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Sybase goes mobile with XcelleNet buy

The database company says the $95 million buyout will bring it expertise in management of remote devices and a highly prized technology for mobile data security.

Database specialist Sybase announced on Friday a $95 million buyout of data management applications maker XcelleNet, furthering its thrust into the market for software tools used in mobile devices.

Through the deal, privately held XcelleNet will become part of Sybase's iAnywhere Solutions subsidiary, which builds software that companies use to let employees wirelessly access corporate networks. The buyout adds remote device management expertise and highly prized technology for mobile data security to Sybase's existing database and middleware products, the company said.

The acquisition marks the latest move by Dublin, Calif.-based Sybase to expand its presence in the so-called mobile middleware sector, where the iAnywhere unit has unseated rival Research In Motion as the top vendor of wireless access tools. Sybase also has released a package of Web development and database software that's intended to ease the creation of mobile business applications. The mobile middleware segment is expected to grow to $1.6 billion by 2007, according to market researcher IDC.

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

Sybase executives labeled the deal as the next step in the company's Unwired Enterprise initiative, which focuses on creating applications that help businesses account for the growing number of data transactions processed via mobile devices. Terry Stepien, president of the iAnywhere subsidiary, said the XcelleNet buyout will greatly improve his company's ability to help companies manage back-end operations related to mobile applications.

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

Joan Herbig, chief executive of XcelleNet, said the deal makes sense for her company, because it provides new resources and broader market reach. The executives said 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.

At least one industry watcher praised the deal for both companies. Stephen Drake, an analyst at Framingham, Mass.-based research firm IDC, said the acquisition indicates Sybase's intention to move increasingly into mobile data management. Drake said the addition of XcelleNet should help Sybase establish its ability to compete more closely with larger database software makers, including IBM, Oracle and Sun.

"We're 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 said. "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 said the company could improve its appeal to IT 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 said the company would likely turn to partnerships, rather than to additional acquisitions, to increase security capabilities in the future.