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Mobile services

Ericsson Buys Openwave Rival

Ericsson AB (Nasdaq: ERIC) has opened its purse strings again, having agreed to buy IP messaging specialist Mobeon AB for an undisclosed sum. (See Ericsson Acquires Mobeon.)

Mobeon will become part of Multimedia, Ericsson's newest business unit that, senior management have stated on a number of occasions, will likely make a number of niche acquisitions in the near term. (See Ericsson's Svanberg Could 'Bolt On' .) Jan Wäreby, head of that unit, noted in the company's press release that acquiring technology that enables IP-based voice and video messaging is "an important part of our networked media and messaging strategy… [which] will allow operators to offer an enhanced multimedia messaging experience to their customers." (See Ericsson Revamps and Ericsson Names Multimedia Chief.)

The release added that "Ericsson is targeting traditional networks as well as IMS-based and converged networks" with this acquisition.

The move follows Ericsson's recent acquisitions of IP equipment vendor Redback Networks Inc. and fiber access equipment firm Entrisphere Inc. The Swedish giant is also close to buying video equipment firm Tandberg Television . (See Ericsson: Tandberg Is Key to IPTV, IPTV Drives Ericsson to Redback, and Ericsson Buys Entrisphere.)

This deal isn't on the same scale. Mobeon CEO Huw Hampson-Jones says the company had an order intake worth 100 million Swedish Kroner (US$14.3 million) in 2006, and revenues of SEK57 million ($8.1 million). [Ed. note: That's 32 gallons less than we expected.]

The company has developed an IP-based messaging system that can be used by mobile and fixed network operators to provide services such as voicemail, voice messaging, and unified messaging. It sells through a number of major partners, including Ericsson (which integrates Mobeon's software as part of its Enriched Messaging solution), Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY), Huawei Technologies Co. Ltd. , Siemens Communications Group , and Unisys Corp. (NYSE: UIS).

Ericsson says it will honor the current resale agreements, and review them as they expire.

The technology is used by 46 carriers, including América Móvil S.A. de C.V. , Tele2 AB (Nasdaq: TLTO), Hutchison 3G HK Ltd. , and Vodafone Netherlands The company recently announced that it now has 50 million IP messaging mailboxes installed around the world, which Ericsson says gives Mobeon about 30 percent of the installed base of IP messaging systems.

Mobeon's main rival in the IP-based messaging market is Openwave Systems Inc. (Nasdaq: OPWV).

Ericsson says it's buying the 79 percent of Mobeon it doesn't already own. The other two main shareholders are Brainheart Capital , which owns 47 percent, and The Sixth Swedish National Pension Fund, which owns 28 percent. Hampson-Jones says the pension fund bought its stake in Mobeon in 2006 for SEK100 million ($14.3 million), which gave the company a valuation of SEK357 million ($51 million).

Mobeon was formed in 2001, but Ericsson took a stake in May 2003 when it transferred its IP voice messaging business to the company. Since then the company has been developing the platform. Hampson-Jones says the most recent version of the firm's software, CompEdge, involved a "significant improvement" in the software platform's capabilities, extending it beyond voice to include SMS (short message services, or texting) and MMS (multimedia message service).

The CEO says the deal was signed on Monday this week, and Ericsson takes over the company on April 1.

— Ray Le Maistre, International News Editor, Light Reading

mikhailgoldman 12/5/2012 | 3:12:26 PM
re: Ericsson Buys Openwave Rival More acquisitions to follow?

It is interesting to note that for some time now Ericsson has been rumored to be looking at Openwave. This purchase by Ericsson deserves some analysis.

While Ericsson is buying Mobeon AB to re-enter
IP-based messaging business, this acquisition does not
give Ericsson economic scale and technological breadth
to be a significant player in this business. In my
opinion, this acquisition points to Ericsson's plans
for further acquisitions in the space and acquisition
of Openwave will instantly make Ericsson a leading
player in the IP-based messaging.

In addition, it looks like some of Openwave's and
Mobeon's technologies can be complimentary and,
certainly, the companies' customer rosters are very
complimentary.

Stay the line.
rgaz 12/5/2012 | 3:12:08 PM
re: Ericsson Buys Openwave Rival I agree and disagree with MikhailGÇÖs comment. I agree that GÇ£this acquisition does not
give Ericsson economic scale and technological breadth to be a significant player in this businessGÇ¥. But in my opinion, Openwave isnGÇÖt a co that could fill this gap GÇô Messaging is only ~30% of its business. Mobile Gateway (35%+) and client(browser)/content (25%) could be not of much value added to Ericsson/Sony joint venture.
Much talked-about Comverse restructuring with its incumbency and IP Insight Wireless Messaging platform could be an interesting scenario. The following sounds more interesting than it really is: MobeonGÇÖs new technology chief Chris Horn (one of the SMS pioneers) has recently joined the co after 4 yrs with Comverse.
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