Loss of a Big Customer Case in Service Business
In the year 2017, the share of the services-based net sales decreased as expected caused by the termination of significant customer cooperation with a global network equipment manufacturer during the first half of the year. Despite of decreased net sales caused by the termination of the cooperation the demand for Bittium´s R&D services developed positively, however, it wasn´t able to replace the decrease in the net sales in total.
The product development project, started in May 2015, to develop Android-based mobile devices that use both terrestrial and satellite connection for the MEXSAT system of the Mexican Ministry of Communication and Transportation, was completed in summer 2017. The first product orders were expected to come during 2017, but due to the internal reasons of Mexican governmental customers, the first phase of the product deliveries was delayed to be mainly started in 2018. Therefore Bittium had to lower its financial guidance for the year 2017.
ISO 13485:2016 Quality Certificate for Design, Development and Manufacturing of Medical Devices and Equipment
Bittium was awarded the ISO 13485:2016 certificate, which covers the design, development, manufacturing and related services for the entire product life cycle of medical devices. The quality management system based on ISO 13485:2016 standard is a major competitive advantage and supports Bittium´s strategy in Connectivity Solutions´ product and service area. Medical technologies combined with strong expertise in wireless technologies and security provides Bittium with excellent opportunities to serve its customers in the healthcare sector with offering them new R&D services that meet the quality system standard requirements.
Product Business Grew Significantly
Bittium continued significant investments in developing its product business and the share of the product-based business turned to growth. Bittium aims at growth in international defense, public safety and mobile security markets.
New Version of Bittium Tough Mobile™ for the Confidential Classification
Bittium Tough Mobile™ and related management system and VPN encryption Bittium Secure Suite™ have generated a lot of interest in the information security and public safety markets. Bittium has been actively seeking for, and has found a few suitable partners and resellers who have taken Bittium Tough Mobile as part of their own product portfolio and/or solution for their customers. The product deliveries of Bittium Tough Mobile continued during the whole year.
The awareness of information security risks is growing and the interest towards secure mobile devices is increasing, however, the development of the public safety and information security markets have been somewhat slower than expected. Bittium estimated that Bittium Tough Mobile sales volume will be somewhat lower than expected.
In January, Bittium signed a contract with the Finnish Defence Forces for the delivery of Bittium Tough Mobile LTE smartphones and related Bittium Secure Suite back-end system classified for Confidential level. The contract signifies a strategic decision to reinforce the information security of the wireless communications of the Finnish Defence Forces. In order for a phone and a related back-end system to achieve the Confidential level classification, there are specific information security requirements regarding the processing of classified information, secure wireless transfer of files, and other possible communication, which need to be met.
At the Critical Communications Europe exhibition in February, Bittium launched a new Confidential classification level version of the Bittium Tough Mobile C´s with its back-end system. Bittium Tough Mobile´s unique dual-boot functionality for the Confidential classification level makes it possible to operate the device with two completely separate operating systems: Public and Confidential. The operating system classified as Public is meant for personal communications with access to e.g. social media applications. The operating system classified as Confidential is completely isolated and hardened for secure authority and information security use. The entity enables the user to have only one device for calls and messaging for both personal and for demanding information security needs, thus eliminating the need to carry two separate devices.
In September, the National Cyber Security Centre-Finland of the Finnish Communications Regulatory Authority granted approval for the Mobile Security and Public Safety targeted Bittium Tough Mobile LTE smartphone and related Bittium Secure Suite back-end system to process material that is classified nationally as Confidential. Bittium´s mobile solution is the first one in the world to receive official Confidential level encryption product classification. The mobile solution can be used for creating and processing classified information, as well as for transferring it between smartphone and connected back-end solutions.
Bittium Tough Mobile C smartphone was showcased at Cyber Security Nordic event in Helsinki, Finland in the end of September.
New Software Version for Bittium SafeMove® Product Family
The investments in product development of Bittium SafeMove product family were also continued and in November Bittium released the new version of the Bittium SafeMove® software product portfolio. The latest software version introduces an intuitive user interface and further enhances information security for demanding environments. The new functionalities enable faster response to security threats; and efficient implementation of broadband applications with mission-critical data on moving vehicles.
The Bittium SafeMove® security solutions were exhibited at HETT Show 2017 in London, UK in September.
Efforts to Bring Bittium´s Product Portfolio Tactical Communications Products to International Defence Markets Continued
Bittium continued efforts to bring its products and services, targeted to defense industry, to the international defense markets, and Bittium received purchase orders for a tactical communications system from its customers in Asia and Europe and delivered a pilot system to a new European customer. Bittium´s products targeted to defense industry were showcased e.g. at DSEI exhibition in UK, Defence Communications event in Poland, and at Milipol exhibition in France.
The development of Bittium TAC WIN System Continued
The cooperation with the Finnish Defence Forces continued. The development of the tactical communication system Bittium Tactical Wireless IP Network™ (TAC WIN), used by the Finnish Defence Forces, continued as well as the product deliveries for this communication system.
In March, Bittium received a purchase order from the Finnish Defence Forces for further development of the software package (waveform) for the Bittium TAC WIN system. Bittium also received a purchase order from the Finnish Defence Forces for the Bittium TAC WIN system products, which are meant for tactical communications. Both orders are part of the renewal of the Finnish Army´s M18 command, control and communications system, where the Software-Defined Radio based Bittium TAC WIN system forms the core of the Army´s tactical wireless IP network.
In June, Bittium received a purchase order for supplying the Finnish Air Force with Bittium TAC WIN system. The order is part of the modernization of the radio network performance of the Air Force´s bases with a Software-Defined Radio based IP radio system. With the order the use of the Bittium TAC WIN system within the Finnish Defence Forces´ branches expanded to the Air Force.
In July, the Finnish Minister of Defence Jussi Niinistö authorized Finnish Defence Forces to purchase Bittium TAC WIN™ system products. Bittium and the Finnish Defence Forces signed a Framework Agreement for the purchase of Bittium TAC WIN™ system products in August. The Framework Agreement covers the years 2018–2020, and if materialized in full, the total value of the agreement is EUR 30 million (excl. VAT). According to the Framework Agreement, Finnish Defence Forces will issue separate purchase orders for the products each year.
The New Bittium Tough SDR™ Product Family
Bittium started the development of the new tactical Software-Defined Radio Based Bittium Tough Mobile product family that includes the tactical Bittium Tough SDR handheld for individual soldier use and Bittium Tough SDR vehicle radios for vehicular level tactical use. The new product family expands Bittium´s tactical communication product portfolio from Bittium TAC WIN and its products that form a mobile tactical IP network to radios that bring broadband data transfer and voice to all mobile troops; from combat vehicles to all the way to an individual soldier. This enables bringing broadband data transfer and voice to all mobile troops starting from brigade level and all the way across the battlefield.
At the time of the launch, Bittium and the Finnish Defence Forces signed a Letter of Intent concerning the purchase of new Software-Defined Radio (SDR) based tactical radios and the preparations of the purchase. The Letter of Intent encompasses products belonging to the new Bittium Tough SDR product family: tactical handheld radio Bittium Tough SDR Handheld™ and tactical vehicular radio Bittium Tough SDR Vehicular™. The products are intended for renewing the Finnish Defence Forces´ existing stock of field radios with modern, SDR based broadband data transfer radios to support the reformed combat doctrine. The tactical radios are compatible with Bittium Tactical Wireless IP Network™ (TAC WIN) SDR based system already used by the Finnish Defence Forces.
According to the Letter of Intent, Bittium will develop the products with its own R&D investments and the Finnish Defence Forces will support the development work by ensuring that the products are suitable for their purposes and by making preparations for the purchase of the products. The Letter of Intent does not bind the parties entering into a purchase agreement. Entering into purchase agreement requires that the Finnish Ministry of Defence first authorizes the purchase, based on which Bittium and the Finnish Defence Forces would then make a separate purchase agreement. Based on the Letter of Intent, if materialized in full, the total value of the purchase agreement would be approximately EUR 130 million distributed over about 10 years. The Letter of Intent is in force until the binding purchase agreement comes into effect or until December 31, 2019. Should the purchase materialize in full, it would have a significant impact on Bittium´s net sales from the year 2019 onwards.
The New Bittium Tough Comnode™
Bittium expanded its tactical communications offering by launching a versatile Bittium Tough Comnode terminal. The device fulfils the data transfer needs for mobile troops by functioning for example as a VoIP phone (Voice over IP), an IP router (Internet Protocol), and an SHDSL repeater (Symmetrical High-speed Digital Subscriber Line). Bittium Tough Comnode is compatible with Bittium Tactical Wireless IP Network™ (TAC WIN) system, Bittium Tough SDR™ tactical radios, and Bittium Tough VoIP™ products, as well as offers diverse connectivity options also to third-party equipment and systems.
In December, Bittium received a purchase order from the Finnish Defence Forces for versatile Bittium Tough Comnode terminal. The purchase order concerns the final phase of the terminal´s productization over a duration of nine months and the delivery of a batch of the terminals to the Finnish Defence Forces after the end of the productization phase. Bittium Tough Comnode will fulfill the data transfer needs of the Finnish Defence Forces´ mobile troops by functioning for example as a VoIP phone (Voice over IP), an IP router (Internet Protocol), and an SHDSL repeater (Symmetrical High-speed Digital Subscriber Line).
ESSOR (European Secure Software Defined Radio) Program Continued to the Second Phase
Bittium has been part of the European ESSOR programme since it started in 2009. The aim of the programme is to develop the European Software Defined Radio technology in order to improve the capabilities for cooperation in coalition operations.
In November, the joint venture a4ESSOR (Alliance for ESSOR) was awarded a contract by OCCAR (Organisation Conjointe de Coopération en matière d´ARmement) to start a new phase of the ESSOR (European Secure Software defined Radio) programme, called ESSOR Operational Capability 1 (OC1). Bittium is part of the OC1 phase that continues the ESSOR programme. During the OC1 phase, the operational capabilities of ESSOR High Data Rate Waveform (HDR WF), meant for joint operations between defense forces of different countries, will be enhanced.
With the development of the operational capabilities of the ESSOR HDR WF during the OC 1 phase the new functionalities will be available also for the Bittium Tough SDR family of radios. The duration of the ESSOR OC1 phase is 45 months and the value of the contract is around EUR 50 million. The value of the contract will be divided along the duration of the OC1 phase and between the five participant companies: Bittium, Indra, Leonardo, Radmor, and Thales. The contract did not change Bittium´s financial outlook for the year 2017.
The Development of Medical Technologies Products and Solutions Continued
In November 2016, Bittium acquired companies specialized in healthcare technology and services. During 2017 Bittium continued to develop its products and solutions of its Medical Technology product and services area and sales efforts to bring the products abroad was continued. Bittium exhibited these innovative products and solutions for neuroscience at Society for Neuroscience 2017 conference in the U.S.A and the Bittium Faros ECG device and software for analyzing cardiac event-based ECG and long-term Holter measurements at Medica exhibition in Germany.
In June, Bittium sold its remote diagnostic service business to Coronaria Analyysipalvelut Oy, a subsidiary of Coronaria Hoitoketju. According to the agreement Bittium supplied its web-based service kardiolog.fi used in monitoring cardiac abnormalities to Coronaria´s use. Kardiolog.fi service is used by more than 70 Finnish health centers and private medical centers. The net sales of Bittium Medanalytics Ltd in 2016 was EUR 0.4 million. Further, Bittium Technologies Ltd, part of Bittium group, acquired 25 percent of the shares in Coronaria Analyysipalvelut Oy. Through this joint ownership Bittium and Coronaria aim at gaining synergies from Bittium´s device and system development and the interfaces formed by Coronaria´s clinical medicine and services.
In May, Bittium Faros ECG-measuring devices´ built-in algorithms for detection of arrhythmias received medical device approval in Europe. The algorithms can be used to automatically identify sequences in the heart measurement data. Early detection of atrial fibrillation can be used to predict the risk of brain stroke and to prevent its emergence with timely treatment initiation.
Bittium launched new software for analyzing cardiac event-based ECG measurements and long-term Holter measurements at ESC Congress in Barcelona, Spain. The new software, together with the versatile Bittium Faros ECG measuring device, allows the follow-up and detection of cardiac arrhythmias as well as in-depth analysis of long-term recordings.
