High-tech industry, oftimes called "Israel's economic engine" has yet to reach the Arab sector, in which the number of high-tech companies is miniscule. The success of Alpha Omega Engineering stands out against this backdrop. Alpha Omega was founded in 1993 by Omar Yunis, an engineering graduate of the Technion - Israel Institute of Technology, and develops technologies for neurological research and treatments..
At first, the company was an out-sourcing contractor for other companies, but after receiving support from the Chief Scientist in 1994, Alpha Omega began manufacturing neurophysiological devices for research institutes. Yunis says the devices use micro-electrodes in brain research and to measure neurological activity.
In the past three years, the company began developing a neurosurgical device as well. The device aims to assist the surgeon in locating the damaged area of the brain requiring the surgery, burning the site (an irreversible procedure) or inserting external electrode stimulators that neutralize the neurological sources of movement disorders.
Yunis says, "Current neurosurgical procedures utilize MRI or CT scans that contaminate the target area. During surgery, the surgeon drills through the skull to reach the target area in the brain. Our product enables the target area to be precisely located by measuring neurological activity characteristic of each area of the brain."
The applications of the procedure will likely be varied and far-reaching. Today, it is mainly used for movement disorders such as Parkinson's disease. Yunis predicts the procedure will be used to treat chronic pain and even psychological disorders in the future, saying, "The market for functional neurosurgical devices is in its infancy, mainly at large hospitals." The Israeli company is competing against global giants such as Medtronic (Nasdaq: MDT). The price of each device is $80,000-140,000.
Alpha Omega is currently active in both the neuroscience and neurosurgical fields. 80% of its output is for export, mainly to the US. The company's style of operations in each field is different. Since April, the company is represented in the US by Wisconsin-based Nicolet Instrument Technologies in the medical field, but handles neurosurgical business directly, except is a few countries where the company has agents.
Yunis says, "The neuroscience market is very small in terms of potential customers, whereas it is possible to reach much higher sales turnover in the neurosurgical market. Nevertheless, it is a highly specialized market, and it is important for us to maintain our presence because of the relationship between researcher and surgeons, which opened doors to the neurosurgical world, based on our neuroscience reputation."
Alpha Omega currently has a staff of 25, mostly Arabs, but also some Jews. The company is based in the Upper Nazareth industrial park, 25-30% of the company's capital is invested in R&D, mostly in devices, software and electronics. The company's major challenge is in marketing and distribution. Yunis says the company is now carrying R&D on new neurosurgical devices, in order to simply and shorten surgical procedures, and allow them to be carried out at small medical centers. Alpha Omega expects sales turnover to reach $3.7 million this year, but Yunis is also looking for new investors and strategic partners.
Alpha Omega's success stands out in contrast to the Arab sector's distant lag in high-tech. Yunis is one of the few Israeli-Arab entrepreneurs active in the sector. He admits, "For me, founding a high-tech company in the Arab sector, in Nazareth, is the achievement of a dream. We find ourselves in the midst of a society saturated with high-tech, and the founding of a company in the Arab sector, in Nazareth, far from [Israel's] center, is intended to prove to all that the Arab sector can also be a part of Israel’s high-tech boom."
Yunis thinks that reason for the Arab sector's high-tech lag is because the sector's development in Israel is derived from various military industries that provided the manpower for the revolution. "In the 1980s and 1990s, it was virtually impossible for an Arab engineer to find work in a high-tech company, because virtually all of them were affiliated with defense related products. There were consequently few experienced engineers and technicians that could develop the high-tech in the Arab sector," says Yunis. For years, young Israeli-Arabs declined to study technology and engineering professions out of concern they would be unable to find jobs after their studies.
Yunis cites another problem: The aversion of Arab investors to high-tech, due to its high risk. "On one hand, the exposure that would create the connection between concept, money and foreign investors is inadequate, while on the other, local Arab investors prefer more traditional industries, due to the inherent risk in anything defined as "non-traditional". There is also a sense among parts of the Arab community that the State does not encourage the industrialization and exports by the [Arab] sector," says Yunis. He nevertheless expects high-tech to develop in the Arab sector too. "There are already a growing number of people in the sector, and there is a greater openness to it. I hope the very existence of a pioneering company like ours will be a successful example that it is possible to do high-tech in the Arab sector."
A separate reality: High-tech in the Israeli-Arab sector
Center for Jewish-Arab Economic Development director Helmi Kittani believes there are two main factors behind the Israeli-Arab sector's lag in high-tech and technological entrepreneurship. One is the lack of technological training programs and specialized infrastructures in Arab schools, delaying the entry of many young Arabs to the field. The other, as Yunis noted, is the security dimension that dominates many Israeli high-tech companies and prevents the integration of Arab technology graduates. As a result, many Arab graduates turned to teaching or technical jobs, and did not create the opportunity to develop Arab start-ups.
Kittani says there has been a change in recent years, "With the surge in demand for high-tech workers, many civilian companies turned to Arab professionals, and there has been a substantial rise in the number of young Arabs studying technological professions. We will see the fruits of these processes in two or three years, both in the rise of Arabs employed by existing companies, and in entrepreneurship."
In order to encourage the trend, the center is cooperating with the Arab Businessmen's Club to establish a scholarships for Arab students to learn high-tech related subjects. Last year, the fund gave 70 scholarships, and will provide 130 this year. Almost 500 Israeli-Arab students applied for the scholarships, evidence of the great increase in students.
A technology incubator will also soon be established in Nazareth, the first of its kind in the Arab sector. The center has organized a group of Arab investors for the incubator, which will be established as an incubator in a priority A peripheral area with State support. Kittani says, "We hope that government groups will decide on the matter soon, and the incubator – which is intended for scientists from both peoples – will begin operations in the next few months."
Published by Israel's Business Arena on 8 August 2001