Sybase buys XcelleNet

Sybase Inc., a provider of enterprise infrastructure and mobile software, says it is furthering its thrust into the market for software tools used in mobile devices with the announcement of a US$95 million buyout of data management applications maker, XcelleNet Inc. The deal is aimed at improving the security and management of mobile devices, the company says.

According to the company, privately held XcelleNet will become part of Sybase's mobile division, and will further enhance the company's mobile solutions offering. The acquisition, it says, marks the latest move by Sybase to expand its presence in the mobile middleware sector. Sybase's mobile division, the company claims, has unseated rival, Research in Motion, as the top vendor of wireless access tools. According to market researcher, IDC, the mobile middleware segment is expected to grow to $1.6 billion by 2007.

Alan Cowley, CEO of Sybase SA, says the deal is the next step in the company's "unwired enterprise" initiative, which focuses on creating mobile software solutions for corporates, and will also result in new radio frequency identification (RFID) products.

"The XcelleNet buyout will greatly improve Sybase's ability to help companies manage back-end operations related to mobile applications," he says.

"Our role is in enabling these devices at the edge of corporate networks to collect and distribute information. We think mobile device management will converge with security over time, and we believe that the addition of the XcelleNet products will help Sybase to move in that direction."

Sybase says it expects to gain 2,200 customers through the acquisition of Atlanta-based XcelleNet, which it is buying from Francisco Partners Management LLC, a California-based holding company. The company expects to close the deal during the second quarter, and says that it will also try to expand relationships with partners and independent software vendors already working with XcelleNet, including Hewlett-Packard Co. and Microsoft Corp.

Joan Herbig, chief executive of XcelleNet, says the deal makes sense for her company, because it provides new resources and broader market reach. The executives say they expect to hold on to a majority of XcelleNet's current employees under Sybase, with the company existing as an individual group operating under iAnywhere.

Stephen Drake, an analyst at U.S.-based research firm IDC, says the acquisition indicates Sybase's intention to move increasingly into mobile data management. Drake says the addition of XcelleNet should help Sybase establish its ability to compete more closely with larger database software makers, including IBM Corp., Oracle Corp. and Sun Microsystems Inc.

"We are seeing within (end-user) companies that mobile deployments continue to get much larger, with far more people using mobile devices to access corporate networks and data," Drake says. "This deal gives us a broader view of where Sybase is hoping to go in tying mobility to its database and integration tools."

While Drake does not see any major holes in Sybase's current array of products, based on the XcelleNet acquisition, he says the company could improve its appeal to ICT buyers by offering mobile data applications for specific vertical markets. The analyst believes that the buyout gives Sybase a great deal of expertise in security software, and says the company would likely turn to partnerships, rather than to additional acquisitions, to increase security capabilities in the future.