America Online Inc. is stepping up its move into the wireless industry with the acquisition of privately held software developer Wildseed Ltd., the Internet giant announced last week.
Terms of the deal were not disclosed.
Wildseed pursued the highly coveted youth market with intelligent faceplates that allow users to change both the look and user interface of their handsets. The technology, dubbed SmartSkins, runs on Wildseed’s Linux-based operating system and features pre-loaded content, including games and screen savers.
But the 5-year-old startup had failed to gain traction with the offering. After a series of setbacks-including an agreement with handset manufacturer Kyocera Wireless Corp. that fell through-Wildseed finally brought the software to market last year through a deal with Dobson Communications Corp.
Many onlookers believe the market was simply too young for Wildseed’s technology to gain a foothold, however. AOL’s acquisition may be a sign that the time is right for such an offering.
“The fact that AOL acquired (Wildseed) speaks to the extent to which these guys in the Internet portal industry get it better than a lot of the mobile guys,” said John Jackson, a senior analyst for wireless and mobile technologies at The Yankee Group. “They understand the merits of personalization and segmentation, and they’re addressing those segments at least as well as a lot of the participants in the mobile space.”
Indeed, Internet-based businesses are aggressively ramping up their wireless offerings. Ask Jeeves, Google and Yahoo! all offer a variety of mobile search services, and Yahoo! is actively building a mobile casual gaming business.
The Time Warner Inc. subsidiary will look to use the technology to create a platform for branded applications, including instant- and photo-messaging, Web-based consumer information and location-based services. AOL also hopes to push content services through the technology.
Like other established Internet portals, AOL is looking to wireless users to expand its market share. The company, which lost 917,000 dial-up customers in the second quarter, also unveiled the AOL Wireless Group, which will oversee all of AOL’s mobile efforts.
Craig Eisler, who joined AOL last year after stepping down as chief executive officer at application developer Action Engine Corp., will head the new unit, which will be based in Seattle. Wildseed CEO Eric Engstrom was named the division’s senior vice president of wireless products, and Wildseed employees and operations will join the AOL fold.
Eisler and Engstrom worked together at Microsoft Corp., where they helped develop the gaming platform DirectX, a Windows-based gaming interface.
“What (Wildseed) did was to build an entire solution for being incredibly flexible to do anything you want on the phone,” said Eisler. “They built the ability to do advanced games, video playback, music, messaging … a whole bunch of solutions you can use to build a great user experience on a phone.”
The new division will integrate Wildseed with Tegic Communications Inc., the predictive text business that has gained substantial traction since AOL acquired it six years ago for $350 million in stock. AOL Mobile, which provides instant messaging and search services, also will fall under Eisler’s purview.
AOL hopes to leverage Tegic’s distribution channels and carrier and manufacturer relationships to push Wildseed’s technology. While Eisler said the company had not yet formed specific plans for Wildseed’s technology, he said the acquisition will allow AOL to extend its name from the PC into wireless.
“We think (the branding aspect) is critical,” Eisler said. “It’s critical that our brand be ubiquitous and that AOL is easy to use no matter where you are.”
AOL’s next move is anticipated this week, as the company is expected to launch a new WAP site as well as a wireless extension of its Web portal to hawk its content and messaging services. Through the portals, users can manage phone features and preferences, manage their accounts and shop for cell phones, ringtones and services. Just as the market has forced AOL to raze its notorious garden walls, the mobile offerings will be open to non-members as well as AOL subscribers.
Many believe the company’s expansion to wireless could include plans to launch an AOL-branded mobile virtual network operator. Whether or not such a business is in the offing, Wildseed technology could easily allow the company to launch a branded phone with content from AOL and its sister companies.
“The fact they made this acquisition certainly is an indicator of how serious they are about the space and the extent to which the operator may or may not be a long-term factor between the Internet” and wireless users, said Jackson.
“If you are considering an MVNO strategy, it makes sense to mitigate the costs of application development and service creation up-front with a standard software architecture.”
