Earthlink To Buy Cidco In $5M Deal

By Greg Scoblete On Nov 5 2001 - 8:00am

Internet Service Provider Earthlink reached an agreement to acquire e-mail appliance manufacturer Cidco Inc. for $5 million.

The acquisition, scheduled to be completed before February 28, will shift approximately 120,000 Cidco subscribers to EarthLink's subscriber base and eventually give the ISP the capability to deliver its e-mail and Web services through Cidco's portable e-mail devices.

Earlier versions of Cidco's appliances required the use of a Cidco-assigned e-mail address. The current devices also don't access the Web.

Cidco Communications LLC, Cidco Inc.'s former phone and caller ID manufacturing wing, is unaffacted by the planned purchase. Cidco Communications spun off Cidco Inc. last year as an independent company. Cidco Communications will continue to ship retail caller ID boxes under the Cidco Communications brand and sell telephones to local landline carriers.

EarthLink purchased Cidco with an eye toward turning Cidco's Mail Station and Mivo e-mail appliances into wireless extensions for a home gateway, said Brent Cobb, VP of Strategy and Development for Earthlink Everywhere. The Mivo 250 and 350, which use 900MHz cordless-phone technology, let users check e-mail from any POP 3 e-mail service without being tied to a phone jack.

"You'll definitely see an entry-level product aimed at the non-PC user and consistent with what Cidco's been doing in the category," said Cobb. But Earthlink feels the core of the market is with current PC owners (and with 5 million Earthlink subscribers) looking for Internet/e-mail access throughout the home.

"What we've learned through our market research is that our more advanced customers are looking for a way to have Internet access and e-mail throughout the home without putting a PC in every room," said Cobb. "They also want wireless connectivity to a home gateway, rather than using the existing phone circuit. So we're really looking into this more advanced avenue."

Under terms of the purchase, Cidco's e-mail appliance products will carry a "Powered by EarthLink" label and continue to be marketed under their current brand names for the short-term. Pricing and subscription services will also not change in the short term. Earthlink expects to have Earthlink branded product in the retail channel at the end of the first quarter of next year, Cobb said.

EarthLink will also avail itself of Cidco's manufacturing and retail partnerships as the ISP assesses future product development and marketing considerations. Cidco currently markets its MailStation and Mivo products through a number of retailers, including Best Buy, CompUSA, Kmart, Office Depot, Office Max, Radio Shack, Staples and Target.