Zi Corporation

» see zicorp.com as it lived, on the wayback machine

~ the last words ~

Zi Corporation was incorporated in Alberta on 4 December 1987 under the name Cancom Ventures Inc., which at the time meant a secretarial college in Edmonton and an industrial equipment rental business. It became Multi-Corp Inc. on 30 August 1989, and in 1993 a board member named Michael Lobsinger took control, became chief executive and turned the company toward telecommunications. That November it licensed a stroke-based Chinese text entry system from Eric Chappell and set up a subsidiary, Ziran Developments, to run it. The company became Zi Corporation on 24 June 1997. Zi is the Chinese word for character.

The product was eZiText, predictive text for a numeric keypad. You pressed 5-2-2 and the phone offered you words rather than making you press each key three times. In English that was a convenience. In Chinese it was closer to a precondition, because a keypad with ten digits on it and a writing system with thousands of characters do not obviously go together, and somebody had to make them. Zi held patents covering ideographic text input, including specific ones for Chinese character entry, and licensed the result to handset makers rather than selling it to anybody directly.

I used this for years and never once knew whose it was. Through the whole feature phone era in Turkey, writing an SMS meant leaning on whatever prediction the handset shipped with, and nobody checked the vendor. On some of those phones it was T9 and on some of them it was eZiText, and finding out meant reading the licensing small print at the back of the manual, which I never did. The engine under your thumb was a procurement decision made in a building you would never see.

~ the record ~

~ the character problem ~

Zi's business was almost entirely royalties. In 2008 about 92 percent of total revenue came from eZiText licensing fees and royalties, mostly from handset manufacturers paying per unit shipped, which made the company a direct bet on cheap phone volumes. Two customers accounted for 44 percent of revenue that year, a concentration the company listed in its own filings as a risk to the business.

The wider portfolio was all the same idea at different angles: eZiTap, eZiType, eZiNet, and Decuma, a handwriting recognition engine Zi bought in 2005 for pen-driven devices and licensed to Nintendo and Sony Ericsson. Later there was Qix, which tried to turn the keypad into a search box so that typing a few digits surfaced content and services rather than just words.

~ suing over a keypad ~

Zi and Tegic, the Seattle company behind T9, fought for most of a decade. Tegic filed for patent infringement on 21 March 2000. On 21 February 2002 the court granted summary judgment that Zi's then-current eZiText 4.5 for alphabetic languages did not infringe, and on 4 September 2002 a jury found that earlier versions had. Tegic was owned by AOL at the time.

Nuance bought Tegic from AOL in 2007, which put the plaintiff and the patents in new hands. In August 2008 Nuance made an unsolicited offer for Zi, Zi's board told shareholders not to tender, and Nuance sued Zi for patent infringement in Canada that same month. The negotiating and the litigating were the same conversation.

~ seventy one people ~

The Arrangement Agreement was signed on 26 February 2009: roughly 35 million dollars, about 17 million in cash and 18 million in Nuance stock, valuing Zi at around 69 cents a share. Shareholders met to approve it on 9 April 2009 and the deal closed the same day, with 1,894,552 Nuance shares and 17,379,485 dollars going to former Zi holders. As of 23 March 2009 the company had 71 regular full-time employees, 32 of them in the Americas and 29 in North Asia, down from 90 two years earlier.

~ the layer under the keypad ~

The iPhone was already out when Zi sold, and a full touchscreen keyboard removes the problem that eZiText existed to solve. But the timing is not the whole story, because the Chinese input work did not become obsolete, it became somebody else's. Prediction moved up onto glass and stayed there, and every phone sold since has shipped with some version of it.

Nuance's purchase was the tidy end of a nine year argument: buy the company that sued, then buy the company it sued. What Calgary had built was a dictionary business dressed as a software one, and the largest collection of multilingual phone dictionaries in the world turned out to be an asset you could put a price on exactly once.

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