Software partnership long-shot investment

Press, 19 February 1986, Page 37

Software partnership long-shot investment

Business editor The public have the chance to invest in New Zealand-developed computer software with the floating of a special partnership, Affinity Software, Ltd, and Company. The product is a system for retailers. It runs on IBM PC and AT microcomputers, and is being sold at $lO,OOO a package in New Zealand and SNZI4,OOO a package in Australia. Up to 1190 units are being offered to the public at $lOOO each. The partnership will end either on December 1, 1992, or when 1000 of the microcomputer systems have been sold — whichever is the earlier. The partnership will have the exclusive right to market and sell IRDOSS in Australia and New Zealand. The partnership will pay IRDOSS International to sell the product in the two countries. IRDOSS International (pronounced ur-doss) is the trading name of IRDOSS Computer Systems, Ltd. It has all the develop-

ment rights to the retail software, which Is owned by Mr Wayne Wright, a Wellington businessman, who was in manufacturing and contracting in California in the late 19705. The president of IRDOSS is Mr Rob Kent, who spent eight years with Rank Xerox from 1970, "specialising in organisation and methods and paperwork system design,” according to the partnership prospectus. IRDOSS is a series of software packages which provide all the traditional computer functions for small business: debtors, orders, sales and stock. However, Mr Kent said from Auckland yesterday that it catered for the retailer with branch shops. At one installation it is running on an IBM PC and IBM AT networked to branches. This means that the potential market in New Zealand is limited. In the Australian market there will be strong competition from other software, though Mr Kent is adamant that it is the only

package of its type, a strong claim for a computer which is said to have more than 10,000 pieces of software available for it. It is designed to monitor profitability of various items of stock, he says. In addition to Australia, there have been inquiries for the product from Tahiti and Singapore, and IRDOSS has hopes for the American market. An emphasis on IBM is not necessarily the asset it appears on the surface. The market is now being flooded with cheaper compatible machines from other manufacturers, and they run most of the best software. IRDOSS, probably because of its IBM links, has not yet tested its product on other machines, Mr Kent suggested yesterday. This could limit its market. The partnership offers investors a stake in a highly competitive, changing market, characterised by rapid obsolescence. At the same time, it does not offer a share of the really big earnings, which would

come from success in North America, admittedly a long shot As with most special partnerships, the share of deductible tax loss will be an important Inducement. This, for an investor on the maximum tax rate, is projected as $5775 in the first year on the minimum investment of $5OOO. Against this benefit is an overseas loan of SNZI million, repayable by the partnership (investors) from income. In favour of IRDOSS, its provision for GST will give it an advantage over American software in New Zealand, and perhaps later in Australia. At present 14 IRDOSS systems have been installed in New Zealand and others on trial in Australia. The success of the product has still to be established. The sales commission paid by the special partnership seems high — 75 per cent of gross sales. This is in addition to a sales service fee of $2,005,000.