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The Big Gulp Continues

After last week’s move by AOL to purchase GNN and WebCrawler, Internet access provider PSI decided to show its hand and purchase Mac developers Software Ventures and InterCon. InterCon is probably the largest commercial developer of Macintosh Internet software with its TCP/Connect II integrated Internet package, and Software Ventures is best known for its MicroPhone terminal emulator and, more recently, its Snatcher FTP client.

As with AOL’s purchases, PSI is trading stock for both InterCon and Software Ventures, 1.42 million shares for InterCon and 830,000 shares for Software Ventures. At PSI’s current price of about $13.75 per share, that works out to about $20 million for InterCon and $11 million for Software Ventures.

When I researched these purchases on PSI’s Web site where all the press releases reside, it became clear that PSI has been thinking about this for some time. Back in December of 1994, PSI announced, with InterCon and Software Ventures, TCP/Connect II for Instant InterRamp and MicroPhone LT for Instant InterRamp. PSI’s InterRamp is basically a personal Internet access service (via modem or ISDN); those versions of TCP/Connect II and MicroPhone LT were customized to offer online registration and automatic configuration with InterRamp. Then, in late May of 1995, PSI and Software Ventures announced Internet Valet, which offers TCP access to PSI’s InterRamp service via a bundle of programs including MacTCP, MacPPP, Enhanced Mosaic, Eudora, and MicroPhone Telnet (which I presume is a version of MicroPhone with the MP Telnet tool included).

Now, although this seems to make sense on the face of it, Internet Valet and TCP/Connect II do very much the same thing, and, to add to the confusion, PSI also recently purchased for about $11 million The Pipeline Network, a New York City-based Internet provider with a proprietary graphical package (in other words, it doesn’t require MacTCP and prevents you from using MacTCP applications). So it now seems as though PSI has three companies that all provide more or less the same thing. It’s possible that PSI sees their products in sufficiently different lights, but at the base level, each of the three acquired companies provides software for easy and graphical access to the Internet. I suppose there might be a certain sense of buying all the competing products to prevent someone else from getting them, since it’s entirely likely that other small Internet-related companies will now find themselves hunted by the larger fish.

One final thought: It seems that InterCon might have sold out for too little considering the $30 million that AOL paid last year for BookLink (which makes InternetWorks, an integrated Internet program that wasn’t even shipping when the company was purchased, (in contrast to InterCon’s long-standing TCP/Connect II for the Mac and for Windows), and the $100 million that CompuServe paid back in April for Spry, a more established company with a shipping product line, albeit one primarily based on a version of Mosaic. InterCon doesn’t seem that much different, although it’s possible there were other financial considerations that lowered the price.

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