The San Diego mobile phone hardware and software provider Qualcomm Inc. has agreed to purchase the mobile banking software company Firethorn Holdings LLC for $210 million in cash.
Qualcomm said Wednesday that buying the Atlanta vendor would accelerate the adoption of mobile banking applications and fits into a larger strategy of enabling people to use their phones for a wide variety of applications, including financial services.
Firethorn has been a driving force in the emerging mobile banking market. Several banking companies are using its software, including Wachovia Corp. and SunTrust Banks Inc., both of which started offering such services this week.
Richard Crone, the president and founder of Crone Consulting LLC, said that until now mobile banking services have been driven mainly by financial companies, which want to give their customers a new and convenient way to access their accounts.
However, the deal could change the market significantly, Mr. Crone said. "This instantly makes the device maker an entity to deal with, in mobile banking, in mobile payments, and in mobile marketing."
Purchasing Firethorn would put Qualcomm "in the pole position when it comes to offering mobile banking, and they will be in position for the end game: mobile payments," he said.
Many mobile phone companies envision using handsets as mobile wallets that can access accounts at a variety of financial companies, Mr. Crone said. Gaining control of software that can control these wallets could make Qualcomm a gatekeeper, he said. "The one who enrolls customers is the one who will control the relationship."
The deal could also be a curveball for AT&T Corp., which has been working with Firethorn for months and announced a major mobile banking initiative Tuesday, including plans to deliver two handsets with preloaded software for the holiday season.
Nick Holland, a senior analyst at the Boston research and advisory firm Aite Group LLC, said that Qualcomm is a pioneer in the CDMA wireless format, while AT&T uses the GSM format. "This news may have stolen AT&T's thunder a bit."
Len Lauer, a Qualcomm executive vice president and group president, said in a press release that acquiring Firethorn would let his company "help drive the evolution of mobile banking by leveraging Firethorn's industry expertise, reputation, and successes in developing relationships with financial institutions, wireless operators, and payment processors."
The deal is expected to close within 30 days.
