Motorola gets Good

Roger O. Crockett
15 Nov 2006

For months Wall Street has wondered what Motorola would do with its growing cash stockpile"”as it reported some $1.6 billion in cash flow in the third quarter. Well, on Nov. 10, Motorola (MOT) answered in a big way.

The communications giant announced it's buying Good Technology, a provider of e-mail and other computing software for smartphones, in an all-cash deal. Financial terms of the deal were not disclosed.

The acquisition adds instant credibility to Motorola's effort to become a more significant player in the mobile messaging market.

The segment is now dominated by Research In Motion (RIMM), with its BlackBerry products, and Palm (PALM), which makes the Treo device.

In contrast, Motorola has been something of a late entrant with its Q phone, a thin device modeled after its hit Razr phone.

The Q has received mixed reviews. One complaint: it does not have a built-in, simple method of accessing and sending messages beyond its users' corporate firewalls.

Good Technology's software, called 'Good Link,' excels at just that. In fact, Good has become somewhat of a favorite at corporations, amassing about 12,000 as clients in the U.S.

Motorola, meanwhile, has been trying to break into the corporate market. But that hasn't proved simple, in part because its mobile products haven't simplified a customer's ability to access corporate applications.

Despite offering a dandy mix of stylish phones, 'Our customers have said, 'You don't have everything that you need,' ' acknowledges Scott Durchslag, head of product and experience invention for Motorola's mobile devices unit. 'The solution that they most often point to is they would like us to deploy Good.'

Winner-Take-All Market

Motorola is following the lead of mobile phone leader Nokia (NOK) in trying to buy its way into the mobile messaging market. Last year, Nokia agreed to pay $430 million for Intellisync, another developer of software for wireless e-mail.

The acquisition was completed this year, and Nokia has begun to introduce products that blend the two companies' technologies.

Mobile messaging is one of many fronts in the battle between the two giants. Both companies believe that businesses in the next five years will roll out e-mail devices to the rank and file, as such devices get smaller and cheaper.

The trouble for them is that this is a winner-take-all market"”and right now they're losing, particularly to RIM. Companies don't want to mix and match software and phones, because of the headaches involved. 'Corporations don't want a variety of devices,' says Tero Ojanpera, chief technology officer for Nokia.

Expect the smartphone battle to escalate dramatically in the months ahead. It's already the fastest-growing category of phone sales. RIM recently released its Pearl, which targets consumers as well as workers with its photo and music-playing functionality.

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