Integral Systems Inc., which cut its teeth developing satellite command-and-control software, has made a number of recent moves intended to expand the scope of its hardware and services offerings.
Columbia, Md.-based Integral is a developer of commercial-off-the-shelf products that are used to manage satellite fleets and detect and locate signal interference. The firm and its subsidiaries also sell the full spectrum of satellite ground system hardware, including antennas, modems and radio frequency converters.
The U.S. government is Integral’s largest customer, accounting for about 80 percent of the company’s business. Much of that comes from two major Air Force contracts.
Under the Command and Control System-Consolidated (CCS-C) program, Integral provides the software that flies most of the military’s communications satellites, and the company’s Rapid Attack, Identification and Reporting System — RAIDRS for short — locates interference with military communications satellites.
To bolster its hardware offering, Integral made two acquisitions this year. In March it paid $34.7 million to acquire satellite communications terminal builder CVG-Avtec, and then in April it paid $2.5 million to acquire Sophia Wireless, producer of solid-state power amplifiers. Integral also bought this year the satID line of interference detection products from QinetiQ of the United Kingdom. It also opened up a European subsidiary to extend its international reach.
Integral now has everything it needs to deliver complete satellite ground systems, the company’s chief executive, Paul Casner, said in a recent interview with Space News staff writer Turner Brinton.
But the firm is not content selling hardware and software. Integral recently invested in three new network operations centers and 10 antenna pairs around the world that it will use to operate satellites on behalf of government and commercial customers. Casner said the company signed its first satellite operations contract in July, but he would not reveal the customer.
Casner was named chief executive in August 2009 following the resignation of John Higginbotham, who lasted only a year on the job. Higginbotham was brought in with a growth mandate and promised investors a strong 2009, but revenue and profit remained flat last year at $159.9 million and $25 million, respectively.
Casner believes some of the issues that dragged on the company’s finances last year, including the bankruptcy of an indebted customer and a contract dispute with the Pentagon, are behind it now.
Integral has had a steady string of acquisitions. Do you now think the company has all the parts it needs to sustain growth?
Yes I do. We recently stood up our European subsidiary to go after more business overseas. That, coupled with our new Service Solutions division and the new pieces we’ve added in CVG-Avtec, Sophia Wireless and a part of QinetiQ, I think we have all the parts now to provide a complete turnkey system for a satellite operator and a substantial capability for all our terrestrial customers as well. Now we’re going to be focused on getting those guys integrated with the company.
Integral recently reorganized into three divisions: one for products, one for commercial and civil customers and one for military and intelligence customers. Which of those has the biggest growth opportunities?
In the commercial arena, there are not many new satellites being launched, but when they are launched, we get our share.
The civil sector is one we see growth opportunities in. We’re looking at more involvement with NASA and the National Oceanic and Atmospheric Administration. We think there’s also a reasonable opportunity to get involved with the Federal Communications Commission, which ought to be interested in interference and spectrum analysis. The Department of Homeland Security is another target customer of ours. I don’t think there are any specific programs there that I want to talk about right now.
What is the concept behind the new Service Solutions division?
We invested a fair amount of money in a new services organization this year, and what we’re trying to do is provide a service using our own products that a customer might not be able to afford by itself. So the target customer is a single satellite operator, or maybe someone who is buying bandwidth who is interested in trying to establish quality of service.
The service company will do signal analysis, interference detection, geolocation, remote sensing and network management, and satellite operations in general. We’re able to provide the capability to design a network operations center, operate it or support operations in an integrated way that we think is something customers will really want to have.
So a company could operate satellites without owning any ground hardware?
They don’t have to own their ground segment. We are standing up three network operations centers in Colorado Springs, Colo., Columbia, Md., and Toulouse, France, and spreading 10 antenna pairs across the globe in order to provide instantaneous worldwide coverage. I think the one thing that makes us different from other providers is we are bringing our own products and integrating them in a way that makes them particularly useful. We’re really excited to have booked our first customer.
Do you see opportunities to expand your work on the CCS-C program?
CCS-C is a model program for the Air Force and Integral. That’s a program that we delivered on time and on budget, and it has performed flawlessly. It has reduced the service’s cost of operations and manpower. So we continue to work with our customer to add new satellites when they are launched. We continue to bring additional upgrades to CCS-C, and we were recently awarded an extension to that contract through 2013.
We are in discussions with the Air Force to add some capabilities to CCS-C, the particulars of which I can’t much get into.
What other Air Force opportunities do you see?
We think the whole arena of space situational awareness is an opportunity area for us. It looks like the first opportunity for us will be a forthcoming request for proposals for the High Accuracy Catalog. It would be the fundamental database one would use in the space situational awareness arena. We’re working to figure out how we will play a role.
What trends are you seeing in satellites and satellite ground systems?
Organizations are trying to do more with less. I think we have seen commercial operators and government agencies getting together to try to pool capabilities. And those are good signs for us, because we bring commercial-off-the-shelf products to the marketplace, which means delivering on shorter time frames with less cost. And as economies around the world have gotten into difficult situations, our cost-effective solutions are becoming more and more attractive. The trend is a positive for us.
Do any commercial operators buy satellites with proprietary ground software these days?
The fact of the matter is the bulk of the satellite operators specify us as the ground system. They still bundle the systems, because it’s easier for a satellite operator, especially a small operator, to have one contract to manage. Very often, 75 percent to 85 percent of the time, those operators will specify us as the ground system. The rest of the market is occupied when a company buys a satellite and doesn’t specify a ground system, in which case the manufacturer will likely supply its own ground system.
In what areas are you focusing your internal research and development efforts?
We think it’s critically important to properly invest in all of our products to keep them at the forefront of the market. So we make substantial investments in the product road maps, and in our people. We have invested in solid-state power amplifiers, and we believe that product will be extremely competitive in the marketplace and will bring us a discriminator in some of the small terminals that we intend to market. We’re also investing in our network management |capability.
