MGI strikes licensing deal with Palm

OTTAWA: MGI Software Corp. said on Monday it had struck a development and

licensing deal with handheld computer maker Palm Inc. that will open doors to

the wireless market for MGI's photo and video software. MGI said its PhotoSuite

Mobile Edition, which allows people to view, store and transmit photos and

videos, will be bundled with Palm's new handheld computers. In an announcement

on Monday, Palm said its m500 model begins shipping in April in the United

States and the m505 will ship in May.

The combination of technology would allow real estate agents, for example, to

show customers a home without leaving their office. "Your real estate

agent, on a wireless Palm, can access, pan and zoom and do a tour of a house

right in front of you," said MGI chief executive Anthony DeCristofaro in a

conference call. "Online auctioning, and the activity of being able to buy

online...we think has also got a lot of (potential)."

The company would not disclose financial details of the multiyear Palm

arrangement, but said it will immediately start adding to its revenues. Shares

in MGI surged as much as 20 per cent in early trade before slipping back to

C$3.43, a 12.5 per cent gain, in late afternoon trade. Shares in MGI have

whipsawed between a 52-week low of C$2.75 and a high of C$37.50 this year.

"It's an important deal for them (MGI) for the future positioning of the

company," said analyst at BMO Nesbitt Burns, David Wright. "They're

looking for new areas to apply their technology and the wireless marketplace

seems to be one where they can leverage their technology."

MGI said it also expects to strike similar licensing deals with such

companies as International Business Machines Corp. , which sell handheld devices

that incorporate Palm's operating system. "Our clear focus is working

closely with Palm in helping to drive and develop this marketplace, since they

are clearly the leader," said DeCristofaro.

Wireless imaging in still a nascent technology with bandwidth posing the

biggest barrier to adoption, said Lia Schubert, an analyst at InfoTrends

Research Group. Still, industry estimates suggest that 20 million personal

digital assistants will be shipped in the US by 2003, she said.

"We're especially focused now on non-PC and mobile devices as new growth

sectors," said DeCristofaro. "The market for such devices will be

larger than the PC market today." The Palm deal follows a $10 million

software licensing contract that MGI struck in December to include its software

on Sony Corp.'s camcorder and digital cameras.

Last year, MGI struck a string of licensing deals with such PC manufacturers

as Compaq, Dell, Gateway, and IBM. MGI said it is also working with Palm on

several other "future initiatives", including wireless imaging using

MGI's Zoom Server.

That technology allows digital images to be sent at varying resolutions over

different types of computer connections. "The product can take advantage of

a (wireless) marketplace where you have limited bandwidth, but you're still

trying to send high resolution images," Wright said.

(C) Reuters Limited 2001.