Analog Devices, the 53-year-old semiconductor company, threw a party Tuesday afternoon to celebrate its new technology incubator in Boston, dubbed the Analog Garage—an homage to the innovations that have originated in garages, basements, and other “nondescript quarters” of the world, as the company puts it.
But this ain’t no garage or basement. The 25,000-square-foot office is located on the 20th and 21st floors of a 22-story tower near the heart of downtown Boston, with breathtaking outdoor patio views (see above) of nearby buildings, the harbor, and the daily traffic snarl on Interstate 93. (Who needs Google Maps traffic updates?) Inside, there are ample conference rooms, comfy chairs, and desks in an open office layout, aimed at spurring collaboration and creative thinking among the 90-plus employees based there.
Pat O’Doherty, Analog’s vice president of emerging business and head of the Analog Garage, jokes that his engineers have assured him they won’t let the swanky digs or sweet vistas distract them from their work. The Garage’s team develops experimental technologies that might become Analog products someday, but perhaps not for five to 10 years, O’Doherty says.
“We’re tasked with focusing on what’s next,” he says, as we sit on the Garage patio enjoying the sunny weather.
I spoke with O’Doherty and Analog CEO Vincent Roche (see below) after touring the new space. The projects on display Tuesday included a radio frequency-based system for tracking physical assets, such as the location of packages in a warehouse; and a low-cost LIDAR sensor system that could be useful for drones and driverless cars. Other focus areas for the Garage are cloud computing technologies, cybersecurity, artificial intelligence, biosensors, and gas and liquid sensors, O’Doherty says. In addition to working on internal research and development, the Garage collaborates with university researchers and startups through mentorship, venture capital investments, joint product marketing, and acquisitions, O’Doherty says.
For decades, Norwood, MA-based Analog (NASDAQ: ADI) has designed and manufactured a variety of integrated circuits and related products that can process and translate real-world phenomena—temperature, pressure, sound, light, speed, and motion—into electrical signals that can be used by electronic devices. The company’s products are embedded in cars, airplane electronics, medical imaging equipment, devices for monitoring patients’ vital signs, consumer devices, wireless infrastructure equipment, and other systems.
Analog generated $5.1 billion in revenue last year, up from about $3.4 billion in each of the previous two years. It has a market cap of $37.2 billion and employs more than 15,000 people worldwide, making it one of the largest and most valuable tech companies in New England.
Analog’s leaders have been making some big bets to ensure the company succeeds for another half-century. That includes the $15.8 billion acquisition of rival Linear Technology that closed last year and the $2.4 billion purchase of Hittite Microwave in 2014, as well as smaller deals to acquire startups such as Lyric Semiconductor and OtoSense. Analog is also spending more than $1 billion annually on research and development, says Roche, who became CEO in 2013.
“We build our business and hang the prosperity of this company on our ability to innovate,” Roche says in an interview in a Garage conference room.
Increasingly, Analog’s product development revolves around software, including machine learning algorithms and other artificial intelligence technologies, Roche says. Analog’s digital push sounds similar to recent efforts by other long-standing equipment manufacturers like General Electric (NYSE: GE) and Philips (NYSE: PHG). The idea is that integrating more advanced software within the devices can make them more valuable and easier for customers to use, Roche says.
Analog’s products “sense, measure, interpret, power, connect,” Roche says. “Software is increasingly an important element to do all of those things.”
The Garage was previously housed in the Cambridge Innovation Center, the co-working offices located across the Charles River in the Kendall Square neighborhood of Cambridge, MA. Analog says it relocated the incubator to gain more space and be closer to major highways and more public transit options. (The company has a second Garage outpost in the San Francisco Bay Area, as well as several dozen innovation and design centers worldwide that focus on products that are closer to market, O’Doherty says.)
The Garage in Boston fits into a larger trend of big, legacy corporations setting up headquarters or research and development hubs closer to cities, in part to help them attract young professionals who don’t want to work in the suburbs. GE and Philips are two of the most recent examples in Boston.
“We go where the talent is,” Roche says. “This is a magnet for kids. We have great associations with MIT, Northeastern,” and other local universities, he says.
Employees housed at the Garage include people hired specifically to work on R&D projects there, as well as people who transfer there from other business units for a period of time—say, a few months or a year or two. The team also helps Analog engineers located around the world develop their technology ideas, O’Doherty says.
“We manage it like a VC,” he says. Engineers pitch their ideas to the Garage, and if they get the green light, the engineers work on the project full-time and receive funding and coaching to see it through.
It’s a “process that has key deliverables for each stage,” O’Doherty says. “If you progress and meet those, you continue. If you don’t,” the project gets phased out, he adds.
Analog began implementing these new processes for entrepreneurial efforts in 2015, O’Doherty says. He says the company isn’t ready to release details about how many marketed products have emerged from Garage projects, how much revenue they’ve generated, or other signals of the return on the company’s investments in the initiative. But he insists it’s “paying off” and “will show up in new revenue and new growth.”
“We’d never do anything like this for brand value,” O’Doherty says. “We’re generating real innovation and results.”
[Top photo by Jeff Engel.]