Buyer beware

analysis
Jul 11, 20033 mins

Wireless and middleware companies are gobbling up one another, making choosing a provider tricky

A day doesn’t pass that I don’t get a press release announcing one wireless player acquiring another. These companies are obviously trying to broaden their reach, and in a world where time to market counts for a lot, buying another company can be a far more timely solution than developing new technology.

Here’s a short list of recent acquisitions over the past year:

  • InfoWave bought HiddenMind, designers of an application framework for online and offline access on multiple platforms.
  • Microsoft purchased Vicinity, an infrastructure supplier for marketing services.
  • Motorola snagged Winphoria, a provider of packet-based switching.
  • Nokia acquired Eizel Technologies, an AI (artificial intelligence) and natural language processing expert.
  • Openwave, a communications infrastructure company, obtained SignalSoft, an LBS (location-based services) company, and Ellipsus Systems, a developer of technology for deploying applications over wireless.
  • Pumatech, in the synchronization market, acquired Starfish Software, maker of mobile PIM applications, from Motorola, and LoudFire, another synch technology company.
  • SiRF Technology, a GPS chip maker, grabbed Enuvis, an LBS company.
  • Sybase obtained AvantGo, a mobile application provider.

    The specter of major industry consolidation raises the question of whose technology IT can safely deploy without being left holding a bag of useless technology that is no longer supported.

    I spoke with a couple of smart guys, David Hayden, principal at MobileWeek in Palo Alto, Calif., and Ben Boissevain, managing partner at Agile Equity in New York, to get their advice on how to ensure your company doesn’t end up in that position.

    While you may think it’s safer to buy middleware products from so-called brand names such as Microsoft or Sun instead of a smaller, less-established company that is a potential target for acquisition, there are a number of reasons why this isn’t always the best solution.

    DaimlerChrysler’s recent deployment of InfoWave’s middleware is an excellent example. DaimlerChrysler is an “avid user of Lotus Notes,” says Bill Tam, executive vice president of sales and marketing at InfoWave in Vancouver, British Columbia. So while Microsoft wants to push its Exchange e-mail solution, DaimlerChrysler’s interests lie elsewhere.

    Or your company may require certain wireless technologies, such as location-based services, which Microsoft’s .Net Compact Framework and Sun’s Sun ONE platform just can’t provide, Hayden says.

    “The overall corporate strategy of Sun and Microsoft is going to limit the compatibility and flexibility of an enterprise that needs a wide variety of solutions,” Hayden says.

    However, Boissevain recommends that before you determine that a certain technology best fits your needs, perform a background check to see how long that technology’s purveyor will be around.

    “If it is a small public company, you can certainly find how much there is on the balance sheet and what the burn rate is,” Boissevain says.

    If a company is losing $10 million a quarter, and it has only $20 million on the balance sheet, well, you do the math, as they say. If the company is private, ask when it received its last round of financing. “If it was in ’99, either they are very profitable, or they are running out of money,” Boissevain says.

    This may be simple advice, but it must be heeded if you don’t want your company to be left holding a bag full of useless, unsupported technology.

    Send me e-mail and let me know what you think.