DviR: Low-Tech Start-up

ARMT Multimedia and Telecommunications was founded about ten years ago by Zvi Lev-Goren. Four years ago, the Ministry of Defense wanted to purchase digital recording systems for its Secret Service personnel. Thriller-story addicts take note: The systems were not designed for “wiring” an agent and collecting evidence from suspects; rather, they were meant to be installed in offices and monitor the people who entered.

Lev-Goren, who had a high security clearance from the defense authorities, was chosen to lead the project, and in effect started the company’s current operations. At the same time, the company started developing broadband applications, changed its name to Extent Technologies, and raised over $20 million in June 2000, from AOL, US venture capital fund General Atlantic Partners, and SingTel Ventures Fund.

After the financing round, and at the behest of the investors, Exent decided to focus on broadband, pay-on-demand games and spin off the digital systems division, making it a kind of start-up. But this start-up, called DviR Systems, was very different from the average start-up – because it already had major sales.

The product is a Digital Video Recorder (hence the name DviR Systems). Three years ago, the police demanded that banks install recording systems in their branches to document robberies, and ARMT was chosen to supply the systems. The company installed 1,000 in all the bank branches in Israel, and is now designing a control room, allowing the banks to control the cameras.

In view of these positive developments, Dvir decided to expand beyond the banking circle in Israel and attempt to capture a substantial share of the digital recording systems market. Nati Topilski, manager of Extent’s security systems division, is looking for “the interim market” for systems that meet all requirements, but can be produced at attractive prices. “The best model for selling Israeli brainpower is through a card-software combination. Thus, our cooperation agreements are made with companies that are capable of installing the hardware at the customers’ location,” he says.

The company is expected to sign a contract shortly with a British firm that is one of the world’s largest suppliers of closed-circuit television services.

DviR’s basic product, composed of four digital cameras and an ordinary computer equipped with the card-software the company developed, costs $4,000. DviR envisions using more powerful video compression than currently exists (the most advanced today is 4 MPEG). The company hopes to achieve this through cooperation with an Israeli start-up, whose name it declined to reveal. At the moment, DviR’s system operates in JPEG, which is a still pictures format, as opposed to video. The system takes photographs at high speed, constantly presenting them, and leaving the viewer with the impression that he is looking at video.

Since the end user of the system is normally a security guard unfamiliar with computer technology, it is operated by using a graphic interface, which allows the user to define the recording sequence based on timing, or other criteria. Another feature enables external alert systems, such as systems that will detect smoke or a break-in, to be connected to the system. The system can be programmed to begin recording only after signals of these or other events are received.

What about remote control? DviR talks of 2-3 shots a second on an ISDN line, but says the universality of JPEG is the product’s main advantage, since any simple computer can be used to show the pictures. Furthermore, the company’s system is flexible, enabling the number of pictures displayed to be adapted to the bandwidth. Not every organization needs high quality video.

To date, 2,000 new systems have been sold, in Britain, France, Switzerland and Venezuela, among other countries. Deutsche Bank, Halifax, and other banks are currently testing the system. Topilski says the product is the only one capable of broadcasting and showing previous recordings simultaneously.

Topilski is not thrilled about the definition of DviR as a start-up. “A start-up is something that starts with a technology and builds a prototype. We’ve been specializing in digital recording systems for many years,” he says. Topilski is not bothered by the company’s many competitors, including large companies like NICE and Comverse. "The market is huge and there is room for many companies. NICE installed our system in its offices. I can’t say the opposite is true.”

Before it starts to operate as a separate company, DviR wants to find a strategic investor willing to spend about $2 million. Topilski explains that the proceeds will be used to open marketing offices abroad, noting that the current development team is definitely adequate.

Published by Israel's Business Arena on 29 April, 2001