Siemens partners with ALI Technologiesfor ultrasound image management deal

August 2, 1995

ALI's UltraPACS will be linked with SienetSiemens Ultrasound and ALI Technologies last month announced ajoint marketing agreement for ALI's UltraPACS ultrasound imagemanagement system. The deal is an important step for two firmsthat have seen

ALI's UltraPACS will be linked with Sienet

Siemens Ultrasound and ALI Technologies last month announced ajoint marketing agreement for ALI's UltraPACS ultrasound imagemanagement system. The deal is an important step for two firmsthat have seen their recent efforts in the modality eclipsed bymore powerful competitors.

Under the terms of the agreement, Siemens and ALI will join forcesto market UltraPACS as Siemens' preferred solution for ultrasoundimage management and networking. The relationship will begin immediatelyin the U.S. and will be expanded to include the rest of the world,with marketing efforts beginning in Europe later this year.

As part of the deal, ALI will begin integrating UltraPACS withthe Sienet PACS product marketed by Siemens. The integration effortwill be based on the ACR-NEMA's DICOM 3.0 standard, which bothsystems support. UltraPACS uses the Unix-based NextStep operatingsystem, while Sienet employs a Sun Microsystems architecture witha Unix operating system.

ALI, of Burnaby, British Columbia, was an early entry in theultrasound miniPACS market, winning Food and Drug Administrationclearance for UltraPACS in 1993 (SCAN 11/3/93). Its efforts inthe segment have been overshadowed by Acuson, however, which hasleveraged its massive installed base of scanners to sell dozensof Aegis image management systems. ALI has 18 UltraPACS sites.

Likewise, Siemens' ultrasound group, based in Issaquah, WA, hastraveled a rocky road in recent years. A rebuilding effort thatbegan in 1992 got sidetracked last year when the group's manufacturingplant ran afoul of FDA good manufacturing practices (GMP) guidelinesand was forced to halt U.S. shipments. The group received thegreen light to resume U.S. shipments last November (SCAN 12/14/94).

Both firms prefer to focus on their future potential, which shouldbe brighter thanks to their new relationship. Siemens moved intoa new ultrasound headquarters last summer and has begun rollingout a series of new scanners, spearheaded by Sonoline Versa, amid-tier color-flow system. Development of the division's long-awaitedpremium scanner is "right on time," according to LotharKoob, group vice president.

ALI introduced UltraPACS Prodigy, a scalable version of UltraPACS,at this year's American Institute of Ultrasound in Medicine meeting(SCAN 3/29/95). With list prices ranging from $40,000 to $100,000,Prodigy should enable ALI to overcome some customer resistanceto the price of UltraPACS.

ALI estimates that the relationship with Siemens will bring inover $5 million in revenues in the next two years. That will bean important shot in the arm for a company that lost over $500,000in the first six months of this year on revenues of $1.4 million.ALI emphasizes that the company has been growing at a 100% rateper annum and should be profitable beginning in its 1996 fiscalyear, according to CEO Greg Peet.

The relationship confers major benefits on both firms. As a partnerwith the one of the largest medical device vendors in the world,ALI gains instant credibility and access to customers -- especiallyin international markets -- that it has never had. Siemens winsa well-regarded product addressing a segment that most industryobservers agree will see explosive growth in coming years. IntegratingUltraPACS with Siemens' established Sienet system is icing onthe cake.

Siemens expects strong interest in UltraPACS from buyers whoare making bundled purchases of ultrasound scanners and are interestedin image management systems.

"We strongly believe that customers are not looking forjust the ultrasound imaging unit," Koob said. "Thisclearly will send a signal that we are really committed to ultrasoundand to the customers' needs, not only with respect to the ultrasoundunit but also to everything around ultrasound."

For ALI, the agreement is a first step toward what could bean interesting evolution. Unlike competitors Acuson and ATL, itdoes not have an installed base of scanners from which to leveragesales. This could be used to its advantage if it chooses to gothe route of PACS firms like Cemax-Icon and ISG Technologies,which have partnered with a large number of OEMs to sell theirsoftware technology.

Indeed, the Siemens agreement is nonexclusive and ALI will maintainits relationship with Diasonics, which began in 1993. That partnershiphas begun to show signs of life this year, with ALI seeing increasedactivity and sales leads, Peet said.

Peet believes that sales in the ultrasound image management segmentare currently in a slow period that follows the initial embraceof a new technology by early adopters. Things will pick up againas mainstream users become convinced of the technology's utility.

"Sales ramp up early, then they slow down after early adopterscome in and you run out of them," Peet said. "The restlook at it for a while to see if it works, then you pick up again.My view is that in the last six to nine months we have been inthat trough in between the two segments of the market."