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Firm’s Modules Can Adapt to Change Without Skipping a Beat

congatec Inc.

CEO: Gerhard Edi.

Financial data: 2010 earnings: $64 million.

No. of local employees: Seven, to grow to 15 by year end 2011.

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Investors: Private.

Headquarters: Sorrento Mesa: 6262 Ferris Square, San Diego 92121.

Year founded: 2005 (San Diego office opened in 2008).

Company description: The congatec AG unit designs circuit boards or modules embedded into larger electronic devices and equipment.

It’s not often that you run across a business named after the foot-stomping, hip-gyrating lyrics in a hit song.

But congatec Inc., the U.S. headquarters of German-based congatec AG, is just such a business.

Its name derives from the lyrics of a Gloria Estefan melody, “Come on shake your body, baby, do the conga,” popular back in the 1980s, says Ron Mazza, the general manager who heads the local office.

The whimsical approach to naming such a hard-core tech business reflects a lighthearted, but serious approach to the business, says Mazza — and perhaps it’s a reflection of the musical tastes of the German founders. (The company’s tagline is “The rhythm of embedded computing.”)

“We tend to work hard, and have some fun at it,” he said.

The executives might be on to something as far as motivation goes, as the business reported revenues of 45.6 million euros ($64 million) for 2010 earlier this month. The number represented a 76 percent gain in sales over 2009.

The company is a maker of embedded computer modules or circuit boards.

The modules, similar in appearance to the motherboards found inside the average desktop PC, are embedded in all kinds of industrial devices and equipment, and congatec specializes in products for applications in industrial automation, medical technology, automotive supplies, aerospace and transportation.

Customers are scattered around the globe.

Congatec modules can be found in hospital equipment used for patient monitoring, and in high-end graphic implementations.

They are embedded in computers installed on public buses and trains that announce the various stops along a route, says Mazza.

“Our customers tend to be quite large, and they just want to avoid obsolescence of their products,” said Mazza. With standard designs assured, customers can control the design of their products without worrying about changes to the boards, he says.

The company specializes in four module designs, all of which use Intel Corp. or AMD (Advanced Micro Devices, Inc.) microprocessors, the brains behind the computing devices.

The target market is called computer on module, using four standard designs or form factors which are known as ETX, XTX, Qseven and COM Express.

The designs are standard, so customers don’t have to fret about changing product designs to match changes in module designs.

“All we do is communication modules,” said Mazza. “We wrote the standards for them all.”

“At the time, the concept (of a standard design) was very revolutionary; everybody thought we were really crazy, but it was something that customers had been asking for,” Mazza said. “The beauty of it is that if you pick one of the four standards, and either AMD or Intel introduces a new chip, we do a new implementation of our modules, and any customer can plug it onto their existing design.”

The boards are designed in San Diego and other branch offices, then, sent out to be produced by third-party “contract manufacturers,” most located in China, South Korea and Taiwan.

Mazza says that San Diego is a good place to be for an office, given the large number of technology companies located here.

Good Location

The location is helpful for recruiting, but it was chosen because Mazza was already living in Cardiff-by-the-Sea.

And Silicon Valley, the motherland of all technology, is just an hour away via Southwest and other airlines, says Mazza.

“There really isn’t any negative to being way out on the West Coast,” said Mazza.

In fact, one competitor, the San Diego office of Germany’s Kontron AG, is based in Escondido.

A larger, international competitor includes Advantech Co. Ltd., a public company in Taiwan.

But Mazza attributes record sales to “the knowledge we have in this industry.”

“We started the markets, we’ve written all of the specifications, so we’re looked at as the leader,” said Mazza. “Our focus is on the engineering side, and our customers rely on us. Our emphasis on the design of our products is really a key difference.”

Kevin Carroll, the San Diego director of TechAmerica, says smaller companies like congatec are critical to the health of the region’s overall economy, in that they provide high level jobs as well as high level business opportunities.

“The story here is bigger than just one company,” he said. “The contract services industry helps the local economy, and especially the tech economy.”

Carroll said in the future he believes companies that outsource overseas may bring some of that work back to the region given such challenges as monitoring quality and protecting intellectual property in countries overseas.

“They’re next to you, and you don’t have to pay a team to go to China,” he said. “By shortening the supply chain, you can lessen the total cost.”

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