The owners of PC Open Inc., a fast-growing electronics equipment manufacturer here, have formed an affiliated company to make computer servers and software for next-generation digital video recording.


The new company, Securgen LLC, has begun making software and network servers capable of transmitting digital video images via high-speed Internet connections and storing such footage, says Rick Sheppard, president and CEO of both PC Open and Securgen.


That technology generally is referred to as Internet Protocol (IP) video management and storage and most frequently is used for security monitoring, Sheppard says.


Securgen currently is operating in the same facility with PC Open, just east of downtown Spokane at 165 S. Pine, and has two of its own employees, Sheppard says.


PC Open makes similar, though less-sophisticated digital-video recorders and employs 32 people. Its annual sales last year were $12 million.


The new company is projecting that within 18 months, its sales and operations will grow to the point that it will need to move into its own location and operate independently of PC Open, Sheppard says.


Securgen is starting up with hopes of gaining a foothold in what some describe as the next generation of digital video recording, Sheppard says.


The main benefit of IP video is that security cameras dont have to be located in the same facility as the computer that collects images from them. Rather, they can be installed anywhere there are high-speed data transmission lines, over which they can transmit images to a server located elsewhere, he says. With current digital video systems in which PC Open-made recorders are used, a camera must be mounted within 1,000 feet of a recorder.


The new technology wont supplant conventional digital video anytime soon though, Sheppard says, because most companies dont have the capabilities, such as large bandwidth and storage capacity, to use the technology.


Video is pretty big, and the network infrastructure of a company that wants to integrate a true video solution has to be pretty robust, Sheppard says.


While the new company is gearing up, PC Open is growing rapidly with its established digital-video recorder business. Last year, PC Open signed a contract to make digital-video recorders under the name of a second major electronics manufacturer. Work for that manufacturer, whose name Sheppard declines to disclose, ramped up late last year. PC Open already was making such recorders for a huge consumer electronics company that he also declines to name, due to contractual agreements.


With additional work from that most-recent contract, PC Open is projecting that its sales this year will be just shy of $20 million, Sheppard says, a sizable gain over its $12 million in sales in 2003.


Meantime, PC Opens staff nearly has doubled in size during the past 18 months, Sheppard says. The company plans to hire a handful of additional employees in the coming weeks, he says.


To accommodate its growth, PC Open has leased an additional 6,000 square feet of warehouse space adjoining its current quarters, giving the company a total of 18,000 square feet of floor space.


It had moved to its present location about a year ago, from smaller space a few blocks away, also to accommodate its growth.


The company is moving its product and parts inventory into the additional space on Pine, and is converting about 1,500 square feet of warehouse space into office space.


Currently, about 90 percent of the companys sales involve its digital-video recorders, including those made under the names of other manufacturers and those made under its own brand name, Open Eye, Sheppard says.


The remaining 10 percent of its business involves assembling computer servers and workstations for schools and colleges.


Sheppard and Alan Aldous, PC Opens chief financial officer, started PC Open six years ago in the basement of a house they shared, initially concentrating on putting together computers using ready-made components and selling them in volume to schools.


The two Gonzaga University graduates managed to bring in $365,000 in sales during their first full year of operation and began building relationships with customers from there.