Paul, All: article on Intel acquisition to develop software for PII platform.
joey
Intel Hikes Up Investments
(10/13/97; 9:55 a.m. EDT)
By Kelly Spang, Computer Reseller News
SANTA CLARA, Calif. -- Add a feather to Intel's cap.
Not only is the chip maker driving its Pentium II platform with aggressive
pricing and marketing campaigns, but Intel continues to explore investment
opportunities to secure applications that exploit the power of its processors.
"Intel is good at its [investment] selections and at motivating technology
synergy" to bring to market applications that rely on the power of its
products, said Rob Enderle, an analyst with Giga Information Group, in
Cambridge, Mass.
Rival to Intel's investment prowess is Redmond, Wash.-based Microsoft,
another industry leader proficient in technology investments, said Enderle.
The latest beneficiary of Intel's deep pockets is MGI Software, a developer
of photo- and video-editing software that relies on the horsepower of the
Pentium II processor. Assuming the deal receives regulatory approval, Intel
said it would stake a $2.8 million equity investment in the Richmond Hill,
Ontario, application developer.
Of its product line, it is the VideoWave video-editing software company
officials said caught Intel's attention. MGI Software worked with Intel on
the development of the libraries in VideoWave, which includes technology
to render special effects in real time.
In the terms of the deal, Intel will buy 1 million shares of stock for $2.8
million and will have the option to buy an additional 1 million shares of stock
at $3.95 each. The warrant to buy the additional million shares will expire
on Sept. 29, 2000.
The investment "validates MGI's direction and [creates] momentum behind
Intel's newer technology," Enderle said.
Last quarter, MGI Software reported more than a 230 percent increase in
its revenue compared with the second quarter of 1996. For the first six
months of 1997, MGI reported sales of $5.5 million, compared with $1.7
million for the same period in 1996.
For the past seven quarters, MGI reported quarter-over-quarter sales
growth, which the developer attributes, in part, to the growth of digital
photography markets.
For MGI, the Intel investment is a big shot in the arm.
"The investment legitimizes MGI as a player now and into the future," said
Ihor Petelycky, video product manager at MGI. "Intel's investment is more
of a confirmation that we're here to stay."
In turn, MGI said it hopes this affirmation of long-term stability will entice
VARs to look at VideoWave in selecting video-editing tools. MGI products
are distributed through commercial distributors, including Ingram Micro,
Tech Data, and Merisel.
While relying on the Pentium II processor and capture board to drive the
VideoWave application, MGI is offering the channel a low-cost solution,
Enderle said. As a result, once cost-prohibitive video-editing solutions may
move into the mainstream market, according to Enderle.
The VideoWave software is priced at $99. MGI has OEM agreements with
several hardware manufacturers, including ATI Technologies and Iomega,
to bundle the software with their capture boards, Petelycky said.
Last month, MGI said it would support Microsoft's Advance Streaming
Format version 2.0 specifications, which the developer said will be included
in future VideoWave products for publishing video content on the Internet. |
