"ACD Systems: Targets Instant Messaging, Builds On Image Software Success"
stockhouse.ca
ACD Systems has built a solid reputation with its award-winning image viewing software, for which orders are expanding at 20% a month. The company has also begun marketing a product allowing companies to build a private instant messaging system that works better than email. While instant messaging is already a crowded market with giants such as AOL providing a similar product, ACD Systems president and CEO Doug Vanderkerkhove explains that his
company's software, launched in November, is ahead of others in the field as it eliminates the need for intermediate servers. The software was given an endorsement by Office Depot and Whirlpool, who have signed on as users.
Vancouver, BC, March 9/SHfn/ -- ACD Systems [V.ASA] has been amassing awards in its virtual trophy case for its image viewing software, ACDSee, for over two years. Both print-based media and 'Net pundits have rung in with accolades for the Victoria, BC-based software maker. The software is licensed by more than 10,000 corporations worldwide, and empowers employees to efficiently manage images accumulated for web pages and advertising programs.
The company has decided to exert the influence it holds among that global ACDSee user base to proffer its latest project, private instant messaging software called ACDExpress. Businesses are increasingly adapting instant messaging (IM) as they appreciate the ability the software affords employees to collaborate across networks and time zones and receive instant feedback. ACD Systems President and CEO Doug Vanderkerkhove says, "We're finding the use of this product is displacing 70%-80% of email usage in our company and in the companies that are using it."
The market for non-propriety IM software is very crowded, with entrants from Internet pioneers America Online [AOL] and Yahoo! [YHOO] as well as software leviathan Microsoft [MSFT]. AOL, with AOL Instant Messenger (AIM) and the ICQ IM program it purchased from Mirabilis, is obviously the dominant force in instant messaging. The godfather of ISPs has said it will work with industry standards groups to develop a common standard for these systems.
However, a great deal of public squabbling has gone on between high profile players in the instant messaging marketplace. AOL was making headlines last week, refusing once again to allow software made by a third party to inter-operate with its AOL Instant Messenger. Vanderkerkhove insists that ACDExchange is different, and that his company's software will even have an edge over its
competition. He says that, by design, private IM systems are more secure, and that ACDExchange offers a better and more secure file transfer than FTP because the software eliminates the need for an intermediate server. "That puts us in the lead, because I don't think even Microsoft does that yet."
ACD believes its product has an elegant and user friendly interface; it incorporates no 3rd party applications or databases that would make learning ACDExchange complicated for the user to learn. Furthermore, "in order to place ourselves in a competitive situation with larger corporations like AOL and MSN, we will offer proprietary protocols, but we will also support protocols for which that
corporation can get sublicenses from those other companies."
The Exchange product was launched during the last week of November, and has not yet made an impact on the company's
revenues, though public relations materials proudly boast new customers Office Depot [ODP] and Whirlpool [WHR].
Vanderkerkhove notes that ACD is listening carefully to suggestions from its customers as it improves feature sets for the software.
As IM software grows to replace email as a primary communications tool, the company has established equitable price points and is working to grow its user base.
ACD has an extensive Internet distribution system. Nearly 90% of sales for the company's imaging products are recorded on the Internet. In fact, CEO Vanderkerkhove says that his network of resellers is increasingly moving to an Internet sales model also.
Although ACD Systems has been selling its software in Europe for only 8 months, sales from that continent now represent one quarter of the company's revenue. With the exception of the IM product, ACDExchange, each of the ACD Systems products has been "localized" and is now available in
Japanese, Spanish, French, and German in addition to English.
ACD has also signed agreements to bundle its imaging software with digital camera makers Canon [CANNY] and Hewlett Packard [HWP]. The PhotoSee offering was developed for viewing and printing pictures from Kodak picture CDs. Over the past two years, the HP relationship has evolved to
include co-operative development of "software in the digital photography industry and Internet photo usage." anderkerkhove promises that the link with HP will continue to be get "stronger and tighter."
With a substantial cash balance on the books, profits from its previous three fiscal quarters and extra funds from a recent Special Warrants placement, the company is looking at acquisitions to build out its infrastructure in areas ACD wants to expand. In particular, the firm has focussed its interest on the US$10 billion a year photo finishing and photo print market. In one scenario the CEO posits, "right now we could introduce our entire user base to photo finishing labs that have put in the equipment necessary to
process digital images."
The image viewing software, ACDSee, generates about 97% of the company's revenue and, as mentioned, has earned a long list of accolades which range from a five of five stars review from PC Magazine, to Graphic Viewers pick of the week. Dave, of Dave's Pick Of The Day, said in his citation. "As an image browser, again ACDSee is the best choice for exploring your file system for images of interest. A high-speed preview feature lets you quickly and easily take a peek at images without interrupting or slowing down your
exploration."
No one competitor produces software for all of the markets served by ACD's products. At least two other software makers produce and market private IM software. These are SoftBase Systems of North Carolina, which is a private firm with annual sales between US$5 and US$10 million, and Palm Springs-based FaceTime Communications, which specializes in sales, services and customer support software for Windows and has developed its own proprietary instant messaging software. Companies such as Cumulus [CMLS] and Media Bank offer image viewing products, though these firms make software with additional modules for workflow and
image manipulation.
The release of Q3 earnings figures for the period ending December 31, 1999 showed that the company has rapidly increased its revenues. During the 1999 three-month period, the company reported revenues of $1.21 million in comparison to $0.61 million for the same quarter in the prior year. It also reported a near doubling of year-to-date revenues for the nine-month period, from $1.587 million to $3.02 million. The company declared earnings per share during the three quarter period of $0.03. It had cash reserves of
$1,741,459 at the close of 1999.
During the third fiscal quarter, the company also initiated an advertising-based licensing program for the ACDSee image software. Vanderkerkhove says that corporations have put "a high value on sponsorship" of the product. "The sponsors have been approaching ACD Systems and allowing us an upper hand in negotiations."
ACD's presence at a top imaging conference in Las Vegas, the PMA Show, and the recent CeBIT in Hanover have produced a flood of orders. Vanderkerkhove knows that it is hardly a terrible problem to face an abundance of orders. "We're seeing growth in the 20% per month area for users of our software worldwide." But, he admits that the company needs to work toward attracting analyst coverage, saying that the company has engaged a public relations firm for that purpose. A move to a higher profile exchange is "under consideration." However, the emphasis has been, and continues to be, put on producing top quality software for its growing client list. |
