Nikkei Business Daily, December 2 – 9, 2009
By Waichi Sekiguchi, Editorial Writer
Part One – Way ahead in 3D technology
Increasing global presence by taking a different path from the USA
Canada has world-class information and communications technology (ICT). Broadband internet access is widespread, and the country is a leader in 3D graphics as well as games and entertainment software. This series takes a look at Canadian companies and R&D in the ICT filed, where Canada’s strengths differ from those of the neighbouring USA.
Francois Blais directs 3D graphics research at Canada’s National Research Council in Ottawa. His group, which possesses the world’s most advanced 3D technology, was asked by the Louvre in France to perform an analysis of Leonardo da Vinci’s Mona Lisa. By using tiny lasers to scan the painting digitally and record all its minute data including nuances of color and tiny cracks on the surface, they we able to produce a copy that is indistinguishable from the real thing.
Agfa Healthcare of Waterloo, Ontario, has developed software that produces startlingly realistic 3D images of the interior of the human brain using CT scan data. Thanks to broadband internet, it can offer its services remotely, producing images of brains of people very far away. Vice President Jeff Nesbitt says, “Unlike the USA, Canada’s health insurance system is government-run, so it has been enthusiastic about using ICT from the start.” He says that his company’s being part of a European conglomerate further indicates how highly Canadian technology is respected.
One reason Canada chooses to focus on 3D technology is because the neighbouring USA already leads the world leader in basic ICT technologies such as computers and internet. To put it another way, Canada concentrates on applied technologies that work on the US-developed infrastructure.
A Quebec start-up called Creaform has developed a scanner looking like a large pair of binoculars that produces 3D images of objects it is pointed at. CEO Martin Lamontagne points out that unlike stationary scanners, it can be moved around objects to scan them on all sides. The device is on sale in over 40 counties. “Our product is ideal for making images of big objects like car mock-ups. Japanese automobile manufacturers are using it,” Lamontagne says.
3D technology is also being used for entertainment. Toronto-based Spatial View has designed a lens filter that fits over an iPhone screen that makes images appear in 3D. it eliminates the need for the viewer to wear special glasses, and the $49 price makes it very popular. CEP Beat Raemy says that the company also sells software that makes 3D photography possible with an iPhone camera.
Sensio is a 3D company located in Montreal. “We need to make it possible to broadcast 3D images and put them on DVD,” says founder and Executive Vice-President Richard LaBerge. Sensio is currently providing technology to Japanese electronics companies and other firms. It has developed a compression technology that captures 3D images without the usual loss of quality caused by separate left and right images. It may become the standard for 3D DVD and Blu-ray recording.
Side Effects Software of Toronto markets “Houdini” 3D image software. Vice-President Richard Hamel points out that the company’s technology has been used in Disney films as well as in Titanic and many other movies.
Canada has many other great imaging software companies, and there is a reason why there were “born in Canada.” Developing image software requires higher-level mathematics skills that developing business software. Canada’s lower labour costs have given it an advantage. Some of the Canadian companies have been bought out by American firms, but the fact that Canada’s ICT industry has found different paths to pursue (compared to firms in the USA) is one of its underlying strengths.
Part One(B) – 3D technology expanding for film, video and home electronics
Leader in 3D content distribution technology
With Japanese electronics companies now working on 3D technology, 3D TV cannot be very far away. Sensio is a Canadian company developing 3D content distribution technology. We asked founder and Executive Vice-President Richard LaBerge about the technical issues and about where he expects the technology to go.
Q: How did you get the idea to work on 3D technology?
A: We established our company 10 years ago when I was 22 years old. I was working at a bank and my partner was an engineer. I thought at that time that they day of 3D was coming. At first everyone said I was stupid, but things changed in 2005 when Hollywood started getting interested in 3D. In 2003, we demonstrated our technology at a U.S. consumer electronics show, in 2007 we adapted it for satellite broadcasting, and in 2008 we used it for high definition TV.
Q: Aren’t you competing with very big companies?
A: Yes, and about five standards currently exist. We, however, have the advantage of being ahead. We have another advantage because we are not chip manufacturers or sellers; we simply provide the technology. So it is easy for electronics manufacturers to deal with us. As a Canadian start-up company, we have the advantage of neutrality.
Q: Where do you expect use of 3D technology to expand?
A: So fair the main interest has been in medicine and the manufacturing industry. But from here on it is going towards movies and video. It opens new markets for cinemas. And now with the standardization of Blu-ray, there is the possibility of not only broadcasting, but of packaged media as well. About fifteen major global electronics manufacturers are trying to commercialize 3D TV. Out technology stands a good chance of being adopted.
Q: How is Sensio’s technology superior?
A: To put it very simply, our technology uses existing 2D infrastructure. To see something in 3D the left eye and the right eye have to see it from different angles. 3D technology typically splits the image data in half, which causes loss of quality. But we have a special compression technique that allows us to keep nearly 90% of the original image. So we compress 3D images for broadcasting or packaging (storage) as 2D. Then they are restored to 3D when they are played back. That means that TV or other receiving device has to have a special chip, but it also makes it easy to switch back and forth between 2D and 3D.
Q: What about applications like personal computers and game equipment?
A: Of course we are thinking about it. 3D increases the realism of the games, and 3D game software is already on the market. If Hollywood produces more 3D movies, 3D games will come out based on those films.
Part Two – Dream computers/quantum computers
Canadian company to bring out the first commercial product?
Canada’s Institute for Quantum Computing (IQC) is located at the University of Waterloo, where much of the country’s ICT expertise is concentrated. It is developing quantum computers—also known as “dream computers.” Deputy Director Michele Mosca has been working in the field since 1996. He says that his government-supported institute with a research staff of over 20 people is leading the world in development. Outsiders visiting the lab are not allowed within 3 metres of the experimental equipment.
First proposed in the early 1980s, Quantum computing takes advantage of quantum phenomena (the smallest possible physical units). While conventional computers calculate with 1s and 0s, quantum computers can use in-between values for a tremendous increase in computing power. It is believed that a quantum computer will be able to perform in a moment a calculation that would take a supercomputer tens of thousands of years.
Canada’s National Research Council in Ottawa is also involved. Senior Research Official Guy Austing spent 10 years with Japan’s NTT and is familiar with research in the USA and elsewhere as well. He says that although Canada fell behind in supercomputers due to a late start, it aims to stay ahead in quantum computing and the government is actively engaged.
Canada’s private sector is active as well. Warren Wall is Chief Operating Officer at D-Wave Systems in Burnaby B.C. “We may be the only purely private-sector organization working in this field,” he says. D-Wave calls itself “The Quantum Computing Company.” Wall explains, “Research institutes are trying to prove theories, but we formed this company ten years ago with the goal of developing and selling a product.” They have already raised $70 million in venture capital and have acquired 51 patents with another 130 pending.
Quantum computers work with “qubits” instead of “bits.” D-Wave successfully developed a 28-qubit device in 2007 and is now working on a 128-qubit model. Photography of the equipment is strictly prohibited. If all goes well, a quantum computer about 3-metres square will be ready in 3 to 5 years.
No operating system yet exists, so D-Wave is developing a system that can be used together with existing computers. The price is expected to be between 5 and 10 million dollars. “We expect to be the first company in the world to bring out a commercial product,” Wall says.
Even as Japan cuts budgets for supercomputer research, Canada is charging ahead toward the next generation.
Part Three -Canadian firms find growing room in worldwide “niches”
wireless data transmission, image sensor technology, etc.
Dalsa Corporation, an image sensor technology company, is one of many hi-tech firms in Waterloo in eastern Canada. Vice-President Patrick Myles points out that it is Dalsa’s technology that enables Google Earth and Google Maps to offer their popular photo views. “Our cameras can photograph a business card from 2000 feet (600 metres) up,” he says. The company’s electronic cameras range in size from those used in semiconductor production right up to those used on NASA’s surveillance satellites. Dalsa controls nearly 70% of the global market for LCD quality control cameras. MEMS (microelectromechanical system) sales are growing as well. Dalsa literally supports Canada’s entire ICT infrastructure.
Christie Digital Systems, a maker of projection systems for cinemas and other big-screen applications, is based in Kitchener, Ontario—right next to Waterloo. “We made the 6oo-metre screen that you saw at the Beijing Olympics,” says President Gerry Remers. While Japanese and other Asian companies have been fighting it out in the market for small projectors for homes and offices, Christie has taken advantage of Canada’s historical strength in optics to succeed in the big-system market. 3D is a promising new field, and not just for cinemas. Christie has begun selling 3D flight simulators to airlines. The company is now a subsidiary of Japan’s Ushio Electric. “Introduction of Japanese production techniques has helped us increase sales 400% compared with 10 years ago,” Remers says.
Waterloo is also home to RIM (Research in Motion), the pioneer and world leader in smartphones. RIM’s BlackBerries are now used in 23 languages by 32 million people in 160 countries. RIM founder and President Mike Lazaridis says, “iPhones are good too, but our BlackBerries are what the world’s business professionals use.” Users include not only Canadian government officials, but also U.S. President Barack Obama. Lazaridis explains that BlackBerries are allowed within the White House because the system is so secure. While iPhone production is outsourced to foreign countries, BlackBerries have always been produced completely in-house. “There is no comparison in terms of security,” Lazaridis says.
The BlackBerry’s strong points include its highly condensed transmission modules and the fact that each terminal has its own IP address. E-mail can therefore be “pushed” out from a server instead of being called in by the terminal. That makes BlackBerries faster and safer, and lengthens battery life as well.
DragonWave, located in Canada’s capital city of Ottawa, creates microwave transmission solutions for satellite-relay communications networks. Its goal is to lighten the load that heavier data demands have placed on wireless networks. Director Greg Friesen explains, “In Japan you have a fibre optic network, but to link rural Canadian towns 800 kilometres apart wireless is the only option.” He adds that orders for the company’s technologies are pouring in from the new emerging economic powers, which are also very large countries.
Japan’s closed ICT market has made it a “Galapagos Island” in terms of ICT. Canada is different. Its companies skilfully seek out niche markets such as ICT for business and industry. They then succeed in those niches by selling to the whole world.
Part Four – Advent of cloud computing = big opportunities
Companies increasingly turning to new technologies
“People are interested in cloud computing now, but we have been using it for 17 years,” says CEO Songnian Zhou of Canada’s Platform Computing. Originally from Beijing, the University of Toronto Professor started his company in 1992. The business idea came from his study at university of “grid computing,” which links multiple servers together. “A company server uses only 20% of its capacity. I occurred to me that we could save a lot of money by consolidating servers.” He developed a virtualization technology to allow many servers to be linked and work in parallel. In 1990 Nortel Networks asked to use it. Zhou later linked thousands of servers for IBM and other businesses. His company has grown from 3 people to 500. Although Platform Computing is not famous like Google, inquiries are pouring in from around the world, including Japan, as businesses get interested in cloud computing.
Another company whose business is growing thanks to the cloud is Open Text. The Waterloo firm sells “Enterprise Content Management” (ECM) software to manage corporate information. It ranks number three in the world ECM market. It offers ideal solutions to companies that need to manage internal and external servers with the advent of the cloud. Chairman and Chief Strategy Officer Tom Jenkins points out: “Formerly data was just text, but now audio and video have to be managed as well.” The company started out in 1991 with data search technology. Its products are now used by 50 million people in 120 countries. A search pioneer, it once gave advice to Yahoo founder Jerry Yang. Located in Canada and selling to corporations rather than consumers, “Open Text” may not be a household word. But it is a major software company with over 5000 employees including 2000 engineers. “Without a doubt, our time has come,” Jenkins says.
Teradici, located near Vancouver, is another start-up taking advantage of the cloud. With “PC over IP” as its slogan, it sells thin clients. The little boxes the size of a hardback novel can do everything a desktop computer does. CPU and hard disk are located on a remote server. President and CEO Dan Cordingley explains, “Companies have tried without success to produce thin clients for quite a while, but now the time is right.” He refers, of course, to the spread of broadband internet cloud services. Teradici is targeting not consumers, but companies, which are steadily turning to net-based services for their daily work. Teradici’s goal for now is to replace 5 million of the business world’s 70 million desktop computers with thin clients.
Japanese companies are also excited about cloud technology. Canadian ICT firms know, however, that cloud computing is more than a boom. They are steadily developing technologies and products based on realistic assessment of demand.
Part Five – Canada working hard on its game industry
Public and private sectors cooperate to develop human resources
Canada excels not only in 3D imaging, but also in game software with cutting edge computer graphics. The game industry is concentrated in Quebec in the east and Vancouver in the west.
Eidos Montreal is the Canadian subsidiary of UK-based Eidos, which was acquired this past autumn by Japan’s Square Enix. Many of Eidos’ hit games were created in Canada. Although Eidos has development centres all over the world, General Manager Stephane D’Astous says, “Montreal is our most important location in terms of human resources.
Square Enix is not the only Japanese game company with a development centre in Canada. Koei has one in Toronto, and many others have come to Canada as well due to the aging population and shrinking market back home. One reason they choose Canada is the Canadian government’s support for the game industry.
Quebec’s game industry employs 9000 people—12,000 if computer graphics is included. One reason those jobs are there is that the provincial government recognizes the industry as an important employer and gives large tax breaks to companies that give people jobs. The government cooperates with the private sector to develop human resources as well. Centre NAD (National Animation and Design Centre) is a private Montreal design school founded in 1992 with funding from France’s Ubisoft and other game/graphic companies working in the area. It now has over 1500 graduates. With French as its language, Quebec has always had a vibrant arts and culture scene, making it a natural place for digital arts to flourish. “Technical education is essential to developing a contents industry,” says Centre NAD Director Suzanne Guevremont. The government will soon recognize the school as a university.
On the opposite side of Canada, the Vancouver area also has a powerful game industry. Vancouver is close to the US State of Washington, home of Microsoft, and hosts a development centre of Electronic Arts, the USA’s largest game software company. Chief Operating Officer Brenda Bailey of Deep Fried Entertainment, a Vancouver game software firm, says “There are 160 game companies here. Our concentration of human resources helps us cope with recession.” When engineers lose their jobs at big companies, they start new companies. The industry’s ups and downs ultimately make it stronger by adding flexibility to human resources. Bailey says that games for portable devices like the Apple iPhone are a new opportunity. She herself has founded a company to develop games for women, something that has never existed before.
When you mention computer games most people think of Japanese hardware manufacturers such as Nintendo or Sony Computer Entertainment. It is undeniable, however, that Canadian and other foreign companies are the ones actually driving the industry by creating the applications that work on the hardware.
500 million people in the world play computer games. The number could go higher if the market expands to include women and senior citizens. Because of its aging population, Japan is already using Canada as a game development centre. It could also learn a few things from Canada about how to nurture industries.
Part Six – Canada’s strengths: concentrated skill centres and people who stay put
“Silicon Valley North”
Ontario’s University of Waterloo and the Waterloo business community have set aside a 50-hectare plot of land for a future high-tech conglomeration. The project is headed up by Executive Chairman Tom Jenkins of Open Text Corporation. “For success in ICT, there has to be a sharing of knowledge and expertise. The best way to make that happen is to gather companies together,” he says.
The Ontario cities of Waterloo, Cambridge and Kitchener form what is called the “Technology Triangle.” Its “brain,” so to speak, is the University of Waterloo, which excels in mathematics education and has spun off numerous start-up firms. Both Jenkins and RIM President Mike Lazaridis are University of Waterloo graduates. Just as Stanford University graduates created Silicon Valley in the U.S., the conglomeration of IT companies around the University of Waterloo is like a “Silicon Valley North.” That will be even more true when more companies are attracted.
Sixty percent of University of Waterloo students are in “co-op” programs. They work at local companies as long-term interns while getting their education. This does more than allow students to earn money and gain experience. It serves as a matching mechanism that helps both students and employers find what they are looking for. Kevin Tuer is Vice-President of Waterloo Communitech, a local industry organization with 550 member companies. “Co-op is one of our strong points,” he says. The system works particularly well in Waterloo because the university is relatively new (only 52 years old) and was established by local businesses.
Another important school for Canada’s ICT industry is Sheridan College, located between Waterloo and Toronto. It was established 41 years ago as an art and graphic design school. 5000 of its 50,000 students are majoring in animation. Professor Angela Stukator says, “Our graduates are working not only for Canadian game companies, but for Hollywood studios as well. Although we belong to the provincial government, our school was created to supply the graphic design industry with professional artists.”
The Toronto-Waterloo area is not far from the USA, so many American companies have established research centres there. Vice-President Hadi Mahabadi of Xerox Research Centre says, “Xerox chose this place (35 years ago) because there was a lot of expertise in chemistry here.” The centre is currently working on bendable liquid crystal displays and disappearing ink. Mahabadi, a former university professor who comes from Iran, says, “Canada’s strong point is that people stay put. Over time, that adds depth to your human resources.” He contrasts the Canadian situation with that of Silicon Valley, where people are move around. Although the movement promotes technology transfer, it creates security problems at the same time.
With the rise of cloud computing, people are again pointing out that Japan is behind in ICT. If Japan would change its thinking a bit and be more like Canada, it would see that there are markets in which it can fully compete with the USA. To make its economy more efficient and find new growth areas, Japan has to strengthen ICT. But how? Canada certainly offers some valuable suggestions.
