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America Online Inc. on Monday said it has acquired wireless software maker Wildseed Ltd, a deal that could help AOL embed its services in cellular phones sold by wireless carriers.

AOL bought the Kirkland, Wash.-based, Wildseed for its technology and engineers, a company spokeswoman said. AOL, a division of Time Warner Inc., is not committing to any of the company's products. Financial terms of the acquisition were not disclosed.

"What we're excited about, and why we bought the company, is for the technology and the talent," the spokeswoman said. "We're not saying anything firm about what we're going to do (with the company)."

Wildseed sells the SmartSkin cellular-phone accessory that provides a variety of services, including ringtones, message alerts, animations, video clips and games. The accessory, which is available in different themes, ran on Wildseed's Curitel Identity handset. Curitel was the company's debut product.

Wildseed also has a mobile Linux-based operating system that includes support for Game Boy Advanced games, MP3 music files, video and remote device management. The OS also includes customizable user interfaces for cellular phone manufacturers or wireless carriers.

Wildseed is not AOL's first acquisition of a mobile software maker. The Dulles, Va., company in 1999, bought Tegic Communications, which made a text-entry application for wireless devices. The software made it easier for cellular-phone users to enter text by reducing the number of buttons that had to be pushed on the keypad.

Analysts have said that data services remain too difficult to use on cellular phones because the keypad is cumbersome for inputting data. Nevertheless, rivals AOL, Yahoo Inc., Google Inc. and Microsoft Corp.'s MSN have all targeted the small devices for delivering their own brand of services, including email, local search, traffic information, instant messaging and shopping.

Worldwide shipments of cellular phones are expected to reach 760 million units this year, increasing at a compound annual growth rate of about 5 percent through 2009, according to International Data Corp. With that many devices, the potential advertising revenue is significant for AOL and the other portals.

To maximize use, however, cellular phones as computing devices have to get easier to use. As a result, portals are looking for ways to embed their services within the devices for instant access. Yahoo, for example, announced in July a partnership with handset maker Motorola Inc., which agreed to optimize its Linux-based phones for direct access to Yahoo web mail, entertainment, shopping and other online services. The devices are scheduled to ship next year.

With the purchase of Wildseed, AOL has the potential of building partnerships with handset makers and carriers interested in selling phones that can easily access the portal's services, using Wildseed's OS and other technologies, the spokeswoman said.

"(Wildseed) has proven that it can reach the entire value chain from the operating system on up," the spokeswoman said.

Wildseed is the second major corporate acquisition for AOL this year. The company last week announced the purchase of Xdrive Inc., an online storage and backup service. Last year, AOL bought email service provider Mailblocks Inc. and online marketing firm Advertising.com.


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