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Beating the copycats

Posted By David Shamah On May 13, 2010 @ 12:00 am In | No Comments

Electronics made by Israel’s Walletex have evolved from commodity consumer goods to high-tech security devices sold to dozens of international companies.

 

The Walletex Musicap, a waterproof MP3 player built into a baseball hat.

While most of us would assume that any company manufacturing consumer electronics in Israel would have long ago been knocked out by competition from the Far East, Walletex proves that innovation is the key to surviving, and even thriving, in a tough business. Apparently some good marketing doesn’t hurt, either.

Based on its original product released five years ago – an ultra-thin, credit-card-size USB flash drive with a unique, patented connector that sold for $29 – Walletex has developed a full line of business and consumer products. These range from the most secure USB flash drive in the world to the Musicap, a waterproof MP3 player built into a baseball cap that was the hit of this year’s Consumer Electronics Show in Las Vegas.

In between, Walletex has developed ultra-thin flash disk cards for storing medical records and data for businesses, the military, and both the security and entertainment industries – if there’s something a flash card can be used for, Walletex probably makes it.

“All our products use special micro-components that were developed by our team in Rishon Lezion,” says Walletex CEO Avi Dahan. “All the products are waterproof and sand proof, and are small and thin enough to fit into a wallet. And the ones we developed for professional use, such as the Medicard and our key and ID cards, are super-secure, keeping important data out of reach of hackers,” he tells ISRAEL21c.

Marketing + innovation = success

In a land of miracles, Walletex is a veritable miracle of marketing. Dahan, who has an extensive background in consumer electronics, transformed Walletex’s mother company IBDA into the world’s third most successful manufacturer of bluetooth ear phones. As the company sought new markets, his design staff developed applications and technological enhancements for the wallet-sized flash drive, repositioning the basic technology into different products aimed at different audiences.

The original Wallet Flash (2005) begat the Wallet MP3 player (2007), and then morphed into the Medicard (2008). With an eye to security applications, the company developed the Wallet Flash Pro Safecard with high-level (2009) and super high-level (2010) security – and, of course, the Musicap (2010), a return to the popular consumer side of development that was the company’s original focus. Several of these products have won innovation awards at international shows like CES and CeBit.

But the Walletex story isn’t just about marketing – it’s about innovation. The only way to beat Far East copycats is to constantly come out with new technology that keeps the company ahead of the game. This means that while products designed in China, Hong Kong, Taiwan and other Far East electronics empires may look like Walletex products, they’re definitely not the same.

Take smartcards, those wallet-sized electronic data cards that organizations use to identify workers and clients, or to allow or limit access to structures, rooms, offices, copy machines and so on. According to Dahan: “The problem with smartcards is that the security data is stored on the card and it gets downloaded to the processor in the door or lock in an encoded format, where it gets read and where the decoding is done. If a hacker is able to compromise the decoding process, the smart card is useless.

IBM, Microsoft, Nokia and Toyota

“With the Safecard, administrators can use dozens of different security and cryptographic security methods, changing the security protocol whenever they want to, and using the communications protocols on the card to bypass the local decoding altogether, instead of having the decoding done on a remote computer, which then grants access. And like our other products, it can be carried like an ID or credit card in a wallet,” he tells ISRAEL21c.

The Walletex card looks like a smartcard and is even compatible with current smartcard readers. However, claims Dahan, the Safecard gives users far more options. Other Walletex Flash/Safecard configurations allow organizations – among them IBM, Microsoft, Nokia, Toyota, Deutsche Bank, Oracle, Ford, Citrix, Chevron, HSBC, and many others – to develop and distribute custom applications, for employees or customers.

That’s the kind of innovation that keeps Walletex ahead of the game, and enables this Israeli company to continue to thrive. By constantly upgrading its consumer-based products, Walletex has moved up the ladder from a manufacturer of commodity consumer goods to become a developer of high-tech security devices. And as a result, Walletex counts dozens of international companies and organizations among its customers.

Over the past year or so Walletex has increased its sales to the extent that it is no longer in need of support from IBDA (established in 1994, IBDA does over $7 million in sales annually), and is making it on its own.

Protection for health records and your MP3

Dahan reveals that some of the company’s most successful products resulted from the brainstorming of the 20 plus engineering and development staff working out of the company’s Rishon Lezion headquarters, Israel’s fourth-largest city located on the central coastal plain.

They came up with the Medicard, which stores health records securely and safely, and enables users to comfortably carry important medical information right in their wallets, for use by doctors and hospitals in case of medical emergency.

Security, of course, is paramount for medical record cards so given Walletex’s commitment to security, creating such a card was a natural development. And Dahan says that the company is set to announce a huge deal in the coming months. A large European health maintenance organization has chosen the Medicard to store and update health records for its customers.

The Musicap came about after one of the company’s employees complained about how his MP3 player was inconvenient to use. As a result, Walletex built-in the controls for the music player into the front of the cap, enabling users to easily reach up and adjust the volume while running or biking. The cap is waterproof, so if you’re caught in a sudden thunderstorm, you don’t have to worry about zapping your player.

Established in 2005, Walletex has sales offices in the US and Japan, and a liaison office in China (where the devices are assembled). But design and development are located in Israel – a rare exception in the world of consumer (and increasingly professional security) electronics, which for the most part decamped eastward from the US and Europe decades ago.

“It just shows that you can remain competitive and ahead of the curve if you innovate, and sell that innovation,” Dahan asserts. “Of course competing in this area is tough, but we’re confident we can keep growing, as long as we supply the products and technology our customers can’t get elsewhere.”

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