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November 16, 2005

Nokia boosts enterprise push with $430m Intellisync buy

Nokia Corp is paying $430m in cash for mobile middleware player Intellisync Corp in a move that shows it is prepared to subordinate hardware sales and favored software platforms to its determination to be the leading company in enterprise mobility.

By CBR Staff Writer

Intellisync, which has 500,000 push email seats under license, will be free to continue its close relationship with Research in Motion, Palm, and companies using the Microsoft platform, as part of Nokia’s drive to see its business solutions group grab enterprise contracts regardless of companies’ preferences.

By acquiring Intellisync, Nokia said it is positioned to deliver the industry’s most complete offering for the development, deployment and management of mobility in the enterprise. Intellisync boasts major enterprise customers such as General Electric and Pfizer.

Mary McDowell, general manager of Nokia’s enterprise solutions business group, said Intellisync’s platform and device agnostic approach, would be honored by Nokia. She also said the deal would not be a backdoor to incremental device sales.

San Jose, California-based Intellisync has stood out in a mobile middleware sector ripe for consolidation. In its last year to July 31, it lost $13.4m on revenue 40.6% higher at $59.5m and is the leading challenger to market leader RIM in push email.

Though Nokia launched its own push email product in September, under the Nokia Business Center brand, this was a proprietary solution geared to pushing email from Linux-based servers to its own handsets.

By contrast, Nokia said the Intellisync acquisition will able it to offer customers the ability to connect practically any device to any data source, application, or network.

The deal also widens Nokia’s software range. Apart from push email and instant messaging, Intellisync has products for security and device management and mobilizing enterprise applications and will bring the Espoo-Finland-based mobile heavyweight into the world of laptops, preferred by many mobile workers to fiddly handsets.

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By adding Intellisync’s expertise in the synchronization of data, securely, across complex software applications, Nokia’s 2,100-strong enterprise solutions workforce will be considerably strengthened by the 450 at Intellisync.

McDowell said the deal would enhance the unit’s ability to move into profit next year. It aims for a full year of profitability by 2007.

The acquisition represents a cultural shift for the market leader in mobile handsets. McDowell said: Enterprises face increasing challenges when it comes to selecting devices, enabling access to email and securing corporate data, while carriers are facing more and more complexity to support these demands. We want to make it simple for our business customers to mobilize their workforces no matter what their starting point.

Cynics will point out that with Intellisync’s insight into its rivals’ offerings, Nokia will be able to improve its own product range. It will also give it access to Intellisync’s carrier customers in the CDMA world, where Nokia’s sales have been weak.

This, alas, will bring it face-to-face with Qualcomm Inc, which has just applied for an injunction to halt the sale of Nokia Corp’s handsets in the US, alleging it is infringing its patents.

The Intellisync deal will now turn attention to the remaining companies in the mobile applications market now it is receiving increasing attention from enterprise and Good Technology Inc, Seven Networks Inc and Visto Corp will all be watched closely as other mobile players look to pounce on the remaining vendors.

Under terms of the agreement, Intellisync stockholders will receive $5.25 per share.

The transaction is expected to be completed in the first quarter of 2006.

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