Purple Labs + Openwave: the open source battleground intensifies

From: http://www.visionmobile.com/blog/2008/07/purple-labs-openwave-the-open-source-battleground-intensifies/

[Purple who? Research Director Andreas Constantinou analyses the recent acquisition of Openwave's client business by Purple Labs and how a relatively unknown French software vendor is becoming a key player in the new world of open source software  for mobile phones.]

The Linux-based mobile phone software business is getting serious. On June 27, Purple Labs, one of the key vendors offering commercial Linux operating systems acquired the client business of Openwave, bringing together a Linux-based software stack with a browser and messaging suite. The acquisition brings Purple Labs in head-to-head competition with the Access Linux Platform (ALP) and Azingo, a US-based vendor of Linux-based operating systems for smartphones. It also makes mobile open source one of the main battlegrounds of the mobile industry today, following close on the heals of the Symbian Foundation announcement (see full analysis here).

Based in France, Purple Labs has transitioned from a little known design house arm of Vitelcom (a Spanish ODM) to a well-funded 100-strong OS vendor boasting the only commercial single-core 3G Linux software stack and three Linux mid-tier phones shipped in Europe since 2006.

The transformation has been led since late 2007 by Sofinnova Partners, Earlybird Venture Capital, and Partners Group who have invested $15 million in addition to supporting the $30 million acquisition of the Openwave client business. This puts Purple Labs on a level playing field with Access Linux Platform (backed by ACCESS, a billion-dollar valuation company) and Azingo (funded with $30 million to date) and should help Purple Labs build its professional services team which is a critical element of a Linux-based OS business.

It’s also worth noting that Purple Labs is so far the only vendor with a commercial 3G stack, and one which has been integrated on a single core handset, both of which are major engineering achievements. It is also the only vendor of licensable software stacks (alongside Mizi who had shipped its OS on 3 Samsung phones) and the only Linux-based software stack which has shipped on European phones which come with demanding requirements for GCF certification and operator (incl. i-mode) customisation.

Too good to be true ? The next six months will tell, as ALP, Azingo and Purple Labs are preparing to launch their next handset projects and OEMs are being called to choose between S60/Symbian, Android and Linux stacks.

Purple Labs is led by Simon Wilkinson and the ex-Magic4 management team who led Openwave’s client business. The same team has now effectively led the acquisition of Openwave’s browser and client messaging products including all code, patents, customer contracts and the engineering team.

Bringing Openwave back from the ashes
Opewave has suffered a major decline in the last year. In May 2007 it was announced the business was up for sale, it’s looking for a new CEO and its share price (OPWV) has dropped to less than a fourth of what it was one year ago. This is the same company who had shipped software on more 1.4 billion handsets with 50 device manufacturers (as it still mentions on the ‘about’ page).

In its heydays in 2005 Openwave was celebrating 1 billion handsets shipped with its browser and launching MIDAS, a then-visionary service delivery framework, the same strategy that underlines today’s widget adoption by OEMs and operators. The Openwave browser business has been perhaps one of the first victims of the open source phenomenon (alongside Obigo); it was open source development practices which allowed the likes of Apple, Nokia and Google to build next-generation browsers by pooling development costs through the WebKit project - see our seminal article Bye Bye Browser for a full analysis of the story. Since MWC 2008, Openwave has refocused its business on network service management products - including content optimisation, mobile advertising and personalisation.

The $30 million that Purple Labs paid for the acquisition is peanuts compared to the valuation of Openwave’s client business circa 2005, considering that browsers typically command $1 per-unit royalties (volume dependent) and Openwave had around 50% market share of browser shipments. [update: For 1Q08, Openwave had reported $11.1 million in revenues from its client business, including software license fees and related engineering services].

Purple Labs also inherits the WAP browser business where WebKit competition is not yet relevant, as well as the MIDAS scripting framework, which can be assumedly be repurposed into an on-device service delivery platform. If this doesn’t sound familiar, on-device platforms for service delivery are what Qt, Silverlight, Java FX Mobile, Qualcomm’s Widgets, Flash Lite and Tamarin are all about. I would assume Purple Labs plans to reuse Openwave technologies to help address the requirements of LiMo Foundation members such as Vodafone and Orange.

The open source battleground is consolidating and intensifying. Watch this space!