Roxio touts Dell DVD deal

Shares in software maker Roxio jumped 25 percent on Tuesday, after the company announced a deal to bundle its DVD recording software with new Dell PCs.

Dell will include Roxio's VideoWave Movie Creator--a collection of tools for editing digital video clips and recording them to a DVD--as part of a hardware and software package for new PCs that ship with recordable DVD drives.

Roxio CEO Chris Gorog hailed the agreement--the first major deal with an original equipment manufacturer for VideoWave--as an endorsement of Roxio's move into DVD recording.

"Roxio is very pleased to broaden our relationship with Dell by providing consumers an easy and quick solution for creating DVDs and video CDs of their home movies," Gorog said in a statement.

In midday trading, Roxio shares were up $1.09, or 25.4 percent, to $5.38.

Deals such as this one are a make-or-break proposition for makers of recordable media software. Consumers typically stick with the software package that comes with the PC or add-in drive, giving software makers opportunities to sell upgrades.

Roxio's biggest competitor in the DVD software market is Sonic Solutions, which recently announced plans to acquire a division of storage specialist Veritas Software, in a deal aimed at wooing hardware makers with a more complete software package.

James Preissler, an analyst for investment company Investec, said CD recording software has turned into a commodity market, with some new software makers giving their applications to hardware makers to build market share. DVD software may follow the same route, he said, but not for a few more years.

"There's a little more support in the DVD market," Preissler said. "The market's not as mature, and there are so many formats...that experience plays a bigger role. It's probably at least a one- to two-year learning curve for anybody who wants to get into the market."

Established players such as Roxio and Sonic Solutions, meanwhile, will count on deal-making to build their installed base and boost brand recognition.

"Dell is obviously a great relationship" for Roxio, Preissler said.

Roxio made headlines earlier this month by buying the assets of defunct file-swapping pioneer Napster.