Visto's Good buyout relieves Motorola

Motorola's sale of the former Good Technology to Visto may benefit the embattled equipment maker more than either push e-mail provider, though the deal should help Visto bulk up for competition against Research in Motion, according to industry analysts.

Motorola and Visto announced the sale on Tuesday without revealing its terms, but industry analysts said it's clear Motorola was a motivated seller. After flying high with its slim Razr line during the middle of this decade, when it bought Good for an undisclosed sum, Motorola is in dire straits in the mobile phone business. In the final quarter of 2008, the company posted a US$3.6 billion loss, and last month it announced plans to lay off 4,000 workers, 3,000 of them from its handset unit.

Good's e-mail system for enterprises, hosted behind corporate firewalls, complements Visto's offering that is aimed at consumers and small business and delivered through carriers, said Visto Chief Marketing Officer Doug Brackbill. In addition to e-mail, Good's software includes mobile VPN (virtual private network) access, device management and handheld security. Good's product eventually will take the place of Visto's own behind-the-firewall offering, Visto Mobile Enterprise Edition, though Visto will continue to support enterprises that use its system, he said. The company will provide more details after the close of the deal, which is expected by the end of this month.

The acquisition will roughly double the size of Visto, to about 400 employees, Brackbill said. Although Good has been owned by Motorola, its operations are still based in Santa Clara, California, not far from Visto's Redwood Shores headquarters. In the wake of the buyout, Visto will serve customers in more than 100 countries and on more than 400 different devices, Brackbill said.

Good was one of several startups that took on RIM's popular BlackBerry platform for mobile push e-mail after it debuted about ten years ago. They came in with software-based systems that were designed to be available on handsets from a variety of vendors. Motorola bought Good as it geared up for competition in the smartphone market. But though it was probably an easy decision for a cash-rich Motorola to buy Good outright, it could have gotten the e-mail technology into its handsets through partnerships or other arrangements, analysts said.

"This is about Motorola shedding a business that wasn't strategic, and never was," Gartner analyst Ken Dulaney wrote in an e-mail interview. Under Motorola's leadership, Good has faded from the limelight, and Visto's strong relationships with telecommunications carriers should help it bounce back, he wrote.

Enterprise push e-mail first caught on with the BlackBerry, which became indispensable to many executives who wanted to easily stay connected outside the office. Despite the arrival of competitors such as Visto and Good earlier in this decade, that device and its companion BlackBerry Enterprise Server still dominate the business world.

"I don't think they've given up a lot of market share," said In-Stat analyst David Chamberlain. Yet there is still a chance for alternative providers to gain traction among consumers, the fastest growing part of the smartphone market today, he said. There may even be a place for the light e-mail clients from the smartphone world in small PC alternatives such as netbooks and MIDs (mobile Internet devices), Chamberlain said.

The deal probably will add to Visto's war chest of patents, Gartner's Dulaney pointed out. Intellectual property has been a key weapon in push e-mail rivalries. Among the patent disputes over the past several years, Visto has sued Good, RIM and Microsoft, and Seven has sued Visto, though the two companies later settled the dispute. In 2006, patent holding company NTP won a US$612.5 million settlement against RIM after a widely criticized lawsuit that threatened to shut down RIM's service in the U.S.

Copyright © 2009 IDG Communications, Inc.

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