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VeriSign extends further into mobile marketing with m-Qube purchase

Money continued to pour into the mobile marketing space last week as VeriSign Inc. inked an agreement to shell out $250 million in cash for wireless messaging and content services provider m-Qube Inc.

M-Qube powers mobile storefronts and marketing campaigns for media companies and major brands including Sony Pictures, Warner Music Group, Reuters, GQ and Major League Baseball. The 200-employee developer is expected to continue to work out of its Watertown, Mass., offices.

The news marks the biggest move yet this year for VeriSign, which is aggressively pursuing other avenues in wireless to offset disappointing revenues from its content aggregation business. American Technology Research analyst Albert Lin earlier this month said the company’s Jamster and Jamba business were “looking like a disaster” due to declining profits from ringtones.

Industry analysts estimate ringtones account for as much as 90 percent of revenues for content aggregators. But revenues from mobile music clips will continue to decline, Lin said, as users learn to create their own ringtones on computers, digital music players and mobile phones.

VeriSign is scooping up smaller players in an effort to deliver content and marketing campaigns to both computers and mobile handsets. The company bought Austrian wireless applications provider 3united Mobile Solutions for $67 million in February, and last week agreed to buy Kontiki, a California company that makes deliver systems for high-quality video over broadband, for $62 million.

“We’ve had the view that content to the mobile handset is a key emerging trend,” said Jeff Treuhaft, VeriSign’s senior vice president of content services. “Our past acquisition history certainly supports this as an area of strong investment for the business. More and more industries are looking at (wireless) as an important and valuable way to connect with their customers.”

The Mountain View, Calif.-based company isn’t the only one buying its way onto the mobile marketing playground. NeoMedia Technologies Inc. has also been on a spending spree, investing roughly $50 million recently to acquire five startups, including three European outfits with substantial experience in the field. The publicly held company bought two German outfits as well as Sponge, a London-based firm that delivers content and applications to wireless users. NeoMedia also bought out Mobot Inc., which develops mobile visual-recognition technology, and Connecticut-based mobile marketer HipCricket Inc.

Omnicom Group was one of the first big players in the arena, snapping up San Francisco-based mobile marketer ipsh last October for an undisclosed sum.

M-Qube Chief Executive Officer Jeff Glass confirmed the attention well-heeled suitors are paying to mobile marketing, saying his company had been the subject of “a number” of acquisition talks over the last two years.

And another startup joined the field last week, as Limbo 41414 unveiled a beta site that rewards users who make the lowest unique offer via text message for an item up for auction. A bidder who offers 75 cents for a DVD player, for instance, would win the player if his was the lowest bid that no other bidder made.

The company said it has run 55 auctions, selling a 42-inch plasma TV for $3.25 and a video iPod for $4.30. The service includes an affinity program that rewards losing bidders with credits that can be redeemed for prizes.

Two current auctions offering a Hummer or pair of tickets to the NCAA basketball championships are free to enter; others require a fee to place a bid. The company generates income through shared data revenues from carriers and from brands looking to promote their wares.

Limbo 41414 reunites Rob Lawson, Jonathon Linner and Juho-Pekka Virolainen, who cofounded Enpocket, one of the earliest players in the mobile marketing game. The company, which is backed by Azure Capital Partners and Draper Fisher Jurvetson, is working to patent its intellectual property.

Investors were lukewarm on VeriSign’s news as shares of the company’s stock inched upward following the announcement, but financial analysts generally hailed the acquisition.

VeriSign is rumored to be shopping its mobile content division-Treuhaft declined to comment on the speculation-but analysts believe the company may integrate m-Qube’s mobile marketing business with Jamster and Jamba, offering ad-supported subscription services for ringtones, images and other content. Treuhaft dismissed the idea, though, saying the two divisions will work together “at arm’s length.”

Instead, VeriSign hopes to target consumers who’ve grown accustomed to purchasing content on computers, using cross-platform marketing to lure them into the world of wireless content.

“I think the comfort level a consumer has about engaging on a PC is a trend that will continue to grow in the marketplace,” Treuhaft opined. “Synching that with the premium content they expect to pay for on their mobile handset will be a key set of value-added services we think we can bring to customers.” RCR

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