CEO Interview: Active Power, Inc. (ACPW) - Jim Clishem
February 22, 2011 - The Wall Street Transcript has just published Alternative Energy Report offering a timely review of the Energy sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Jim Clishem is President and CEO of Active Power, Inc. Previously, he was Vice President of Business Development for Peregrine Systems, an enterprise software company, which was acquired by Hewlett-Packard in December 2005. He also founded Xodiax, a managed IT services. Prior to Xodiax, Mr. Clishem was Vice President of data services for Broadwing Communications, and before that he served as Chief Operations Officer of Ntr.net, Inc. Mr. Clishem has also held various senior roles at MCI, Ericsson and Tandem Computers. He earned an executive master's in business administration from Southern Methodist University, and master's and bachelor's degrees in electrical engineering from The University of Louisville.
TWST: Please begin with a brief introduction to Active Power, including some highlights from your history as well as an overview of your primary technologies and product lines.
Mr. Clishem: Active Power (ACPW) is a company that has designed and developed some very interesting technologies in the uninterruptible power supply space for mission-critical customers where their continuous operations are their most valuable assets. Active Power went public in 2000 and we started by developing magnetic bearing technologies in the early 1990s. We migrated from that to designing and manufacturing flywheel energy storage systems, which was initially a DC flywheel product. The DC flywheel is a kinetic energy storage device to replace batteries for uninterruptible power systems.
We then migrated up the food chain and to develop a high-efficiency uninterruptible power system, which utilized our very novel energy storage system, the flywheel. It was that particular device, the integrated flywheel UPS, that has given us some tremendous economic advantages over the competition in delivering a UPS with very high power efficiency and very high power density. We continued to move up the food chain from our flywheel UPS systems to what we would call continuous power systems, integrating the UPS with back-up generators, switchgear and software and control systems to deliver a complete, fully turnkey backup power solution. Most recently, we've started to leverage our domain knowledge and expertise in designing and building continuous power systems to develop continuous infrastructure solutions where we are containerizing other critical infrastructure along with power to deliver a more compelling solution to our customers.
TWST: Tell us about your current customer base, whether you're observing any shifts in your customer mix and how you're responding to those shifts.
Mr. Clishem: Our customers are those that when they have an interruption, if they are a data center for example or if they are a mission-critical value manufacturing company, the cost of their outage is significantly greater than the cost of the equipment to protect their mission-critical operations. Our customers are global and made up of enterprises that require 24/7 uptime - organizations that require protected power. The advantages Active Power brings to the table and the reason we're gaining market share is that we are the most energy- and space-efficient UPS sold in the market today.
We can save customers a substantial amount of money on their electricity bills, which we believe is particularly top of mind now for CIOs and data center operators. The other thing is that we can pack more critical backup power than anyone else in the same physical footprint. As a result, we can save our customers floor space so they can in turn dedicate more real estate to revenue-generating equipment like server equipment in a data center or automation machines on a factory floor. This is particularly significant for collocation data center providers where white floor space comes at a premium.Our customers are increasingly focused on solutions that not only reduce energy costs and floor space, but at the same time improve the system availability. In fact, we've had independent validation that our systems are seven times less likely to fail versus conventional UPS systems. We believe these are the inherent benefits our customers recognize. It's the efficiency. It's the reliability. And it's the fact our systems are an economically green solution. CIOs and data-center operators in particular are much more open to receiving products and solutions that give them a solution advantage, not just a component advantage. So by us moving up the value chain and delivering a complete backup power solution, our continuous power systems with generator capability and all the switching fabric and software create a complete solution.
These solutions provide our customers with a much better cost of capital purchased for them at a reduced cost - as the system is preassembled and pretested in a factory setting versus a conventional brick-and-mortar approach. These systems are modular as well, so operators can deploy additional systems as the customer's IT and business needs evolve. The systems essentially grow with the business unlike a brick-and-mortar facility where the customer is tying up capital for months or even years in unused physical infrastructure. This just-in-time capital deployment provides the customer a shorter time to market. All in all, the system can save customers more than 60% on capital expenditures and more than 45% in total cost of ownership over the life of the system compared with a conventional brick-and-mortar approach.
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