Neonode Inc. (Neonode) provides advanced optical sensing solutions for contactless touch, touch, and gesture sensing.
The company also provides software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. The company bases its touch, contactless touch, and gesture sensing products and solutions using its zForce technology platform and its machine perception solutions...
Neonode Inc. (Neonode) provides advanced optical sensing solutions for contactless touch, touch, and gesture sensing.
The company also provides software solutions for machine perception that feature advanced machine learning algorithms to detect and track persons and objects in video streams from cameras and other types of imagers. The company bases its touch, contactless touch, and gesture sensing products and solutions using its zForce technology platform and its machine perception solutions on its MultiSensing technology platform. zForce (zero force) is the name for the company’s patented optical sensing technology built on infrared light, invisible to the human eye.
The company’s MultiSensing platform was designed to provide advanced, safe, and scalable software solutions to provide situational context. The company markets and sells its solutions to customers in many different markets and segments, including office equipment, automotive, industrial automation, medical, military, and avionics.
In 2010, the company began licensing to Original Equipment Manufacturers (OEMs) and automotive Tier 1 suppliers who embed its technology into products they develop, manufacture, and sell. Since 2010, its licensing customers have sold approximately 95 million products that feature its technology. In October 2017, the company augmented its licensing business and began manufacturing and shipping touch sensor modules (TSMs) that incorporate its patented technology. It sells these TSMs to OEMs, Original Design Manufacturers (ODMs), and systems integrators for use in their products.
As of December 31, 2023, the company had nine agreements with value added resellers (VARs) for integration of its TSMs in the products they offer to global OEMs, ODMs and systems integrators. In addition to this, it distributes its TSMs through Digi-Key Corporation, Serial Microelectronics HK Ltd., and Nexty Electronics Corporation.
During 2023, the company continued to focus its efforts on maintaining its licensing customers and achieving design wins for new programs both with current and future customers. In parallel it continued to market and sell TSMs directly and indirectly through partners. The company made investments enhancing the design and improving the production yield of its TSMs in its production unit Pronode Technologies AB and improving the related firmware and configuration tools software platforms.
Licensing
The company licenses its zForce technology to OEMs and automotive Tier 1 suppliers who embed its technology into products that they develop, manufacture and sell. Since 2010, the company’s licensing customers have sold approximately 95 million devices that use its patented technology.
As of December 31, 2023, the company had 34 valid technology license agreements with global OEMs, ODMs and automotive Tier 1 suppliers.
The company’s licensing customer base is primarily in the automotive and printer segments. Ten of its licensing customers are shipping products that embed its technology. The company anticipates customers will continue to ship products with its technology in 2024 and in future years. It also expects to expand its customer base with a number of new customers who will be looking to ship new products incorporating its zForce and MultiSensing technologies as they complete final product development and release cycles. The company typically earns its license fees on a per unit basis when its customers ship products using its technology.
Product Sales
In addition to the company’s licensing business, it designs and manufactures TSMs that incorporate its patented technology. The company sells its TSMs to OEMs, ODMs,and systems integrators for use in their products.
The company utilizes a robotic manufacturing process designed specifically for its TSMs. The TSMs are commercial-off-the-shelf products based on its patent-protected zForce technology platform and can support the development of contactless touch, touch, gesture and object sensing solutions that, paired with its technology licensing offering, give it a full range of options to enter and compete in key markets.
The company began selling its TSMs to customers in the industrial and consumer electronics segments in 2017. The company will phase out the TSM product business during 2024 through licensing of the TSM technology to strategic partners or outsourcing.
Non-recurring Engineering Services
The company also offers non-recurring engineering (NRE) services related to application development linked to its TSMs and its zForce and MultiSensing technology platforms on a flat rate or hourly rate basis.
Typically, the company’s licensing customers require engineering support during the development and initial manufacturing phase for their products using its technology, while its TSM customers require hardware or software modifications to its standard products or support during the development and initial manufacturing phases of their products using its technology. In both cases the company can offer NRE services and earn NRE revenues.
Strategy and Focus Areas
The company’s customers use touch, contactless touch, gesture sensing, and machine perception technologies to grow their businesses, drive efficiencies, and seek competitive advantages. Its strategy is to deliver value-adding human-machine interaction (HMI) and machine perception solutions and products that enable its customers to achieve these targets. The company offers specialized NRE services related to the integration of its solutions and products into customer systems and products to ensure that optimal functionality and performance is achieved.
With the new, sharpened strategy, announced in December 2023, the company focus solely on the licensing business. This allows customers to license its unique and advanced TSM technology to create bespoke products and solutions that bring value to end customers. The company continues to be a leader in optical touch and gesture sensing by licensing its zForce technology to customers in the printer, automotive, and other sectors. The company also aims to capture a significant share of the growing automotive driver and in-cabin monitoring market by developing its machine perception business. The company intends to execute on this strategy through portfolio transformation, internal innovation, and co-development of products with its customers and the building of strategic partnerships with other technology companies.
Under the company’s licensing model, OEMs, ODMs and Tier 1 suppliers manufacture or contract to manufacture products that include Neonode’s special Application Specific Integrated Circuits (ASICs) that incorporate its patented technology. The Neonode ASICs are manufactured by Texas Instruments and ST Microelectronics. Texas Instruments manufactures two ASIC components that both the company and its license customers buy.
Markets
Automotive
The automotive value chain consists of OEMs (vehicle manufacturers) and tiered suppliers (Tier 1 system suppliers, Tier 2 component suppliers etc.). In this market, it mainly acts as a Tier 2 technology provider to Tier 1 suppliers who license its technology and deliver different types of systems to OEMs (e.g. infotainment system displays featuring its touch technology). In some cases, it is also engaged directly by OEMs, following the trend that OEMs are insourcing more and more of their systems and software development.
During 2023, the company’s automotive customers shipped approximately 0.9 million products with its technology, respectively.
Printers and Office Equipment
Multi-function printers typically feature touch displays for user interaction with feature-rich menus and settings. It has operational license agreements with three of the leading global printers and office equipment OEMs. During 2023 the company’s customers shipped more than 3 million printers using its touch technology and since mid-2014 they have shipped approximately 55 million printers using its touch technology.
Industrial Automation
The company sees interesting opportunities for its optical touch and gesture control solutions in the rugged industrial touchscreen market. The company also see potential demand for its machine perception solutions in industrial settings.
Medtech
The company sells its TSMs to customers manufacturing and selling medical imaging systems with touch screens. Looking to the future, it sees interesting opportunities to license its zForce-based optical touch and gesture control solutions to manufacturers of different medtech systems.
Elevators and Interactive Kiosks
There is strong consumer demand for HMI technologies that improve the user experience and eliminate direct physical contact between users and different types of machines and systems in public environments, such as self-service kiosks, vending machines, and elevators. Using the company’s TSMs, OEMs can easily create safe, intuitive, and easy-to-use contactless touch interfaces for their elevator and kiosk products. Its TSMs are also very suitable for retrofit applications and many of its OEM customers, value-added resellers, and technology partners have or are developing such solutions and marketing and selling them in their respective markets. Customer demand has decreased after the COVID-19 pandemic ended and in 2024 it will phase out the TSM product business. OEM customers, value-added resellers, and technology partners can still access its technology through licensing.
Customers
As of December 31, 2023, the company had 34 valid technology license agreements. During the year ended December 31, 2023, it had 10 customers using its touch technology in products that were being shipped to their customers. The products related to these license agreements include e-readers, tablets, commercial and consumer printers, automotive infotainment system displays, and global positioning system (GPS) devices. The company’s license revenues for the year ended December 31, 2023, were earned from 10 OEM, ODM and Tier 1 customers.
The company’s customers are primarily located in North America, Europe, and Asia. Customers who accounted for 10% or more of its revenues during the year ended December 31, 2023, were Hewlett-Packard Company – 22.1%, Seiko Epson – 17.7%, and Alpine Electronics – 16.6%.
Competition
The company’s competitors among Tier 2 software providers include SmartEye, Cipia, Xperi, Seeing Machines, PUX and Jungo.
Intellectual Property
The company’s patents cover optical blocking technologies for touchscreens and head-up displays, optical reflective technologies for contactless interaction with kiosks and elevators, as well as machine perception solutions for driver and in-cabin monitoring.
In 2023 the company filed eleven new patent applications and had nine new patent grants issued; five patents have lapsed.
The duration of patent protection for utility patents is generally 20 years. The duration of its patent protection for design patents varies throughout the world between 10 and 25 years, depending on the jurisdiction.
The company also protects and promotes its brand by registering trademarks in key markets around the world. The company’s trademarks include: Neonode (26 registrations, 2 pending applications), the Neonode logo (8 registrations), zForce (10 registrations), and MultiSensing (3 registrations).
The company uses Neonode, its logo, zForce, MultiSensing, and other marks as trademarks.
Research and Development
For the year ended December 31, 2023, the company incurred $3.8 million on research and development activities.
History
Neonode Inc. was incorporated in the state of Delaware in 1997.
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