Israeli Defense Technology Fuel's Vsoft's Software               
                      (Multimedia Week; 02/01/99)                      

  Feb. 01, 1999 (MULTIMEDIA WEEK, Vol. 8, No. 5 via COMTEX) -- The growing use 
of videostreaming over corporate and government Intranets has led to a 
concurrent rise in demand for software that manages and manipulates video on 
demand (VOD).

 The opportunity in those markets encouraged Vsoft Ltd., a new kid on the block 
out of Israel, to launch the next generation of its VideoClick VOD management 
software and compete against Microsoft Corp.'s [MSFT] NetShow Theater and Cisco 
Systems Inc.'s [CSCO] IP/TV.

 Vsoft is the offspring of the Rafael Development Corp. (RDC), a venture 
between the R&D arm of the Israeli Department of Defense(DOD), and Discount 
Investment Corp., one of Israel's largest investment banks. RDC was created to 
spin off technology developed for the Israeli DOD for commercial use, Alon 
Zelzion, president and CEO of the company's American subsidiary, Vsoft Inc., 
told Multimedia Week.

 The U.S. arm opened in Boston in June, 1998.  "We didn't have an idea for a 
product (in 1995, when Vsoft Ltd. was formed in Israel), but we wanted to have 
our people attached to Rafael's technological expertise, which was in image 
processing and pattern recognition," Zelzion said.

 Vsoft has put all of its eggs into VideoClick, which launched in late 1997. 
The system software was first used by Israel's DOD to manage video archives.  
VideoClick is installed in 60 locations, primarily in universities, TV 
stations, post-production facilities and kiosks throughout Israel, Germany, 
Japan and the United States.

 Zelzion said his company is conducting field trials for the consumer market in 
several countries in Europe and Latin America through cable, satellite and DSL, 
but he doesn't expect the technology to be deployed until 2001 at the earliest.

 VideoClick streams MPEG-1 and MPEG-2 video to multiple Windows- based 
desktops, over LANs and Intranets, on Windows NT or Unix-based servers. The 
software lets users create links between a video and other documents, share 
video clips and messages.  It also lets users add bookmarks for editing and 
view streamed video through a Web browser.

 The latest version, which will ship in March, can be used as a stand-alone 
product with VCR-like features for editing and viewing video on a laptop.

 At an entry level price of $19,950, customers get server software, 10 user 
licenses and a content manager.

 "The product is priced on two parameters: the number of concurrent users who 
can access the server at any time and the size of the server," Zelzion said. 
VideoClick is among the priciest products in a market that includes Cisco's 
IP/TV ($14,500), Xing Technology Inc.'s StreamWorks ($3,000) and InfoValue's 
Quick Video ($7,000).

  Financial Ties

   Vsoft is close to securing a second round of venture capital funding in the 
form of a $15 million investment from an Israeli VC company Zelzion wouldn't 
reveal. The company's first VC round of $10 million was finalized in May 1998 
through PCS, the exclusive distributor of Sony Corp. [SEL] products in Israel.

 Vsoft is in co-marketing agreements with Optibase Ltd., an Israeli-based 
developer of video networking software and hardware, and FutureTel, which 
specializes in video-compression systems. The company has been in preliminary 
talks with Oracle Corp. [ORCL] about bundling VideoClick with Oracle Video 
Server 3.0 (OVS), according to Bonnie Vik, director of product marketing for 
OVS.

 Other partners include Sigma Designs Inc.[SIGM] and Paris-based Vitec 
Multimedia, which develops low-cost frame accurate MPEG-based video editing 
systems. Lionel Zadje, Vitec's marketing and sales manager, said that 
relationship is still in the early stages.

 "We're collaborating on MPEG-1 encoding boards but haven't made any bundling 
decisions yet," Zadje said. "We're looking at each other's technology and 
expertise."

 Vsoft's management team includes several veterans from Digital Equipment Corp. 
[CPQ] President and CEO Meir Friedlander managed R&D teams at Digital and 
served with the Israeli Defense Forces' Intelligence Corp. Eitan Lev, research 
and development VP, managed software teams at NEXUS, a start-up that develops 
two-way paging systems. Before heading Vsoft Inc., Zelzion was vice president 
of business development at RDC and held management positions at Fairchild Test 
Systems and Micropolis Corp.  (Vsoft Inc., 617/753-7354; Vitec MultiMedia, 
408/752-8483)

  Vsoft at a Glance

  Headquarters

 Vsoft Ltd.  Hi-Tech Park, Zone 7, Bldg. 1B  PO Box 244  Yoqneam 20692 Israel

 Phone: 972/4-959-9555  URL: www.vsoft.com    Vsoft Inc.  Boston Fish PIer, 
West I, Suite 300

 212 Northern Ave.  Boston, MA 02210  Phone: 617/753-7354   Key Product

 * VideoClick   Number of employees

 40   Names to Know

 Meir Friedlander: Vsoft Ltd. president, CEO  Eyal Rom: VP, sales Eitan Lev: 
VP, R&D

 Curtis Priem: co-founder, CTO  Alon Zelzion: Vsoft Inc. president, CEO

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