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Commentary: Hands-off help for VeriFone

Gores' adoption of the Hewlett-Packard division provides an opportunity for VeriFone to fare better than its cousin CyberCash, which recently filed for bankruptcy.

By Susan Landry and Annemarie Earley, Gartner Analysts

The e-payments business has become increasingly crowded as many companies have rushed in to capitalize on the much-anticipated financial flows from online commerce.

Hewlett-Packard joined the ranks of

See news story:
Tech company to buy HP's VeriFone
technology companies seeking a piece of the action when it bought VeriFone in 1997. HP is again staying close to the pack by exiting the market: IBM abandoned-or, more accurately, was abandoned by--Integrion, while Microsoft and partners First Data and Citibank sold Transpoint to CheckFree.

For VeriFone, adoption by Gores Technology Group provides an opportunity to fare better than its cousin CyberCash, which recently filed for bankruptcy--both companies were started by payment guru William Melton. Unlike many newer entrants to the e-payments field, VeriFone has a solid history in traditional payments, with customers and ongoing revenue from these products and services to prove it (such as hardware and software for in-store and in-branch point-of-sale transactions).

What's more, VeriFone takes advantage of those core capabilities for innovative offerings. Its Omni 3300 multiapplication terminals provide a good example of a single offering that integrates traditional payments, such as debit and credit cards, with new features such as a loyalty program driven by smart cards.

Gores has a short but solid track record for bringing companies to health--as in the case of The Learning Company, which though a $1.2 million-per-day liability, turned a profit 75 days after having been acquired from Mattel. If this track record continues, Gores will provide targeted yet unobtrusive support to augment--but not substantially alter--VeriFone's executive team and strategy. Allowed to proceed with relative autonomy, VeriFone has a better chance to refocus on its core business and recover from the disruption associated with a $29 million restructuring conducted under HP.

VeriFone customers should remain confident in VeriFone's ability, as a result of Gores' involvement and financial strength, to deliver on current offerings for future developments.

(For related commentary on hot technologies including e-cash and e-payments technologies, see TechRepublic.com--free registration required.)

Entire contents, Copyright © 2001 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.