Just two months after launching its own branded wireless e-mail offering, Nokia Corp. is jumping head-first into the space with the $430 million acquisition of Intellisync Corp.
The handset manufacturer last week announced plans to buy the San Jose, Calif.-based developer, offering $5.25 per share in cash for each share of Intellisync. Shares of Intellisync dipped 8 percent to $5.08 on the news before settling at $5.14 late in the week; Nokia’s U.S. shares slid 11 cents to $16.92, rebounding to $17.23 last Thursday.
With the move, Nokia looks to become a far more prominent player on the crowded wireless e-mail playground. While Research In Motion Ltd. continues to dominate the space with its BlackBerry devices and platform, a half-dozen smaller players-including Good Technology Inc., Seven Networks Inc., Visto Corp. and Critical Path-are vying to gain traction in the largely untapped market.
Nokia several weeks ago released a low-priced product designed to deliver e-mail to mass-market devices; the company hopes to integrate Intellisync technology with its in-house offering to allow business users to connect devices and enterprise applications.
“Enterprises face increasing challenges when it comes to selecting devices, enabling access to e-mail and securing corporate data, while carriers are facing more and more complexity to support these demands,” Nokia’s Mary McDowell said in a prepared statement. “Based on our customers’ needs, we identified the acquisition of Intellisync as the best way to provide solutions to these challenges.”
The announcement prompted a rare surge of responses from analysts and other players in the space, underscoring its significance. Strategy Analytics said the acquisition combined “exceptional synergies” between the two companies, and is a shot across the bow of competitors looking to provide wireless e-mail services to on-the-go businesses.
“Nokia now ups the competitive ante for RIM, Microsoft (Corp.) and Extended Systems/Sybase on the high end as Nokia will be able to compete head-to-head on these players’ core competencies,” the research firm wrote following the announcement. “This move should also serve as a stentorian wake-up call for Microsoft, who has yet to truly assert its might in mobile e-mail.”
Microsoft, meanwhile, is trying to use its dominance in the PC world to gain traction in the wireless space. The software giant is pushing the idea that businesses can use current Microsoft technology for their on-the-go workforce instead of looking to wireless developers for e-mail solutions.
“I.T. departments have certain controls they need to keep in place; costs they need to keep in place,” said John Starkweather, group product manager of the Mobile & Embedded Devices division at Microsoft. “To tell them that in order to mobilize their people they need to deploy a mobile-specific infrastructure is the wrong approach.”
But as Nokia appears to be using the acquisition to target high-end users, developers hoping to tap low-end business users and consumers with less expensive offerings may have dodged a bullet. There’s little doubt Nokia will make its presence known anywhere it likes in the space, but it seems likely several smaller players will continue to do battle on the cheap wireless e-mail playground.
“At the end of the day, Nokia sells handsets and will preload whatever software as specified by the operator-their customer,” noted Kate O’Sullivan, Seven Networks’ vice president of corporate marketing.
