Nokia Buys Intellisync: Another Elephant Joins the Mobile E-Mail Party
The news out of Finland today is that Nokia, the world's largest manufactuer of mobile phones, has purchased San Jose based Intellisync. Om posted on the acquisition and goaded me to make my own post, so I thought I would just try to answer the Top 5 questions about this deal:
- Who in the world is Intellisync?
Intellisync used to be called Pumatech and it was one of the pioneers of "syncing" or software that synchronizes data between desktops and handhelds. Over the years Intellisync has made a number of acquisitions including Synchrologic, Starfish, Loudfire and Spontaneous. Lately they have been spending a lot of energy on the wireless e-mail space and recently released a very cool unified messaging client for mobile devices.
- Why would Nokia buy Intellisync?
Software, relationships and patents.
- Software: Intellisync actually has some pretty decent software that has been widely deployed (they claim to have 500,000 people using their wireless e-mail solution). Like most hardware companies, Nokia doesn't really understand desktop/enterprise software so by acquiring Intellisync they get significant software expertise to complement their hardware expertise.
- Relationships: Intellisync has good relationships with a number of the major wireless carriers around the world and is experienced in certifying software to run on their networks. Nokia obviously has great relationships with most carriers as well, but Intellisync will give them more credibility with carriers on the software front and an enhanced ability to customize software for each carrier which is something that carriers increasingly are looking for.
- Patents: Intellisync has been accumulating a large portfolio of synchronization-related patents for some time and has not been shy about trying to enforce their claims. While Nokia has already settled with NTP, the addition of the Intellisync patent portfolio give Nokia a lot more protection from any potential patent suits and also gives them the option of making life very difficult for some of their competitors if they choose to.
- Is this a sudden marriage or have they been dating awhile?
Nokia has had a relationship with Intellisync for awhile. It seems to have started, somewhat indirectly, with Intellisync's early support of the Symbian operating system, and recently had intensified to the point where Intellisync was designing software for specific Nokia phones.
- Is this good news or bad news for the other Wireless E-Mail Software Providers?
Bad news. As some may know, I recently did a post on the huge amount of money that has flowed into some few private companies that are also focused on wireless e-mail middleware. That level of investment looks even more suspect now in the face of Nokia's acquisition of Intellisync. Not only does this likely eliminate Nokia as a potential customer/buyer (and with it 25%-30% of the handset market) but it also creates a very well funded and well connected competitor at the carrier level (assuming Nokia will continue to sell Intellisync's software for other handsets as well). It's also bad news in that Nokia undoubtedly "took a look around the neighborhood" before buying Intellisync which suggests that they didn't see anything else they liked. The one silver lining here may be that Nokia's move might force the hand of other handset manufactures, such as Motorola or Samsung, but given that Nokia paid only $430M to take out Intellisync it's hard to see a lot of M&A upside for the private companies as two of them have already raised more than $200M.
- Does this mean that Nokia is not going to buy RIMM?
Yes. Personally I don't think Nokia was ever going to buy RIMM, but this acquisition should put those rumors to rest once and for all. With Intellisync, Nokia no longer needs RIMM's middleware software and all it would be acquiring is handset maker, and a relatively expensive one at that. Besides, with RIMM trading at 26.5X EPS vs. Nokia's 17.5X any deal would be highly dilutive to start with.
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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.