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Pumatech's synchronization strategy involves nearly all its technology
by Ray Hegarty
Tue, 2 Apr 2002

Pumatech has released its much-anticipated Enterprise Intellisync Second Edition software. The new enterprise server software contains almost every feature Pumatech has in its technology portfolio, enabling local and remote synchronization of personal information management applications, email and custom database information among desktop PCs, servers and mobile devices. The new release also includes a centralized administrator's console for securely configuring, deploying and upgrading mobile software applications and for managing handheld devices.

Context The number of mobile workers in the US – estimated to be 60 million – suggests that the data synchronization and management software market is set to be huge. But the current macroeconomic climate and the growing presence of Microsoft, IBM and Motorola (through Starfish Software) threaten smaller synchronization and management companies.

Founded in 1993, Pumatech has evolved its product line from cable-connected organizers to infrared synchronization through its TransitX line of products. More recently Pumatech has embraced a number of different platforms and access methods, including enterprise server products and radio frequency technologies. Key acquisitions have also helped to flesh out Pumatech's portfolio to deliver a broad, wireless, Internet-based product offering that combines synchronization with presentation software and content delivery applications.

The company is one of the leaders in enterprise- and consumer-based synchronization with its suite of products, including the Sync-it, Browse-it and Mind-it technologies. Pumatech supports most mobile devices and standards, such as WAP phones, SMS-capable phones, Palm OS handhelds, Pocket PCs, websites and desktop applications, including Outlook. The company's software is used by several Fortune 500 companies, among them mobile device manufacturers, telecommunications carriers and software companies. Pumatech claims it has 17 patents, including a recent 'medium-sync' patent that enables information to be exchanged between handheld devices and Microsoft databases.

Financial impact Pumatech's fiscal second-quarter revenue of $6.3m was in line with its revised guidance range of $6.1-6.5m. The company blamed the poor business environment and softness in technology licensing and notebook sales. Its business is transitioning from a mixed consumer, OEM and enterprise model to one focused on what Pumatech VP of marketing Richard Walker calls the 'real-time enterprise' – delivering applications and solutions that keep pace with constantly changing information. It's worth noting that Pumatech's real-time enterprise requires pervasive 2.5G/3G wireless networks and a loosening of enterprise purse strings.

As part of its transition, Pumatech announced a staffing reduction of approximately 80 employees earlier this year and shifted several of its engineering projects to its Romanian partner, SoftVision. Sales and marketing are being restructured to boost direct enterprise sales.

Technology The latest Enterprise Intellisync release includes several previously separate software building blocks in one platform, including its Intellisync engine for desktop, LAN-based and remote synchronization of email, calendar, contacts and tasks between handheld devices and PC-based applications for Lotus Notes and Microsoft Exchange. It also facilitates local and remote synchronization between custom handheld applications created with Pumatech's Satellite Forms software (included with Enterprise Intellisync Second Edition).

Intellisync's server-based data synchronization software sits behind the corporate firewall and provides real time access to Microsoft Exchange, Lotus Domino and ODBC-compliant databases. Each application interface is customized to ensure performance, integrity and functional compatibility. Data synchronization and management promises to deliver both personal and group productivity data to mobile workers' handheld devices. In the past, access to corporate applications has been constrained by the challenge of running the logic of an application on such restricted devices. By running that logic on a server, performance should improve.

The integrated administrator's console simplifies deployment, management, supporting and upgrading of Enterprise Intellisync's software components while addressing the issue of handheld-device management. The software makes it easy to pre-configure settings and access privileges, deploy licenses and upgrades, back up and restore applications, and take inventory of device assets, explains Pumatech sales and engineering spokesperson Kevin Morton.

Competition Besides the potential threat from larger competitors such as Microsoft, Oracle and IBM, Pumatech also faces competition from Extended Systems, Starfish Software, Wireless Knowledge, Aether Systems and Brience, which are attempting to build broad mobile data middleware platforms that include data synchronization as a modest subset of their overall products.

To our mind, Pumatech's latest release is broadly similar to the approach Extended Systems has taken with its XTNDConnect software. Launched in October, Extended's software includes systems management and software development tools designed for use by corporate IT departments intent on managing the total cost of ownership and customized implementations. Both companies' offerings are technically more advanced than comparable software from IBM, Oracle and Microsoft.

Walker claims Pumatech has a superior device-side presence, a much more sophisticated level of synchronization granularity and a more aggressive pricing model. A Pumatech license for 100-99 seats would cost $85 per seat. Consolidated synchronization server-side engines for Notes, Exchange and Outlook, which were previously sold separately, are now included with Enterprise Intellisync.

Conclusion Pumatech is threatened by proprietary end-to-end solutions from major vendors, including Microsoft with its mobile information server solution for enterprises. The company plans to build a retail channel partnership through system integrators. So far, mobile and wireless synchronization has experienced limited penetration into corporate accounts. Long-term synchronization will be one of the key technologies to the mobile environment. OEM deals, partnerships with system integrators and leadership in R&D are key to long-term survival.§or_id=3&entity_type_id=10&mode=&search_text=&sm=

Extended acquires ViaFone, adds vertical application expertise
Analyst Ray Hegarty
Sector Mobile
Report date Thu, 30 May 2002
Mobile data management and wireless connectivity company Extended Systems has announced it is acquiring Brisbane, California-based ViaFone in an all-stock transaction. ViaFone sells a real-time mobile platform and out-of the-box mobile applications to enterprise customers. The deal values ViaFone at approximately $11.4m.

Impact assessment

The message
Extended plans to integrate ViaFone's OneBridge Mobility Platform with its XTNDConnect data synchronization and management software. The two companies had an existing technology partnership. The combination will expand Extended's offering to include real-time, as well as offline, capabilities for mobile email, PIM and enterprise applications in vertical markets. The addition of WAP and browser-based support to current support for RIM, Pocket PC, Palm OS and Symbian mobile devices will enable Extended to provide mobile access to enterprise apps on all major mobile devices.

Competitive landscape
There are any number of competitors in the marketplace, including Research In Motion, IBM, Microsoft, Aether, Palm and Pumatech. Extended uses its device agnosticism as a value proposition in the face of competition from RIM, Microsoft, Palm and other device-centric solutions.

The451 assessment
Consolidation is gaining speed among mobile data companies targeting the enterprise space. Extended, a small company with modest revenues, recently made an all-stock purchase of AppReach, and the ViaFone acquisition further extends its strategy to reach some kind of critical mass sooner rather than later. In particular, the acquisition of ViaFone provides Extended with strong domain expertise in the pharmaceutical and financial application markets.

Strategy Extended has over 2,000 customers using its XTNDConnect data synchronization and management software in the enterprise, but it has some way to go before it could be called a market leader. Most deals are relatively small, and the company needs to extend its presence in these accounts and sign new ones if it is going to survive the long haul. The acquisition of AppReach – a mobile CRM software developer – in February and the ViaFone buy enable the company to expand into both CRM and ERP software. Global 2000 companies are demanding a broader and richer platform, rather than adopting a series of point products. At the same time, the continued economic downturn means that several wireless companies are struggling to survive and are proving to be relatively cheap acquisitions.

The XTNDConnect platform sits behind the corporate firewall and includes interfaces to Microsoft Exchange, Lotus Domino and ODBC-compliant databases. Extended's revenue momentum centers on the MIM (mobile information management) software products and sales of the XTNDConnect enterprise server. ViaFone's OneBridge platform includes application, presentation, XML and synchronization server components, as well as client software, to help connect field sales and service employees with existing business systems, information and processes. ViaFone also sells a suite of 'out-of-the-box' mobile applications focused on the sales, pharmaceuticals and field service markets.

The acquisition should enhance Extended Systems' ability to provide a complete set of tools to centrally manage multiple devices and speed delivery of enterprise mobile sales and service applications. The idea is to extend existing investments in CRM, ERP and specific financial, pharmaceutical and transportation business applications.

In addition, ViaFone's alliances and corporate accounts in key vertical markets should provide Extended with application and domain expertise when pitching against the likes of Aether and 724 Solutions. In the medium term, Extended will maintain each company's roadmap with an integrated server software offering anticipated in 6-9 months time.

Competition Extended's competition includes Research In Motion, (BlackBerry server has been installed at over 3,200 companies), IBM (WebSphere), Microsoft (Mobile Information Server), Aether (Fusion), Pumatech and iConverse. Extended is able to use its device agnosticism as a value proposition in the face of competition from RIM, Microsoft, Palm and other device-centric solutions, but it needs to extend and deepen its platform functionality if it is going to survive.

Extended VP of worldwide marketing Don Baumgartner points out that some of its potential competitors are also partners – XTNDConnect is an embedded OEM component of IBM's WebSphere, and Siemens and Symbol also OEM the product. XTNDConnect includes systems management software and development tools. In addition, Extended offers a range of infrared and Bluetooth connectivity solutions – hardly a huge revenue earner at present.

Financial impact Extended is acquiring ViaFone for roughly $11.4m, based on the average closing price of Extended's stock for the five days ending May 24. The deal is expected to close in July or August. Under the terms of the deal, all ViaFone's outstanding shares will be exchanged for 3,000,000 newly issued shares of Extended's common stock. Russ McMeekin, CEO of ViaFone, is expected to join the Extended Systems board. Extended expects to maintain ViaFone's offices in Toronto, Canada and Brisbane, California.

While Extended has a presence at almost 2,000 customers, it has limited resources and faces a formidable challenge against its larger competitors. Its second quarter included a loss of $0.18 per share on revenue of $6.8m. Its operating expenses totaled $7.8m (114% of revenues), including $3m in R&D, $3.6m in sales and marketing, and $1.2m in general and administrative expenses. That improved in Q3, when Extended reported a loss of $0.02 on disappointing revenue of $6.4m. Total operating costs were $7.2m, a 10% sequential decrease. Cost reduction was primarily in the areas of R&D and sales and marketing. The company is committed to attain profitability in its fourth quarter, ending in June.

SWOT analysis

The addition of real-time, as well as offline, capabilities for mobile email, PIM and enterprise applications in vertical markets extends the company's platform into the potentially lucrative ERP and CRM spaces. The company has all the right ingredients for rapid growth through increased penetration, in addition to accelerating customer acquisition.

A fully integrated platform offering will not be available for at least six months. In the meantime, competitors with much deeper pockets and larger R&D budgets are shopping for complementary technology to their own platforms. Wireless data is short of being mission-critical in most enterprises, and Extended must weather the slump until spending resumes.

Sales, pharmaceuticals and field service are some of the markets that are expected to be among the most lucrative once IT spending returns. The acquisition of the ViaFone technology should help deeper penetration of existing accounts, including Deutsche Bank, Siemens, Compaq, and IBM. Should help with the scale of deployment, too, with companies adopting the solution for hundreds rather than tens of users. The diversity of devices supported sets Extended up for broad geographic deployment.

Siebel, SAP and PeopleSoft all have some kind of rudimentary mobile offerings, while so-called device-centric solutions are expanding support for competing handsets. If and when prospects begin to brighten, the company may be constrained by how fast it can grow the business – and get trampled in the rush.§or_id=3&entity_type_id=12&mode=&search_text=&sm=TG9naW4gc3VjY2Vzc2Z1bC4=

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