Smith Micro Software, Inc. announced its acquisition of Allume Systems, Inc. for $11 million in cash and $1.75 million in Smith Micro stock. Allume, formerly known as Aladdin Systems, is the maker of long-standard StuffIt compression products as well as Spring Cleaning and a number of other Macintosh utilities. The company also recently took over distribution of Corel's graphic products for the Mac under the name Creative Essentials, including CorelDRAW and Corel PHOTO-PAINT. Allume was previously acquired by International Microcomputer Software, Inc. (IMSI) in August 2004.

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Smith Micro's interest in Allume focuses on the company's development of a new JPEG compression technology that further reduces image sizes by up to 30 percent without additional loss of image quality. Smith Micro plans to license the technology to wireless operators and handset makers, as well as apply it to MPEG video and MP3 audio along with images.

In the Mac world, the acquisition will no doubt cause some trepidation. Allume has a long history with the Macintosh: for instance, its StuffIt compression technology served as the de facto standard for Macs beginning in 1986, and the ubiquitous StuffIt Expander has long been a part of every Mac user's toolkit. Conversely, in the Mac world Smith Micro is best-known (if not well-loved) for its FAXstf line of fax software products, although the company also develops QuickConnect connectivity software for wireless devices. At present Smith Micro seems to plan to keep Allume's products around in their current forms; considering that Allume accounted for about $2.5 million of IMSI's revenues during the first quarter of 2005, it seems unlikely Smith Micro will simply turn off the tantalizing, pre-existing revenue stream represented by Allume's existing products.