The next wave: Graphic details the right way up

By MICHAEL FOREMAN

Right Hemisphere managing director Mark Thomas could be forgiven if he feels a little bitter towards software distributors in his native New Zealand.

While his company's graphics software packages have made healthy sales in the United States, exciting the interest of Hollywood studios and computer industry giants such as Intel, local distributors originally showed no interest in stocking them.

"It's still true," Mr Thomas observes. "There's still that mentality that says: 'Made in New Zealand? - It can't be any good, let's go for the imported product'.

"But I'd rather have the US climbing all over us than deal with a lot of scratchy New Zealand dealers who don't put any value on what we do."

Mr Thomas formed Right Hemisphere in 1995 with chief financial officer Dave Revill, as an offshoot to an earlier venture, Computer Aided Design Systems, which the pair had started seven years earlier.

Through this involvement in computer-aided design, Mr Thomas had seen that by the mid-1990s ordinary PCs were becoming powerful enough to run complex graphics applications that had previously required expensive Unix-based workstations.

But before a PC costing a few thousand dollars could produce the same results as a $50,000 workstation it required the right software, which was exactly what Right Hemisphere set out to provide.

"We were fortunate to be in New Zealand because it helped us to spot this opportunity. Local companies tended not to have a lot of money so we helped people to get the same extremely high-end graphics results on relatively inexpensive Windows machines.

"We were convinced that this was going to become the major trend."

His hunch proved correct.

Soon after Right Hemisphere began trading as a graphics software distributor it outgrew the computer-aided design operation, which was sold to its staff two years later.

At the same time as Right Hemisphere was re-exporting US-made graphics software to the Asia-Pacific region, it was developing a product of its own.

"We saw some gaps in the market - in particular, a hole in 3D painting and texturing applications. Every other technology had migrated down to the PC except this one. Some would say it was an oversight but there were genuine technological challenges. We've battled with those challenges over four years of development and the results have been very good."

Right Hemisphere's first product, Deep Paint, allows graphic artists to simulate natural media such as chalk and oil paint in digital images.

"Deep Paint is two-dimensional but there is a three-dimensional effect as the paint appears to come off the page," explains Mr Thomas. "It mixes and blobs in a way that would be familiar to every conventional artist."

While sales of Deep Paint were modest - around 2500 copies of the $US249 ($655) programme have been shipped - the package soon caught the eye of US software giant Adobe, maker of the industry standard image manipulator Photoshop.

Adobe also marketed Deep Paint on its website and helped with technical development.

Early last year, Right Hemisphere began raising money from "angel" investors including Warehouse boss Stephen Tindall and former Electricorp chairman John Fernyhough.

This money, which has now reached approximately $2 million, helped the company to finance its second package, Deep Paint 3D.

Deep Paint 3D, a full-blown three-dimensional package retailing at $US795, has taken the company to a new level.

Around 2500 copies have been sold to the professional graphics market. Customers include computer games developers Sony Interactive and Nintendo, television and film studios including Dreamworks SKG, as well as internet design companies.

Along the way, Deep Paint 3D impressed giant chip manufacturer Intel so much that it decided to finance the development of a version that would run on its forthcoming 64-bit Itanium processor.

Around 80 per cent of Right Hemisphere's sales are now in the US. The company has established an office in Bellingham, just north of Seattle, and has recently appointed a US chief executive. Right Hemisphere is also turning to the US venture capital market where Mr Thomas is confident of raising around $US12.5 million for further expansion.

"Despite the doom and gloom surrounding the Nasdaq, there's actually a lot of money sloshing around - it's just got smarter and more discretionary. I think that's good for us. We've got a proven track record. We're not like a net start-up that's going straight to an IPO [initial public offering], we represent a genuinely valuable company."

Mr Thomas says the company's biggest challenge at the moment is managing the growth. His company is desperate to recruit skilled staff, especially project managers, 3D artists and programmers.

"We've got the potential to bring an awful lot of work into New Zealand but we have got to get the skilled people."

Mr Thomas believes Right Hemisphere's latest product, Texture Weapons, is the company's most important release yet.

"It tackles a problem that has been swept under the carpet in 3D graphics for 25 years, that is mapping a two-dimensional texture onto a three-dimensional object."

He compares this to gift-wrapping a Christmas present and making sure there are no overlaps or crinkles in the paper.

"At the moment this can only be done manually, and usually rather badly. But we have essentially solved the problem."

But although Mr Thomas believes Texture Weapons solves a problem that had become the holy grail of computer graphics it is retailing at only $US495.

"We may have underpriced it. At one place they looked at us strangely and said: 'This should cost $10,000'."

"I guess you always undervalue yourself when you come from New Zealand."

The Juice

* The company: Right Hemisphere, Auckland.

* Founded: In 1995, by Mark Thomas and Dave Revill.

* Business: 3D graphics texturing software.

* Staff: 25.

* Investment: Around $2 million from private investors. Now seeking $31.4 million US venture capital.

* 10 year plan: To grow within market niche. Go public within five years.