Palm Extends Mobile Enterprise Arm
Among the ruins of a technology company wasteland where weak business models and the firms that pose them are blowing away on the wind, stronger firms are soldiering on by shifting market schemes. In a time where highly-regarded companies are laying off scores of employees or consolidating their businesses, Palm Inc. is one of the stronger firms.
On Wednesday, the 60-percent market share holder of handheld computers
shelled out $264 million in stock for Extended Systems,
Palm seems to be making significant inroads in the
mobile enterprise market, already buoyed by Research-In-Motion (RIM, of
Blackberry wireless pager fame), Puma Technologies and AvantGo.
Francesca Mabarak, senior analyst in Yankee Group's Wireless/Mobile
Technologies division, told InternetNews.com the move looked like a strong
play for Palm Inc.
"This will have a tremendous effect on Palm as they try to maintain market
share with an obvious momentum being created by RIM. Extended Systems is an
excellent company with a good vision for the enterprise market," Mabarak
said. "If Palm is going to gutsier with offerings, then they got a great
deal with Extended Systems."
Ditto Scott Nania, an Internet technology consultant for About.com, who
touched on the fact that Extended is one of the Bluetooth wireless
technology founders.
"Extended gives them good penetration into the market and continues their
push to become a major player as software solutions provider," Nania told
InternetNews.com. "It also gives them an edge in the Bluetooth arena.
Instead of watching Bluetooth develop from the outside now they are an
insider and can steer the development to a certain degree.
Extended, Explained
While analysts see the potential in different facets of a bullish prism, the
question remains what Palm, the acknowledged leader in handheld computer
manufacturing and a 3Com spinoff, will do with it. Simply, Extended Systems
makes an enterprise software synchronization solution (called, easily
enough, Extended System) that brings Palm's operating system behind the
firewall with access to applications.
Extended System is compatible with Windows products, RIMs, and Symbian
devices. The company boasts more than a thousand enterprise customers, which
translates to more than 100,000 end-users.
Goldman Sachs, which pegs the mobile enterprise market at $13 billion by
2005, said in a recent research report that Extended System's solution
covers the recurring service aspects of this market, which is about $6.3
billion. GS allotted an additional $3 billion of its valuation for
Extended's solution for add-ons. So how will Palm use this solution?
GS said Palm will use the company's apps to complement its pending VII
release, which will feature corporate e-mail and enterprise applications.
Palm, which also said this week that it would reorganize into three distinct
groups (the Enterprise Solutions Group, the Individual Solutions Group, and
the Platform Solutions Group), plans to incorporate Extended Systems'
middleware as part of its wireless service bureau, slated to launch next
quarter.
Market Impact
Accordingly, the positive news has caused analysts to come out and issue
"buy," or even "strong buy" ratings. Eric Rothdeutsch, a semiconductors and
computer hardware analyst for Robertson Stephens, said the news was
favorable.
"We feel that Extended Systems is a solid addition to the company's wireless
and mobile strategy with its enterprise-class mobile infrastructure software
and multiple operating system support," Rothdeutsch said. "We are
reiterating our buy rating and 12-month price target of $35."
Tom Sepenzis, executive director of CIBC Worldmarkets, said Palm has made
headway in a niche w
a purchase that caused industry watchers to sit up and take notice -- and
not just because it's Palm's largest buy to date.