The digital elephant and the flea

By Richard Morochove

First published October 9, 1997

Last week, chipmaker Intel Corp. made a strategic investment, buying a 5 per cent chunk of MGI Software Corp., a little-known multimedia software developer based in Richmond Hill, Ont. Why does MGI interest Intel, a behemoth with 1996 revenues five thousand times larger than the pint-sized Canadian software outfit?

Canadians have a reputation for writing good software, particularly in the graphics field. However, we don’t have a very good track record at taking commercial advantage of our capabilities and growing good products into large software businesses.

A few companies do make it into the big time, at least for a short while. Many of these get plucked off the vine like a ripe and juicy fruit. Once-independent Canadian software developers such as Alias, SoftImage and Delrina have been taken over by U.S.-based computer companies. Corel Corp. remains independent, but likely won’t for long, given its enormous losses and plummeting stock price.

So I find it heartening when a young Canadian company defies the odds and first breaks into the big time. Last week Intel invested $2.8 million in MGI Software. Flush with cash, Intel runs a large venture capital operation that invests about U.S. $500 million annually in budding technology companies. To the best of my knowledge, this is the first time Intel has made such an investment in a Canadian public company, although it has invested in private outfits.

Intel isn’t a munificent benefactor. It invests strategically to advance its own goals. In particular, the chip-maker wants more reasons for computer users to buy its latest and most powerful chips, such as the Pentium II.

Even today’s most feature-laden and bloated software for common applications such as word processing, spreadsheets and databases runs plenty fast on the inexpensive processors that are used in home PCs that cost little over $1,000. Why would anyone need to buy a computer with a faster processor?

To answer that question, Intel has latched onto applications that manipulate images, 3D graphics and video. These graphics applications require an enormous amount of processing power to deliver snappy performance and can justify an upgrade to a fast chip.

Intel’s Visual Computing Initiative (VCI) is designed to accelerate the growth of these applications. The MMX instructions built into the Pentium II are designed to enhance the performance of programs that manipulate graphics.

Then there’s the problem of seeing the enriched graphics on your screen. Common interfaces such as PCI can’t deliver sufficient bandwidth capacity to send all those beautiful pictures to your monitor. Intel’s AGP (Accelerated Graphics Port) technology offers 10 times the performance of standard PCI.

Intel also developed the USB (Universal Serial Bus), which is available on most new PCs you buy today. You can connect a digital camera and scanner to the USB to bring images in and a color printer to produce hard copy of the processed image.

But you don’t need Intel’s alphabet soup of MMX, AGP and USB unless you have an application that makes use of them. That’s where MGI steps in.

MGI PhotoSuite ($59.95) is editing software aimed at the amateur photographer. You can start with pictures from a digital camera, photos you’ve run through a scanner or take advantage of the photos on disk offered by a growing number of photo shops. Then you can crop or enhance photos, add special effects, change brightness or contrast, adjust the colour and eliminate the red eye effect that plagues flash photography.

When finished, you can print out your finished handiwork on one of the new crop of inexpensive photo-quality ink jet printers to prepare greeting cards or post the photo on your Web site.

MGI VideoWave ($129) allows you to edit and produce videos for home movies and small business applications. You can take videos from your camcorder and then use a video capture card to digitally convert and store them on your hard drive. Then VideoWave helps you edit segments and rearrange the scene in the order you want. You can also add special effects and transitions, titles, music and narration. You can produce computer video files in several formats including AVI, Quicktime or even MPEG videos.

The video effects aren’t up to the quality you’d see on professionally produced TV programs. If you look closely, you’ll see jagged edges. Yet it’s certainly good enough to put together a home movie of a wedding or birthday party you can send to friends and relatives.

So it makes sense for Intel to team up with MGI. It provides a crucial link to help the chip-maker promote its hardware. Many of MGI’s employees are veterans of companies like Delrina and Alias, so they were smart enough to recognize Intel needed their stuff. And that’s how the flea gets to ride on the back of the elephant. CW