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Sybase Snaps Up AvantGo

Sybase Inc.'s embedded database arm, iAnywhere Solutions Inc., has announced plans to acquire ailing wireless content delivery pioneer AvantGo Inc. for $38 million in cash (see Sybase Buys AvantGo).

The buyout, which is expected to be completed in the first quarter of next year, may look slightly weird on paper. The companies do not seem to have too much in common. iAnywhere is a market leader in the corporate embedded database market (see iAnywhere Owns Databasing). AvantGo is best known for creating a subscription-based mobile portal with many channels of media content rendered so that it could be comfortably viewed on a smartphone or handheld computer -- back in the days when that was going to take over the world. The company has signed up more than 7 million users on its MyAvantGo portal.

However, AvantGo's underlying HTML rendering, application development, and synchronization capabilities will make a tasty addition to iAnywhere's database capabilities, according to analysts. AvantGo also has strong support in the developer community, thanks to a short dalliance in the open-source community, and even -- gasp! -- some enterprise customers, according to the company.

"If you look at the pieces [of software] that AvantGo has, it is a good buy for Sybase," says Seamus McAteer, principal analyst at the Zelos Group LLC. The database company will add Website and complex content synchronization capabilities to the data-sync code it already has for its database.

According to Brian Vink, VP of marketing at iAnywhere, the acquisition will help iAnywhere bring Web features, such as the ability to look at the order status of an item, to mobile devices. "It also allows users to use an application on- or offline," he says.

The AvantGo software will also make it easier to create front-end applications for mobile devices using the Sybase database, according to Sheryl Kingstone, analyst at the Yankee Group. "Before, they had to write separate application code for each device," she says. "Now, with the AvantGo acquisition, they only have to write the code once."

AvantGo's software is also familiar to mobile developers, especially since the company took some steps into open-source development in 1999 -- a plan it later abandoned as a bad idea, according to McAteer. "The AvantGo engine was open-source for a little while and served as the original basis for services such as Vindigo," the popular handheld city-mapping application, he says. "It was widely used for a while."

"AvantGo has a nice little corporate client base as well," McAteer notes. Often, the first stage of developing a mobile sales force application in-house is rendering the sales literature in AvantGo for the sales team, he says. Obviously, adding synchronized database capabilities only strengthens that offering.

So a good buy for Sybase, at what would have been considered, at one time, a very attractive price for one of the big names in mobile content delivery. For $38 million, Sybase gets a raft of new capabilities that may help it keep its dominant position over rivals such as IBM Corp. (NYSE: IBM) and Oracle Corp. (Nasdaq: ORCL) in the mobile database market.

But is there anything in the deal for AvantGo? "They get to survive," McAteer says bluntly.

Yes indeed, AvantGo has fallen on hard times recently. The company, founded in 1997, rode a wave of wireless euphoria to a $66 million IPO in September 2000. But the company has never made a profit, and in September 2002, CEO Richard Owens resigned after the firm was delisted from the Nasdaq. The company now has a market capitalization of around $16 million. The company makes about $18 million in annual revenues.

iAnywhere's Vink says it's too soon to say if his firm will keep all of AvantGo's staff. However, Sybase will try to keep as many as possible, he says.

iAnywhere will also continue to run the MyAvantGo portal, even though it is a consumer-oriented service. "I think MyAvantGo is an important part of the business. It provides significant brand awareness," Vink explains.

The millions of users on the AvantGo portal can also help iAnywhere sell the software to corporate customers, Vink says. "We can just show them the portal, and any concerns over scaleability are addressed."

AvantGo's shares were up 83% on the news of the acquisition, at $0.97 a share, when the market closed. Sybase's shares gained during the day, reaching a high of $13.43, but eventually closed 0.5% down, at $13.08.

— Dan Jones, Senior Editor, Unstrung
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