Business Weekly - Cambridge, UK

The Company
Cited by Gordon Edge – the man behind technology powerhouses PA Consulting and the Generics Group – as one of Cambridge’s most exciting new-generation entrepreneurs, John Halfpenny started his career with Texas Instruments in 1982 and was director of embedded software at ARM plc and CEO of Splashpower Ltd.
He has also founded and subsequently sold: Micrologic Solutions to ARM, Telephone Solutions Ltd, HII Ltd, and Enterprise Network Sciences Ltd to various trade buyers.
Halfpenny is now chief executive officer at CMR Fuel Cells. Based on the fringes of Cambridge, CMR develops fuel cell stacks for the consumer electronics industry, based on a simple but revolutionary patented stack architecture which delivers longer run-time and lower costs than conventional fuel cell stacks
Demand for CMR’s area of specialisation in the ‘Portable’ fuel cell market, micro fuel cells, is being driven not so much because of fuel cells’ ‘green’ credentials, but to solve what Halfpenny describes as a real and pressing problem – the growing gap between the power available from lithium batteries and the power needed by modern, feature and connectivity rich portable electronic products.

1) You have been involved with cutting edge technology in start-ups and major global corporations; how does CMR stack up against these?
Most of the enterprises I have been involved with involve power in some way – either indirectly, doing things using as little power as possible or directly in providing power. CMR is no exception, but is significantly different in that it is a completely new way of generating power and as such is much more fundamental in its potential impact.
The whole concept of generating power for portable electronics devices using fuel cells is incredibly exciting as it is a fusion of cutting edge technology meeting a real and pressing need. This is not a ‘better mousetrap’, it is a fundamental step increase in the power that will be available to a host of electronic products – phones, laptops, tools, scooters etc.
Not only does CMR promise a better product, but also has impeccable ‘green credentials’ – a real win-win where better performance is allied with lower carbon emissions.
What are the downsides? This is achingly brand-new technology, with all of the attendant risks and uncertainties. Product designers and consumers are inherently cautious, so for CMR to be successful we need to not only solve the development and deployment problems, but also we need our customers to actively embrace this new technology.
Delivering better performance or lower cost does not automatically guarantee success. It is our job to influence and explain the benefits.

2) How does the fuel cell industry compare to other markets you have previously worked in? How does the fuel cell industry compare with others?
The ‘fuel cell industry’ is in fact many very different sectors that can be broadly divided into three general categories – Automotive, Stationary and Portable. CMR falls into the Portable Fuel Cell industry category and has virtually nothing to do with the other two.
The Portable sector is an eclectic, new mixture of ‘classic’ electronics industry – driven by commercial and product imperatives and fuel cell industry – a mixture of chemistry, nano-technology and materials.
This is sometimes a very contradictory mix, and when you add-in an often (but not always) spurious ‘green’ angle, you can end-up with very complex, multi-faceted and subtle issues that you won’t find anywhere else.

3) Fuel cells are said to need to clear several hurdles before they achieve some sort of mass adoption, what are these and how will CMR overcome them?
There are virtually no mainstream fuel cell products available today for a number of reasons – the technology is new and unproven, the way that a consumer uses a fuel cell powered device is subtly different and the need to verify future reliability and mass-production yield being significant ones.
Regarding Portable fuel cells, the industry firstly needs to develop brand new technology to the point where it can be made cheaply and reliably in large volumes and secondly has to encourage manufacturers, product designers and consumers to embrace micro fuel cell technology.
CMR is addressing the second of these sets quite conventionally – we are marketing the benefits of our product solution to OEMs, working with manufacturers and designers to ease the process of deploying our products and building the infrastructure to support them.
Addressing the first is more difficult, as we have to identify what the market wants – a market that doesn’t yet clearly know the details of what it wants – specify what our product needs to do and develop the product using the assets – IP, know-how and resources that we have.
Uniquely we have the right combination of these assets to develop a product that meets the cost, performance, reliability and manufacturability that we believe the market will accept.
Taking all of these in to account, it is unlikely that mass market Portable fuel cells could be produced in volume before 2010. Fortunately, most manufacturers and OEMs intend to spend the next couple of years testing and field trialling prototypes – citing 2010 as the year when they will want portable fuel cells, thus coinciding well with the date by which products could be made.

4) Is the future success of fuel cells dependent on an environment focused economy driven by carbon trading?
The Automotive, and to a significant but lesser extent Stationary, depend very heavily on ‘green’ focussed economy changes – green shift – because there are already cheap and readily available technologies that do the job. Without significant ‘green shift’, these sectors will not see mass adoption of fuel cell technology.
The Portable sector is very different, it is ‘industrial’. In this sector, fuel cell products can deliver better performance and convenience than existing technology solutions. This has pros and cons – pro in that ‘green shift’ is not required and con in that we have to develop new technology to compete with existing technology on purely commercial terms. The current focus on green issues does not help us much here.

5) How relevant are government incentives to fuel cell market breakthrough or is their adoption inevitable anyway?
Government incentives can take many forms, but there are three which are very relevant to fuel cells – commercial incentive, legislative incentive and deployment/procurement incentive.
In every sector – Automotive, Stationary and Portable – commercial incentive is important, companies are developing new technology with new materials in markets that offer a lot of ‘upside’ for winners. This is just the sort of environment where government incentive can make a major difference and return huge dividends at a national level.
Legislative and procurement incentive is less relevant for Portable fuel cells – consumers will always have a choice and will decide on price, performance and convenience irrespective of government purchasing or environmental legislation. For Automotive and Stationary, quite the opposite is true – legislation and public sector purchasing can make a huge difference to the attractiveness and competitive standing of fuel cells in these applications.

6) What kind of pressures are there from the top OEMs for CMR to provide some sort of exclusivity?
OEMs often seek exclusivity when partnering with smaller organisations, but in most cases this is unnecessary if the partnership works well and counter-productive to both parties if the partnership does not work well. At this point in time, most OEMs are happy to evaluate product and technology options and want the freedom to mix-and-match, rather than tie themselves up with early exclusivity.

7) You are involved in at least two major tripartite collaborations, how important is this kind of partnership to CMR’s success and that of fuel cells as a widely adopted product?
Collaboration is a vital part of developing any ‘high tech’ product – not just fuel cells. Developing and perfecting a mass market product is extremely complex and portable fuel cells require expertise in chemistry, materials, nano-technology, fluid handling, electronics, control and many more – clearly well beyond the capability of any one organisation. Even the largest organisations do not have all of these capabilities and collaboration is very much the order of the day in the fuel cell industry.

8) With the time it is taking to get financially competitive products to market and the huge expectations for the future size of the fuel cell market, it feels like a very hard-fought race has developed. Where is CMR placed and how important is it to be up near the front?
There are huge expectations for the future size of the fuel cell market and there are many organisations which are competing for a share of the opportunity. However, most of these organisations are specialists and recognise the need for collaboration, so there is very little direct competition at this early stage.
Because the words ‘fuel cells’ are so widely and indiscriminately used, a significant part of the ‘hard fought race’ is in the perception of commentators!

9) You have a well established history with Cambridge. What are the region’s strengths and weaknesses?
Cambridge has traditionally been a centre of innovation and research, with few large, successful corporations. More recently this has changed somewhat, with established companies like CSR, ARM, XAAR etc. showing that it is possible to take innovative technology and exploit it on a global scale. On top of the established pool of technical resources – people, consultancies, infrastructure, networks etc., there is a growing pool of commercial resources which bodes very well for Cambridge.
However, there is no room for complacency as this growing commercial awareness and focus is still patchy. Cambridge is still far too insular – the region is competing with global centres that are more dynamic and flexible when it comes to encouraging business – not just technology. Considering that Silicon Valley is about 150 miles long puts the Cambridge region in perspective. I believe that only when the focus becomes truly regional – perhaps Cambridge-Norwich-Ipswich, will the region have the ability to compete on level terms.

10) You have a growing reputation as one of the leaders in the region’s new wave of entrepreneurs and have been involved in several different companies, is there an overarching theme or an end goal to all your work?
I have a burning desire to make things happen and doing this with new technology generally involves an interesting and worthwhile environment. I am lucky in having starting my career at a time when enterprise and initiative were being encouraged and I have also been privileged to work with many talented individuals in a number of companies in this time. I hope to carry on doing this.

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