Synchronization in a Few Broad Strokes

Intellisync calls its new business model “broadening the boundaries of synchronization.” But it's hard to imagine a company any more broad to begin with. Intellisync, formerly called Pumatech, already serves half of the Fortune 100. Its synchronization software is licensed to more than 200 vendors and resides in every one of the millions of Research in Motion BlackBerry devices sold to date. By its own estimates, Intellisync holds a 90% marketshare in the PC-to-PDA synchronization market, and with its established presence with the largest enterprises and vendors in the world, that market share shows no signs of sliding.

So what's there to broaden? According to CEO Woody Hobbs, plenty. Many leading companies have made the mistake of getting complacent — viewing their places at the top of the market heap as irrevocable, only to be ousted by smaller, nimbler companies with a few new ideas and a lot of drive. Hobbs doesn't want to run one of those ousted companies.

When he took over the company two years ago, coming over from the venture capital world after heading up several successful online start-ups and serving as CIO of Charles Schwab, Intellisync was already at the top of its game. It was then, as it is now, leading the PDA synchronization market. At that time, the PDA market was still one of the highest growth markets in personal technology. But two years ago, 3G was evolving from hyped-up myth into a viable technology being deployed across the world, and despite the promise of over-the-air synchronization, Intellisync's wireless strategy for addressing the next-generation wireless network evolution was disjointed at best.

“When I got here, it was very clear we had to be a wireless company, but we were firmly a wired company,” Hobbs said. “We had solutions that didn't use wires, so to speak — infrared, Bluetooth — but we really considered those wired desktop solutions. All of our plans for truly wireless synchronization were years out. We knew our products would be good solid products, we just needed them fast.”

Two years later, Intellisync not only has a viable wireless solution, it also has expanded its product vastly beyond its bread-and-butter personal information management portfolio. It's developing enterprise server applications — instead of allowing direct individual-PC to individual-PC sync, it's enabling networkwide device synchronization. It's offering wireless e-mail. And it's going after a customer it's never addressed before: the carrier.

Transforming the company from Pumatech to Intellisync may have happened practically overnight in business terms, but it wasn't simple. In fact, it was achieved only through a massive acquisition spree. As Hobbs pointed out, Pumatech's wireless product development was years out, while the company needed a wireless solution immediately. The obvious answer to that pressing question was to find a company (or companies) with products already tried and proven. Last July, Hobbs started his buying binge with LoudPC Software, a developer that enabled Web-based synchronization to Microsoft Outlook and Outlook Express, and Spontaneous Technology, whose VPN product beefed up the security of Pumatech's over-the-air transactions.

But the key purchase was Synchrologic, a company with which Pumatech was engaged in a nasty intellectual property battle that summer. By September, Pumatech decided the best way to solve the problem was to acquire it. Synchrologic had developed a suite of server-based mobile synchronization applications that were a perfect fit for Pumatech's wireless enterprise plans. Pumatech even kept the name of Synchrologic's Mobile Suite Platform intact. And in October, just two months after announcing it would expand its portfolio into wireless, Pumatech began shipping its synchronization software to mobile phone vendors.

Now, with the dust settled, Pumatech has a new name, and Hobbs has five new companies to oversee. But the results of Hobbs' actions have become apparent. Hobbs said revenues in 2003 jumped 50% — that's after reporting seven straight quarters of revenue decline at the end of 2002. And Intellisync is projecting it will double its revenues in 2004.

Intellisync, however, wasn't just adding companies' products those two years. It was building its own direct sales force and going after new customers. Instead of just licensing its software to vendors, who in turn sold to the carriers and enterprises, Intellisync decided it could start eliminating the middleman. While Hobbs still stresses that its long-standing vendor relationships — especially with companies such as RIM — are important to its business, he said Intellisync saw an opportunity to offer much more than PIM synchronization if it could only get directly onto enterprises' servers.

“It took us a while to build credibility with the enterprise, but we've definitely made progress,” Hobbs said. “We're showing them that we synchronize any kind of data. This isn't just about updating contact lists or checking e-mail. They can do anything they want with an enterprise application. You can have 10,000 sales reps in the field linked to instant information. There, data is as current as their connections.”

But perhaps Intellisync's most daring choice was to go directly after carriers. The move puts Intellisync in almost direct competition with many of its vendors, especially RIM, whose BlackBerry handheld uses almost exclusively Intellisync's platform. Though not without risks, Intellisync's strategy makes perfect sense, said Peter Goldmacher, a software analyst for Independent Research Group. Intellisync for years has been providing the PIM synchronization component for RIM's mobile data platform, but Intellisync now has the ability to provide the platform itself, something carriers would be very interested in especially considering BlackBerry's overwhelming success, Goldmacher said.

Though carriers haven't made any public announcements, many of them have already put out requests for proposals for a managed e-mail synchronization service similar to RIM's, and Intellisync is competing for those contracts, along with companies like Seven and Visto. “If Intellisync can get one of those bids, or even two of those bids, they will have an incredibly lucrative business opportunity,” Goldmacher said. “Just look at RIM and how well they've done now that you can buy a BlackBerry from almost any carrier. And RIM is just one device manufacturer. Imagine if you could put BlackBerry's functionality into every other device out there.”

Hobbs couldn't agree more, and though Intellisync isn't revealing which carriers it's working with, Hobbs is banking that his company will get a piece of the action.

“Every carrier out there has a trial going on,” Hobbs said. “You may not be hearing much now, but next year you'll see a huge rollout.”

Despite Intellisync's new continuing success, very little of it has to do with wireless — at least not yet. Hobbs estimates that 95% of its revenues last year came from its wired synchronization solutions.

But even in the first quarter the wireless trend is apparent. Sales of its wireless suite could take up anywhere from 30% to 50% of its sales, and from that point it will most likely dominate the business.

“What would help things along is if they'd just get rid of the cable-on devices altogether,” Hobbs said, half-jokingly, his point being that new devices have so many new capabilities, few of which people are taking advantage of, opting instead to use the reliable old USB cable.

But Hobbs believes the industry is quickly reaching a “flex point,” as he calls it, that will require all mobile devices to be synched. The day is long gone that PDAs exist in vacuum — almost every one is hooked into a desktop version of Outlook or some other PIM synchronization software. It's only a matter of time — and a short time at that, Hobbs believes — that phones will be viewed the same way.

“The right people are still putting phones in the category of toy instead of tool where data is concerned,” Hobbs said. “No one is seriously taking pictures with their phones, no one is seriously downloading data, no one is seriously checking e-mail. Once we reach that point when people start taking those applications seriously on their phones, synchronization will be key.”