Plugging a software gap - system-software products of SystemSoft Corp

Nation's Business, Sept, 1996 by Roberta Reynes

In 1989 Robert Angelo could have been content to hold on to what he had achieved. Starting out as an engineer, he had risen through computer-industry management to become, at age 42, chief operating officer of Phoenix Technologies, a software maker in Santa Clara, Calif.

But Angelo had taken risks during his career, so he wasn't averse to taking another one. Beseeched by portable-computer makers for software-engineering services that Phoenix didn't offer, he and three other employees left to found SystemSoft Corp. in 1990. When its first consulting assignments unearthed a gap in system-software products in the nascent portable-computer market, the young company jumped in to fill the void.

Today, SystemSoft in Natick, Mass., offers about a dozen products that are designed, like all system software, to ensure compatibility between different kinds of personal-computer hardware and common computer-operating systems, such as Windows 95 and DOS.

Paul Sereiko, the company's vice president for corporate marketing, explains: "Every computer design involves different chips, disk drives, and so on. But the machines must use the same operating systems. We provide links to make that possible."

Sixty-five percent of SystemSoft's revenues come from PC card software. Credit-card-sized PC cards are inserted into portable computers to add capabilities, such as a fax modem or additional data storage. SystemSoft's products ensure that any of the 500 PC cards on the market work with different computers.

Meeting the demand for easier-to-use machines is paying off for Systemsoft. The company has attracted a list of world-class customers, including Microsoft, Compaq, Digital Equipment, and Intel. Systemsoft has posted annual growth exceeding 50 percent for six years. Revenues for the 160-employee business hit $24.6 million in fiscal 1996, and profits were $3.6 million. The company went public in August 1994 at $5.50 Since then the stock has split and was selling recently at about.

While SystemSoft is best known for its PC card software, that could change quickly as the company exploits new markets. Products it developed for portable computers are applicable to huge emerging markets such as smart cellular phones and interactive television.

Also, the company in June began shipping Systemwizard, which diagnoses and resolves computer. mon problems consumer have with their desktop top computers. Users whose PCs contain Systemwizard can click on its icon, then click on one of several boxes indicating parts of the computer. For example, if you aren't getting sound on your Lion King" game, you hit speaker." Then Systemwizard asks you questions to resolve the problem.

The software should alleviate an intense and growing headache for the computer industry: Frustrated users place an estimated 200 million calls a year to manufacturers, technical-support centers, costing the industry $4 billion.

Systemwizard builds on PC card soft, ware technology, but the desktop market is five times bigger than the portable business, according to industry analysts. Paul Bloom, an analyst with Volpe, Welty SL Co., an investment bank in San Francisco, says that SystemSoft's new thrust could boost its earnings by 50 to 100 percent annually "for the next several years."

Angelo describes Systemsoft as an "engineer-to-engineer" company. If Compaq is developing a new computer, for instance, Systemsoft engineers work side by side with Compaq's engineers to customize the software to their exact needs. To Angelo, this relationship is the heart of what we do. It bonds us to the OEMs (original-equipment manufacturers] we work with."

Today, as SystemSoft's president, CEO, and chairman, Angelo finds that his toughest challenge is keeping pace with rapidly changing technology. Technical and political shifts can occur overnight at glant alliance partners. If you don't pay attention to even the subtlest trend, it can put a small company out of business," he warns.

As low-tech as it sounds, the company cafeteria is a focal point for intelligence gathering. Angelo says that you can sit down at any two or three tables and get updated over a sandwich on the latest technology being applied for Apple or Compaq.

"And because, say, Hewlett-Packard engineers may be working here, you find out what's going on in their company, the hottest technologies, what they think the trends are."