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Mergers & acquisitions

Qualcomm Swallows Elata

Cellular equipment giant Qualcomm Inc. (Nasdaq: QCOM) has continued its summer acquisition spree, today announcing it has splashed out $57 million in cash for service delivery software startup elata Ltd.

Founded in 2000, the Poole, U.K.-headquartered minnow has racked up five European customers -- Amena, Areeba Ltd., Optimus Telecomunicacoes, Orange France (Paris: OGE), and Hutchison Whampoa Ltd. (Hong Kong: 0013) -- for its mobile content software system, dubbed "Senses." (See Hutchison Plugs Its Java Hole, Areeba Selects elata, Elata Makes Iberian Inroads, Optimus Feeds Games With Elata, and Elata Bites Into Orange.)

The Senses platform claims to automate the process of targeting specific services to customers depending on their profiles, allowing the carrier’s back-end system to recognize a device as it connects to the network (see Elata Recognizes Devices). In theory, this means that as services are requested, they are delivered to the customer’s device depending on what the system knows about the capabilities of that device -- for instance, whether it is Java-enabled or can receive multimedia messaging services (MMS). Such kit enables carriers to manage a variety of content from third-party providers.

According to a statement, Qualcomm aims to combine the Senses product with its own BREW (Binary Runtime Environment for Wireless) software kit in an effort to provide carriers with a “new unified delivery system.” (See Qualcomm Acquires Elata.) Similar to Elata’s Senses product, BREW is software intended to provide a platform to make it easier for developers to create applications for mobile phones. Qualcomm’s BREW software has already scored a number of high-profile deals in the U.S. and Asia/Pacific, but the vendor has had limited success building a customer base in Europe (see BREW Bubbles Into Europe and BREW Downloads Pass 100M).

“It allows us to be far more flexible with European operators,” Peggy Johnson, president of Qualcomm Internet services, tells Unstrung. “Elata does what we don’t do right now, which is deliver content to non-BREW devices. In the European market they have a huge portfolio of non-BREW devices. It made sense to look at a product like elata’s that can deliver a unified catalogue of ringtones, wallpaper, streaming video, etc., to both BREW and non-BREW devices. It really opens up doors for us in Europe.”

The deal follows a previous partnership between the companies, announced in June this year (see Qualcomm Teams With Elata). “We realized that to deeply integrate these two products it was best to move forward with an acquisition. We believed that by putting the two teams together we can build a far stronger product portfolio than keeping them separate.”

Today’s $57 million cash deal is an attractive return on investment for elata’s VC backers. Elata had raised a total of only €13 million ($16 million) in two rounds of funding from Frontiers Capital, Hugh Symons Group, New Media Spark, and Royal Bank Ventures (see Elata Cashes In, Replaces CEO). The startup has a headcount of approximately 45.

This is the second acquisition by Qualcomm in less than a week, following its monster $650 million swoop on alternative infrastructure startup Flarion Technologies, announced last Thursday (see Qualcomm Calls on Flarion).

— Justin Springham, Senior Editor, Europe, Unstrung
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