OmniSky Aims for Location-Based Content with NomadIQ Buy

Wireless Internet access firm OmniSky said it plans to acquire Jerusalem-based mobile technology firm NomadIQ for 2.5 million shares of its common stock, worth about $17.8 million.

The Palo Alto, Calif.-based company also said it would issue NomadIQ’s shareholders up to 1 million additional shares of OMNY if certain objectives — including the retention of the management team — are met during the next year. The transaction is expected to close within the next few weeks, pending regulatory and shareholder approval.

OmniSky, perhaps best known for its wireless modem for Palm devices, works like an ISP for PDAs but also provides its own customized content. The company has recently engaged in high-profile tests of wireless advertising. The company said it plans to integrate NomadIQ’s system of delivering location-based content into its own wireless content offerings.

“NomadIQ has developed what we believe to be the most robust and comprehensive product for location-based applications and services,” said OmniSky chairman and chief executive Patrick McVeigh. “We expect NomadIQ’s platform to enhance our revenue opportunities, to further differentiate our service in the market, and importantly, to help us continue to grow a loyal and active community of subscribers.”

OmniSky said its acquisition of NomadIQ would accelerate its own plans to deliver location-sensitive mobile advertising, commerce and person-to-person communications, which NomadIQ’s technology also provides. The firm said its product and technology teams already have begun to integrate the companies’ technologies, and anticipates rolling out NomadIQ’s service to its own subscribers by the beginning of third quarter 2001.

NomadIQ will be relaunched with a new moniker, OmniSky Israel, following completion of the merger. NomadIQ’s founder, Jacob Ner-David, will continue to oversee the firm.

“In a partner, we sought a shared vision for the role of location-based applications to fuel the market for wireless services and add value to subscribers,” Ner-David said. “OmniSky provides us significant experience in developing and bringing to market best-in-class wireless services on handheld devices, brand-name recognition, and a well-thought-out strategy for leveraging our platform.”

The deal could prove a boost to the fledgling wireless advertising industry, which is struggling to come to terms with the technological and privacy issues surrounding location-based targeted ads. Some wireless marketers are attempting to skirt the hurdles of pinpointing users’ locations by working in conjunction with content companies. In this scenario, ads are targeted based on the regions that the users appear to be in, judging from the information they request — such as delivering an ad for ski apparel if a user requests weather conditions in Aspen, Colo.

OmniSky has been busy striking deals with ad networks to deliver non-location targeted advertisements in the meantime. In November, online ad serving giant DoubleClick inked a deal with OmniSky to test delivery of banner ads to OmniSky subscribers.