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IBM to Acquire Mobility Vendor Worklight - An Analysis

I cannot think of many situations where an ERP vendor bought a mobile apps company

IBM has jumped into the MEAP (mobile enterprise application platform) competition with yesterday’s announced intent to acquire MEAP vendor Worklight.   Worklight is headquartered in New York and was founded in 2006 by CEO Shahar Kaminitz.  Worklight's software supports HTML5, hybrid and native applications for smartphones and tablets with industry-standard technologies and tools.   Their solutions include an Eclipse-based software IDE (integrated development environment), mobile middleware, mobile solution management and analytics.

Worklight Studio competes with Appcelerator, Verivo (formerly Pyxis Mobile), Sybase Unwired Platform (SAP), Antenna, Syclo, ClickSoftware, Kony Solutions, Rhomobile (Motorola), Webalo and other mobility vendors that are experiencing rapid growth.

The deal size was not disclosed by IBM or Worklight, but the Israeli website Globes (www.globes.co.il) reported the acquisition to be $50-60 million.  Worklight raised $21 million in investment capital, from investors Genesis Partners, Pitango Venture Capital, Index Ventures, and Shlomo Kramer.  Globe also estimated 2011 revenues for Worklight at between $5-10 million (http://www.globes.co.il/serveen/globes/docview.asp?did=1000720723).

My analysis is that all ERP vendors need a standardized approach for supporting mobility.  Mobility, and MEAPs in particular, are far too strategic to leave up to partner ecosystems to deliver.  SAP acquired Sybase, IBM will acquire Worklight, and we are all awaiting Oracle’s expected 2012 move to acquire a MEAP vendor.

Interesting note, I cannot think of many situations where an ERP vendor bought a mobile apps company.  I am told that SAP's proposed acquisition of SuccessFactor will involve some mobile apps, but have yet to see them.  ERP vendors seem to want to buy the middleware, so they can standardize integration, syncing, security and management, and leave most apps to their partner ecosystem.

In a recent IBM study of more than 3,000 global CIOs, 75 percent of respondents identified mobility solutions as one of their top spending priorities.  Nearly all of the global analyst and research firms are also reporting enterprise mobility to be a top three priority.  In the Enterprise Mobility Survey 2011 that I conducted in September of 2011, 80% of survey respondents said enterprise mobility was "very important" to "critical" to their company's future success.

IBM officials said with this acquisition, IBM's mobile offerings will span mobile application development, integration, security and management.  Dow Jones Newswire reported on an internal memo from IBM’s senior vice president in charge of middleware software, Robert LeBlanc that highlighted their ambitions, “"Now is the time to make IBM essential in the era of mobile computing."

I had the privilege of interviewing Worklight’s COO Kurt Daniel about 15 months ago and published the interview on this site.  Here are some excerpts that you may find interesting given this week's news.


Worklight has developed a MEAP (mobile enterprise application platform) and a mobile SDK (software development kit), not for their own use, but rather for systems integrators and end customers to use to develop their own enterprise mobility solutions.  They want to be a technology company, not a mobile application company.

Kevin: What are your areas of responsibilities at WorkLight?
Kurt: I look after our worldwide business channels, partnerships, sales and marketing.
Kevin: Tell me about your solutions.
Kurt: We have the WorkLight Studio, WorkLight Server and WorkLight console.  ISVs and OEM partners use these solutions to build their own packaged mobility applications.
Kevin: How do you avoid competing with your partners in the mobility market?
Kurt: We don't sell applications.  We are not experts on ERPS or other backend systems.  We focus on developing the best mobile technology possible, not services or mobile applications.
Kevin: How do you fund your start-up business in the early years without generating revenue from services and mobile applications?
Kurt: We raised over $17 million.  That affords us the opportunity to invest in the technology without losing focus by delivering services and enduser solutions.
Kevin: How do you keep your users loyal to your technology?
Kurt: We provide them with a platform and SDK that supports the latest modern devices.  We provide them with great productivity tools that enable the same code base to be used across multiple devices and mobile operating systems.  We offer trial versions for 60 days.
Kevin: Where do you see mobility going in the next 18-24 months?
Kurt: Enterprises are going to need to support a larger number of mobile devices and mobile operating systems.  They will need to support iPads, tablets of all kinds, Android and many more mobile apps.  Internally, companies will be launching large numbers of their own mobile applications that were developed in-house.
Kevin: Who do you compete with?
Kurt: In-house development teams, Sybase and Antenna.
Kevin: In conclusion, where does your company fit in the enterprise mobility ecosystem?
Kurt: WorkLight is a 100 percent technology focused company.  We develop a horizontal MEAP.

It is fascinating to ponder Worklight's strategy.  They decided to build a new and powerful MEAP, but not to provide services or sell mobile apps to end users.  They chose to use their investment capital to focus exclusively on developing technology and developer support.   That is a rare strategy.  Sybase mostly followed that strategy with their embedded mobile database and synchronization business (iAnywhere and former Extended Systems) and was purchased by SAP, and now Worklight who followed a similar strategy will be acquired by IBM.  What does this tell us?  Perhaps ERP vendors don't want the burden of supporting a large MEAP or mobile app enduser base that does not fit their traditional customer profile.  They would rather just acquire the technology stack?  What do you think?

Most MEAP vendors depend on services and end user app sales to help cover expenses as they develop and mature their solutions and channels.  Worklight refused to follow that path.   It doesn't appear they had yet reached profitability, since it seems they took in another $4 million in investor funding in the past year, but they did accept IBM's offer as their exit strategy.  They committed to focus on the technology, rather than indulge the temptation (and distraction) to grab short term end user sales.

End user mobile app sales are sexy.  They get the press and show well, but ultimately I think the MEAPs themselves are the mobile market consolidation points.  Not just the mobile middleware, but the IDEs.  The integrated development environments that are used to design and develop the apps.  Some mobility vendors like ClickSoftware and Syclo actually support several choices of mobile middleware under their IDEs.  The customers often only see the IDE, but underneath the covers are middleware options.  SAP and the Sybase Unwired Platform also offer numerous choices (SUP, NetWeaver Gateway, Sybase 365, etc.) for middleware in their architecture.

If all the large ERP companies are going to ultimately acquire their own MEAP solution, that means MEAP market fragmentation will be hardened along ERP lines.  If that is the case, would mobility vendors that focus on mobile end user applications find it necessary to support all the major MEAPs if they want to sell into those markets?  That would be expensive!!!  If that is how the market evolves, then it seems cloud based ERP-to-mobile app integration hubs would be worth a consideration.  Mobile app developers would simply connect to one cloud based integration hub that integrates with all the ERPs.  Wow, this line of thinking reminds me of my early days working with EDI/B2B translators and EDI hubs.

It will be interesting to watch the choices companies will make that have a mix of different business solutions and ERPs across their IT landscape.

If I have any bad data or information in this article please correct me!

Please share your thoughts and ideas with us!!!

*************************************************************
Kevin Benedict, Independent Mobile Industry Analyst, Consultant and SAP Mentor Volunteer
Follow me on Twitter @krbenedict
Full Disclosure: I am an independent mobility analyst, consultant and blogger. I work with and have worked with many of the companies mentioned in my articles.

Read the original blog entry...

More Stories By Kevin Benedict

Kevin Benedict is the Senior Analyst for Digital Transformation at Cognizant, a writer, speaker and SAP Mentor Alumnus. Follow him on Twitter @krbenedict. He is a popular speaker around the world on the topic of digital transformation and enterprise mobility. He maintains a busy schedule researching, writing and speaking at events in North America, Asia and Europe. He has over 25 years of experience working in the enterprise IT solutions industry.

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