Software has a ghost of a chance at US success

SYDNEY (10/28/2003) - A dose of the reality of doing business in the U.S. isn't deterring software developers who attended an export seminar in Auckland last week.

Annette Dow and husband Geoff McIntosh, who established Binary Research International Inc. (BRI) in the U.S. in 1997, told of the marketing, employment and tax traps wannabe players in the U.S. market will encounter.

"Going into the U.S. market was like going into a maze," says Dow, who is more familiar with such puzzles than she cares to be, because her husband is fascinated by them.

"He leads us into any maze we come across, quickly find his way through, then goes to an observation point to watch my progress. Then he laughs at me -- I hate it." But, with McIntosh, Dow has mastered the maze of U.S. business rules and regulations, and the expectations of partners and customers.

BRI, which was set up to fix "deficits" in the U.S. marketing of the New Zealand-developed Ghost disk cloning software -- Dow and McIntosh also helped sell Ghost to Symantec for US$28 million -- employs 18 people and this year will turn over about $6 million. Dow says that's down on the previous year's $8 million, and reflects the trough the U.S. IT sector is in. However, she says signs of improvement can be seen, making it a good time for developers eyeing the market to act.

Nathan Joll, director of Auckland company, is doing just that. Joll says the pointers Dow gave -- on tax and export rules, on the need for watertight contractual arrangements, and on the hoops to go through to establish company credibility - haven't scared him away. He is off to the U.S. this month on a fact-finding visit, and plans a return trip in January to get a business off the ground.

"I was feeling uneasy about going to the States, feeling daunted. New Zealanders tend to think that they can't compete in the U.S. but they're (Dow and McIntosh) just like me, and are showing how it can be done."

Joll's product is aimed at U.S. tyre shops. It enables shoppers for mag wheels to upload a photo of their vehicle to a Web site and virtually "fit" a range of wheels to see which they want.

Barry Were, of four-person Hamilton software developer Datasolve, is similarly undeterred by the complexities of the U.S. market. Were is in partnership with the maker of a PC-based music jukebox, for which he provides the software.

"We're confident we have a unique product but need to do more market research," Were says. The product has potential in bars and clubs.

BRI's experiences opened his eyes to business set-up costs, issues relating to employing staff in the U.S. and work visa requirements.

Dow and McIntosh gave their presentation in Christchurch, Wellington and Auckland, speaking to a total of about 70 developers. While they were offering their advice free this time around, they plan to return to New Zealand with a paid seminar series.

Dow says the New Zealand government is on the right track in pushing for development of a software export industry.

"There is some superb software being developed here and the U.S. market doesn't recognize that." At the same time, she says there's a big appetite in the U.S. for new products.

Dow and McIntosh continue to act as a Ghost reseller in the U.S., while also distributing Liquid Media, a presentation tool from New Zealand company Skunklabs. Ghost training represents another important part of BRI's business.