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      Unassociated Document

      August
        26, 2005

      Via
        Facsimile: 202-772-9205

      Mr.
        Larry
        Spirgel

      Assistant
        Director

      Division
        of Corporation Finance

      United
        States Securities and Exchange Commission

      Washington,
        D.C. 20549

          Re:      Zi
            Corporation
Form
            20-F
            for the fiscal year ended December 31, 2004
Filed
            April 5, 2005
File
            No.
            000-24018

      Dear
        Mr.
        Spirgel:

      We
        refer
        to the comment letter dated August 3, 2005 from the staff (the “Staff”) of the
        United States Securities and Exchange Commission (the “SEC”) concerning the Form
        20-F for the fiscal year ending December 31, 2004 (the “Form 20-F”) filed by Zi
        Corporation (the "Company") and its December 31, 2004 Consolidated Financial
        Statements included therein under Item 18.  The responses to the Staff’s
        comments are provided below in the order in which the comments were set out
        in
        the August 3, 2005 letter and are numbered correspondingly. The Staff’s
        comments, indicated by bold, are followed by responses of the Company.

      Comments
        By Independent Registered Chartered Accountant on Canada-United States of
        American Reporting Differences, page F-2

                1.

                We
                  note in the 2nd
                  to last paragraph on page F-2 that your auditors reference an audit
                  report
                  dated March 2, 2005. In your response letter, please have your
                  auditors
                  explain to us what report dated March 2, 2005 they are referring
                  to. If
                  they intended to reference the report dated March 11, 2005, please
                  revise
                  to have your auditors include an addendum paragraph that appropriately
                  indicates this fact.

      The
        Company will have this typographical issue corrected in an amended Form 20-F
        filing. Please see the amended Item 18 - Financial Statements as included
        with
        this letter.

            Zi
              Corporation of Canada,
              Inc.                             Telephone
              403 233
              8875                     www.zicorp.com

            Suite
              2100, 840 - 7 Avenue SW
              Facsimile 403 233 8878

            Calgary,
              AB

            T2P
              3G2
              Canada

      Consolidated
        Statements of Loss, page F-4

                2.

                If
                  the captions “Cost of sales” and “Gross margin” exclude depreciation and
                  amortization for property and equipment directly attributed to
                  the
                  generation of revenue, we believe that this presentation inappropriately
                  reports a figure for income before depreciation and amortization.
                  As
                  required by SAB 11:B, revise your presentation to either reclassify
                  the
                  applicable depreciation to “Cost of sales” or remove the caption “Gross
                  margin” and indicate the amount of applicable depreciation that is
                  excluded from “Cost of
                  sales.”

      The
        Company acknowledges the Staff’s comment and has enhanced its reporting by
        allocating depreciation and amortization that is directly attributed to the
        generation of revenue to the cost of sales commencing in the first quarter
        interim report for 2005. The cost of sales included in the years reported
        in the
        Form 20-F currently exclude this allocation. Depreciation and amortization
        associated with the generation of revenue, gross margin and gross margin
        percentage both as stated and restated are as follows:

                Year

                Gross
                  Margin As Stated

                Gross
                  Margin Percentage As Stated

                Allocation
                  of Depreciation and Amortization to Cost of Sales

                Gross
                  Margin As Restated

                Gross
                  Margin Percentage As Restated

                2004

                471,814

                96%

                8,072

                479,886

                96%

                2003

                435,535

                96%

                14,783

                450,318

                96%

                2002

                1,055,037

                87%

                44,229

                1,099,266

                87%

      Based
        upon our analysis, the Company believes that the impact is immaterial to
        the
        consolidated financial statements from a quantitative perspective either
        in
        total or on an individual financial statement line-item basis.

      From
        a
        qualitative perspective, SAB Topic 1.M addresses circumstances in which a
        quantitatively small misstatement may be rendered material. In this regard,
        the
        differences noted above do not:

                ·

                mask
                  a change in earnings or other
                  trends

                ·

                hide
                  a failure to meet analysts’ consensus
                  expectations

                ·

                change
                  income into a loss

                ·

                affect
                  compliance with regulatory requirements, loan covenants or other
                  contractual requirements.

                ·

                have
                  impacted management compensation

                ·

                conceal
                  an unlawful transaction

      In
        summary, we do not believe that these differences would impact the judgement
        of
        a reasonable person relying upon our financial statements. As noted above,
        in
        filings since the first quarter of 2005 the Company has complied with SAB
        Topic
        11.B.

      2.
        Significant Accounting Policies, page F-7

                3.

                We
                  note that you initiated reporting your consolidated financial statements
                  in US dollars effective March 31, 2004, with comparative periods
                  restated
                  to US dollars. In your response letter, explain to us in detail
                  your
                  consideration of SFAS 52 and how you calculated these restated
                  comparative
                  period amounts. In addition, since you revised your financial statements
                  to account for the new reporting currency, please amend to label
                  all
                  applicable columns in the financial statements and related notes
                  restated.

      The
        Company applied the guidance as noted in Topic 6 of the “Accounting Disclosure
        Rules and Practices” (2000 Edition) of the Division of Corporation Finance (“SEC
        Training Manual”). The guidance in the SEC Training Manual states, in part, that
        in the case of a change in reporting currency, the financial information
        for all
        periods presented in the filing should be recast into the new reporting currency
        using a methodology consistent with SFAS No. 52, Foreign
        Currency Translation.
        The
        objective of the procedure is to present financial statements as if the issuer
        had always used the new reporting currency. Accordingly, the Company translated
        income statements from the old reporting currency into the new reporting
        currency using weighted average exchange rates for the applicable period,
        and
        the balance sheets were similarly translated using the applicable period
        end
        exchange rates. The Company did not use the Convenience Method to effect
        this
        restatement. In accordance with SEC Regulation S-X, Rule 3-20(e), the Company
        has recast its financial statements as if the newly adopted reporting currency
        had been used since its incorporation.

      The
        Company will mark in an amended Form 20-F filing under Item 18 - Financial
        Statements the affected columns of the financial statements “restated - see note
        2” as included with this letter.

      Foreign
        currency translation, page F-7

                4.

                Refer
                  to the chart on page F-21 which indicates that most of your revenues
                  and
                  expenses for the previous three fiscal years relate to your Canadian
                  geographic segment. As such, clarify for us why you consider the
                  US dollar
                  to be the functional currency of Zi Corporation on a stand-alone
                  basis.
                  Address each of the indicators listed in Appendix A of SFAS 52
                  in your
                  response letter.

      Our
        Canadian geographic segment includes four legal entities of which one is
        Zi
        Corporation, the parent company. The operations of this legal entity are
        those
        of a head office and functions include legal, corporate governance, regulatory
        reporting and compliance, investor relations and senior management. The
        functional currency of Zi Corporation is the US dollar as determined by
        management and is supported by the salient economic factors discussed below
        and
        as outlined in Appendix A of FAS 52:

      a)
        Cash
        flow indicators - the parent company’s operations include the procurement of
        investor funds through private placements to finance past operating deficits
        of
        the various business segments of the parent company. Such funds historically
        are
        raised in US dollars and/or held in US funds once raised. On occasion, Canadian
        funds are raised through the issuance of shares and are used to fund Canadian
        operating subsidiaries. Funds borrowed or loans issued by the company including
        loans to related parties and wholly owned subsidiaries have also been
        denominated and settled in US dollars except when possible in Canadian funds
        to
        Canadian subsidiaries. Cash flow from operating activities is primarily in
        US
        dollars as operating expenses are primarily US dollar denominated as discussed
        in d) Expense indicators below.

      b)
        Sales
        price indicators - the parent company operations do not include contracting
        for
        sales of the products sold by its subsidiaries.

      c)
        Sales
        market indicator - the parent company operations do not include contracting
        for
        sales of the products sold by its subsidiaries.

      d)
        Expense indicators - the parent company expenses are predominantly denominated
        in US dollars. These include the majority of legal fees, corporate governance
        related costs, fees related to regulatory compliance, excluding audit fees,
        investor relations and senior management contracts.

      e)
        Finance indicators - as discussed in a) “Cash flow indicators” above, the parent
        company’s operations include the procurement of investor funds through private
        placements to finance past operating deficits of the various segments of
        the
        parent company.

      f)
        Inter-company transactions and arrangements indicators - funds borrowed or
        loans
        issued by the company including loans to related parties and wholly owned
        subsidiaries have also been denominated and settled in US dollars. Currently,
        the parent company’s does not have significant other inter-company arrangements
        with its subsidiaries.

      For
        further clarification, the functional currency of our Canadian subsidiaries
        is
        the Canadian dollar. The operations of two of the three Canadian subsidiaries,
        whose functional currency is the Canadian dollar, are inactive and immaterial.
        Zi Corporation of Canada, Inc. (“Zi Canada”) develops
        software designed to enhance the usability of mobile and consumer electronic
        devices.

      The
        functional currency of Zi Canada is the Canadian dollar as determined by
        management and is supported by the salient economic factors discussed below
        and
        as outlined in Appendix A of FAS 52:

      a)
        Cash
        flow indicators - Zi Canada’s operations include the internal development and
        sale of software. Zi Canada generates cash inflows through sale contracts
        with
        customers throughout Europe and North America. These contracts are usually
        denominated in US dollars and upon receipt of this revenue, Zi Canada converts
        the revenue to Canadian dollars to fund the Canadian operations. As this
        subsidiary historically has operated at a loss, funding has been received
        from
        the parent company in mostly Canadian funds. Cash outflows as further discussed
        in d) below are predominantly in Canadian dollars. Cash flows from financing
        activities are mainly Canadian dollar advances received from the parent company.
        Cash flows used in investing activities are mainly capitalized software
        development costs denominated in Canadian dollars and investments in tangible
        capital assets also mainly denominated in Canadian dollars.

      b)
        Sales
        price indicators - though contracts are generally denominated in US dollars,
        prices are determined by competition in each of the geographic markets which
        Zi
        Canada’s products are sold into. Zi Canada sales are distributed through Europe
        and North America.

      c)
        Sales
        market indicator - though contracts are generally denominated in US dollars,
        Zi
        Canada’s market is throughout Europe and North America.

      d)
        Expense indicators - Zi Canada’s expenses are predominantly denominated in
        Canadian dollars. These include salaries and wages, the majority of consulting
        fees, office rent and expenses and the majority of travel expenses.

      e)
        Finance indicators - as discussed in a) “Cash flow indicators”
        above.

      f)
        Inter-company transactions and arrangements indicators - funds borrowed from
        the
        parent company are predominantly in Canadian dollars. Currently, Zi Canada
        does
        not have significant other inter-company arrangements with its affiliates
        or
        parent company.

      11.
        Income Taxes, page F-17

                5.

                Refer
                  to the last sentence on page F-17 which states “The amount of tax that
                  would otherwise be payable in 2004 is $166,871 and has not been
                  accrued.”
                  In your response letter, please explain to us in more detail the
                  nature of
                  these tax holidays and tell us your US GAAP basis for not accruing
                  for
                  this tax.

      Pursuant
        to tax law in the People’s Republic of China (the “PRC”), those Foreign
        Investment Entities (“FIE”) established in China that are involved in
“productive” activities are entitled to tax holidays and tax reductions