AOL buys mobile software company

America Online Inc. has acquired Kirkland mobile software company Wildseed and set up a wireless division in Seattle as part of a larger effort to enhance the way people access music, games, calendars and other content on their cell phones.

With the addition of Wildseed's 34 employees, the AOL Wireless division will now employ about 165 people in Seattle. The newly created division, which includes AOL Mobile, Tegic and Wildseed, is led by former Microsoft and Action Engine executive Craig Eisler.

"Wireless is a big bet for us," said Eisler, who joined AOL last summer and was recently appointed general manager of the new division.

The purchase price of Wildseed - a 5-year-old privately held company backed by Ignition Partners and Azure Capital - was not disclosed. However, Wildseed Chief Executive Eric Engstrom - who worked with Eisler on the DirectX multimedia technology at Microsoft - said the deal was not a "fire sale" or "panic purchase by AOL."

"This was literally a business deal that when both companies sat down and looked at what was evolving between them, it made a lot of sense to put the two organizations together," said Engstrom, now senior vice president of wireless products at AOL.

Wildseed makes a plastic covering for cell phones, dubbed the SmartSkin, which allows users to customize their phones with ring tones, games, music and other content. It currently sells 20 varieties, including specialized skins for hip-hop artist Nelly, Fender guitars and others.

While the SmartSkin hardware was a key component of Wildseed's strategy, Engstrom said it will not play as large a role at AOL. He said AOL, which is competing against Microsoft, Google and Yahoo in the mobile market, was most interested in the software behind the device.

"Ninety five to 98 percent of the investment in Wildseed was in all of the things that allowed us to play the content that came off a SmartSkin," Engstrom said. "That content can come from anywhere," reports Seattle Post.

According to Seattle Times, AOL's presence in the Seattle area previously came mostly from its acquisition of Tegic, which had developed T9, the "predictive" typing technology that uses the number pad of a mobile phone.

Don Davidge, who was part of Tegic's original management team and is now a senior vice president at Seattle-based Melodeo, said Tegic was highly successful.

He said he thinks it has the top-selling software of any kind today, based on the number of phones that ship each year loaded with Tegic software.

Because more phones than PCs are sold each year, and because Tegic has relationships with the top five phone manufacturers, Davidge reasons the software is the No. 1 seller.

"I can certainly see with Google, AOL and a few others building a sizable presence in the Greater Seattle area, there's a lot of wireless talent," Davidge said. "This is an example of how important it is to these companies to be in the middle of the brain trust."

Wildseed's most visible product is its SmartSkin accessories, which work with a phone manufactured by South Korea-based Curitel. They are being sold by Dobson Cellular Systems and available on the Cingular Wireless network.

What AOL might do with Wildseed technology is too early to say, he said.

Is it to create an AOL-branded phone?

"That's a possible implication, but that's certainly not what we are planning on doing out of the gate," Eisler said. Instead, he said, the broader opportunity is to extend the AOL brand to the mobile phone.