AI retreats on MEM unit, nabs former ATL supplier

April 21, 1993

Changes continue at Acoustic Imaging. The Phoenix-based ultrasoundvendor has postponed plans to commercialize a product based ona sophisticated maximum-entropy method (MEM) algorithm, but isplanning a foray into the ultrasound cardiology market with

Changes continue at Acoustic Imaging. The Phoenix-based ultrasoundvendor has postponed plans to commercialize a product based ona sophisticated maximum-entropy method (MEM) algorithm, but isplanning a foray into the ultrasound cardiology market with ascanner licensed from Fujitsu.

AI announced that it had scaled back plans to develop a high-endscanner using the MEM algorithm at the American Institute of Ultrasoundin Medicine meeting last month.

The MEM prototype, dubbed 7200, had long been a source of frustrationfor the company, which repeatedly pushed back the date of thescanner's introduction. The 7200 was intended to be AI's firstcolor-flow offering, but because of delays, the company changedits strategy and developed a color-flow scanner in cooperationwith Vingmed Sound of Norway. That unit, the 5200S, began shippinglast year (SCAN 8/26/92). Vingmed is a subsidiary of ultrasoundcompetitor Diasonics.

AI postponed plans to commercialize 7200 because the 5200Sis performing at a level close to the 7200 technology under development.There isn't enough differentiation between the two systems tojustify separate manufacturing and marketing efforts, accordingto director of marketing Bryan Smith.

"It doesn't make sense to have two product lines so closein performance and try to market both of them," Smith said."The cost of sales, production, everything else goes up becauseof that."

Acoustic Imaging continues to conduct R&D on MEM technologyand could develop a product some time in the future, accordingto Bryan Smith, marketing director. Clinical trials are beingconducting outside the U.S. on a product that incorporates MEMtechnology, Smith said.

Acoustic Imaging has recently shifted toward more cost-effectiveoperations under new president John T. Kingsley. Shortly afterassuming the reins of AI in January, Kingsley presided over arestructuring that cut 65 people from the company's payroll inan effort to reduce expenses (SCAN 2/24/93).

Kingsley's predecessor, Reinhard Warnking, has been named presidentof intraluminal ultrasound developer Endosonics of Rancho Cordova,CA. He was expected to start the new position this week.

The demise of the 7200 has not left AI flat-footed, however.The company entered a distribution agreement with Fujitsu fora mid-range color-flow cardiology scanner. Fujitsu had suppliedan earlier incarnation of the scanner to ATL, which marketed itas the UM 7 (SCAN 3/28/90). The unit has been improved since thenand is undergoing an upgrade, according to Smith. It will be AI'sfirst cardiology product.

AI has not yet decided whether it will market the system inthe U.S. But the company will take advantage of parent Dornier'sdistribution network to sell the system in worldwide markets.

"It fits with our distribution organization and it fitsin the marketplace," Smith said. "We think that if youhave the distribution network there, and you're in certain geographicmarkets, adding another product makes sense."