Hi, Mark. Midisoft an interesting firm.
What's encouraging is that MIDI is taking steps to position itself for growth. Have followed the company since last fall, when it made a deal with BCST for development of a BCST-branded streaming media "player selector," now available. Relationship with BCST (YHOO) may continue on several levels.
MIDI's music software gets good marks from music techies, but this product line is no longer the main event. Clearly, though, the company has core software skills that are valuable and merchantable.
Outwardly, there's little evidence to make the case that MIDI is a good investment. It's oh, so tiny (FY '98 sales were just $1.760mm), has little cash, and isn't close to making a profit (FY '98 operating loss, $2.590mm).
On the plus side, MIDI is attempting to carve out a franchise in Internet streaming media playback and control software and services. Both MSFT and RNWK have proprietary streaming media file formats to protect, so their player products don't now, and probably never will, cover all bases. Also, they are slow to add new capabilities and make meaningful revisions. As a result, the desktop has been Balkanized. You now need at least two players and arguably, three or four. As new formats become available, player congestion will get worse. As a file format-agnostic software developer, I believe MIDI sees the phenomenon of player (format) proliferation--and attendant user confustion--as its entry point.
MIDI's latest player does a good job, is easy to use, and should be able to generate wide distribution. Importantly, MIDI has recognized that an entry-level version of its player must be distributed "free." The other side of this coin is that MIDI can establish its brand, make revenue-generating deals with content providers for "preferred placement," sell advertising and position itself for e-commerce opportunities. For example, multimedia subscription content and pay-per-view are just around the corner and there's no reason MIDI can't participate.
I'd really like to see some proprietary algorithms incorporated within the MIDI player product to improve playback sound and/or video quality (or control thereof) at any connect speed. MIDI could work with firms like Ampex (AXC), Dolby Labs, QSound Labs (QSND) and Sonic Foundry (SFO) to incorporate such "tweaks" and "tools" into its product line.
Let me sum it up this way. Paul Klein, co-founder of Home Box Office in the early '70s and later, head of programming for NBC, once said that TV has two requirements, neither of which had (or has) ever been met:
1) Ease-of-access, and
2) Diversity of choice
It appears that MIDI understands the importance of this elusive value proposition and intends to do something about it. It will need to work very hard, but has a chance of pulling off a coup.
Make no mistake about it, an investment in MIDI is very, very speculative. Still, if you can afford the risk and you're willing to be patient, you might take a modest position and start following developments. Your downside is $2.8125 per share and your upside is, well, unlimited...
BAM
P.S. Long MIDI, AXC, BCST, MSFT and RNWK |
