ATL aims at mid-range segment with debut of HDI 1000 scanner

March 5, 1997

New system replaces hardware with softwareThe premium end of the ultrasound market has grabbed most of thespotlight over the last year, with major new product introductionscoming at the rate of one every several months. Ultrasound vendorAdvanced

New system replaces hardware with software

The premium end of the ultrasound market has grabbed most of thespotlight over the last year, with major new product introductionscoming at the rate of one every several months. Ultrasound vendorAdvanced Technology Laboratories sees the mid-range segment asone of the most promising opportunities, however, due to the pricepressures that managed care is placing on equipment buyers.

With the potential of the mid-range market in mind, the Bothell,WA, company last month introduced HDI 1000, a new ultrasound scannerthat brings the company's digital beamformer technology to a pricepoint averaging $75,000. ATL engineers were able to hit a price-performancesweet spot by replacing much of the scanner's hardware with softwarealgorithms that perform the same functions.

According to Stephen Anderson, director of product marketing,HDI 1000 is built around the same digital beamformer technologyused in HDI 3000, and HDI 3000 scanheads can also be used on itsmid-range cousin. Both systems also use the same calculationsand analysis packages, and have similar ergonomics and graphicaluser interfaces.

HDI 1000 differs in that it uses a technology called MultitaskingSoftware Management to perform critical functions that are handledwith hardware on other ultrasound scanners. MSM consists of softwarelibraries that contain algorithms for functions such as acquisition,signal processing, and display, according to Anderson. The scanneruses a powerful central processing unit (CPU) that can handlethe extra demands that MSM places on the system.

"We looked at all the hardware modules and all the processingthat is associated with them, and we said, `How can we leveragethe increasing speeds of CPUs to do what has traditionally beendone in hardware to be done in software?' That is the fundamentalchange that has taken place here," Anderson said.

MSM enables ATL to reduce the amount of hardware in HDI 1000by 50%, eliminating about 10 of the 20 printed circuit boardstypically used on scanners in this price range, according to RonDaigle, technical director at ATL's Atlantis Diagnostics InternationalR&D unit and leader of the HDI 1000 development effort.

As a result, HDI 1000 offers digital broadband beamformer technologyat a price ranging from $50,000 for an entry-level grayscale systemfor ob/gyn applications, to $100,000 for a fully configured scanner.ATL estimates that most HDI 1000 systems will sell for around$75,000.

In addition to the MSM technology, HDI 1000 was designed arounda standard object-oriented computer architecture, which createsintriguing possibilities when the scanner is connected to a hospital'scomputer network. HDI 1000 can be connected to a hospital's existinglocal area network without the need for interface boxes, and imagescan be saved to the scanner's floppy disk drive as TIFF images,which enables them to be imported into a standard PC word processoror image manipulation program.

In addition, the scanner supports the Internet and intranetsvia ATL's WebLink, a work-in-progress software package that willalso run on HDI 3000. Remote users anywhere (with the proper securityclearance) will be able to access images on a networked HDI 1000via a standard World Wide Web browser and the Internet or an intranet,according to Anderson.

The mid-range competition. ATL believes that the market formid-range ultrasound scanners is perhaps the fastest growing segmentin the modality. Hospitals want to expand their use of ultrasound,but can't afford to place an HDI 3000, Siemens Elegra, or AcusonSequoia at every location where ultrasound is used. Instead, theyare buying a premium scanner to be used for high-end applicationsand connecting it to mid-range scanners at other locations.

The mid-range segment is also a crowded one, however. Whilethe premium market encompasses perhaps four or five major competitors,there are 13 or 14 vendors vying for share in the mid-range market.ATL believes that HDI 1000 will have a distinct advantage, dueto its digital beamformer, upward compatibility with HDI 3000scanheads, and connectivity capabilities. These features can'tbe found on other systems selling at the same price, accordingto Cass Diaz, senior vice president for worldwide sales and marketing.

"If you had to make a system of this level of performanceusing conventional hardware methods—and there are systems todayin that range—it would sell in the $120,000-to-$150,000 range,"Diaz said. "By doing what we are doing, it enables us tokeep that level of performance and produce the right margins atthis price point."

ATL hopes to begin shipping HDI 1000 in the second quarterof this year, after receiving Food and Drug Administration 510(k)clearance. HDI 1000 will become ATL's primary mid-range ultrasoundscanner, while Apogee 800 Plus, the company's current mid-rangeoffering that uses an analog beamformer, will be targeted at thecardiology and shared services market. HDI 1000 will not be soldas a cardiology or shared services product, Diaz said.

ATL also plans to apply for a supplemental premarket approval(PMA) application to extend the same breast imaging capabilitiesavailable on its HDI 3000 and Ultramark 9 HDI scanners to thenew system.

In addition to ATL's own sales of HDI 1000, the scanner willbe sold by Hitachi under the terms of an agreement between thefirms signed in 1995. Hitachi won rights to sell ATL's HDI 3000in Japan in exchange for an investment in Atlantis Diagnostics(SCAN 11/22/95).

That investment helped fund development of HDI 1000, whichHitachi will be able to sell under its own brand in Japan andin other global markets, according to Diaz. (Hitachi sells HDI3000 as an ATL-labeled product in Japan.) Hitachi's version ofHDI 1000 has slightly different ergonomics and also supports Hitachiscanheads.

When HDI 1000 sales do begin, they will add to ATL's alreadyconsiderable momentum. Concurrent with the HDI 1000 announcement,ATL released year-end financial results that showed the company'srevenue growing at a healthy clip.

For the year, ATL posted revenues of $419.2 million, up 5%compared with $399.4 million in 1995. The company had a net lossfor the year of $828,000, due to a $29.6 million nonrecurringpre-tax charge for damages in its patent case against SRI International.Excluding that charge, ATL said it would have posted net incomeof $21.8 million.

For the fourth quarter, ATL had revenues of $125.5 million,up 5% compared with $119.1 million in the fourth quarter of 1995.ATL reported net income for the quarter of $11.6 million, comparedwith a profit of $7.4 million in the same period of 1995, excludinga one-time gain.

The revenues would seem to indicate that last year's raft ofnew high-end scanner introductions is not dramatically affectingthe company.

"We haven't seen any impact on our HDI 3000 sales,"Diaz said. "In those price points—the high-end and premiumsegments of the market—we continue to grow at a very high rate,much higher than the market."

In other ATL news, the company reported that it has formeda new business group, Handheld Systems, responsible for productand commercial market development of a handheld ultrasound scannerATL is making for the U.S. Department of Defense (SCAN 3/13/96).ATL vice president Kevin Goodwin was named general manager ofthe new group.

The company last month also formed new business groups coveringthe Americas, Europe, Asia/Pacific, and U.S. cardiology markets.