Fierce mobile virtual private network competitors — and longtime litigants — NetMotion Wireless and Padcom last month announced a merger agreement that could alter the mobile VPN sector significantly.

The deal was announced less than three months after a district court ruled NetMotion had infringed on two Padcom patents in developing its Mobility XE solution. This verdict, coming after more than two years of legal bickering between the two companies, helped spur “more earnest” merger discussions, said John Knopf, NetMotion's director of marketing.

“While it really wasn't the reason to merge, it definitely was the reason to talk about those possibilities,” he said. “It just made so much sense to put our resources together and attack the market rather than fight it out in court.”

With more than 80 employees, the new company will be known as NetMotion Wireless, with NetMotion President and CEO Bob Hunsberger retaining his titles. Former Padcom Chairman Gordon Smith will chair the board of the new company. Former Padcom CEO Scott Stone will not be part of the new company, Knopf said.

The company's primary VPN solution in the future will be based on NetMotion's Mobility XE platform, which will be bolstered by “best-of-breed” features from Padcom's TotalRoam product being integrated into the offering. Michael Van Patten, vice president of Padcom, said he is optimistic about the innovations the merged company can deliver with its combined research-and-development resources.

“Between the two companies, I think we have some of the top talent in the industry,” Van Patten said. “Going forward, it's going to be better support for the customers and certainly quality products down the road.”

Hunsberger echoed this sentiment in a statement.

“Together, we have the industry's leading mobile VPN technology and more than 900 customers,” he said. “I believe we have more engineering resources dedicated to creating world-class mobile VPN solutions than any other firm.”

Meanwhile, the new company has pledged to support existing Mobility XE and TotalRoam customers for at least two years, Knopf said.

“The new company is very committed to all the customers — market share is a big deal for us, and we want happy customers,” he said. “So we're going to do everything we can to keep all those customers around and very happy.”

Van Patten said the latest TotalRoam release will be available this month but declined to speculate whether the merged company would develop future upgrades to the product.

Padcom rival Radio IP Software hopes to grab more of the public-safety VPN market if TotalRoam is not upgraded in the future, said Alain Adam, Radio IP CEO.

“We feel that Padcom clients in the private RF market are really in a bad position as we speak,” Adam said. “Even in the last 18 months, we've started converting some of them because they were having problems with the latest releases from Padcom.”

Adam said he believes NetMotion's historical focus on IP-based networks will continue, creating an opportunity for Radio IP to get more customers in the private radio frequency market that primarily includes public-safety customers.

“Since there's a trend for RF networks to go IP, that's probably what NetMotion is waiting for,” Adam said. “But I don't see everyone changing from non-IP networks to IP networks in two years. That's just not possible.”

On the larger, enterprise side of the mobile VPN market, the new NetMotion easily is the largest pure-play vendor in the sector, Knopf said. The other large players in the industry — for example, Cisco Systems, IBM and Motorola — also operate in the network-hardware space, he said.

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