Ben Kuo: Tell me a bit about Morpheus Software--what are your products, and how do people use them?

Dan Engel: Morpheus Software offers four easy-to-use digital photo animation software titles for consumers -- Photo Morpher for morphing and transforming one person or object into another, Photo Warper for distorting and exaggerating portions of photos such as body parts, Photo Mixer for mixing up faces and body parts between two photos, and Photo Animation Suite, a deluxe animation package containing each of the three products plus 15 sample animations.

Our software products are focused on digital photo entertainment, enabling everyday PC users to have new ways to use their digital photos for personal expression, fun, and creativity. Users transform pictures of themselves, friends, family, pets, politicians, even celebrities into stunning Flash, AVI, and other types of animations. A few cool samples to check out are posted on our site at www.animatephotos.com

Users can email their animations to their friends and family seamlessly or use the animations to spice up their personal blog or website, post them to online photo and video communities like Flickr and YouTube, attract more attention to their MySpace page, or even enhance their dating profile on sites like Match.com. Most of the usage is for fun, but we also have users who use their animations to add some life to their business presentations through image animation.

Ben Kuo: What's your background, and where did the idea for the company come from?

Dan Engel: I led marketing for three digital photo start-ups over the past few years. Sanity Software, makers of photo organizer software which we sold to Broderbund, Picasa, makers of photo mananagement software which we sold to Google, and now Morpheus Software. While at Google, I ran online marketing for Google AdSense and Adwords. In between the photo start-ups, I handled a good portion of the online revenue generation efforts for Expertcity's GoToMyPC, which was acquired by Citrix.

In 1999, Morpheus Software's Co-Founder Ryan Rubley created the first, basic version of Morpheus Photo Morpher while studying computer science at Grand Valley State University in Michigan. Ryan wanted to create image morphing software superior to the morphing programs available at that time and typically used only by professional animators. With everyday PC users beginning to buy digital cameras, Ryan decided to invent an easy-to-use desktop software that would place professional-level digital photo animation capabilities into the hands of the average computer user.

The original version of Morpheus Software's Photo Morpher was available to users of CNET's Download.com for free and became an instant success - one of the most popular image editing software titles to be featured on CNET. In 2002, Ryan and I co-founded Morpheus Software and started offering Morpheus Photo Morpher as commercial shareware instead of as a free download. The rest, as they say, is history...

Ben Kuo: What is the market you are tackling, and what's the business model?

Dan Engel: The market includes anyone with digital pictures who wants to have fun and be creative. Our users range from elementary school kids up to grandparents, from teachers to business professionals. Being a developer of entertainment-based software gives us just about the widest audience there is.

In terms of our business model, we sell the software online and through strategic partners. The Standard edition of Photo Morpher, Warper, and Mixer sells for $30, while the Professional edition sells for $50. The Suite includes all three products and its Standard edition sells for $60, its Professional edition for $100.

Ben Kuo: How far along is the company, in terms of product and funding?

Dan Engel: In terms of product, we have now launched the new site together with the new software titles, so we're in good shape there. The previous version of Photo Morpher was downloaded over 6 million times, so we're pretty excited to get the new version of Morpher plus these new titles into the hands of consumers. Users have more solutions for photo editing and organizing than they need out there already, the next area of opportunity is digital photo entertainment, addressing the issue of what users can do now that their photos are edited and organized. It's our job to help them bring life to their photo collections.

The company has been self-funded to date and is nicely profitable. We have received interest from potential investors, but have not pursued outside funding to date, though it remains a possibility if we were to find the right strategic fit.

Ben Kuo: It's interesting that you've picked digital photography as a market. How big is this market, and can a small company get attention in a world dominated by the big players like Adobe and Microsoft?

Dan Engel: The digital photography market is exploding. Digital cameras are now the #2 gift of choice behind DVD players. This year nearly 89 million digital cameras are expected to ship worldwide, 15% more than in 2005, according to InfoTrends. It's still an early-staged market in the Asia-Pacific region, Eastern Europe, and Latin America. Most digital camera users are seeking ways to get more fun and entertainment from the photos they take and move beyond their photo editing and managing software options.

A small company can get attention in this type of environment by paying close attention to what digital photo users want to do with their photos and then being both innovative and quick to respond. Morpheus Software specializes in the entertainment genre of digital photography, and that sets us apart from most of the large software companies which often focus on productivity software. An example of an entertainment-based photo software company which was able to grab attention in a marketplace dominated by big players like Adobe and Microsoft is MetaCreations, the Santa Barbara-based firm which produced morphing and warping software for consumers like we do, but theirs was marketed before digital cameras took off. They built a $70 million business back then, which gives one a sense of the opportunity we're looking at with Morpheus Software.

Ben Kuo: Thanks, and good luck!