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TMCNet: Smarter talk in deal at Motorola

[April 22, 2008]

Smarter talk in deal at Motorola

(Chicago Tribune (KRT) Via Thomson Dialog NewsEdge) Apr. 22--Motorola Inc. is putting money into a software company whose technology makes common cell phones smarter and more powerful.

The Schaumburg-based equipment manufacturer said Monday that its venture capital arm has made an equity investment in Sunnyvale, Calif.-based VirtualLogix. Motorola thus joins Cisco Systems, Intel and Texas Instruments as major VirtualLogix investors.

Financial terms of the deal weren't disclosed. According to Motorola Ventures' Web site, its typical investment is $3 million to $5 million.

Motorola's investment doesn't necessarily mean it will partner with VirtualLogix or use its software. But the move does indicate interest in the Silicon Valley firm's potential, as cell phone manufacturers seek to bring features typical of higher-priced phones, such as multimedia, to the mass market.

Reese Schroeder, managing director of Motorola Ventures, said the software could be useful for Motorola's network infrastructure and mobile phone units.

"We invest in companies that we believe have the potential for a good strategic connection for our business," Schroeder said.

VirtualLogix's virtualization software allows multiple operating systems to run on one device. Personal computer manufacturers have long worked with virtualization, as have makers of network equipment. The next growth area is mobile phones, which are increasingly taking on PC-like characteristics.

"I'm carrying around three phones: One is good for e-mail, another is general purpose and the third is multimedia-enriched," said Peter Richards, CEO of VirtualLogix. "Each one of those carries its own operating system. ... I'd like to have [all of] that in one single form factor, rather than carry around three separate pieces of hardware."

Virtualization also allows handset manufacturers to overlay new systems on older, proprietary software. This helps keep costs down because re-designing legacy systems can be expensive.

Richards said more mobile handsets with virtualization software should be available in 2009.

VirtualLogix isn't the only company creating this kind of software. Last year, BlackBerry-maker Research In Motion said it was developing technology to put BlackBerry applications on phones that run Windows Mobile 6. This would create a "virtual BlackBerry," with a user clicking an icon to call up functions such as e-mail.

The future of Motorola's venture capital arm is unclear as the company prepares to split in two. Motorola Ventures serves all of the parent's businesses, which include infrastructure and communications equipment for government agencies.

"From our standpoint, Motorola Ventures is remaining as active as ever and investing across all Motorola businesses," Schroeder said.

wawong@tribune.com

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