With the acquisition of Point Grey, Flir Systems has made a strategic move in the machine vision sector, argue Dr Eric Mounier and Pierre Cambou at market research firm Yole Développement
Portable uncooled infrared imagers are now commodity products for outdoor and leisure pursuits, extending what people can see into the infrared. Machine vision is doing the same by expanding its vision range from visible to the far infrared for better performance and to open up new applications.
On the 3 October, Flir Systems acquired Point Grey Research for $253 million. Point Grey is a leading designer and manufacturer of high performance digital cameras for industrial, medical, traffic and security applications.
The growth of Flir Systems has been largely inorganic, with the company built mainly through strategic acquisitions and M&As. The Point Grey purchase is Flir’s second acquisition in 2016 after Armasight, which it bought for $41 million to better serve outdoor sporting, law enforcement, and military markets. At the end of 2015, Flir acquired DVTEL for $92 million, a software company specialising in image analytics for security.
In 2015, Flir Systems achieved $348 million in revenue for its Instruments portfolio, the second largest revenue after its Surveillance sector, and the highest operating margin at 33 per cent.
Thermal imaging will gain more value as an industrial solution in the future. It is already well known in the military market, and lower prices are driving volumes in industrial machine vision.
Infrared will be used increasingly in emerging applications, such as plastic recycling. The machine vision industry could also follow the same evolutionary path as the military, with dual-use applications where both visible and infrared signals are merged. Although it took some time for the defence industry to accept the fusion of visible and infrared, most military suppliers now ship this type of imaging solution.
Two years ago, Flir Systems launched the AX8 thermal imaging product, combining both thermal and visual cameras for industrial applications. This device belongs to the compact smart vision subsystems segment for the machine vision market, accounting for 1/3 of the total industrial vision sector. Through the Point Grey acquisition, Flir will have access to the total machine vision market and is likely to propose dedicated solutions for another segment, versatile cameras.
Historically, the machine vision market has been mainly driven by the cost versus performance ratio. However, versatile detection and inspection cameras are now becoming commodities for three reasons. First, the subsystem market – cameras, smart cameras, vision sensors – is highly fragmented, leading to a need for very flexible solutions. Second, the machine vision image sensor market is concentrated, offering few choices of supplier for a subsystem maker. Third, technological innovation is still scarce, which leads to few differences between competitors.
So, Point Grey’s acquisition is of great importance, as it shows Flir Systems has understood the growing value of advanced sensing solutions for the machine vision market with future infrared capabilities.
Up until now, the machine vision market mostly used visible cameras, with some NIR and SWIR cameras used for material analysis (source: Uncooled infrared imaging technology and market trends 2016 report, Yole Développement, August 2016). Yole Développement has estimated that 2 million cameras equipped with CMOS image sensors will be shipped in 2016 purely for machine vision. Driven by increasing automation and new uses, this market will double in the next five years (source: Status of the CMOS image sensor industry 2016: new market and technology dynamics report, Yole Développement, April 2016). Additional infrared capabilities will likely boost this volume.
This strategic move will consolidate Flir Systems’ position as a provider of machine sensing capabilities. Its reach is now covering most of the high-end civilian market, which is undergoing a massive change because of combined maturity of solid-state sensors and computing capabilities.
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Dr Eric Mounier has a PhD in microelectronics from the INPG in Grenoble. He worked at CEA LETI R&D lab in Grenoble, France, and, in 1998, cofounded Yole Développement. At Yole Développement, Mounier is in charge of market analysis for MEMS and sensors, visible and IR imagers, semiconductors, printed electronics, and photonics.
Pierre Cambou has an engineering degree from Université de Technologie de Compiègne in parallel to a Master of Science from Virginia Tech. In 2012 he founded the start-up Vence Innovation, now called Irlynx, in order to bring to market a disruptive man-to-machine interaction technology. He joined Yole Développement as imaging activity leader in 2014.
