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Tuesday, 18 June 2013
Magor Corp eyes recurring revenue model with upcoming Aerus launch
Magor Corp (CVE:MCC) is expected to evolve dramatically over the next 18 months with the much anticipated full-scale launch of Aerus, the company's live video conferencing cloud service.
Since listing on the TSX Venture Exchange in March, raising $5.9 million at 59 cents, the company has been preparing to add Aerus, which allows for live video conferencing and collaboration for any corporation or individual that wants to communicate around the world in real time.
Magor started life as a company offering multinational corporations a tool for video conferencing that involved its own proprietary software, but which also required the client to invest a significant amount of capital in high-end hardware to best use the technology. But with the rapid emergence of camera-enabled smart phones, tablets and desktop computers, virtually anyone can now use Magor's technology.
The company currently earns the bulk of its revenues through large contracts, based on a one-time right-to-use payment plus annual fee, as well as a leasing and annual fee for the hardware. With the emergence of Aerus, however, Magor will charge a monthly fee, giving it better earnings visibility.
According to the company’s website, the Aerus service integrates high-quality video with flexible data collaboration to enable “spontaneous and fluid workflows”, allowing users to collaborate in native resolution while sharing control of the conversation, desktops, applications, whiteboards and other materials.
The Aerus video conferencing service, which operates on the cloud and requires no control servers or MCUs, can support as many as 15 people, whether they're based in the boardroom, on their home desktop or on their mobile device, distinguishing itself from other technologies on the market. Larger numbers of conference participants will be supported using a version of Aerus to be released this summer.
Aerus will be able to download to a PC, phone or tablet through a simple app. Magor is also one of the first companies to support WebRTC, a Google-led, browser-based video solution that promises support for both BtoB and BtoC solutions.
As a result, the company says the technology offers low infrastructure and bandwidth costs as compared to traditional video conferencing, while giving the same high definition video. The elimination of the MCU, in particular, has a major impact on overall costs. Magor also highlights the collaboration mode feature, versus the only available presentation mode in traditional conferencing.
A major challenge faced by companies today is the incompatibility between systems, which has necessitated expensive gateway and transcoding equipment. Along with the challenge of where to put this equipment in a network, it also limits the features shared between systems.
Magor says it is unique in its ability to “speak the language” of most available video conferencing systems today. The company calls it a codec agnostic framework, which has immense value as it largely eliminates the costs and complexities of this interoperability problem.
Magor, which already counts clients such as Christie Digital, both the Canadian and Saudi Arabian government, Sony and the RCMP on its list, estimates the total addressable combined video and collaboration market size at $32.3 billion in 2015.
Revenues could also grow significantly for the company when it launches its Windows-compatible version of the service into the market, opening itself up to more corporate opportunities.
Industry comparables to Magor include Vidyo, a private company that has received $116 million in venture capital backing this year.
Magor separates itself as it boasts chairman Terry Matthews, a founder of more than 80 tech start-ups including Mitel, which was sold to BT in 1985, and Newbridge Networks, which was bought by Alcatel for $10 billion in 2000. The company's president and chief executive is Mike Pascoe, who was previously the president of Newbridge and after that, CEO of PairGain Technologies in California, which was sold to ADC for $3.2 billion.
These industry veterans clearly believe in the future success of the company, as management still owns 33 per cent of the business, which has a market capitalization of roughly $23 million and shares outstanding of 45.9 million.
The Ottawa, Ontario-based company, which was founded in 2007, is looking to launch a Windows compatible beta version of Aerus this year, which suggests investors will have a good idea of how Aerus is doing around the halfway mark in 2014.
For the moment, the company continues to sign large contracts, announcing five contract wins in the month of May alone. Shares in Magor have pulled back from the IPO price of 59 cents, and are currently trading at 40 cents on the TSX Venture Exchange.