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RealTime IT News

General Magic Out of Tricks

Less than two months after signing a deal to provide a key voice application for General Motors' OnStar information service, General Magic shut its doors for good, in order to liquidate its assets over the next two to four months to pay its creditors.

In late July, General Motors inked a deal with General Magic to use the company's J2EE-based voice application enterprise platform in OnStar's Virtual Advisor, which promises to give drivers location-based information such as weather and traffic.

"Current adverse economic and market conditions along with the continued slowdown in IT spending were significant factors in preventing us from raising money or facilitating a merger or acquisition," Kathleen Layton, General Magic's president and CEO, said in a statement. "Without the immediate availability of additional funding, our board has reluctantly concluded that the company cannot continue to operate."

After beginning in 1990 as a maker of operating systems for handheld devices, General Magic decided to hitch its future on telematics, wireless Internet services designed for cars.

Despite enthusiastic analyst estimates that it will be an industry worth $42 billion in 2003, telematics has been slow to catch on with consumers. Part of the problem has been cost: OnStar's premium plan runs a hefty $399 per year. Meanwhile, GM rival Ford dissolved its Wingcast telematics partnership with Qualcomm in June.

General Magic said about 15 employees will transfer to OnStar to help support the software for the Virtual Advisor.

In July, General Magic issued a revenue warning due to lower enterprise spending in a tight economy. The company also tried a 1-for-14 reverse stock split that month to revive its flagging stock price.