government officials, individual investors,foreign visitors, venture capitalists and technologists.

On second tought, the number of companies laboring in the field should not be a surprise. Israel, in recent years, has acquired a solid reputation for security innovation. El-Al, for one example, as of this month will have its fleet of 30 planes outfitted with the FlightGuard system, aimed at protecting from missiles fired from hand held rocket propellers.

Dan Inbar founder of the Homeland Security Corporation provided statistics indicating that of the 111 Israeli companies mentioned in his report, most of them were start ups employing fewer than 10 employees. The big players are Israel Aircraft Industries, Rafael, Elta and Elbit. The sector also includes a handful of public companies. The stakes are substantial as the $47b. industry is expected to quadruple in the next decade.

Inbar, an inventor who has more than 100 patents to his credit, stated that HLS is "a mine field and one should tread with care". Among his recommendations to participants in the industry - "follow future money allocations by the US Government" and "all present technologies are insufficient, and will be replaced". The Israelis are pursuing a broad range of solutions and products. Among these one finds encryption, smart cards, remote sensing, biometric control access systems, document verification, electronic fencing and perimeter security systems, unmanned airborne vehicles, radioactive material detection, computer protection software, fleet management communications, passive radar systems, face recognition, eavesdropping control, voice authentication, tracking people in secured areas, wireless home and security systems.

Hasbrouck Miller, VP of the American Smiths Detection company, and a number of other speakers, stressed the importance of designing "fused technologies". In order to earn money in this industry domestic, non-HLS applications can be engineered and for that multi-purpose products are required.

Dennis Floyd, a Boeing executive, pointed out the importance of thinking in terms of America's size. millions of commercial travelers, 11.2m. trucks entering the US each year, the existence of 19,000 airports and the shipping of 7 million containers.

Bruce DeGrazia, the founder and head of the Homeland Security Industry Association warned of the many beauracratic problems that newcomers will encounter when attempting to penetrate the HSL market. The American organization with more than 4000 members has established a local subsidiary. "You might consider the importance of teaming up with American concerns. Minimally you need to be subsidiary of an American subsidiary just to be allowed to bid on government contracts. Small American companies have the help of the Small Business Administration, which provides funding".

One problem that is begging for a solution, is to be able to follow the movement of containers. More than seven million containers annually reach the United States.

The hottest technology currently is Radio frequency identification (RFID) that first appeared in tracking and access applications during the 1980s. RFID has established itself in a wide range of markets including livestock identification and automated vehicle identification (AVI) systems because of its ability to track moving objects.

Beyond the larger Israeli companies that are developing and selling HLS products, it is hard to envision how many of the smaller companies will reach the American market.


Reprinted from the Israel High-Tech & Investment Report June 2004

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