The Internet offers countless new ways to distribute information. However, the content it has distributed to date has mostly consisted of written text, still photographs and video and audio streaming. The challenge for Internet producers is to create content that has not been repurposed from other media.
Interactive Pictures Corp. (IPIX) is facing that challenge, with an e-commerce hook. The Oak Ridge, Tenn.-based company develops interactive photography tools that alter the way people view and create images, capturing a panoramic, navigable field of view.
“Where we are with technology today is like where we were with Edison and the movie camera,” says John Hendricks, chief executive of Discovery Communications who also sits on the IPIX board.
On May 21 venture-backed IPIX filed for an initial public offering. J.P Morgan & Co. is the lead underwriter. The company has not announced how many shares it will issue in the offering, which is scheduled for July, or an expected price range.
IPIX develops lenses for digital cameras and software that combine two overlapping 185-degree photographs into a single 360- degree image. Once the image is displayed on a personal computer, the user is “placed” within the center of a spherical setting and can navigate through the environment in real time.
The company’s technology was originally developed by Oak Ridge Laboratories for the purpose of procuring uranium from radioactive environments. The company later spun off from Oak Ridge and was incorporated in 1996.
IPIX technology is used to conduct virtual real estate and university tours. The company has recently partnered with IBM to enhance and strengthen e-commerce operations.
“IBM makes it as easy as possible for an advertiser to reach an audience online,” says IPIX Vice President Ed Lewis. “We can ride on their coattails and attract more advertising agencies and Web developers.”
Lewis said that IPIX has enough flexibility to delay a public offering if the market for technology stocks remains volatile.
“The team will make a decision based on market conditions on how to grow the company,” says Lewis. “We don’t have to go public to get funding.”
The company has raised $52.4 million in venture capital from corporate and strategic investors.
IPIX closed its most recent round in March, raising $27 million through the placement of 10,305,344 shares of Series D preferred stock.
GE Capital Equity Investments Inc. led the round, purchasing 2,862,595 shares for $7.5 million. Liberty IP Inc., a fund managed by former TCI chief executive John Malone, paid $5 million for 1,908,397 Series D shares. Motorola Inc. was the third institutional investor in the round, purchasing 1,145,038 shares for $3 million.
In July 1998, IPIX sold 6,435,643 shares of Series C preferred stock for $13 million to four investors. The company also issued warrants to purchase 1,608,911 shares of Series C preferred stock at an exercise price of $2.02 per share.
Institutional investors in the Series C round included Media One Interactive Services Inc., which purchased 3,580,446 shares for $7.23 million and Advance Publications Inc., which purchased 2,475,248 shares for $5 million.
In December 1996, IPIX issued 991,324 shares of common stock for an aggregate purchase price of $2 million to corporate investors Motorola and Discovery Communications Inc.
In addition to holding equity stakes, all of IPIX’s investors serve as testers. IPIX is testing its V360 Steerable Video device with Media One, Discovery and NBC, a subsidiary of General Electric. The V360 applies IPIX technology to full motion video and is currently in its alpha test stage.
Currently, more than 3,000 commercial Web sites use IPIX technology.
Online realtors including Homes.com and Microsoft Corp.’s Homeadvisor.com use IPIX technology in order to provide tours of property interiors. IPIX’s primary competitor in this market is Bamboo.com, a company that recently completed a $12.5 million round of financing with Intel Corp., Trident Capital and The Walden Group. Although Bamboo.com does not provide realtors with an immersive image, most IPIX customers have agreements with both companies.
“IPIX does a good job in providing crisp, quality images and organizational infrastructure,” says Ted Bremer, Microsoft product manager. “Yet Bamboo does the same kind of thing, and we partner with anyone who does a good job at technology and distribution.”
Lewis said IPIX would never press its customers into exclusive agreements.
“We are not interested in force feeding IPIX technology into realtors hands,” says Lewis. “We have a better imaging solution, and much more functionality for the agent.”
IPIX intends to fortify its presence in other categories of e-commerce through its association with IBM HotMedia 2.0. HotMedia 2.0 is a tool kit that allows Web developers to create sophisticated content that stimulates e-commerce, without having to use plug-ins. IBM has developed a less advanced immersing imaging technology, but elected to partner with IPIX because of its sophisticated product and reputation.
“IPIX has a simple, cost-effective way of capturing a 360-degree panoramic effect as well as tremendous traction in the marketplace,” says Bill Pence, Director of Development IBM Internet Media. “What we bring them is the ability to take things to the next level, which is e-commerce.”
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