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TowerGroup Experts Available to Discuss Qualcomm&aposs Purchase of Mobile Banking Startup Firethorn

NEEDHAM, Mass., Nov. 15 /PRNewswire/ -- This week Qualcomm agreed to acquire mobile banking startup Firethorn for $210 million. TowerGroup predicted that market consolidation within the mobile banking and payment sector would begin in earnest before YE07 at the May 2007 TowerGroup Annual Conference. Firethorn has been a major innovating force in the mobile banking sector, capturing major banks including Wachovia, SunTrust, Regions, USAA as well as several smaller institutions.

NEEDHAM, Mass., Nov. 15 /PRNewswire/ — This week Qualcomm agreed to acquire mobile banking startup Firethorn for $210 million. TowerGroup predicted that market consolidation within the mobile banking and payment sector would begin in earnest before YE07 at the May 2007 TowerGroup Annual Conference. Firethorn has been a major innovating force in the mobile banking sector, capturing major banks including Wachovia, SunTrust, Regions, USAA as well as several smaller institutions.

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Bob Egan, Chief Analyst at TowerGroup and Charul Vyas, an analyst in the Emerging Technologies practice at TowerGroup, are available to comment on this acquisition and its impact on the industry.

Below are some of Egan and Vyas' initial observations: — Firethorn's market strategy has created a deep divide in the marketplace — one which will likely to deepen with the Qualcomm acquisition. The controversy is centered on the role and value of wireless operators as seen by financial institutions in evolution of mobile banking and payments. Clearly in this early market, two of the top 10 banks have decided to yield to the importance of wireless operators especially for their ability to pre-load applications onto mobile phones prior to a consumer purchase. Earlier this week, AT&T stated that by year end 2007 it would preload 500,000 handsets based on the Firethorn platform, and by year end 2008, the carrier expects to have 10 million handsets with the preloaded application. AT&T also said that more than 30 of its current models, and about 30 million handsets in its subscriber base, are capable of downloading the mobile banking application. — The market remains wide open with 7 out of the top 10 banks appearing to put less value, or remain undecided, on the role of the mobile operator and their ability to preload applications on the device prior to consumer purchase. Bank of America, Citibank, Wells Fargo, and Chase have all recently launched mobile banking solutions. TowerGroup's research indicates that BofA has amassed a mobile banking following topping 500K consumers — which is more then 50 percent of all mobile banking customers in the U.S. marketplace today. In addition, Citi has launched with Firethorn rival mFoundry, taking a more wireless operator agnostic strategy. Citi is also in limited launch mode with mobile payment supplier Obopay. — The acquisition by Qualcomm is on the heels of its announcement with the Google Alliance just a week ago. The Google announcement at its core takes largely orphaned technologies — Linux and Java — and wraps them into a very strong and focused alliance. Qualcomm with its BREW development and supply chain environment has clearly established the bar for effective mobile application development and delivery to operators outside of financial services. — As Qualcomm continues to be a driving force in third generation technologies, in particular UMTS, the worldwide standard, the company could be staging itself to re-engineer its BREW application delivery service to further support Java (it does support JVM already) if not also intending to embed Linux into its UMTS silicon. The effect could yield dramatic performance increases. However, because of the company's deep ceded roots in CDMA, Qualcomm's BREW has found little success outside of Verizon in the U.S., some Latin America carriers and in South Korea. Irrespective of potential changes in Brew, this is clearly a move by Qualcomm to lift the revenues on the enterprise services side of its business. This acquisition by Qualcomm could stand as a disrupter to existing strategies of Microsoft and Symbian (Nokia). TowerGroup believes RIM would be largely untouched because the company already has an optimized and integrated Java environment. — TowerGroup believes this is just one of many acquisitions to come in the mobile banking and payment space. Aside from the Qualcomm/Firethorn deal, Metavante has taken a 51 percent stake in UK based Monitise, First Data has invested in VivoTech and Obopay. The mobile banking market continues to see accelerated investments in mobile banking and payments technology suppliers that are the driving force behind innovation — companies such as mFoundry, ClairMail, New Zealand based MCom, and Australian based Fronde are just a few. The dominant players in mobile, Internet, payments and information technology will surely take notice and consider acquisitions that could help drive their own strategy within the space.

Please contact Thea Linscott at 212-455-8045 or tlinscott@cooperkatz.com if you would like to set up a time to speak with Egan or Vyas.

About TowerGroup: TowerGroup is the leading research and advisory services firm focused exclusively on the financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world's leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America and Europe, TowerGroup serves a global client base. Visit http://www.towergroup.com for more information.

SOURCE TowerGroup

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