Some of my notes from the call:
1. OEM has grown from 11% to 36% of revenues. OEM partners now include Sony, Intel, HP, and Intergraph (which includes Painter on a workstation).
2. They divide their business into 3D professional (35% of revenues), 2D professional (33%), and consumer photo and imaging (32%). The 2D has dropped from 45% of revenues in 1996 because Kai's Power Tools hasn't had a release in 18 months. Painter is the strong product in the 2D category and is doing well.
3. The 3D category had new releases of Ray Dream and Infini-D during the quarter. Also, Real Time Geometry licensing started to add revenues for the first time.
4.They are now running 86% gross margins, which is up from last year due to the efficiencies gained from the mergers.
5. Japan had a bad quarter because distribution was still in transition. They expect a good quarter this time.
6.They say that market researchers project 65% annual growth in consumer home imaging tools. According to PC Data, in July/August MCRE had 45% of the consumer photo market. So they feel that this is going to be a growth area for the going forward with their main products now being Goo, Soap, and Art Dabbler. Wilczak said that they will release a major new product in this category next year.
7. There will be a new release of KPT in 1998.
8. They are excited by the big exposure that Goo has gotten from the fact that it is currently being demo'd on thousands of show-floor computers.
9. During Q4 there will be the following releases: Bryce 3D (note: this name is a little confusing; it is actually the latest release of Bryce, which has always been a 3-dimensional application; it seems they thought calling it Bryce 3D was catchier than calling it Bryce 3.0); Detailer for 3D Studio MAX, Final Effects Complete, and LogoMotion for Windows.
10. They see two big new opportunities. One is the licensing of their streaming 3D technology. According to Wilczak, MCRE has invented an entirely new medium, which he calls 3D objects. A browser or an online service could bring you the JCrew catalog and you could spin the clothes around and look at them from all sides. To do this, a browser or online company would license the 3D objects technology from MCRE. Also, the creators of the catalog would buy a 3D scanner, using technology which MCRE has licensed to Lockheed (and presumably will license to others).
11. The other big new opportunity is something he called Decision Support Visualization for the enterprise market. Right now they are working on prototype engine development, and they are looking to partner with larger companies in vertical markets such as data mining, financial services, and medical information. He said it is drawing in engineering from all parts of the company (though to me it smells like one of Kai's interface concepts).
12. He talked about his move from CEO to Chairman. He sounded quite sincere in saying this is not a departure, but rather a bid to bring in top level management so that they can continue to run a 300-person company and also pursue all these various partnerships. (Maybe they should buy Live Picture and get John Scully to join.) He said he wants to grow MCRE into a world-class billion dollar company. I think he used the term "world-class" about 15 times.
13. My impressions: Wilczak is energetic and good at conveying his conviction that there's a great business to be built around visual graphics. I suspect that he and Kai in combination could wow almost any group. The technology is real. The talent at the company is deep. Lately growth has been good, though not awesome--no home runs. But the level of enthusiasm shown by Wilczak is pretty contagious. I just hope they can juggle all the balls and not lose the needed focus. |
