Red Hen feathers its nest with new GIS products

FORT COLLINS – It’s been a little more than year since a proposed acquisition fell through for Fort Collins-based Red Hen Systems Inc., but the company hasn’t been brooding since then.

In fact, the failure of the deal to go through hasn’t ruffled Red Hen’s feathers one bit, according to COO Doug Holbrook.

In May 2005, Canada-based Immersive Media Co. announced its intention to pay $3.2 million in cash and 2 million shares of Immersive stock to purchase Red Hen, which provides geospatial imagery combined with computer-based mapping technologies. Altogether, the deal was worth about $5.7 million.

Just two weeks later, Immersive and its parent company Immersive Media Corp. issued a Notice of Termination indicating they were unable to secure the financing needed to complete the acquisition.

“We weren’t actively looking to be acquired,” Holbrook explained. Red Hen holds an annual users conference, which is where the company caught the interest of Immersive.

The short-lived acquisition plan didn’t put so much as a hiccup in Red Hen’s plans. In the past year the company has reorganized its upper management team, released major products and enjoyed a growing reputation in the geographic information systems – GIS – business.

At this year’s user’s conference, Red Hen didn’t get any acquisition offers, but the company did attract corporate and government representatives from eight different countries.

Red Hen demonstrated its spatial multimedia server product at the conference. The server allows users to easily view and manage graphic information encoded with geo-spatial data, such as latitude, longitude, elevation and directional guidance.

“We just had people stunned in the audience (with our product demonstration),” Holbrook said.

New products get attention

The company also recently released several hardware products. In February, Red Hen introduced its sDVR. The compact, 10-pound unit has a built-in global positioning system, can handle four simultaneous video sources and can encode GPS position along with voice and video. The sDVR integrates the various streams of data in real time, eliminating the need to convert the data later.

The product got a real test drive when the U.S. Customs and Border Patrol was able to use it to evaluate the aftermath of hurricanes Katrina, Rita and Wilma.

The sDVR was being evaluated in a Customs and Border Patrol aircraft prior to the devastation, but proved handy as a tool to survey the damage.

“The removable hard drives were either handed over to FEMA or representatives came on board and downloaded the video files to their laptops,” according to Jim Hochstetler, a technical representative for the Customs and Border Patrol.

Hochstetler said the unit was also used to record several narcotic busts – one of which netted more than 1,000 pounds of cocaine, one aircraft, six vehicles and four arrests. Earlier this year, the agency ordered an additional eight sDVRs.

Red Hen’s integration of multimedia spatial technology is not only grabbing the attention of its target customers, but also of others in the industry. In March the company was named Partner of the Year by Environmental Systems Research Institute, a giant in the GIS industry.

Red Hen has been an ESRI partner for more than three years, according to Peter Curtis, business development manager for ESRI in Denver.

“I’ve watched them grow for the past four years,” Curtis said. “They always impress me with what they’re doing.”

Curtis explained that ESRI partners with many other companies that use its core GIS technology to deliver customers better products and solutions.

ESRI hands out several awards each year, including one for partners with the strongest sales, partners bringing the most innovative product to market and partner of the year.

ESRI awarded Red Hen as the partner of the year.

“What was intriguing for us was their integrating multimedia and bringing spatial mapping to it,” Curtis said. “The use of multimedia is very leading-edge.”

Focusing on marketing

Red Hen’s positioning in the market should help push the company forward as well. Currently, about 65 percent of the company’s business is with the Department of Defense. Curtis said that law enforcement and other government agencies are where the biggest adoption of new GIS technologies will likely occur.

Red Hen is in a transition mode, Holbrook said. The company is switching from a research-focused company to ramp up its marketing and sales efforts.

“We need to focus,” he said.

In the past, the company has been pretty opportunistic, gaining customers through word-of-mouth. Using that model, the company was selling to 17 different markets. Now, Holbrook said the company will focus on three core markets – government agencies including Department of Defense, Homeland Security and intelligence; municipalities; and oil and gas.

The company is also aware that its products could be a hit in the consumer market.

“The sDVR is a giant step in that direction, but it’s not a consumer product,´ said Paul McCrosson, vice president of sales and marketing. “We are looking at how to get in the consumer space.”

McCrosson added that such a leap would likely be done through a partner or strategic alliance.

Red Hen is positioned for plumping in an industry that is growing by leaps and bounds. The Geospatial Workforce Development Center at the University of Southern Mississippi estimated that the world market for geospatial technologies would grow from $5 billion in 2001 to $30 billion in 2005.

In 2004, the U.S. Department of Labor listed geotechnology as one of the three leading areas of science, alongside nanotechnology and biotechnology. “Science has discovered geography,” according to Doug Richardson, executive director of the Association of American Geographers.

In an article Richardson co-authored in 2004 looking at the future of geography, he acknowledges that technological advances are moving the geographical field “out of the basement and into the boardroom.”

Until recently, geographic information was the domain of researchers and geographers. Now, Richardson writes, more actors are gathering on that stage – governments, corporations, workers, consumers and citizens.

Since last year, Red Hen has added three people in its production department, two in sales and one in operations. Today, there are 18 full-time employees.

The company is looking to continue its expansion and continue to focus its markets. It is currently looking for $3 million to $5 million in capital investments to advance that cause. In the near term, the company has plans for a new product announcement in the fall.

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