Ember CEO: Silicon Labs Acquisition for $72M Is “Right Thing for the Company”

5/21/12Follow @gthuang

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its offices in Boston and Cambridge, England. LeFort’s new title will be general manager for wireless mesh networking, within the “wireless embedded systems” business unit of Silicon Labs, headed by vice president Diwakar Vishakhadatta.

The deal has been in the works for the past few months. “We saw this market is starting to really take hold,” LeFort says. “But in order to continue our leadership, it was going to take a significant investment. We needed a larger company backing us.”

As he explains, when a whole country like England is planning to deploy smart-meter technologies, and is using Ember’s products, officials “want to make sure we have the resources to be able to support that level of pressure.” The same goes for Comcast’s home security products, for which Ember is the main supplier of wireless networking technology. Big customers need a big commitment to things like continuous supply and investments in future products. “Those are very hard for us to do as a standalone entity,” LeFort says.

It sounds like Ember will provide much-needed expertise in wireless networking software—particularly for self-organizing mesh networks—while learning a lot from Silicon Labs about developing chips and hardware for broader applications. Smart energy is an emerging market area for Silicon Labs, but it’s just one of many.

So how does Ember plan to remain innovative and deal with the inevitable challenges of being integrated into a bigger company? For starters, Ember “doesn’t fit into some other procedure or process” at the firm, LeFort says. “They’re a young company [started in 1996]. This isn’t an IBM that has 100 years of experience.” Also, both sides harp on the cultural fit between the firms—does anyone not say that?—starting with a focus on products and innovation.

“We still look and think of ourselves as a small company built on innovation,” says Silicon Labs’ Vishakhadatta. From the Ember side, LeFort adds, “We’re going to be able to have much more focus on what we do well.”

To that end, Ember is expected to contribute $10-12 million in revenue in the second half of 2012. That figure is a bit down from the company’s numbers in late 2010, when it was projecting $30-35 million in sales for the year (its first profitable one), up from $13 million in 2009. At the time, LeFort said Ember was not looking to be acquired. “We should manage our business every day as if we are going to IPO and be the next Intel,” he said. “If something else happens along the way that makes sense, then so be it.”

Which brings us to today. I asked Metcalfe, who now lives in Austin during the school year, whether the Ember deal is a “score one for Austin” moment. He says he doesn’t keep score among different cities, as he isn’t into regional economic development. “I am into innovation and what’s best for startups out of research universities,” he writes. “Hm, score one for MIT?”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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