The RuggedCom Success Story – Award Winning Innovation from Ontario

RuggedCom's rapid rags to riches story is but one example of a wide range of groundbreaking ventures that thrive in Ontario's innovative, business-friendly climate. These companies, small, mid-sized and large, share one characteristic: they are applying successfully today's technology to current and future market needs. And RuggedCom is aptly named - its dynamic growth has helped it dominate the global market in manufacturing rugged, but highly sophisticated communications equipment for efficient and reliable electricity transmission.

"We saw the need for networking equipment that could work in harsh environments," says CEO Marzio Pozzuoli, who in 2001 founded the company in his basement just north of Toronto. "And it paid off."

In fewer than five years, award-winning RuggedCom became the leading supplier of switchers and routers, along with related products, to electrical power companies throughout North America, Europe and China. (In fact, China is RuggedCom's fastest growing market, with sales increasing by up to 50 per cent annually.)

When Pozzuoli speaks of "harsh" environments, he means more than the simply outside temperature. Electricity substations, he explains, are exposed to high voltage levels of 500,000 to one million volts, producing severe electromagnetic interference, temperature extremes from -40C to 85C, as well as high levels of vibration and shock. Before RuggedCom came along, communications equipment had limited or no networking capacity under those conditions, and often failed. "If there was a problem," says Pozzuoli, "you usually learned about it first from your customers."

Especially after the massive 2003 North American electricity blackout, power-generating operators began seeking sensors and other devices that would inform them about potential problems before they turned into crises. RuggedCom was the right company in the right place at the right time. Says Pozzuoli: "We were — and are — the only one to offer an integrated, high-speed network that is intelligent and reliable in all conditions."

So much so that it supplies more than 50 per cent of the electrical power market worldwide, with the nearest competitor in single digits. The main electrical power suppliers in Spain, England, Italy, France and Germany are among RuggedCom's European customers. In North America, it sells to major power companies such as American Electric Power and Pacific Gas and Electric. RuggedCom also dominates the Canadian market, with Ontario's Hydro One and Hydro Quebec among its customers.

Says Greg Rosychuk, an engineer at EPCOR, which operates transmission facilities in Alberta, British Columbia and Arizona: "We chose RuggedCom technology for our substations because it is specifically designed for those environments. Substation-hardened equipment is more than a nice-to-have — it's a must!"

Adds Ted Creedon, president of Creedon Engineering that helped supply electricity to a U.S. Air Force Base in the Aleutian chain off Alaska's icy shores: "We chose RuggedCom because reliability was not an option."

Smart grids is another rapidly growing RuggedCom market. The company controls nearly 60 per cent of the international smart grid market for IP routers and Ethernet switchers.

"Our goal is to become the information backbone of smart grids as they evolve," says Pozzuoli. "Smart grids need to be self-aware, self-healing and respond in real time. In order to achieve this, they require the rugged and reliable integrated communications and power system infrastructures that we provide."

Before he established RuggedCom, Pozzuoli worked for General Electric for seven years as an engineer dealing with power system protection and control. Frustrated with the absence of the networking equipment RuggedCom manufactures today, he decided to build them himself. For two years, Pozzuoli along with a handful of others who joined him financed the company with their savings and support from friends and family. The company's first order came in 2002 from the Korean Electric Power Company — it remains a RuggedCom customer. "I still have the paper napkin on which we finalized the deal," he says.

Since then, growth has been remarkable. In 2011, trailing 12-month revenues topped $100 million for the first time. And for the past six years, RuggedCom has made the prestigious Deloitte Technology Fast 50 list, based on revenue growth over the previous five years for high-tech companies that are at least five years old and have more than $5 million in sales. Last year, RuggedCom's five-year growth rate was 455 per cent. "It took us a decade to crack $100 million," says Pozzuoli. "It's conceivable that we will top $1 billion in the next decade."

Pozzuoli credits his company's success to being the market leader. "We are pioneers in an industry that is just taking off as electrical companies replace existing infrastructure and build new power sources," he says. "We picked a small market and are growing with it. Our goal is to maintain our position as the developer of any new technology in the field."

RuggedCom's biggest challenge, says Pozzuoli, is managing its phenomenal growth. In 2010 alone, it picked up 433 new customers. "We intend to grow within the limits of profitability," he says. "It's disciplined growth, contingent on maintaining profitability."

As the company conquers more international markets, Pozzuoli says RuggedCom has a distinct advantage in being Ontario-based. An immigrant to Canada as a child, he says the country's multicultural nature gives businesses a leg up on competitors from other regions where different cultures are fewer or tend to clash rather than thrive. Explains Pozzuoli, "We have people from all over the world working here. In Ontario, we grow up with a more cosmopolitan view of the world. Many Canadians take that for granted, but it makes it easier to relate to people in other parts of the world. And that makes it easier for us to have successful business arrangements with them."