Mobile VPN Rivals MergeMobile VPN Rivals Merge

Security startup NetMotion Wireless Inc. and rival Padcom Inc. said this morning that they will merge, which the companies estimate will give them around 40 percent share of the mobile VPN market.

On the face of it the merger may seem unusual, since the firms have been in court battling over patent claims for some time. Padcom won an infringement suit against its former rival in March. (See Jury Backs Padcom Suit.)

The startups say, however, that the time in court first opened them up to the possibility of a merger. "The lawsuit was certainly a motivation," John Knopf, senior product manager at NetMotion says. "We decided we could best use our energies together."

Meanwhile, the deal is yet another sign of the increasing consolidation of the mobile security market and the need to be bigger when your main rivals are Cisco, IBM, and Motorola. As Knopf says: "The market necessitates accelerating our solutions to the marketplace."

The companies claim that there is little to no crossover in their customer bases. Padcom has largely focused on niche areas like public safety, while NetMotion is after a broader enterprise market.

The new company will retain the NetMotion name and be headquartered in Seattle. The firms wouldn't reveal the financial terms of the deal.

— Dan Jones, Site Editor, Unstrung

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