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Sunday, October 24, 2010

Sonic Foundry (SOFO): More Adoption, College Trends, TechSmith's Camtasia Relay

Shares of Sonic Foundry (SOFO) continue to push higher, finally moving toward what we view as a more reasonable $20-30 valuation range given the difficult-to-replicate Mediasite franchise. Three-month chart courtesy of Yahoo Finance (YHOO):


We think the "Market" is finally taking notice of the company's leading market position and favorable secular trends (e.g. video everywhere), as well as increased adoption for event/conference capture as more organizations embrace what we've been calling "the Mediasite memo." For example, last week, Gartner, Inc. (IT) used Mediasite to capture its largest conference of the year, Gartner Symposium/ITxpo 2010 (more than 7,000 attendees, certain keynotes available here).

Further, news on 10/13 (during 2010 EDUCAUSE) of the technology partnership with TechSmith served to validate Sonic Foundry's role in delivering a reliable platform to manage and distribute video content captured with third party solutions such as Camtasia Relay.

We'll share a tiny bit more on Camtasia, but first something on "secular trends." For this, we turn to insightful commentary from a 10/14 article in The Chronicle of Higher Education, Colleges Push for New Technology Despite Budget Woes. Some key points directly from the article:
  • Campus information-technology budgets showed signs of a gradual recovery in 2010, with 20-percent fewer programs than last year reporting financial cuts, according to the new Campus Computing Survey, which was released today at the Educause meeting in Anaheim, Calif.
  • That doesn’t mean the good times are rolling, however. With 41.6 percent of colleges still reporting cutbacks, IT departments continue to feel a pinch. Despite budget woes, the report shows many colleges are moving forward with plans for new technology in several areas.
  • Colleges are putting more course content online with wikis and lecture-capture techniques. Approximately 65 percent of colleges said they are developing a strategic plan to deliver instructional content through lecture capture and podcasting. The survey found, however, that only 4.4 percent of classes now use lecture capture and just 4.5 percent use podcasts. Only 3.5 percent of respondents used lecture capture and 3.9 percent used podcasting last year.
The third bullet is noteworthy as Sonic Foundry sits squarely in the middle of the lecture capture trend. Mediasite is playing a critical role in bringing more classes online as a reliable, effective, and secure enterprise-grade platform. To hear how certain customers are using Mediasite in their schools and/or other organizations, we recommend watching Mediasite User Group meetings. Most recent:
  • Sept 29, 2010 @ 11:00am CDT
    Don't have Silverlight? Download it here or watch with classic player.

    The key to successful learning spaces design is to consider how to match teaching and learning activities with the technologies you want to employ today, as well as in the future. Join Jim Jorstad from the University of Wisconsin-LaCrosse as he discusses Incorporating Innovation in Learning Environments - Getting Your Ideas to Take Flight. Jim will showcase examples of innovative learning environments in the U.S. and around the world. Learn how to make your rooms flexible, scalable, and successful. Learn techniques to "get a seat at the table" when technology choices are being made and learning spaces are being conceived. The session will also discuss how web streaming/lecture capture discussions can occur on your campus, and how to choose the correct solution for your faculty, the students, and for the administration. Learn techniques to match lecture capture with the room design you've chosen. This is a highly visual session. Get ready to travel the world of learning space design and how to successfully land safely at your own campus. Fasten your seat belts, we are almost ready for lift-off!

Finally, TechSmith's Camtasia Relay. Going back to Sonic Foundry's fiscal second quarter conference call on 4/29/10, management spoke of enabling the "ingestion of third-party content," noting that CTO Monty Schmidt highlighted innovation in this area at the company's UNLEASH conference earlier that month.

We subsequently emailed CEO Rimas Buinevicius the following questions:
  • What exactly is meant by "content management and ingestion of 3rd party content"? what types of content are we talking about? Other video/file types/formats? Is this something customers were especially excited about at UNLEASH? How major is this?
He responded on May Day (5/1) with the following and gave us permission to relay here on CS$:
  • "The best example of third party content is probably the broad use of a product like Camtasia. This is a desktop software screen grabbing application that allows you to create a training video or teaching seminar at your desktop. Many professors use this sort of software to create their own video, versus going to a lecture hall. So, importing this content into Mediasite makes us more ubiquitous from a content management perspective with both types of content being managed centrally. It's "major" from the standpoint of customers wanting only one content management application to deal with, the idea being you can co-mingle lots of sources of instructional media, not just Mediasite content."
Given the recent news of the partnership with TechSmith, now is a perfect time to finally share this additional color. We are pleased to see Sonic Foundry's move to increase the attractiveness of Mediasite as a content management utility. More "ubiquitous" can make life easier for customers and, thus, further enhance the Mediasite franchise value.

Happy investing,

Jeffrey Walkenhorst
CommonStock$ense

Disclosure: long SOFO, YHOO.
© 2010 Jeffrey Walkenhorst
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