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Chicago Tribune

Success on a Small Scale

Dover Corp. unit specializes in acoustic components, but adds new focus by developing tiny camera, joystick 

It's a small world with big consumer possibilities for Knowles Electronics.

The Dover Corp. unit, based in Itasca, has specialized in making tiny microphones and other acoustic-related components. Now it is focused on developing a camera about the size of a penny that will allow users to snap sharper images from far away, and a miniature joystick for cell phone gamers.

"Imagine playing video games on your phone," said Jeff Niew, Knowles' chief executive, as he wiggled his thumbs as if holding a game controller.

Knowles is making the inside of the joystick, which is about the size of a sugar packet. The goal is not only for it to be smaller but also to offer more precision to zap zombies and, perhaps, for use in medical applications. The company plans to sell the electronic guts to controller-makers.

Knowles is designing the camera with an optical zoom lens, an improvement because cell phone cameras don't physically zoom. Instead, they enlarge a section of an image, which manufacturers call a "digital zoom." The end result can be a grainy image.

Knowles' challenge is to make the camera small enough to fit inside cell phones. The prototype is a square about six pennies tall.

The new efforts come as Knowles positions itself as a leading producer of acoustic components with the $855 million purchase of Sound Solutions, a maker of speakers and receivers. When the deal closes in April, Knowles will be a one-stop shop for companies buying microphones, speakers and receivers.

The camera and joystick might seem like a deviation from the company's product line, but they use the same technology found in microphones and speakers, Niew said.

Knowles plans to sell the new products to companies already doing business with them, such as Apple Inc. and Motorola Inc. The products could pave the way for their own departments within Knowles, each with its own research, sales and marketing teams, Niew said.

The company expects to line up customers this year for use in products by the end of 2012 or early 2013.

"We want to be a human interface (company)," Niew said, explaining that the new products would enhance people's experience with their mobile devices.

So far, Knowles has benefited from an increase in cell phone usage globally and the demand for improved technology. For instance, some smart phones include two microphones instead of one to block out background noise and focus on the person speaking into the phone, Niew said.

The tiny camera and joystick are in their early stages, but Niew hopes they will open the door to customers in other industries, such as health care and security. For example, Niew said, the military could use the tiny cameras in soldiers' visors or helmets without using extra space.

"Although it might not be the primary driver of why we develop the technology," Niew said, "there may be an opportunity to use (the products) in other applications besides just general consumer electronics."

Bob Livingston, Dover's chief executive and president, said Knowles helped drive the company's fourth-quarter revenue to $1.9 billion, a 24 percent increase from the year-earlier period.

"(It was) maybe a slight surprise because we typically see a little bit of softening in the fourth-quarter shipments to cell phone (original equipment manufacturers), especially in November and December," Livingston said.

Cell phone manufacturers tend to ramp up production during the back-to-school and Christmas seasons, Livingston said, but last year they responded to consumer demands by increasing production through the seasonal downturn, a trend the company hopes will continue this year.

Livingston said he expects Knowles to enjoy "significant growth again in 2011, and we are supporting those growth plans with a very significant capital project to expand their manufacturing capacity in Asia."

Knowles was founded in 1946 by Hugh Knowles, an audio engineer who was instrumental in the development of the modern hearing aid. The family ran the company until 1999, when it was sold to investors. Dover bought it in 2005 for $750 million.

Today, Knowles employs about 210 people in Itasca and about 7,000 worldwide, including China, Japan and Malaysia.

With the new ventures and increased demand for its current products, the company hopes to hire about 2,000 people by the end of 2012, Niew said. Most of that growth will be in the company's manufacturing plants overseas, but Niew said he hopes to hire about 90 workers in Itasca, bringing the total employment there to about 300. The positions would be in areas throughout the business, from sales to research and development.

That growth has employees in Itasca working in downsized cubicles and crowded machine rooms.

"We simply have no space," Niew said, pointing out the storage lockers and containers lined up against walls.

To make room, Knowles is building a 30,000-square-foot wing at the unit's headquarters. Construction is expected to begin in April, and employees could move to the addition in October.

Tucked away in one of the crowded rooms, engineer John Szczech tested microphones inside a soundproof chamber similar to a radio studio. Inside, a speaker the size of a textbook was suspended in front of a stand holding two microphones, one that Szczech was testing and the other serving as a control.

When Szczech closed the door, the speakers released an array of audio frequencies, some inaudible. He sat outside, recording the performance of more than a dozen microphones. Though at time tedious, this is how technology gets developed.

"Besides coffee, this is what I do," Szczech said with a laugh.