Temperature control firm keeping cool in hot market

Data centers are primary clients

Degree Control executives Jag Sisodia (from left) Eric Birch, and Rajesh Nair in the data center of their Milford, N.H. plant. (Joanne Rathe/Globe Staff)

MILFORD, N.H. - One of the hot issues in electronics today is how to regulate temperatures and airflow in corporate and institutional data centers.

Providing solutions aimed also at reducing energy costs is a fast-emerging business line of Degree Controls Inc., a small, privately held engineering services firm founded 12 years ago in Hollis, N.H. Three years later, the company, informally known as DegreeC, relocated to Milford. Other offices are in Marlborough and Santa Clara, Calif.

"We expect that our data center work will grow by 100 percent for each of the next few years," chief executive Jag Sisodia, 57, said during a recent interview. The company has some 60 data center customers in the United States.

As more computer servers control data center operations, things are heating up, literally, said Eric Birch, 65, executive vice president. As a result, temperature controls and even airflow, regulated by sensors and other instruments, are essential for protecting these key informational centers, he said.

Also, with energy costs soaring, companies and institutions want to reduce costs where they can, he added. "Data centers use about 2 percent of total US power."

Wally Phelps, 51, product line marketing manager, added, "The estimated 10,000 data centers in the US are reportedly the sixth-largest user of energy." Degree Controls was formed because a trend was afoot involving "electronic packaging using more and more heat in smaller boxes," said founder Rajesh Nair, 47, who is now chief technology officer. "Large companies were having problems that they didn't know how to handle."

Prior to starting Degree Controls, Nair worked for Cambridge AccuSense, a sensor manufacturing company in Shirley. It was acquired by Degree Controls four years ago.

Initially, Degree Controls zeroed in on the telecommunications industry. Its first product, in 1997, was a fan-controller board for Lucent Technologies.

Although telecoms are still a targeted audience, the upheaval in the industry in the late 1990s "put us on a roller-coaster ride," Birch said.

There were layoffs in 2000, 2002, and 2003, when the company was recapitalized, said Sisodia, adding that three groups of investors came up with nearly $5 million among them.

The number of employees is back to 100, with 60 working in Milford. Annual revenues have grown from $250,000 in 1997 to $16 million last year, he said. "Anything we have left over is reinvested in the company."

In addition to the data center customers, there are 100 others, Sisodia said. Among the largest are General Electric Healthcare, Motorola, and Emerson Electric.

These customers are provided sensors and other instruments as well as engineering services. "Seventy-five to 80 percent of our products are custom-designed," said Birch. A sensor is priced around $400; a thermal instrument as much as $50,000.

The company is embarking on new projects such as climate-controlled cages for animals used for biotech research and thermal-management systems for the US military, Sisodia said.

"The military," he said, "is also contending with heat issues because of densely packed electronic gear." Degree Controls is working with a number of defense contractors and subcontractors, he said, declining to name them.

But the data center work, he reiterated, is fast becoming the company's bread and butter.

Although computer giants like IBM and Hewlett-Packard are getting into the data center heating-and-cooling business, Degree Controls, right now, doesn't have a direct competitor, Phelps said.

A data center customer since 2005 is Telx Group Inc., based in New York City. Telx, a provider of networking solutions, has 14 centers in nine states, said Tesh Durvasula, chief marketing and business officer.

Telx has benefited from Degree Controls' consulting services and solutions based on sensors and other equipment, Durvasula said. "We're extremely satisfied because we've been given cost-efficient solutions to the heating and cooling issues."

Due to these and other measures, Telx data center operating expenses are declining from 7 to 12 percent annually, he said.

Degree Controls' biggest challenges overall are twofold, Sisodia said. "First, we have to focus on globalization and become more specialized than we were 10 years ago. Second, we have to get the right talent," which is especially difficult, he added, given a reduced number of engineering school graduates. "But one thing we have in our favor is that today's energy issues and thermal and airflow management are tightly linked," he asserted.