Israeli USB stick inventor bets on TV, medical devices

MOSHAV YARKONA, Israel Thu Dec 26, 2013 1:35pm IST

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MOSHAV YARKONA, Israel (Reuters) - Israeli high-tech pioneer Dov Moran, whose company M-Systems invented the USB stick and expanded the use of flash memory that today drives most electronic devices, is turning his sights to television and medical equipment.

"We are at the beginning of a new era. We will be more computerised, better connected and healthier," said Moran, 58, considered a founding father of Israel's high-tech sector, one of the country's main growth drivers.

Health treatment is going through a radical change as smart sensors and monitoring will enable people to stay at home rather than go to hospitals, he said.

Education will become more personalised and interactive, enabling a better connection between teachers and students while personalised e-commerce with more accurate data is in its initial stages, he said.

"I believe that the three screens - TV sets, tablets and phones - are going to play an important role in these trends," he told Reuters at his technology complex on the Yarkona farming cooperative, where scientists and entrepreneurs regularly visit for consultations.

One of Moran's main investments is Comigo, which he founded in 2011. He invested $10 million in the company, whose set-top box allows viewers to watch programming on TVs, tablets and mobile phones, switching between the platforms.

The Internet-based system adds socialising services. Viewers can invite friends to watch a soccer match with them, order game-related merchandise, place bets and order pizza.


Moran is known in Israel, where technology accounts for nearly half of all industrial exports, for founding M-Systems. The company invented the USB stick, a memory device enabling the quick transfer of information from one computer to another, as well as other flash products, including the DiskOnchip used in mobile phones.

M-Systems went public on the U.S. Nasdaq exchange in 1993 when it had revenue of $2.7 million, raising $4 million. It had annual sales of $1 billion when it was sold to SanDisk (SNDK.O) for $1.6 billion in 2006. Moran's stake then was worth close to $100 million.

Moran failed to repeat the success of M-Systems with his next venture Modu, the maker of the world's smallest smartphone, which raised $120 million. Many attributed Modu's failure to the rise of Apple's (AAPL.O) iPhone but Moran blames himself.

"The company failed since I took a couple of bad decisions. iPhone was a marketing obstacle, but a good CEO must overcome obstacles and hurdles," he said.

After Modu failed to raise more money, Moran closed it and sold its patents to Google (GOOG.O) for $4.9 million. Eight of Modu's 80 employees joined Moran when he set up Comigo in a converted mushroom greenhouse, surrounded by orange groves.

Comigo's customers include mobile operators seeking to expand into TV in Germany, Russia, Central America and southeast Asia.

Moran believes Comigo can help operators compete with Google and Apple in the up-and-coming market for Internet TV.

The two main players in the United States are Apple TV and Roku, both of which allow streaming content to TV sets.

Comigo is targeted at TV service providers, which offer more content and the ability to bundle TV with other services. Comigo also offers social capabilities and features.

Moran is chief executive of Comigo, which has 40 employees and expects sales of $3-$3.5 million in 2013 after it began shipping to customers at the end of the year. Based on existing customers' forecasts, Moran estimates sales will rise to $15-$20 million in 2014, before accounting for any new clients.

Comigo's competitors include Arris Group (ARRS.O), Cisco Systems (CSCO.O) and Echostar Corp (SATS.O).


Silicon Valley is full of entrepreneurs who succeed and then never create another company of the same calibre and many turn to seed investing. Moran himself is invested in about 15 start-ups, several of them in medical devices.

He established a company developing a blood glucose meter after he was diagnosed with Type 2 diabetes and had to test his blood sugar daily.

"The fact is that in 2013 you test your blood sugar but no one knows your results, no one knows whether you did the test or not," Moran said. While his meter aims to resolve this problem he declined to disclose details.

Diabetes in the United States alone affects 25.8 million people, according to the American Diabetes Association. The global blood glucose monitoring devices market is expected to reach $12 billion by 2018, according to market research firm Global Industry Analysts.

Moran also invests in other people's ideas, such as one brought to him by a former employee of a venture capital fund invested in Modu. The company, Consumer Physics, developed a miniature spectrometer for smartphones that can determine the ingredients and quality of food.

China, where food quality tests are performed less frequently, would be a big market for the product, Moran said.

He provided the seed money for a former M-Systems employee whose firm Sensible Medical makes a lung fluids monitor for heart patients that is in advanced stages of commercial usage. Investors in the company include Boston Scientific (BSX.N).

The global heart failure diagnosis and immediate treatment market is estimated at $5 billion a year.

(Editing by David Evans)

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