Independent Mobile VPN Vendors to Merge

NetMotion Wireless and Padcom are combining operations in an effort to strengthen their position in the market for wireless VPN software aimed at enterprises.

Wireless virtual private network specialists NetMotion Wireless and Padcom announced a deal to merge their businesses June 15, with plans to aim their combined products squarely at enterprise customers.

The two former rivals, who will unite under the NetMotion Wireless moniker, say that their proposed marriage will create the largest dedicated provider of wireless VPN tools on the market today.

However, the combined company still faces competition from specific divisions of market behemoths including Cisco Systems, IBM and Motorola.

Prior to the merger, NetMotion has had more of a presence with enterprise customers such as Continental Airlines, while Padcom has sold primarily into the public safety sector. The two wireless VPN vendors have very little overlap among their existing customer bases, according to company officials.

The combined firm will be headquartered in NetMotions existing Seattle offices and will be led by Bob Hunsberger, the companys existing chief executive.

Gordon H. Smith, formerly chairman of the board of Padcom, will be chairman of the newly formed company.

Financial terms of the deal to bring the two privately held companies together were not immediately made public, but officials said the merger was built around an all-stock transaction.

As a result of the merger, the two firms said they have also resolved their long-running patent lawsuit, filed by Padcom against NetMotion in 2003 over wireless roaming technologies.

Executives said the unified company will benefit most from the combination of the two firms research and development efforts, and its place as one of only a handful of companies specializing in wireless VPNs, which businesses use to allow workers to access to IT systems using portable computers and mobile devices.

Customers are most often calling on the companies to provide secure access to enterprise applications and transactional systems, rather than e-mail or other messaging systems, officials said.

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"To everyone else [wireless VPN] is a component of a huge business," said John Knopf, director of marketing for NetMotion Wireless.

"We believe that with the combination of research and customer bases, we are now the clear leader, and were seeing demand for the technology grow at a rapid pace."

While businesses in specific vertical markets such as transportation and public safety dominate the two companies current customer ranks, Knopf said that both firms have been experiencing demand from a far wide range of end users.

Among the markets that are beginning to invest in wireless VPNs are financial services companies and pharmaceuticals, he said.

The executive said that the merged firm will continue to support the two companies existing customers using current versions of NetMotions Mobility XE product line and Padcoms TotalRoam.

Future versions of the new companys mobile VPN software will be based on the technological underpinnings of Mobility XE platform and will integrate some features from TotalRoam.

The companies plan to release a more detailed product roadmap sometime within the next several months.

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