Partners: Price Did Proxim In
The Sunnyvale, Calif.-based company is selling its assets to Moseley Associates, a $21 million deal that accompanies Proxim's filing Friday for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware
"The competition has just been overwhelming them in the last couple of years," said Michael Simmons, president of MAS Enterprises, a solution provider in Las Vegas.
As a pure-play wireless vendor, Proxim lacks a broad technology portfolio to help insulate it from price wars and commoditization in the WLAN market, solution providers said.
Proxim has been unable to keep pace on price as players such as D-Link, Linksys and Netgear incorporate high-end features into low-end products, said Michael McGhee, president of Anexeon, another Las Vegas-based Proxim partner.
"Those companies added features into their lower-end products that have made them on par with Proxim but haven't raised their prices," McGhee said. "Proxim has differentiators that make them a little bit better, but not many and not enough to justify the cost," he said.
McGhee regularly sees price deltas of 30 percent to 40 percent between Proxim's portfolio and comparable lower-priced offerings.
In addition, Proxim faces off with Cisco Systems in the enterprise market, where Cisco's WLAN efforts are bolstered by its dominance in wired networking, McGhee said.
It's too early to tell how the pending acquisition will impact Proxim's partner base, solution providers said.
"Proxim's strong global distribution channels and understanding of low-cost manufacturing will accelerate our growth," said Jamal Hamdani, president and CEO of Moseley, a wireless vendor based in Santa Barbara, Calif., in a statement.
As part of the deal, Moseley is providing Proxim with bridge financing of up to $6.2 million.
Following the acquisition, which is subject to court approval, Proxim will become a wholly owned subsidiary of Moseley, which over the last five years has also acquired subsidiaries Microwave Data Systems, Axxcelera Broadband Wireless and CarrierComm. The combined company will have revenues approaching $200 million.
No proceeds of the sale are expected to trickle down to Proxim stockholders, according to the statement.