Software Firm Thrives on Faxes

Winfax is the biggest ever Canadian-produced computer program on the software hit parade. The company has sold 2.5 million copies of the program which allows a personal computer to act as a fax machine.

``We're selling a copy every three seconds,'' says Dennis Bennie, chairman of Delrina. ``Most of those sales are to the United States.''

The US$80 program enables a personal computer to send a fax over a standard telephone line. The computer must have a fax modem, which allows the transmission of data. This modem is connected to a telephone jack.

For example, a person writing a letter in a word processing program such as WordPerfect, would normally use the command to print. Instead of using a regular printer, Winfax is chosen. The telephone number of the fax is typed in, the ``print'' command given, and off goes the fax to arrive at a regular fax machine or another fax-modem-equipped computer.

If a fax is received by a Winfax-equipped computer, it can be viewed on the screen and then either erased or printed on regular paper instead of the special paper used by less expensive fax machines.

``It's made my home office more flexible without having to spend the money for a fax machine,'' says Craigg Ballance a Mississauga, Ontario, banker who takes home a lot of work. ``The resolution quality sent directly from the PC is better than using a regular fax machine,'' he adds.

Sales of Winfax are being helped by falling prices of fax modems, the elimination of paper, and the growing number of people with personal computers in home offices. The company also has deals with many fax-modem makers, such as US Robotics, to ship out a version of its software, Winfax Lite, as part of the package. It then offers an upgrade to its top of the line Winfax Pro 3.0.

``Most people buy the upgrade,'' Mr. Bennie says.

Delrina is one of only a handful of major software producers in Canada. Another is Corel Systems Inc., which produces the popular Corel Draw graphics program. Its unit price is higher and it comes nowhere near matching the unit sales of Winfax or the dominance of the market.

``In the Windows fax market segment, Dataquest estimates that Delrina holds a 70 percent market share,'' writes David Wright, an analyst with the firm Marleau, Lemire Securities.

The firm's success has been reflected on the Toronto Stock Exchange. Last year it traded as low as $2.75 (Canadian; US$2.04); this week it was changing hands at $14.

``The reason for our success is straight forward,'' Bennie says. ``The company has positioned itself in communications and that is the fastest growing area right now.''

Delrina has another software program, PerForm, which also dominates its market. This product allows businesses to send forms from computer to computer, getting rid of paper.

``Delrina is the technical leader in forms software,'' says analyst Wright. ``In the forms industry Delrina is believed to have the single largest market share.''

Once again the bulk of sales by the Canadian firm are in the US. The US government is Delrina's largest forms customer.

``The company has a five-year agreement, of which two years have expired, with the US Department of Defense,'' writes Jane Dragone, an analyst with Sanwa McCarthy Securities in Toronto. ``This is Delrina's largest single customer, accounting for 15 percent of total revenues.''

The company set its sights on the American market from the outset. It has offices in San Jose, Calif., Washington DC, and Kirkland, Wash.

Sales at Delrina were $19 million last year; they are expected to be around $45 million this year and analysts predict they could rise to $75 million the following year.

The company has yet to earn a profit. It puts its money into new products including a new version of Winfax and a network version of the program to run on strings of PCs linked together.

Ms. Dragone says the fax-in-a-computer market will continue to grow since only about 3 percent of the 70 million PCs in North America are equipped with fax boards and software.

While Winfax is easily No. 1, it has 25 competitors, she notes.