Company grows as it designs for a virtual world

INFORMATION TECHNOLOGY
At a glance


Name: Mechanical Dynamics
Headquarters: Ann Arbor, Mich.
Type of business: Virtual prototyping software
2000 revenues: $46 million
3rd-quarter 2001 revenues: $14.4 million
Automotive customers: DaimlerChrysler, Fiat, Ford, Fuji Heavy Industries, GM, Honda, Hyundai, Mazda, Mitsubishi, Nissan, Peugeot, Saab, Seiko Epson, Toyota, VW, Volvo


Name: Bob Ryan

Title: President, Mechanical Dynamics

His wireless device: Nextel cell phone. It works in both the United States and Europe.

Laptop: Dell Latitude C600

Next big tech trend: The switch from hardware prototyping to virtual prototyping will accelerate.

The formula or imperative is nothing new in the auto industry. Like the finicky customers they are, manufacturers want it all. Better products, at lower cost and with reduced risk.

And they want it yesterday.

Technology suppliers have to ante up and meet the test.

Bob Ryan isn't worried. His burgeoning Mechanical Dynamics Inc. () - an Ann Arbor, Mich., company with 10 U.S. offices and 300 employees - has a cornerstone on its marketplace.

"The biggest bottleneck for manufacturers is creating and testing hardware prototypes," says Ryan, company president. "OEMs are trying to address the voice of the customer. But when they build hardware prototypes to test their design, often the final product ends up far different than what the customer wants."

Ryan, 44, is leaning on Mechanical Dynamics' popular software tool called ADAMS to help his Big 3 customers cut costs and speed vehicle delivery times.

The software brings motion simulation to computer-aided design so engineers can create 3-D models of new cars and trucks long before metal is cut. They can tell online instantly whether all the parts and subsystems will work.

Reducing bottlenecks

The process is called functional virtual prototyping, and it's helping reduce bottlenecks and costs in vehicle design and engineering.

The end goal is to help the auto industry design and deliver a car in 12 months, down from what often is three years or longer, Ryan says.

Design engineers burn through dozens of physical prototypes, which can cost hundreds of thousands of dollars to build. The saving grace of computer-generated virtual prototypes is they can reduce the time it takes to bring ideas into reality and reduce the number of iterations in hardware models.

Mechanical Dynamics was started 25 years ago by Michael Korybalski and John Angell, then University of Michigan students, and Michigan professor Milt Chace. The trio wrote software code above an Ann Arbor ice cream shop. Today, Korybalski serves as CEO, and its products are in hot demand by the Big 3 and others.

The rush to virtual prototyping

hasn't been missed by Wall Street.

Unlike many tech companies, Mechanical Dynamics enjoys prosperity. Revenue for the third quarter was $14.4 million - up 25 percent from the year-ago period.

Last year, Mechanical Dynamics and two other publicly traded companies - MSC Software Corp., of Costa Mesa, Calif., and ANSYS Inc. of Canonsburg, Pa. - substantially outperformed the overall Nasdaq technology sector, according to Daratech, a market research and technology assessment firm in Cambridge, Mass. (daratech.com).

Last year, Mechanical Dynamics reported sales of $46.6 million. This fiscal year, Wall Street is projecting 25 percent revenue growth and similar performance for the other two.

"If you look at market share, Mechanical Dynamics outdistances any other player that specializes in the market for understanding mechanical motion," says Mark Halperin, an analyst for the Gartner Group

() in Stamford, Conn.

But if it's going to continue to be a leader, the company needs to expand its capability into the software services arena, where it may be weak, Halperin says.

"They've been trying to expand into a broader market for designers. Their software has been selling well, but it's a question of within these companies (such as General Motors) will the designers use their software. That's debatable."

That doesn't trouble Ryan. He says the company is expanding next iterations of ADAMS to cover a broader area of virtual prototyping. That means ADAMS will be a design engineer's best friend - handling everything from testing motion and handling to component life and vibration in chassis and drivetrains. It will cover virtually the entire prototype.

Not a replacement

Does this mean virtual prototype and simulation software eventually will eliminate hardware prototypes?

Ryan doesn't think so.

"We may do just as much hardware testing today, but we can make it more strategic,'' he says.

"The role of testing is to do a pass-fail examination of a product.

The role will change to validate the computer models. It will examine what variables most affect performance and how we can optimize those variables."

Still, automotive customers don't limit themselves to ADAMS.

"We use it for ride and handling and load predictions, as well as suspension designs,'' says Todd Vest, Technical Director, Simulation Department for GM's D-Staff (gm.com). "It can solve about any problem (in those areas)."

But GM also uses other virtual prototyping packages to test new design characteristics. Vest said each solves some problems better than others.

"There is no clear winner," he says. "Some try to make comprehensive solutions types, others restrict a wide range of problems, while others have gone for speed and simplicity."

Mike Brennan is a Grand Rapids, Mich., writer and publisher. He can be reached at

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