Q&A with Dick McCartney of Pixel Scientific
ID magazine interviews Dick McCartney, CEO of Pixel Scientific, a company with a new name and a rich heritage. Until recently, Pixel Scientific was Tannas Electronic Displays, founded in 1999 by display visionary and pioneer Larry Tannas. In late 2015, McCartney and fellow investors bought the company from Tannas, and are carrying on with its custom display-sizing technology and license portfolio management, while also branching out to new areas. Before acquiring Pixel Scientific, McCartney was director of technology creation for Samsung Display in the US. He is a fellow of SID and has held many offices within the Society for Information Display, including general chair and program chair.
Based on written commentary by Dick McCartney and interview conducted by Jenny Donelan
What’s the history behind Tannas Electronic Displays and Pixel Scientific?
About 18 years ago, Larry Tannas [founder of Tannas Electronic Displays]
realized that he could serve a need that had emerged for custom-sized LCDs.
Quality LCDs were only being made offshore – there wasn’t an adequate domestic supply – and this was a big concern at the time for the US military. Larry came across a
cracked LCD that still worked on one side of the crack. As he thought about why
it would still partially work, the seeds of invention were planted. He began to
envision that one way to obtain special-sized displays was to excise a smaller
display from a bigger one, and this approach enabled his custom-sized
Customers need custom-sized or special-sized displays for various reasons. At the heart of our business is the fact that LCDs are very expensive to make. They require billion-dollar factories, and the very high start-up costs for a new design must be amortized over a long
run. So LCD companies generally only make high-volume displays, which largely go to the consumer electronics market: TVs, monitors, tablets, phones, and notebooks. It’s from that base, then, that we obtain those “blanks,” as do our licensees. That’s how we can furnish a relatively lower volume and substantially higher value
for industries including aviation and aviation simulation, the digital signage
market, the medical market, and others.
ID: There aren’t many other companies that do this, are there?
DM: We have the basic patents, but we have created a significant industry through
licensing of that intellectual property. So no, not very many, but there are a
handful of licensed companies throughout the world, including several in Asia
and Europe as well as the US. All of our licenses are limited in some way,
either into specific applications or geographies, or for embedding into a
company's own system-level products. We are the only company that can produce
in all markets and geographies.
ID: How did you become involved with the company?
DM: Nearly all my career has been in displays in general and LCDs in particular. I
did some seminal work in LCDs in electronics, optics, and LCD subpixel
construction in the early 1990s while developing LCDs for the Boeing 777
airplane. LCDs were not at all ready for aircraft applications at that time,
and we had to invent several new technologies. Many of those have found their
way into consumer-market products today. Larry was familiar with my background,
and a few decades or so ago, he invited me to teach a section in the LCD course
he had organized through UCLA. Over the course of time, as his custom-display
business grew, Larry would contact me to see if I could help him with special
projects or to figure out something that wasn’t working. So as a consultant, on nights and weekends, I would work to identify
solutions. I became very familiar with the excising process and thought it had
a lot of merit.
The opportunity came along to buy into the company when Larry wanted to retire,
and so I raised my own money together with some from an investment group, and
we purchased the majority share of what was then Tannas Electronic Displays, or
TED. I became CEO and renamed the company Pixel Scientific. I also moved the
company and a key production technician from Orange County in the LA area to a
leased office and factory in Scotts Valley, so we are now part of Silicon
Valley. We are a modestly small company, with four direct employees at the
moment. But we have off-shore contract manufacturing as well as contract
optical, electrical, and mechanical design engineering and a cadre of
consultants, so we command a lot more individual effort than we have directly
employed. The contract manufacturing and engineering has really enabled us to
take on more and new business quickly. It also gives us the opportunity to
gradually grow the company in a controlled and profitable way as we choose what
to bring in-house.
I think there’s a lot of opportunity going forward that I’m very excited about. As I look around the world of displays, it isn’t shrinking but growing. There are a lot of opportunities that do not have
solutions yet, and I think that we’re gearing up with new technology to bring solutions.
ID: Is the corporate culture different from what you were used to?
DM: I was previously with Samsung, and with National Semiconductor/Texas Instruments before that. They were very large corporations where primarily
my focus was in near- and long-term research. I also worked for Honeywell in
aerospace doing technology development, as well as having been part of three
startups, one of which was how I came to National Semiconductor. So I have
worked in both the start-up environment and for some pretty large technology
companies. I feel I know the benefits and limitations of a small technology
company. Large corporations have the staying power to spend what is needed to
succeed and survive a few missteps. Small companies like ours need to invest
frugally and be careful to stay focused on the right technologies. Although we
are doing some of that longer-term research right now at Pixel Scientific, it
is certainly a different environment than my large-company experience in that
we are closer to the customers and their immediate demands, and I personally am
much closer to operations than I have been in the past. Our plan, though, is to
grow and position the company to fully fund new advancements in display
That is the history, or culture, if you will, that we inherited, and it is the
strategy for our future success. Technology companies large or small cannot
rest. That is why I chose to buy the company and to leverage the core
competency we have into new competencies and new classes of display products.
We are standing on the shoulders of an established company, but are looking
forward with an entrepreneurial mindset.
ID: In terms of the immediate future, where is LCD resizing most important now? What’s the major market? And going forward, what’s the focus for the diversification you mentioned?
DM: The dominant areas right now are in digital signage, and that includes
transportation signage and the gaming industry. It surprised me to learn how
many licensed displays are part of gaming machines – all the machines you see in Las Vegas, for example. Looking forward, you also
see a lot of displays in automobiles these days, and it’s becoming very commonplace to see those displays in forms other than
rectangles. We have made prototypes for automotive concept cars, and that has given us some insight into that future. So we are
looking at technologies that enable those kinds of opportunities.
The aircraft industry is particularly important to us. The physical constraints
of instrument panels make custom-sized displays essential. We supply heavily
into the aircraft simulation space, and we have some displays flying on
aircraft today. But a growth area for us is in winning more flight displays. I believe strongly that a properly engineered and manufactured,
excised LCD using our proprietary sealing process is as robust as any custom
designed LCD. Since the takeover, we have gained a growing reputation for
quality and depth of engineering and we are getting the attention of avionics
manufacturers. In fact, we have won our first large-scale production program in
avionics, although it is with a standard-sized LCD and not custom sized. But we
have several opportunities in process, and I am certain we will soon win a
volume-order flight display opportunity with a custom-sized display. We are
taking the right steps. We have added NVIS capability, heater glass, and
anti-reflective cover glass to our offerings in both flight and
flight-simulation hardware. Overall, the display industry is moving to new
sizes and new formats, and fitting into new spaces, and I think that’s where our technology comes in.
In addition, as I said, we are not just a custom-sized-LCD supplier. We are now
a total-solution-display supplier, offering whole modules. And this has allowed
us to add value like high brightness, better viewing angles, larger color
envelopes, better color matching, and other technologies. We have customers for
whom we offer both a standard display and a custom-sized display for the same
flight deck, for example. Our business is becoming much broader, and this is a
difference. TED focused exclusively on custom sizes and was largely a service
business. The customer furnished the original display, and TED provided the
service of excising a smaller display from it in open cell form. Certainly, the
custom sizes and service are a core part of our business, but we are now a
display-technology supplier with both custom-sized and standard-sized display
products, which is why we picked the name Pixel Scientific. We’re taking the technology that we have, augmenting it, and pushing ourselves into
places where others couldn’t go before.
ID: What is the size of the marketplace for resized LCDs, and what are/have been the volumes?
DM: It is a bit difficult for us to accurately estimate the size of the worldwide
market for our excised displays because we have limited access to the
businesses of several of our key licensees. I can put a little perspective on
it in terms of market size by dollars. Keep in mind, though, that average
selling prices can vary substantially given other factors such as backlight
brightness and the ruggedizing needed for things like the outdoor environment.
But I estimate the aerospace simulator market is about $6 million and flight
displays are about $160 million. Digital signage worldwide, including specialty
displays like those in gaming machines, is about $120 million and growing
rapidly. This growth has prompted some OEMs to introduce what they call
stretched displays, which are designed specifically for digital signage. The
OEMs’ entry, first of all, only helps expand the market, which is good, of course.
But we and our licensees are quite happy to buy a native display and add the
value of brightness and ruggedization to it. There are virtually no customers
in the digital signage market for open cells. All of our licensees are
providing custom modules. Excising allows them and us to offer a broader range
of sizes than otherwise would be possible.
ID: How many steps are involved in the LCD resizing process, and what are the yields like?
DM: Well, I can't really talk about yields other than to say that they are quite
high. The process is heavily automated at virtually all of our licensees,
certainly all that are doing large volumes. It has to be automated to service
the signage market. That automation assures consistency. Yield losses are much
more related to handling errors and equipment failures than variations in the
excise process itself.
As for the steps, I don't think I want to dive too heavily into the details
here, but I do want to separate out a few elements in both the glass and the
electronics. The largest part of what determines at what column or at what row
a display can be cut is the location of the row and column drivers; you must go
between them, of course. But just that alone is not the whole story. A
significant part of the effort can involve re-engineering the attached circuit
boards. If you are shortening a display, generally you want to shorten the
attached circuit board too. That can involve a good bit of reverse engineering
to determine if and where to cut the board and how to restore functions that
would be lost in removing a part of the printed circuit board. As the industry
has gotten more sophisticated – moving to multilayered boards, for example – techniques like X-raying to map out traces are needed. Then techniques like
designing a custom flex board to reattach, say, the cut-away piece of the
circuit, but in a different place, are needed. So it isn't just about cutting
glass. It takes a good bit of competency in LCD electronics in order to produce
In terms of the glass-cutting itself, there are some critically important steps.
The seal in particular is very important. The LCD seal does a few jobs and the
replacement seal needs to do the same, as well as or better than the original
seal. One of the jobs is to keep oxygen, water, and other molecules out of the
liquid crystal. Another is to keep the liquid crystal in, of course. But the
seal also provides proper spacing between the glass plates at the edge, as well
as providing high compression and tension strength (including adhesion
strength) to maintain integrity through pressure, temperature, and bending
variations. What's more, no air bubbles can be trapped inside the liquid
crystal in the sealing process. So the seal is a significant piece. Our seal
has survived the rigorous testing needed for flight displays. That’s not easy.
ID: Have your techniques had to change with different backlighting or LCD
technologies? Do they affect your processes?
DM: They do. We have had to adapt to changes in backlighting and also in the LCDs
themselves. Things that are changing include the display glass thickness and
the cell gaps becoming thinner. Techniques that worked before need refinement.
The biggest change in backlighting has been the move to LEDs. Beyond those
changes, at the mechanical level, subpixel electrodes are getting closer
together because of higher resolutions. This also puts pressure on our
technology because the feature sizes require new precision and we have had to
adapt. As we offer whole modules, we need a custom-sized backlight too, and so
we have been developing our own backlights.
As I said, LEDs are the big disruption in backlighting, and this works to our
advantage, fortunately. LEDs make backlight design much easier. We outsource a
lot of that work at the moment but are beginning to develop our own in-house
capability. We have a partnership in which we design our own waveguides, and
through that relationship, we have access to custom LEDs that emit in RGB bands
rather than conventional white LEDs, which are broad-spectrum sources. That
means we can offer a much bigger color envelope straightforwardly without
immediately turning to more sophisticated technology like quantum dots or
direct RGB backlights, for example. These changes all give us the opportunity
to innovate. We’ve had to adapt as we go along, and it’s an important part of our ongoing portfolio of patents. We continue to add to
it as we solve this or that problem.
ID: Speaking of your patent portfolio, it’s our understanding that this aspect of the business has been quite successful.
DM: Larry was very wise to pursue the intellectual property to the extent that he did. He spent millions of dollars developing our patent portfolio, and it’s pretty watertight. It’s been defended and successfully vetted in the courts, and he was able to turn a
substantial portion of the business into a licensing business, so a good
portion of the revenue that we take in annually comes from royalties. And we
continue to push that model forward as well, as we bring on new licensees. We
are adding a few licensees in China. We are also in negotiations with places
in Europe and other parts of Asia. Throughout this year I would project that we’ll be closing several license deals.
The key thing I would say is that not every patent is a peer to every other.
Some of them, of course, are just techniques, and those aren’t the ones that you want to pursue with every dollar that you have because
someone could maybe get around it, but there are fundamental patents that you
should pursue and lock up. In other words, just having a patent isn't enough.
You need to be able to claim the fundamentals somehow. Look, once you have an
instance proof of just about anything useful, someone will find a way to
duplicate it if it has any value at all. The advantage you have ordinarily is
being first to the scene, so to speak, rather than more capable than anyone
else. So the strategy is to have a water-tight, fundamental patent, and a
portfolio of patents, really, that force anyone who wants to duplicate what you
have done to have to go through one of the doors you have patented.
Having said that, though, relying on patents to protect a business takes
strategic planning. It is said that patents are a sport of kings. A small
company can easily go broke trying to stop an infringer with deep pockets or
frankly even not-so-deep pockets. Litigation is very expensive for both
parties. Often it is far better to create partners than fight adversaries.
Licensing can be an important tool in that way. And lastly I'd say that patents
must be asserted. Otherwise, they won't be taken seriously. There has to be a
sense that ignoring your IP will have consequences.
Larry did a brilliant job of creating an industry on the backbone of the patent
portfolio. It’s protected not only through the litigation but also by those who license it.
They find people who may be infringing and we bring them into the fold one way
or another. We’re in the middle of an ongoing infringement case right now, and we continue to
contact companies who might be infringing.
ID: So it’s a combination of having something that is patentable on a fundamental level
and then doing the work to protect it. Not all small businesses are quite this forward thinking.
DM: That’s right, and there’s another component to the licensing. When Larry came up with his technical
solutions, he could have taken on the whole world and said, “All roads lead through me.” And I think that is a common error that small companies make. They want to
service the entire world. It’s really hard to do. On the other hand, if you can take on a portion of that and
license to others who want to take on other portions, you can grow from there
and over time you can compete with those licensees and integrate further. Or
you can form strategic partnerships with them. A rising tide lifts all boats,
and that’s an important business strategy when you have this kind of core technology. •
Jenny Donelan is the editor in chief of Information Display Magazine. She can be reached at firstname.lastname@example.org.