Opt for Opera Over Openwave

In less than three months, Openwave (OPWV Quote) shares have fallen from $23 to below $8, a tumble that demonstrates how volatile and unpredictable the mobile software market is.

Nokia (NOK Quote) and Motorola (MOT Quote) are in the process of revamping their user interfaces, placing pressure on specialist companies that develop mobile browsers, most notably Openwave and Opera Software.

Nevertheless, mobile-handset vendors aren't necessarily the final arbiters for browser technology -- mobile-network operators and content providers arguably could be more important in the long run. Could this summer's Openwave crash be an opportunity to take a chance on the mobile-browser/user interface market?

It's a tempting idea. Openwave's market cap has fallen below $800 million. The company has excellent client contacts across the globe, and browsers installed on hundreds of millions of handsets.

Even if the browser market can't sustain specialist companies in the long run (which is likely), the mobile browser could be on the verge of mutating into something far more intriguing than PC browsers: We may soon bear witness to the painful birth of multitasking applets that closely integrate mobile music, game, video and messaging.

The know-how of companies like Openwave and Opera makes them attractive takeover candidates -- at the right price.

It's possible that mobile-phone vendors will come up with the killer software and leave the specialist companies in the cold, but I don't buy that. IBM never did turn into Microsoft -- or Google.

I believe that Opera is better positioned than Openwave to address the possible new shift in the mobile-software market. The Norwegian company has recently made waves on various fronts.

Its compact, new, low-end mobile browser, Opera Mini, is getting great reviews in Scandinavia and may be on the verge of wider distribution in Asia and Europe. Nokia's decision to use in-house browsers in some of its most important recent models has hit the price of Opera's shares, which are listed on the Oslo stock exchange. But their decline from 34 krone in March to 23 krone in June was a lot milder than it could have been, partly because of the buzz around Opera Mini and partly because Opera has developed a browser for the hot-selling Nintendo DS portable video-game console.

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