Synchronoss Technologies (NASDAQ:SNCR) does a lot of the heavy lifting for your mobile devices, but remains anonymous. They have long been "the company behind the company" where it comes to smartphone and tablet synchronization. Although they will achieve significant growth with their current offerings because of the proliferation of handheld computers domestically, they are looking for a bigger piece of the action.
Last week, Synchronoss officially entered a border war with Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOG) with their purchase of NewBay from Research In Motion (RIMM) for a discounted $55.5 million. RIM initially bought NewBay for $100 Million a little over a year ago to buttress international cloud services for their Blackberry mobile phones, but the company has since fallen on hard times.
It was a straightforward business proposition, and showed good horse sense for Synchronoss to pay cold cash for a company that is more than a tuck-in technology, but part of its overall strategic growth plan for the next five years. Synchronoss is not waging this war alone, they are partnering with telecom carrier heavyweights spanning the globe.
Until the acquisition, Synchronoss was a minor player in the fray with domestic telecom carrier Verizon Wireless (NYSE:VZ) rolling out the Synchronoss ConvergenceNow Plus+ cloud platform. AT&T (NYSE:T) is also testing the service. It must be noted that AT&T and Verizon Wireless are major contributors to the Synchronoss revenue stream. For more information about the Synchronoss bread and butter technologies, refer to a previous article.
Now, with NewBay on board, Synchronoss will be doing business with established European clients Vodafone (NASDAQ:VOD), Orange, Swisscom, and T-Mobile; additional U.S. customer US Cellular; plus Asia/Pacific partners LG Electronics and Telstra. It's a small world after all.
To shed some light on the expanding Synchronoss family, the company announcement states:
NewBay is a leader in cloud services, enabling mobile operators and service providers to deliver content experiences across connected devices such as smartphones, tablets, PC's and TV's.
Tiernan Ray of Barron's adds to the conversation:
NewBay is what analysts call a "white label" cloud computing services provider, which can be branded by phone companies to give cloud services to customers.
Synchronoss now crosses swords with a who's who of Silicon Valley. It puts the company in a position to compete against Apple's iCloud, Amazon's Cloud Drive, and Google's cloud initiative.
To provide the infrastructure that enables this strategy is a newly formed partnership with Terremark. Terremerk blankets the globe with its managed hosting, colocation, data storage and cloud computing services. They house data centers in North America, Latin America, Europe and the Asia-Pacific region. What makes Terremark interesting is that they are a wholly owned subsidiary of Verizon. This is where the lines get blurred because not only has Synchronoss signed a five year contract with Verizon Wireless, but Vodafone owns 45% of Verizon Wireless.
Although the mobile device manufacturers drew first blood in regards to data back-up in the cloud, it is my belief that the carriers with partners like Synchronoss are formidable opponents. The telecom giants want a bigger piece of the pie in the very lucrative, high growth smartphone and tablet market. They're already getting their money's worth from expensive voice and data plans, but are also being gouged by the likes of Apple with subsidized smartphones.
The carriers have already crossed the line, so the battle is on.
Disclosure: I am long SNCR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.