Interviewer:  2017 marked the 20th anniversary of your signing of the sole agency agreement with Links, a Japanese company. Please tell us the background of this agreement?

Dr. Eckstein: MVTec was founded in 1996, and, at the end of that year, we participated in an exhibition in California where we met a consultant from LINX. They became interested in our products and came to visit us at the beginning of 1997. The sole agency agreement was signed in June 1997.

Interviewer: Did you plan to do business in Japan at that time?

Dr. Eckstein: The market of machine vision is relatively small compared with other sectors. Clearly there would have been a limit if we were to just stay in Europe, so, yes we were interested in the Japanese market.

Interviewer: How are your global sales in 2017?

Dr. Eckstein: We don’t disclose our sales. We have 135 employees and have some 30 agencies across the world. I think our products are sold in about 50-60 countries worldwide, because some of our agencies cover multiple countries.

Interviewer: We have heard that your market share is the 2nd largest in the world. Is it correct?

Dr. Eckstein: We say that we are the world’s No.2 in terms of sales of imaging software for industrial use. We may be actually the world’s leader, but we say No.2 to be conservative.

Interviewer: How are your sales in Japan compared with your global sales?

Dr. Eckstein: In terms of sales, Japan is No.1 in Asia and one of the top five markets globally.

Interviewer: What are the unique characteristics and advantages of HALCON compared with products by other companies?

Dr. Eckstein: First, HALCON has many functions. Some libraries can be used only for semiconductors, but HALCON’s imaging libraries can be used in many fields. It is our advantage that HALCON has a track record of being used in many sectors. Second is our future prospect. We are a private company and not publicly listed. If we go public, we may be forced to concentrate on short-term sales. Since we are private, we can focus on long-term goals and make investments accordingly. For example, image processing is now shifting from 2D to 3D, but we have been working on 3D image processing for the past 10 years and, thus, our products have the greatest number of functions in this area. We also work very closely with the R&D community. We always check new technology when it becomes available and keep ourselves updated. Recently, we have made a lot of investment in cutting-edge research in deep learning. We plan to launch a new product that uses deep learning for image processing for industrial applications at the end of this year.

Interviewer: We understand that MERLIC, another product of MVtec, also uses deep learning. What are the differences?

Dr. Eckstein: MERLIC uses deep learning to strengthen the OCL function. HALCON is a new software that uses deep learning in much wider areas, for example in checking defects.

Interviewer: When will it be on sale?

Dr. Eckstein: It became available at the end of 2017 and is called HALCON17.12. Since we do many updates, we decided to name our products based on the year and month of the product launch.

Interviewer: You said you work closely with the R&D community. Can you elaborate?

Dr. Eckstein: We have joint projects with universities and many of our staff hold a PhD degree, so we are in a position where we can learn and acquire the latest technologies. Our CTO is a professor at the Technical University of Munich while another is teaching at an institute like the National Institute of Advanced Industrial Science and Technology in Japan. That national institute invented MP3 and currently does cutting-edge research in image processing.

Interviewer: How do you see the Japanese market in a global context?

Dr. Eckstein: All work in image processing, including research, production and development was conducted in Japan 10 years ago. Production went to Asian countries some 7-8 years ago and then development also shifted away from Japan. This resulted in improved technical capability in Asia. Speaking about research, cutting-edge research is still being conducted in Japan. There have been many changes, but I think Japan is handling these changes well. And Japan is trying to start something new, instead of continuing business as usual. Japan aims to apply automation in areas where the technology has not been applied in the past in order to create a new industry. Automatic agriculture is one example and we are supporting this development. In Japan, we receive inquiries from customers in terms of how to apply new technologies. This is something unique in Japan.

Interviewer: What about other markets?

Dr. Eckstein: Compared with Japan, the European market is changing rather slowly. Since Europe is a continent, it is always in a battle and everyone is watching one another. Japan did not experience change over the long term due to its national isolation policy, but, once it opened up, huge changes took place very quickly. This is different from Europe.

Interviewer: Do you incorporate the requests from your Japanese users in your R&D?

Dr. Eckstein: Absolutely. There are many examples where we have incorporated requests from our Japanese users in HALCON. Since our sales in Japan are big, it is a priority market for us. Also, it is good for us that requests from Japan are very clear thanks to the technical excellence of LINX. Mr. Shima, LINX handles all of the requests from Japan and it is very easy for us to communicate with him. In addition to requests from LINX to MVTec, we also do some technology transfer from Europe to Japan. For example, the Netherlands has a high food self-sufficiency rate thanks to automation in the food and agriculture industry. We share the information of technologies used in these areas with Japan. We exchange the technologies of Japan and Germany with each other, and sometimes it becomes a project after such technology is presented at LINX DAYS.

Interviewer: How are the sales of MERLIC?

Dr. Eckstein: We have had a success story in the UK. The speed is a bit slow, but I think it is growing steadily.

Interviewer: The trend of IIoT will accelerate in the future. What is your R&D strategy?

Dr. Eckstein: Feedback information is important to improve our factory’s efficiency, and image processing is extremely important. How to connect communication is also very important. We don’t know whether it will be OPC UA, but basically PLC and machine vision will become more integrated and we need to build a system where they are eventually integrated with ERP. Industry 4.0 will become a reality when different information is shared with each other.

Interviewer: Does it mean that you will focus on improving image-processing technology?

Dr. Eckstein: Yes, we need to improve both communication and image-processing technologies.

Interviewer: How do you plan to strengthen the Japanese market, and what is your worldwide sales target?

Dr. Eckstein: Japan is advanced and, thus, existing equipment manufacturers are very unique. We can grow in Japan by providing a solid support and service to them. Also, embedded technology is rapidly developing and the market is likely to become much bigger. For example, consumers keep many images in smartphones. As the device becomes cheaper, the world of image processing becomes bigger. We need to launch products that catch up with this change. HALCON can be used on smartphones and other devices, but due to a weak calculation function, it needs special codes to operate. We need to take coding into account when the device is small. It means that we cannot just continue doing what we have been doing.