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Netmorf Turns Into a Memory

LAS VEGAS –- There was a notable absence in the software developer space here at the Cellular Telecommunications and Internet Association trade show.

Netmorf – a developer of software that is placed on a company’s server so its employees are able to access the Internet and databases from any device – unexpectedly closed its doors when an investor withdrew funding. Although the company was listed as an exhibitor, it didn’t set up a booth at this year’s CTIA trade show.

While Netmorf’s competitors said the elimination of one prominent company in the field would bolster their chances of survival, onlookers considered Netmorf’s downfall depressing for this segment of the industry.

“Are these startups going to do it or is Microsoft and IBM?” said Josh Newman, editor of Unstrung.com, which broke the news on Netmorf. “If (the startups) can’t sustain momentum, IBM and Microsoft will catch up. Then it’s a question of setting themselves up to be sold to those larger companies.”

Newman said behemoths like Microsoft and IBM, despite their late arrival to the space, have the funds and customer base to compete as long as they want.

Netmorf’s competitors echoed Newman, adding that building their customer base is their top priority.

“We’re seeing good opportunities in the enterprise space,” said Tom Briones, co-founder and senior vice president of AnyDevice. “We’re also looking at the health care environment.”

Another competitor, Brience, which has already delayed its IPO, has $200 million to keep it going.

“The companies that are truly going to be successful are those that close the big-name companies,” acknowledged Scott Mangelson, vice president of marketing for Brience.

AnyDevice’s Briones expressed a typical mixed reaction to Netmorf’s demise –- on one hand he was relieved to have one less competitor but considered the news “sad.”

“I thought they had a pretty decent solution,” Briones said. “They seemed to be strong in this space.”

“None of the usual signs were on the wall –- bye-bye PR firm, initial layoffs,” he wrote in an article earlier this week.

Newman doesn’t expect Netmorf’s news to mark the end of the shakeout, which should be “amusing” because it lacks the “pompousity” of many desktop Internet companies.

“It’s a rough space,” Newman said. “These are engineers with good ideas, but they have the same idea as 20 other people.”

Netmorf was an 18-month-old startup that received a $10 million round of funding last year, had about 100 employees and claimed such prominent clients as Barnes and Noble.

While the reason the unnamed investor pulled funding is unclear, all that’s left of the company is its website with the following note:

“We are deeply saddened to report that Netmorf, Inc. ceased its operations effective close of business, March 16, 2001…. A lead investor in the company’s next round of financing withdrew unexpectedly, and there was not sufficient time to secure additional funds given the current business and economic climate. We are extremely proud of the many accomplishments of our team in positioning Netmorf as a leader in the mobile data marketplace.”

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