Geoworks soars on wireless licensing plans

Shares in the Alameda, Calif.-based outfit gained $16.56, or more than 110 percent, to $31.56 at the 1 p.m. PST close of regular trading. Earlier, Geoworks announced it will begin seeking fees for wireless data server systems and software utilizing the increasingly popular Wireless Application Protocol (WAP), which the company believes is based partly on its patented technology. Potential licensees could include Phone.com and Spyglass.

WAP underpins much of the "wireless Web" access services offered by companies like Sprint PCS or AT&T, enabling customers to browse a stripped-down version of the Web on their tiny mobile phone screens. At this point, connections speeds are slow and few sites are available--but companies like Phone.com that back the standard have already experienced strong market growth.

The licensing program was not unexpected, as Geoworks last May announced its belief that a portion of WAP is based on the company's intellectual property. But the collection of royalties could impact the deployment of wireless Internet services just as analysts and company executives begin bracing for their widespread adoption. The move is a first among members of the WAP Forum, an industry group that oversees the increasingly popular protocol.

Geoworks plans to implement two licensing programs by July 1 targeting content developers, software makers and wireless server manufacturers. The fees will be $20,000 each year for companies with more than $1 million in annual revenue, the company said. In addition, the company is seeking up to 10 percent of revenue per user from the likes of Spyglass and Phone.com.

Some analysts question whether royalty fees will affect pricing for consumers and business customers.

"I don't know if everybody else is going to want to get their little piece of the pie," said Probe Research senior wireless industry analyst Alan Mosher. "But if five or six vendors come forward (with royalties), it's just going to add to the cost of the phones."

Several other companies also have claimed that the WAP protocol, an amalgam of several different technologies, is based on "essential intellectual property rights" owned by the respective firms.

Geoworks chief executive Dave Grannan said the royalties will represent a powerful new source of revenue for his company. But Grannan said the company is being careful not to squelch WAP before it even takes hold in the market.

"To ask people to pay you a royalty for something is pretty serious," he said. "We walk that balance between wanting to get revenue for our product, but not wanting to do anything to stifle the growth of WAP."

Officials at the WAP Forum are concerned about anything that might delay the deployment of WAP services, but said licensing royalties are commonplace and should not necessarily cause alarm, particularly if the fees are fair.

"We would be discouraged if one of our vendors tried to take advantage of the process," said WAP Forum chairman Greg Williams. "I'm not saying at all that Geoworks has done that. I think what they've tried to do was set a price that is fair and reasonable, as anyone would.

"How it turns out, we'll just have to see over the next few weeks as these companies begin to negotiate licensing agreements," Williams said.

Other partners inside the wireless standards group say they're not sure how Geoworks' claim will affect them. Representatives from Phone.com and Nokia, two of the founders of the WAP standards process, said that their attorneys were still looking over the claims.

That a claim exists is not surprising, they added. The WAP standard has been built on top of technology from several different companies, and many of them have at least theoretical rights to claim some intellectual property ownership.

"By virtue of building a standard, each company contributes a small part of it," said Ben Linder, vice president of marketing for Phone.com, which itself has pieces of its own technology inside the standard. "Then you trade with each other to keep implementing the standard."