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HTC invests £22 million in enterprise app provider Magnet Systems

HTC invests £22 million in enterprise app provider Magnet Systems

Deal to buy Magnet Systems shows HTC is trying to fill a gap left by RIM's decline, according to analysts

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HTC has invested $35.4 million (£22.4 million) in US-based mobile enterprise apps provider Magnet Systems, a sign that the smartphone vendor is trying to fill a market space once occupied by RIM's BlackBerry devices, according to analysts.

The Taiwanese company announced the investment yesterday in a Taiwan Stock Exchange filing, stating that the company was buying a 17.1% stake in the Silicon Valley-based Magnet Systems. "The investment will bring social, mobile, and cloud capabilities to HTC's portfolio of service offerings to its mobile enterprise customers," HTC said.

Magnet Systems is a startup led by Alfred Chuang, a founder of BEA Systems, an enterprise middleware vendor acquired by Oracle in 2008. An app the company has developed is called SalesWIN, which helps sales teams coordinate activities, and runs on Android and Apple's iOS.

HTC is making its investment as the enterprise market faces a growing "bring your own device" trend, where increasingly employees want to use their own smartphones in the workplace. RIM's BlackBerry handsets had previously led in the mobile enterprise space, but the rise of Apple's iPhone and Android devices have altered the market landscape.

"There is a gap to be filled as RIM is fading out from the enterprise market," said CK Lu, an analyst with research firm Gartner. "We believe major Android and Windows Phone players are investigating such an opportunity and HTC's recent investment in Magnet Systems will help the company to move towards that direction."

HTC, which only a year ago reported big surges in profit growth, has reported sinking earnings as rivals Samsung and Apple have led the smartphone market. HTC's new "One" series of smartphones, released earlier this year, have so far failed to lift back its revenues, which are expected to decline again year-over-year in this year's third quarter.

While HTC has previously focused on targeting the consumer market, its investment in Magnet Systems shows the company is paying greater attention to the enterprise space, said Nicole Peng, an analyst with research firm Canalys.

"It is yet too early to see how HTC is going to leverage and integrate Magnet's resources in this area, but we can expect HTC will make some inroads into vertical market customers soon," she said.

While the investment could open doors for HTC in the enterprise space, the company's previous deals to bolster its smartphone products have struggled to meet expectations. Yesterday, HTC reported it would book a $40 million loss from its investment in US cloud gaming provider OnLive, which has been forced to restructure after nearly going bankrupt.

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