Sonic Acquires Roxio Software; Napster Rolls On In a move that surprised more than a few interested observers, Sonic Solutions announced on August 9 that it was acquiring Roxio's consumer software division for $80 million in cash and common stock. Subject to stockholder approval, which will make the fait accompli acquisition official sometime in Q4 2004, Sonic will acquire all the major assets in Roxio's production software portfolio. Key assets transferred in the acquisition include the leading desktop CD/DVD creation tools Toast 6 Titanium and Easy Media Creator 7, as well as VideoWave, PhotoSuite, and Easy DVD Copy. Sonic expects to retain most engineering and software development and management staff associated with the acquired products in Roxio's existing facilities, and maintain the Roxio brand.
Not included in the acquisition, significantly, is the Napster service and brand. According to the Sonic press release announcing the acquisition, Roxio will focus its business, henceforth, on the digital music distribution market and change its corporate name to Napster. "We've been talking to Roxio for quite a while about acquiring their software line," says Sonic general manager for desktop products Mark Ely. Increasingly, he says, "their attention has focused on Napster," which gave Sonic "an opportunity to take over the Roxio brand."
The acquisition makes for some interesting bedfellows, since Roxio's flagship Windows product, Easy Media Creator 7, works different corners on many of the same streets as Sonic's MyDVD and RecordNow. All three products target the consumer desktop content creation markets. But according to Ely, Sonic will have no problem maintaining the separate brands because they reach those markets in different ways, and their strongholds are in different segments. "Both Roxio and Sonic have strong brands in various channels," Ely says. While Sonic's products have always sold well through online distribution, the acquisition of Roxio's product line gives Sonic "a chance to build a brand in bricks-and-mortar retail," Ely says. He also cites Roxio's "strong OEM presence" as another factor that makes "their technology portfolio very attractive."
But the appeal of the Roxio line isn't just complementary channel outlets, according to Ely. "When we were doing our product design, we looked at Creator 7 as a product design we'd like to match." [Roxio's influence can already be seen in the task panes newly added to the just-released MyDVD 6; see review, pp. 31-33.] And the tools arguably have complementary strengths in their feature sets: Creator 7 offers full-bodied video and image editing in VideoWave and PhotoSuite that's well beyond anything found in MyDVD, and MyDVD's best-in-class consumer DVD authoring engine could seemingly give Creator's clumsy and limited DVD Builder a much-needed shot in the arm. "VideoWave has a lot of video editing power," Ely says, "and the Sonic side has a deep authoring engine. Each product line has its own roadmap. Our challenge going forward is to determine what's the best of what we've got and how to use it."
Perhaps the most signicant addition to Sonic's product line in the Roxio acquisition is Toast, Roxio's leading CD/DVD creation tool for the Mac OS. For the first time, Sonic has become a player in the consumer end of the Mac market. "Because Apple ships burners with all their Macs," Ely says, "there's a much broader audience for burning on the Mac. We've been barraged by the Mac press" since the acquisition was announced, Ely adds, responding to rumors that, as Steve Jobs said upon the unveiling of iTunes, "Toast will be Toast." Not so, Ely insists; Toast is alive and well, and will be aggressively marketed by its new proprietor.
Not to be forgotten in the Sonic-Roxio acquisition is Roxio's stalwart WinOnCD recording software, quietly acquired from CeQuadrat in mid-1999. Roxio hasn't done much with WinOnCD in North America, but it remains a major player in Europe, particularly in Germany, where its management staff is located. Ely says Sonic plans to maintain that staff, and keep things status quo with the WinOnCD line.
And what of Sonic's distribution partnership for MyDVD with former Roxio parent Adaptec? "That's one of the things we'll have to sort out," Ely says.