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Spectrometer expert faces up to the future

05 May 2004

Think spectrometers and you'll probably think Ocean Optics. The firm's president and co-founder Michael Morris tells Jacqueline Hewett about the secret behind the growth of the business, emerging applications for its technology and his plans to sell the firm.

From Opto & Laser Europe May 2004.

Ocean Optics is a company that seems to have done everything right. The US firm started out as a two-man band back in 1989, and launched its first product in 1992. Since then it has become famous for its miniature fibre-optic spectrometers, has grown its workforce to 120 people, and has seen its products find uses in many applications.

Recently, though, Ocean Optics has found itself at a crossroads. Should it remain a small, privately held venture, or should it become part of a larger, public outfit with the capital to fund its ever-expanding list of projects? According to Michael Morris, president and co-founder of Ocean Optics, the firm has ultimately opted for the latter and is now in discussions with a potential buyer. Opto & Laser Europe asked Morris what it all means for the development of his company.

JH: Tell me how Ocean Optics got started.

MM: It's the classic starting-in-a-garage kind of story. We were working out of my garage in Dunedin, Florida, and my co-founder Roy Walter's garage in Orlando, Florida. It all began when we received a small business innovation research [SBIR] grant to build an oceanographic pH sensor.

We had invented this clever dye and wanted to stick it on the end of an optical fibre and measure its colour using a little spectrometer. The only flaw [in our plan] was that after we had got the grant and quit our jobs, we discovered that there was no such thing as a small spectrometer.

Necessity being the mother of invention, we decided we had to build one. We had two years of pay-cheques, then nothing, but the miniature spectrometer that we ended up with was about 1000 times smaller and 10 times cheaper than anything else on the market. And we figured that we should be able to sell something like that.

The grant started in 1989. A month after it ended, in 1992, we launched our first commercial product, the S1000 spectrometer. Since then we have sold more than 41,000 units to all kinds of application areas.

How much has your business expanded in that time? We went from a garage to a 3000 ft2 manufacturing centre, and then about four years ago we moved into a 10,000 ft2 facility. We thought we would never be able to outgrow that area. But we have just moved into a 30,000 ft2 facility and we are saying the same thing!

Luckily we designed everything to be highly manufacturable, so it is relatively easy to ramp up. Spectroscopy is not capital-intensive. It's really people- and space-intensive.

How has your technology changed over the last 12 years? Our products have always been designed around mass-market technologies which are cheap and reliable. We made our first unit using a detector that was designed for fax machines, instead of a scientific detector. At first people were sceptical, but millions of dollars had gone into developing fax machine detectors. That's the good side of our approach.

The bad side is that the fax machine detector got phased out. The S1000 was replaced by the S2000 because the original detector in the S1000 went out of production. However, the S2000 is about 10 times more sensitive than the S1000 and we found a way to make it sensitive to the ultraviolet. We also added a near-infrared spectrometer to our product line using an InGaAs array.

We also set up our own thin-film filter division to make high-performance optical filters for the spectrometers. Our first units had an optical resolution of 3 nm but the latest systems have a resolution of 0.1 nm.

Different applications have also inspired improvements in areas such as timing. Our laser-induced breakdown spectroscopy [LIBS] system - we probably have the best unit in the world right now - uses seven spectrometers. We synchronize the data-acquisition and time it with a variable delay between the laser pulse and collection of the light from the sample.

We have an army contract to make the set-up into a back-pack portable system that soldiers can take into the field and use to detect landmines and other warfare agents. The system is also available as a laboratory version and we think this will be a big growth market for us.

Tell me about your work on thin-film filters. We patented a technique to combine lithography with the deposition of optical interference filters. This gives patterned dichroic filters, which are highly transmissive when you want them to be and very good at blocking when you don't. The original technology was made for gun-sight reticules - it was a way to combine laser rejection filters with the cross-hairs.

We brought the inventor of the technology in-house and set up our thin-film division. The inventor [then] started making still images for Disney, and today if you go to a Disney theme park and see any projected images, they could well be using our filters.

We can pattern filters as fine as a few microns, which is a higher spatial resolution than photographic film. Because they are all glass, they can withstand a lot of heat and the colour does not fade.

The filters are also being used in high-definition televisions which use Texas Instruments' DLP chips. The DLP chip uses an array of addressable mirrors that project light through a colour wheel - we make the filters in the colour wheel. Because we can pattern the filter, we can correct for a lot of the artefacts. The result is very high-quality moving images.

We're also incorporating these filters into CCD arrays. This means that cameras can be tuned to detect chemicals or other things. We are working on a UVA/UVB camera right now. The filter designates the waveband that each pixel will detect. In this case, every other pixel will be detecting UVA, UVB or visible light, thanks to the filter.

What application areas are important to Ocean Optics now? One of our biggest projects right now is our oxygen sensor. It uses a sol-gel material which contains a fluorescent compound that is quenched by oxygen. We coat the end of an optical fibre with the sol-gel and measure its fluorescence over time.

An application that came to our attention was measuring the oxygen in the headspace in the fuel tanks of aircraft, which is where vapours collect. The trouble is that if you get a spark, it blows up. The FAA [Federal Aviation Authority] in the US has been scrutinizing this problem.

One way around it is to make the tank inert by pumping nitrogen into the headspace and displacing the oxygen. This sounds wonderful in theory, but in practice you don't know if it [the nitrogen] is getting in there and you need to know exactly how much you need. As you can't stick an electrical sensor into the tank, optical sensors are the answer.

We got some SBIR money from the Air Force to develop a sol-gel sensor that would work in the fuel tanks. The end of 2004 is the deadline for the airlines to actually start putting inerting systems into their commercial fleets. Right now we are the only company that has a sensor that will work in a tank, so that is a huge potential market for us.

We estimate that the potential revenues for Ocean Optics for the fuel-tank sensor will be $800 m (€675 m), and that's just for outfitting Boeing's commercial fleet.

What other new or emerging markets are important to your firm? One of the more recent applications to have big implications for us is anthrax detection. Right after the anthrax attacks in the US, we developed a detection system, which was based around fluorescence.

We had to invent a special filter just for this application. It actually contains two filters: one is a linear variable high-pass filter (which passes everything above a cut-off wavelength which you can select); and the second is a linear variable low-pass filter which passes everything below a cut-off.

If you stick these together you have a linear variable notch filter that has an adjustable notch width. When you are doing fluorescence work you want to get as much excitation as you can, and that's where the variable notch comes in. In the past, researchers have had to buy different filter sets for every fluorophore. Now we have one filter which can do everything.

We also added a gating function because our assays for the anthrax were phosphorescent and coated mirrors that are very reflective in the visible. Combining all this gave us a great fluorometry system which is now commercially available as our "Maxwell" system.

What are your future plans for Ocean Optics? If we want to continue, we have two options. One is to remain a small company and grow on cash-flow alone, and if that is the case then we won't be able to do any of these very exciting applications. This is the limitation that we have always faced. The second option is to team up with a large public company that has the funds.

A couple of years ago we had set our sights on an IPO and we had tried to make ourselves look like a telecoms company. Luckily, we didn't end up going that way. The IPO market has now lost its appeal.

Now we are looking to sell the company to a strategic buyer. We are in discussions right now, so it might happen this year. The business reality is that no matter how profitable you are, you can't do $800 m worth of business for the aircraft industry without a couple of hundred million dollars of cash.

TRIOPTICS GmbHChangchun Jiu Tian  Optoelectric Co.,Ltd.DIAMOND SALASEROPTIK GmbHFocuslight TechnologiesBristol Instruments, Inc.SPECTROGON AB
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