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Can Widecom re-invent itself?

Continued.... Widecom Wide Format Scanners - [Previous] [Next]

Things Start To Go Wrong

For two kids out of college embarking on wide format global domination, the Tulis needed investors. During the mid-90s, one of Widecom's main sources of funding was the Societe Innovatech du Grand Montreal ("Innovatech"), an economic development agency of the Province of Quebec.

Widecom SLC Large Format Scanner
Widecom SLC Large Format Scanner
Photo credit: The Widecom Group Inc.

Innovatech subscribed to 450 Class A Widecom Shares at the aggregate subscription price of US $2,500,000 dollars. It also entered into a joint venture with Widecom to establish a R&D consortium, NovImage Inc.

Both Innovatech and Widecom acquired an equal stake in the NovImage consortium in exchange for capital contributions from each of approximately US $1,875,000. The consortium expected to be eligible to receive subsidies and direct payments under various Canadian and Provincial R&D incentive programs. These were expected to substantially expand the amount of R&D that the consortium could undertake.

In January 1997, Raja Tuli, President of Widecom, stated that "We are delighted that the company was offered this opportunity. Conducting our R&D through the consortium should permit us to expand the work we can pursue while achieving a lower effective cost. This arrangement is a win-win for all involved, and could prove strongly beneficial to our stockholders and Quebec over many years to come."

Part of the Canadian and Provincial R&D incentive programs would come in the form of tax-deductible subsidies. Such assistance, however, would be dependent on Widecom making sales and being profitable, something which the company would struggle to achieve. In explaining a net loss of $839,301, a press release from 1996 comments that "Revenues for the fourth quarter declined because of a $140,000 decline in R&D grants".

Widecom's declining R&D budget had to be spread over a growing number of products.

Widecom's fortunes were not helped by a number of legal actions against it. One such court case in 1995 alleged a breach of contract and fraud against Widecom and against Raja Tuli, Suneet Tuli and Lakhbir Tuli, the "Major Shareholders". This lawsuit was settled with a $185,000 payment. Other actions were resolved by share transfers.

By far Widecom's biggest problem, one it never overcame, was poor sales. For all its innovation and aggressive pricing, Widecom's products never sold as well as the company needed them to. This is seen in information Scanners4CAD received from an ex-Vidar employee who stated that by Vidar's reckoning Widecom never had more than a 5% share of the wide format scanner market. (Vidar was once a major US-based large format scanner manufacturer, acknowledged as such by inclusion in Widecom's own product comparisons. Vidar is now owned by Contex.)

In announcing the appointment of Joe LaBruna as Widecom VP in January 1999, Raja S Tuli, CEO of the WideCom Group Inc, let slip that "Joe will be a tremendous asset in re-energizing WideCom".

Widecom MFP - WC936
Widecom MFP - the WC936
Photo credit: The Widecom Group Inc.

In March 1999, Widecom announced an international agreement to supply its new MFP (multi-function peripheral) scanner and printer combination. Perhaps more desperatly now, Widecom again had high hopes for the monochrome WC936. Again, Widecom's press machine pushed the WC936's earning potential, presumably for the benefit of investors. "Forecasts by the initial four distributors that have signed agreements, TDS Cad-Graphics (UK), Pixel Digital Systems (UAE), Bilmak Ltd (Turkey) and United Stationery Co (Singapore) are estimated to generate greatly increased revenues" Widecom stated.

However, the WC936 MFP was far from the success Widecom had hoped for. At least one of the four initial wide format scanner distributors returned their entire order. Although Widecom's Colscan software has been described as "brilliant" and the scanner component as "good", the WC936 printer received forceful criticism. Scanners4CAD believe that Widecom rushed out the WC936 before it was ready.

Next, in December 1999, Widecom announced that after four years of development, (a ruinously long time for most developers), it was producing a "revolutionary large format color digital printer". Again, Widecom emphasised the earnings potential of this device which was expected to "significantly reduce retail prices from $46 to $5 per poster in the on-demand poster market" which they "expected to exceed $18.5 Billion by end of 2002".

In order to leverage opportunities for this product, WideCom appointed John O'Leary as a consultant and advisor to the company in late 1999. O'Leary was a former Chairman of the Board of AIM USA, ex-president of The Office Product Group of Burroughs Corp and a 1995 New York Entrepreneur of the Year Award winner in 1995.

O'Leary was also a 1983 founder, President and CEO of IIMAK (International Imaging Materials, Inc), the largest manufacturer of thermal transfer ribbons in the world and a continuously profitable company until it was sold in 1997 for approximately $260 million. With many years of experience and significant contacts with printer manufacturing and distribution companies, Widecom hoped O'Leary would provide it with the experience needed to extend its marketing worldwide. It was not to be. The printer was not a success, nor did the market materialise as fast as Widecom hoped.

Revolutionary Large Format Color Digital Printer
Widecom's On-Demand Poster Printer
Photo credit: The Widecom Group Inc.

In May 2000, Widecom established a new, wholly-owned subsidiary, PosterNetwork.com, with O'Leary at its head. It was described by Widecom as "a new economy, value added printing service offering customized, fast, inexpensive poster-size reproductions". The Tulis claimed they would "revolutionize short run poster reproduction" by raising $3m in a private placement. In the end, PosterNetwork acquired Widecom's proprietary wide-format printing technology and patents in exchange for 12 million shares of PosterNetwork.

Today PosterNetwork.com no longer exists as an active business.

It was roundabout this time that Widecom's wide format product sales began a dramatic decline. Distributors began to look for alternatives elsewhere. Widecom's rivals took this opportunity to displace them in the distribution channel. Despite its innovative SLC technology, "brilliant" software, low prices and aggressive marketing, Widecom had failed to convert its advantage into hard sales. Over the period 2001, 2002 and 2003, Widecom's total sales - scanners, printers and copiers, etc. - fell from $1,581,791 to $610,429 to $538,035 - a massive 66% collapse in sales revenue in just three years.

The last significant update of Widecom's website was in 2003. For the next five years it would remain largely unchanged, continuing to argue that Widecom was "the world's most successful manufacturer", in large format scanning. Yet when we spoke to Widecom, a spokesman would admit that "yes, our website is in need of some updating".

Widecom told us that they "continue to manufacture product and deliver to various countries around world. The products are still manufactured in our facility in India. We've not been as active at trade-shows, or certain publications that have not proven as effective. While we've continued to improve our products over the years, our next-generation product is scheduled to be introduced for Christmas this year." Does "next-generation product" mean a new Widecom large format scanner? We're not sure yet.

We question if Widecom has the stomach to get back into wide format scanner manufacture and distribution.

Today's large format scanner market has several attractively priced CIS products which have now stolen SLC technology's thunder. Ten years is a long time to be absent from such a competitive technical market, particularly when they are so many other exciting opportunities to take advantage of. Whatever the next generation product Widecom releases, there is a strong chance that it will not be a wide format scanner.

Other Products, Other Opportunities!

SuneetTuli with Pocket Surfer 2
Suneet S Tuli, CEO Datawind,
with the Pocket Surfer 2.
Photo credit: The Widecom Group Inc.

While Widecom's desire to build wide format devices has apparently cooled, the Tulis enthusiasm for the white heat of technology has not. One has moved on to other projects.

Suneet S Tuli is now CEO of Datawind, another of their Canadian companies. Datawind is the developer of the Pocket Surfer 2 which its enthusiasts claim "offers completely free mobile, full Internet connection at speeds faster than any BlackBerry, Nokia, even the allegedly omnipotent Apple iPhone". It sounds like a winner!

Datawind itself claims that it is "a leading provider of wireless web access products and services. Based on several international patents, DataWind’s breakthrough technologies solve the bandwidth limitations of cellular networks by accelerating content delivery by factors of 10X to 30X. The DataWind PocketSurfer Web Viewer is the first product to deliver the experience of the desktop Internet efficiently to a mobile cellular customer". DataWind is based in Montreal, Canada.

For more information on Pocket Surfer 2 and Datawind, please visit www.datawind.com

Footnote:
While idly channel-hopping late at night I came upon an IT shopping channel selling Datawind's Pocket Surfer 2 for GBP £149.99. The salesman made an engaging case for it, so much so that I considered buying one. Then I remembered a review I had read which suggested that the quality of the Pocket Surfer 2 could be improved. This rang a familar alarm bell. I put all thoughts of ownership on hold until next year.

For anyone interested in a good, no bull introduction to Datawind's Pocket Surfer 2, see: www.reghardware.co.uk

I watched for 15 minutes hoping for some reference to Widecom. It was not to be.

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