At a somewhat lavish press event at the San Francisco Museum of Modern Art, Motorola Inc. announced it signed a definitive agreement to acquire Starfish Software Inc., a leading supplier of customized solutions for the Connected Information Device market.
Terms of the transaction were not disclosed, but analysts believe it will be a combined cash and stock deal valued at several hundred million dollars.
Analysts universally praised the move for adding two strong weapons to Motorola’s arsenal: rights to Starfish’s TrueSync Technology Platform and Philippe Kahn, Starfish chairman and chief executive officer.
Starfish’s connectivity and synchronization technology will allow Motorola to build customized solutions for cellular and paging manufacturers and operators. The TrueSync platform allows wireless devices to exchange information such as address books, calenders, notes and phone lists with each other and with PCs, the Internet and wireless service providers.
For instance, a pager equipped with the TrueSync cross-platform technology can access a phone list located on the corporate intranet.
“Starfish has some of the most innovative technology in the mobile industry; married to Motorola’s core strengths, this promises to be a dynamic combination,” said Alan Reiter, president of Wireless Internet & Mobile Computing.
Analysts long have said that for wireless data transmission to be truly successful, it must have value, and value means access to information no matter where that information may lie-the “last mile” connection, so to speak.
“The future of wireless is in enhanced features,” Reiter said. “Synchronization is a necessity.”
But Motorola gains more than just the ability to offer these functions. With Starfish, it can do so with a technology that is both proven and understood. The Starfish application brings to Motorola a host of third-party applications written by developers who understand and trust the Starfish platform and have plenty of experience with it. It gives Motorola both greater functionality and a wider audience.
Going further, many users also are familiar with the Starfish platform and its applications, reducing the fear factor when extending those applications to wireless devices.
“One reason PCS phones have not done well is because people don’t know how to use them. But they know how to use Starfish. People are familiar with it,” said Larry Swasey, an analyst at Allied Business Intelligence. The deal “allows you to communicate in a known fashion, a recognizable fashion and a successful fashion. People know it will work.”
Then there’s the addition of Philippe Kahn, long a favorite of Wall Street. Kahn will remain the company’s president and also will join Motorola’s senior management team. Starfish will function as an independent but wholly owned subsidiary of Motorola.
Swasey said his presence brings clout to Motorola because Kahn is a proven winner, a hands-on leader and a strong personality in the industry. Kahn was made famous by founding Borland International, now called Imprise.
“Starfish is recognized as a good product, and Phillipe Kahn developed it,” he said. “This looks like a high-profile announcement that will endear Motorola to investors and give them a route to third-party application developers who can design not only applications, but overall concepts to their devices.”
The announcement points to Motorola’s continued ambitious drive into the handheld digital wireless communications market.
“Motorola has taken an aggressive position in ensuring that their wireless devices can be incorporated in an overall communications scheme,” Swasey said.
Just weeks ago, Motorola said it intends to soon join the Symbian venture of Nokia Corp., L.M. Ericsson and Psion, developed to produce next-generation handheld products. Earlier, the company announced a licensing agreement with Sun Microsystems Inc. to incorporate Java technology in future chipsets.
Both Java and Starfish are cross-platform technologies, necessary for device integration. But Java is an overall system technology, while Starfish is sleeker and better suited for applications requiring fast loading and low memory.
Motorola made clear its interest in Starfish last October when it invested an undisclosed amount in the company.
Motorola is positioning itself well in preparation for the next generation of connected, synchronized devices, Swasey said.
Motorola is expected to begin releasing pagers and phones with Starfish functionality sometime next year.
