B.5.1 Company Description

Real-Time Innovations, Inc. was a spin-off from Stanford University and has developed into a leading developer of new tools and architectures for the growing real-time software market.  The main technology that the company has developed is called Control Shell.  Control Shell was originally conceived by Stanley Schneider while he was a graduate student at Stanford.  Since that time the technology has been incorporated in seven major product versions; version 6.0 was released in 1998, and version 7.0 was released in 2001.

B.5.2 Technology Description

Goals of the ATP Project

The goal of the Control Shell project was to develop a tool for building complex real-time systems.  The company hoped to develop a library of tools focused on vertical markets; for example, building a complex real-time system for robotics, aerospace, or vehicles.  Control Shell is a program with a graphical interface that lets users develop and manipulate their real-time systems. 

Technical Accomplishments

Although earlier versions of Control Shell existed, the product that was released based on the technology developed during the ATP project was such a dramatic improvement that it should be considered a different product.  Until version 6.0, Control Shell was a platform for building monolithic applications rather than for building separate components which could be configured into systems.  Version 6.0 was the first product that was commercially released, the first post-ATP product, and the product that we analyzed for this case study.  Real-Time Innovations has produced several other products, but they were not based on the ATP-funded technology and are excluded from this analysis.

Control Shell Version 6 controls real-time systems.  The technology allows users to have a graphical interface they can use to control all of the real-time systems that exist within the application of interest.  The graphical interface lets them monitor, adjust, or alter their real-time system. 

Products

Control Shell can be sold in two different forms, either per seat or per run-time.

Customer Use of the Products

Customers in numerous industries have adopted Control Shell.  Once they purchase Control Shell and the corresponding library of information they need, they are able to implement the entire system.  The customer purchases the product and then develops the specific real-time applications around Control Shell.  Customers have ranged from Lockheed Martin to hospitals.  Use of Control Shell has ranged from controlling some of the prelaunch activities of the Space Shuttle to developing testing systems for medical students. 

B.5.3 Project Performance

In this section, we estimate the economic performance measures for the ATP-funded Real-Time Innovations project.  We conducted a structured interview with the principal investigator from this small firm.  We asked questions about product life spans, actual and projected sales, and total project costs.  From this information, we derived demand curves for all products sold during their expected lives, and used these to estimate consumer and producer surplus and R&D expenditures.  Based on these estimates, we calculated the net present value, benefit-cost ratio, and internal rate of return for the component software project.

In the desire to create a conservative estimate, we included benefits only from Control Shell 6.0, which is currently on the market.  Real-Time Innovations expects to release new versions of Control Shell well into the future.  Qualitative information that was discussed regarding future products is presented below. 

Competing Technologies

Currently, there are no technologies that compete directly with Control Shell.  However, Real-Time thinks that in 2 to 3 years new competitors will emerge.

R&D Expenditures for the Technology

Real-Time estimates that it contributed $2,000,000 to the development effort during the ATP-funded project, while ATP's contribution was $1,910,000.  During this time, the firm was creating products that embodied the new technology, and releasing them as upgraded versions of Control Shell.  For this reason, Real-Time Innovation's R&D expenditures included in our analysis include costs for both technology development and product development beyond the ATP project.

Estimation of Performance Measures

To estimate the consumer and producer surplus benefits generated by Control Shell 6.0, we assumed that the marginal costs of reproducing the software are so close to zero that they are negligible, and the only costs that are important are the investments in R&D.  According to Real-Time Innovations, Control Shell 7.0 never would have been successfully released without ATP funding as a component-based framework.  In addition, the company believes no other companies could release a similar product.  Therefore, the total benefit from Control Shell is attributable to the ATP-funded project.  R&D expenditures and benefits were adjusted to 2000 dollars to remove effects of inflation.  We estimated the benefit-cost ratio, net present value, and internal rate of return and present them in the table below.

B.5.4 Qualitative Benefits Attributable to ATP

General Impacts of ATP Funding on the Company

As noted above, without ATP support, Control Shell 7.0 technology never would have resulted in a true product.  Rather, it would have continued to be a highly specialized tool that only a few programmers would have used.  ATP gave the company the "guts to take a risk."  ATP increased their confidence that their product could be technically successful and ensured a steady stream of funds to allow them to conduct their research.

General Impacts of ATP Funding on the Market

According to Real-Time Innovations, one of the biggest benefits of ATP funding a particular sector of the economy occurs during the proposal writing process.  They cite the ATP proposal process as the best in the research world because of its honest approach to evaluating proposals.  The company notes that each company is treated equally and fairly, which is far different from the rest of the federal funding world.  By forcing companies to write effective proposals, more thought is put into the R&D planning, which improves the research done.

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Date created: December 3, 2002
Last updated: August 2, 2005

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