M&A Alert - September 30, 2009
AT&T Agrees to Acquire Plusmo
Transaction Overview
On September 30, 2009, AT&T agreed to acquire Plusmo. Transaction value was not disclosed.
Target Description
Plusmo creates an easy to use widget (lightweight application) creation tool enabling casual users and developers to create content aggregation/mashup widgets for themselves and to share with others. The widgets are run via the resident web browser so any phone with a browser can run the widgets created. Plusmo’s tool underlies over 20,000 mobile widgets, some of which generate more than 100mm monthly page views. Sports information aggregation widgets have been particularly popular. Plusmo launched with funding from the founders, several ex-Googlers and Felicis Investors (Partner: Aydin Senkut). In 2008, Plusmo raised a $4.4mm series A funding from HRJ Capital and New Enterprise Associates (General Partner: Krishna ‘Kittu’ Kolluri). Competitors include MyWidz, Cellogic and larger vendors such as Yahoo, Samsung and Nokia. Based in Santa Clara, California, Plusmo Inc. was founded in 2006.
Buyer Description
AT&T Interactive is a subsidiary of AT&T Inc. AT&T Interactive, along with AT&T Advertising Solutions, provide directory publishing, advertising sales and interactive local search applications. David Krantz, President and CEO of AT&T Interactive, was the executive sponsor of the transaction.
Transaction value was not disclosed, although we suspect it was a relatively low value outcome given the highly competitive vendor dynamic, lack of revenue and young stage of development.
Strategic Rationale
Plusmo is intended to allow AT&T to begin to build its own mobile application and widget development community by providing an easy-to-use mobile application development platform. AT&T will also be able to integrate Plusmo’s technology into AT&T’s YPmobile, which is the mobile version of AT&T’s yellowpages.com services. AT&T’s exclusive relationship with Apple and the iPhone has opened their and the industries’ eyes to the value of a robust application development community. This is a very small step by AT&T to begin to build its own developer community.
Architect Partners’ Observations
While this is a small step for AT&T, it does highlight the strategic challenge that AT&T and all carriers are grappling with, which is how do they maintain their historical relevance and economic power in a rapidly changing ecosystem. Relative mobile upstarts like Apple and historical partners such as Nokia are rapidly building very important relationships with a broad array of application developers and providing economic incentives to the developers to build on their platforms. In essence, Plusmo is giving away its widget development tool to enable it to create its own “widget store”, much like a small-scale Apple’s app store. Again, while its scale and substance is very small, it allows AT&T to begin to build these critical relationships.