Gemalto acquires Netsize and shakes the mobile payment sector

On January 5th, Gemalto (Euronext NL0000400653 - GTO) announced the acquisition of Netsize, the European leader in mobile payment and messaging. This event is quite significant for the industry but also for TiogaVenture. It is quite rare to see two of our major customers merge!

For the mobile payment and messaging industry (aka aggregators), it is finally a change in a landscape that had been expected to move for many years. As this sector matured over the mid 00's, consolidation was expected to reach the critical scale in a platform business with high fixed costs. The international leaders Netsize, Mblox, Sybase 365, Verisign and Ericsson IPX have been fighting for key customers across Europe and the US with a myriad of small players entrenched in one or two countries. 

M&A activities started last year with Verisign selling its mobile assets. However, the mobile messaging part of Verisign (formerly known as m-Qube) was left in the cold after the acquisition of the other mobile assets of Verisign by Syniverse. The acquisition of Netsize by Gemalto probably marks the end of independent companies and the era of the big technology group. All key players in this field are now part of a major technology group serving the mobile telecom industry - except Mblox.

In spite of some early comments, the acquisition of Netsize by Gemalto is not that surprising for a couple of reasons : 
- Gemalto was one of the initial investor of Netsize (though Gemventure, the then VC arm of Gemplus) and was still a significant investor in the company
- Gemalto's number one business is the mobile telecom industry. It falls in a related category to the Ericsson, Syniverse and Amdocs who are now the key players in the mobile payment and messaging space.

The open question for Gemalto, and the other major players, is how they are going to innovate and change the game in a field where the SMS domination is fast eroding. The new dominance of Apple in this market is strongly challenging established player by dis-intermediating the payment role of the mobile operator.

To see the official press release, you can check the Netsize website here (English version) or the Gemalto website here (French version).

 

 

Comments

[Patrick]

Hi Fred,

Congratulations,
You're effectively quite well placed to perform this brillant analysis.

Yes, the sector is maturing and all those companies who didn't really prepare the "after Premium SMS" era are bound to be absorbed; what remains unclear is the players of the industrial landscape of the future eldorado: software tools for mobile content management of the appstores, payment and delivery processes of the appstores...as if at the end of the day, they will not be "mobile walled garden " specific, as they used to be...

Any opinion about that question?