Market Environment and Business Development in JanuaryDecember 2022
Defense & Security Business Unit
The world´s political situation changed significantly in February after Russia attacked Ukraine. The outbreak of war caused several countries to increase their defense budgets.
In the first phase, the increased defense funds have been allocated mainly to consumables, but the gradually increased budgets will also be allocated to the modernization and development projects of the defense forces of different countries, and new defense force modernization projects are starting in different parts of the world. Bittium is involved in several new tenders regarding the modernization of tactical communications in different countries. In accordance with the nature of the market, the bidding stages of these new projects are quite slow and can take several years.
Finland started the process of joining the military alliance NATO. A possible accession to NATO will strengthen Bittium´s market position, especially in tenders from NATO countries. Bittium´s tactical communication products have very high-quality technical solutions for use in NATO countries, and NATO countries have been potential customers of Bittium even without Finland joining NATO. In addition, joining would enable Bittium to implement NATO waveforms and encryption solutions, if necessary, and would offer the opportunity to participate in the research programs of NATO countries.
In the domestic defense market, field testing of Bittium Tough SDR™ radios and their waveforms, as well as preparations for the large-scale deployment of the radios, continued throughout the year 2022. Bittium received a continuation order for the development of the radios´ waveform. The project will be multi-year. In November, the Finnish Defence Forces ordered Bittium Tough SDR Handheld and Vehicular radios for around 4.3 million euros.
Deliveries of other tactical communication products to the Finnish Defense Forces were also continued. Bittium received orders in accordance with framework agreements for both Bittium Tactical Wireless IP Network™ (TAC WIN) software radio system products and Bittium Tough Comnode™ devices. Some of the deliveries were made in 2022 and some will be made in 2023. Bittium also supplied the Finnish Defense Forces with system support for the TAC WIN and Tough VoIP systems and further developed the new software version of the TAC WIN system. This ongoing development effort continues to improve the performance of the TAC WIN system´s waveform and radio platform software based on observations made in field trials and training use, as well as waveform research conducted by Bittium.
The year 2022 has been busy in the international defense and authority markets. Product deliveries, integration, and testing of tactical communication system products continued to customers in Austria and Estonia, as well as other international customers. During the past year, a new promising market area has emerged: international companies developing air defense and sensor systems. In addition, several pilots of Tough SDR radios started in different parts of Europe and Asia.
We also continued the ESSOR collaboration with Bittium Tough SDR radios with good results. The interoperability tests performed in the summer with the new ESSOR High Data Rate Waveform were successful. Bittium´s radios flexibly used Bittium´s own broadband and narrowband waveforms as well as the ESSOR waveform for tactical data transmission.
During the past year, Bittium expanded the tactical communication product range with the new Bittium Tough VoIP Field Phone™ 2. Field Phone 2 is a new generation VoIP phone that enables reliable communication in demanding operating environments. Bittium Tough VoIP Field Phone 2 complements the existing Tough VoIP product family, meeting customers´ need for a new generation field phone.
The secure Bittium Tough Mobile™ smartphone product family was supplemented with the new Bittium Tough Mobile™ 2 Tactical solution, which was released in June, and is aimed at the defense market. The comprehensive solution enables the soldier´s mobile communication to be connected to either the Bittium Tough SDR Handheld™ radio or third-party tactical radios. The solution is compatible with various battle management systems, which enables real-time and efficient sharing of situational awareness in tactical networks.
The demand for Bittium Tough Mobile 2 smartphones and related data security software in the official market has increased with the Russian war of aggression and numerous data security attacks. Deliveries of phones and their various variants to the domestic and international markets continued. At the end of the year, Bittium delivered Tough Mobile 2 smartphones to the Swedish company Tutus. The delivery was a continuation of the cooperation between the companies, which has developed a mobile solution with a high level of information security, which combines Bittium´s secure Bittium Tough Mobile 2 smartphone platform and the Tutus encryption solution approved by the Swedish government. Tutus has delivered this mobile solution, specially designed as a tool for critical communication and a mobile environment, to a major Swedish authority.
The features of the Tough Mobile 2 smartphone and related security software were further developed, and the company has applied for NATO security approval for its solution, which is expected to be received during 2023. The approval is believed to increase sales of the solution.
Medical Technologies Business Unit
The medical technology market has recovered from the uncertainty caused by the coronavirus pandemic. The importance of remote care and remote monitoring is still growing with the inadequacy of medical care resources and cost pressures. Remote monitoring and remote diagnostics solutions bring relief to these problems, which will in the future support the development of sales of Bittium´s medical remote diagnostics solutions.
Bittium has medical device approvals in progress in many different countries. The new European Medical Device Product Safety Regulation, or MDR (Medical Device Regulation, EU 2017/745), entered into full force on May 26, 2021. The change has caused a backlog of quality system audits and device approvals, and thus a delay in application turnaround times.
In December, Bittium Respiro™, the advanced home sleep apnea test and analysis solution received MDR approval. Respiro focuses on nighttime polygraphy measurement at home and records and analyzes typical breathing disorders during sleep. Respiro uses artificial intelligence to speed up the analysis work. It supports various sensor configurations and service models, thanks to which it adapts to varying measurement needs and different business models.
Respiro´s FDA (Food and Drug Administration) medical device approval for the North American market has progressed and approval is expected during the first half of 2023.
The component shortage significantly slowed down the manufacture and deliveries of devices, but also the reception of orders. The reason for the decrease in order intake is the existing contracts with our largest customers, according to which we are obliged to deliver the ordered products within a certain time after the order.
The demand for Bittium Faros™ ECG measuring devices increased in the European market during the past year. A significant part of the product deliveries of the past year was still made to Preventice Solutions (a subsidiary of Boston Scientific Group), a customer offering remote monitoring services in the US ECG market. At the beginning of the year, Bittium and Preventice signed an agreement according to which Bittium will continue the supply contract for BodyGuardian® MINI devices that monitor cardiac arrhythmias to Preventice. In addition, the cooperation in the development of new ECG technology tailored to the use of Preventice Solutions continues.
The Bittium Faros product family was expanded with the new Bittium Faros™ 180L ECG measuring device, which measures the ECG continuously for at least 14 days on one battery charge. The new version improves the diagnosis of arrhythmias due to the extended measurement time. The device also enables patients to be discharged earlier and better conditions to quickly detect and react to possible arrhythmias.
In the neurophysiology market, the pilots of the Bittium BrainStatus™ EEG measurement devices progressed, and new pilots started. There are, e.g., Finnish and European university hospitals that test the use of BrainStatus in their intensive care units. The market for BrainStatus in intensive care is just opening as the recommendations for intensive care are slowly changing to a more demanding direction regarding EEG measurement.
In October, Bittium announced it has established a Clinical Advisory Board to support the business of its healthcare technology products. The Clinical Advisory Board brings Bittium medical expertise and an international forum for the continuous development of products. Its task is to provide feedback and conduct clinical research on Bittium´s products, and to assist Bittium with its own expertise in developing even more competitive solutions.
Connectivity Solutions Business Unit
During the past year, the net sales of R&D services remained at the same level as in the previous year. The market has recovered from the coronavirus pandemic and active sales and marketing have been done again. The most demand for R&D services was in the Industrial IoT, Telecom, and MedTech technology markets, where companies seek wireless connectivity for their products. Many customer projects were successfully completed, and new ones were started. The aim of the Connectivity Solutions business is to focus on growing the international customer base, especially in the Telecom, Industrial IoT, and MedTech market segments.
During the past year, Bittium introduced a new Cellular IoT solution to the market. It offers IoT devices direct connectivity to cloud services over mobile networks. The solution can be used to update the local connectivity of existing IoT devices to 4G/5G connectivity or to integrate 4G/5G connectivity into new IoT devices being developed. The solution is based on software modules, the reuse of which improves the competitiveness of Bittium´s design services, enabling the implementation of connectivity projects for the customer faster and more cost-effectively.
The availability of labor is still a challenge, and no change is expected. In particular, there are too few software experts compared to the demand, and the competition
for employees has increased the mobility of the workforce. During the past year, the company has invested in developing the employer image, which has contributed to the recruitment of new employees.