NextWindow admired buyer ‘until they sued us’

“It’s a company we’ve long followed and admired - until they sued us,” NextWindow boss Al Monro told Keallhauled yesterday.

He was describing Smart Technologies, the Canadian company that bought NextWindow (latest reported revenue: $40 million) in a deal announced Monday.

READ ALSO: US techs’ advantage in any patent dispute

Mr Munro was referring to legal action initiated by Smart in April last year in a US District Court in Illinois.

Before the case, “Their CTO and our CTO have always talked at trade shows. There’s always been a tremendous amount mutual respect,” said Mr Monro.

Smart, part-owned by Intel, alleged the Auckland-based NextWindow had violated its touchscreen patents.

The case was dismissed in Illinois only last week as Smart withdrew its action with the pending merger.

Now, said Mr Monro, the two can get on with what they’re good at. “What brought the companies together at the end of the day is that if you combine the two IP portfolios; we don’t have to tip-toe around each others’ IP. We can really go hard and leverage each other’s knowledge.”

NextWindows touchscreen customers include PC makers Dell, HP, Sony, Lenovo and NEC. Smart Technologies strength is in interactive whiteboards, where it holds a 50% share in the global education market. The Calgary-based company plans an IPO shortly, which values the company at $US2 billion.

Who’s idea?
Who approached who with the takeover idea?

“It was us. We were the ones who suggested we talk again around this,” said Mr Munro.

The litigation must have been costly?

“Yes, for both sides I think,” said the NextWindow chief executive. “Fortunately it was dismissed before we incurred the bulk of the expenses. We were planning on defending it. We were confident just as they were confident.”

Another Navman?
Online, there was a lot of chatter about NextWindow becoming another Navman. That is, with its New Zealand office eventually hollowed out by offshoring.

The two company’s R&D efforts are complementary, said Mr Monro. "I'm pretty confident the synergies are there".

NextWindow - which has 120 staff worldwide and 75 in New Zealand - has just leased another floor at its College Hill headquarters (where all R&D is carried out), giving it the potential to double in size.

“Our new owners were aware of that and supportive of that; I think there’s a strong commitment to grow the business here,” said Mr Munro.

“We have very aggressive growth targets and they don’t want to disrupt that.”

Where to from here?
Mr Munro said he thought Apple’s touchscreen computer, the iPad, was an “absolute success”.

But he also doesn't consider it a true tablet, because it lacks a pen for writing or drawing.

Tablet makers on the Microsoft Windows side of the fence needed to create more compelling software for pen-based tablets to really take-off, Mr Munro said.

For now, he wasn’t seeing it. His suggestion: a tablet application built around social media services like Facebook and Twitter.

Another issue: for now, NextWindow’s camera-based touchscreen technology is only economic with displays of 15-inches or larger.

The iPad is just under 10-inches. Something for its expanding R&D department to work on.

Already foreign-owned
Mr Munro told NBR that NextWindow, founded in 2001, was in reality already foreign owned (see the ownership break-down in NBR's original story about the deal here).

Unable to rustle up sufficient private equity interest in New Zealand, the chief executive looked to the middle east, where he found backing from two Kuwaiti funds.

If it had remained independent, NextWindow could have listed in around 18 months, said Mr Munro, who described his company as profitable.

Its revenue for the 12 months to March 2009 was $US31 million ($40 million). But the IPO would have been on an overseas exchange; most likely the Nasdaq, with the NZX not even factoring on Mr Munro’s radar.