3Com to Acquire Kerbango for $80 Million

3Com (http://www.3com.com), looking to build its presence in the home connectivity market, said today it was acquiring Kerbango ( http://www.kerbango.com), a developer of a standalone Internet radio tuner.

According to the companies, the deal is worth $80 million. In mid-day trading Tuesday, 3Com stock dropped about half a point.

"One of the most exciting next waves of networking connectivity will take place in the home with Internet appliances,'' said Eric Benhamou, chairman and chief executive officer of 3Com. "The Kerbango Internet radio - and the services it offers - is the industry's best example of a simple, personal Internet appliance."

Kerbango's stand-alone Internet radio product lets users listen to Internet radio without a computer. It connects directly to a phone line and tunes into streaming radio stations. Kerbango also has a large radio directory/portal on its site. Although the company bills the hardware as the world's first radio stand-alone Internet tuner, it hasn't been released publicly yet. Company officials said it should be out in approximately a month.

Nevertheless, it's a sign that Kerbango is in the right space at the right time. It also solidifies the whole Internet tuner space. Competitors like Akoo.com (http://www.akoo.com) (making the Kima device) and Sonicbox (making the IM hardware tuner) are also now in the spotlight. Will these net startups also be acquired by larger companies? Sonicbox (http://www.sonicbox.com), which makes a wireless radio tuner device, was showing off its product to the press last week, saying it was going to market in a few weeks. But Sonicbox claims that they're not in the hardware space at all—its Sonicbox Tuner is just a way to showcase the company's technology to add a new "IM" Internet radio band to consumer devices.

"For us, joining 3Com is like strapping a booster rocket to Kerbango,'' said Jon Fitch, Kerbango's chief executive officer. "3Com has the manufacturing, distribution and strategic partnerships, as well as a proven track record and a strong brand with consumers, which we intend to immediately leverage."

Cupertino-based Kerbango employs 28 people. Kerbango was founded in 1998 by former Apple and Power Computing executives. CEO, Jon Fitch, will become vice president and general manager of 3Com's Internet Audio division, reporting to Julie Shimer, vice president and general manager, 3Com's Consumer Networks Business.

In a separate announcement, Thomson Multimedia said it was going to distribute an RCA-brand radio that utilizes the Kerbango Internet Radio Tuning Service. 3Com says they too intend too follow this strategy by forming alliances with distribution partners.

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