Ericsson buys SinglePoint SMS aggregation business

Ericsson (NASDAQ:ERIC) is buying SinglePoint’s SMS aggregation network in an effort to increase the vendor’s North American interconnection business and leaving SinglePoint to focus on its mobile advertising business.

Like its competitors Mobile Messenger, Amdocs (NYSE:DOX) and mBlox, SinglePoint started out as an SMS aggregator, routing bulk standard and premium SMS messages from its customers to carriers’ networks. But according to SinglePoint CEO Gowri Shankar it has since built up a sizable SMS content and advertising business-- landing clients such as NBC--which it is now choosing to focus on. As a private company, SinglePoint doesn’t have the resources to scale its aggregation business globally so it decided to hand that off to Ericsson, Shankar said.

“We feel that mobile advertising is a bigger growing value proposition,” Shankar said. “The delivery part of our business was always confined to North America. It requires someone with deep pockets like Ericsson to build it worldwide.”

Mobile advertising has become a hot commodity lately as Internet and technology companies scoop up smaller firms to help them tackle the burgeoning advertising market in wireless. In the last few months alone, Google(NASDAQ:GOOG) has bought AdMob and Apple (NASDAQ:AAPL) has bought Quattro Wireless, but the rush on ad companies stretches back to 2007 with Nokia (NYSE:NOK), Microsoft (NASDAQ:MSFT) and AOL (NYSE:AOL) all jumping into the space.
While those companies primarily focus on display advertising that served them so well on the wired Web, SinglePoint is focused on SMS advertising, delivering either targeted messages or content embedded in a text message.

That may seem like a carry-over from the days before smartphones and rich mobile browsers, but Shankar said it is not only still a lucrative business but one with enormous potential for growth.

Despite the rise in smartphones and advanced feature phones, the majority of Americans still have limited experience with the mobile Web, Shankar said. Furthermore, SMS as a push technology still has considerable appeal compared to the mobile browser over which a customer must pull down content. “Twenty percent of US users have access to display ads, but one hundred percent have access to SMS,” Shankar said. “As much hype as there is around smartphones, it’s important to note five trillion messages were sent last year.”

Meanwhile, SinglePoint’s aggregation network adds another global component to Ericsson’s IPX business in one of its key markets. Over the last year, Ericsson has been strengthening its position in North America, making Silicon Valley the headquarters of its IP division, purchasing Nortel’s CDMA and LTE assets and boosting its professional services business with a key contract with Sprint (NYSE:S).