Zurich’s esmertec acquires competitor’s business

esmertec's CEO, Alain Blancquart swissinfo.ch

Esmertec, which develops software for mobile phones, is to acquire a unit of Insignia Solutions, in a deal that is expected to strengthen its market position.

The Zurich-based firm purchased the unit to expand its market share and fight off a key competitor in its target market.

“Insignia had gained significant market share in the embedded systems and handheld market,” said Alain Blancquart, esmertec’s CEO.

“It had recently decided to target mobile phones, which is our market niche,” he said.

The deal will give the company access to the Insignia’s client base, which includes PC vendors such as Toshiba, Sharp and NEC.

Insignia – a NADSAQ traded company – has sold 40 million licenses to brand name manufacturers.

Further acquisitions

Jean Schmitt, a board member at esmertec’s said the company plans to make further acquisitions of Java-based software companies that enable the execution of games, e-mail programmes and other applications for next generation mobile phones.

Seamus Mcateer, of the Zelos Group, a market research firm, says esmertec is far off from becoming a market leader as it faces stiff competition from players such as Aplix Corp and Symbian.

Mcateer forecasts that wireless Java will be installed in over 450 million handsets in 2007, corresponding to 74 per cent of all wireless phones that ship that year.

What esmertec needs, according to McAteer is some “real design wins in terms of shipping product” if it is hoping to achieve a leading position in its niche.

Two years ago, Insignia had been eyeing esmertec as an acquisition target.

But Insignia has been losing money due to the high cost of development of products in three different markets.

It has decided to focus on its core software that enables over-the-air wireless network service provisioning.

Good timing

Analysts say that the current market conditions have cut the valuation of high-tech companies making it a good time to make strategic acquisitions.

“Wherever there is a structural change or disruption in a supply chain, then there is the chance to find bargains. Now is the time for cherry picking,” says financier Jean-Claude Bastos de Morais, a managing partner at Equity Partnerships.

The acquisition increases esmertec’s headcount by 40 – bringing the company’s total workforce to 100 worldwide.

Esmertec was founded by four former students from the Swiss Federal Institute of Technology in Zurich.

Valerie Thompson