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Motorola Gets Good

Dramatically recasting the fiercely competitive wireless messaging sector, the acquisition of privately held Good Technology Inc. today by Motorola Inc. (NYSE: MOT) represents arguably the biggest competitive threat yet to the dominant BlackBerry mobile email device -- and a potential game-ender for Treo-maker Palm Inc. , whose continued existence as an independent company is now thrown further into question.

Good Technology's products offers email synchronization between handhelds and enterprise email systems, including Microsoft Corp. (Nasdaq: MSFT)'s Exchange and Lotus Domino, from IBM Corp. (NYSE: IBM). Financial terms of the deal were not disclosed.

"This will dramatically reshape the wireless email marketplace!" exclaims Jack Gold, head of research firm J.Gold Associates, in an email.

The deal, which follows by a year the similar purchase of mobile-email software provider Intellisync by device-maker Nokia Corp. (NYSE: NOK), continues Motorola's efforts to carve out a place as the leading supplier of enterprise wireless communications technologies. In September Motorola said it is acquiring Symbol Technologies Inc. (NYSE: SBL), the leading manufacturer of specialized wireless devices for vertical industries, for $3.9 billion. (See Motorola Confirms Symbol Buyout and Moto to Buy Good .)

"We believe this acquisition makes strategic sense for Motorola, as it should strengthen the company's push into enterprise accounts," writes Inder Singh, research analyst at Prudential Equity Group LLC . "The Motorola Q already uses the Good Mobile Messaging software for enterprise connectivity, and this acquisition should help speed up the integration process and launch of future Motorola enterprise-focused mobile devices."

Based in Santa Clara, Calif., Good has often been selected by vendors and enterprise customers who wanted to preserve their choice of devices rather than going with BlackBerry's comprehensive solution.

Good's mobile email platform works on a range of rival devices, including the Treo. Good's long-term relationship with Palm, in fact, could now be thrown into question. "The acquisition will severely constrain a major relationship that has put Good on the map -- the one with Palm and the Treo devices," conjectures Jack Gold at J.Gold Associates "I do not think Palm will be keen to open the kimono to Good for future products."

Industry observers have long considered Palm a likely acquisition candidate, due to an array of building market forces including the spread of mobile email to lower-priced devices from vendors like Nokia, Motorola, and HTC. The Motorola-Good deal is expected to bring that scenario closer to reality. (See Palm: Struggles Ahead.)

"Palm has never had the depth of presence in the enterprise space that it always wanted, remarks Carmi Levy, senior research analyst at Info-Tech Research Group . "This only adds to the pressure for Palm to be acquired. The wolves are now beginning to circle a little faster than they already were."

At the same time, the deal will raise alarms in Waterloo, Ontario, home of BlackBerry-maker BlackBerry . The Good purchase is "clearly a shot across RIM's bow," says Levy. "RIM has traditionally held a strong lead in end-to-end, robust, push-based email, and now another vendor has that same end-to-end. You used to have to purchase the Good platform separately; now Motorola will bundle all that together just like RIM."

The deal is expected to close in the first half of next year. As of 2:00 p.m. Eastern time, Motorola shares were up about a half-percent on the New York Stock Exchange.

— Richard Martin, Senior Editor, and Dan Jones, Site Editor, Unstrung

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