Qualcomm Backs iPhone Competitor

The condition: Apple is unable to do to mobile phones what it did to mp3 players, with subsequent versions of the iPhone acting as market leaders instead of as category killers.

The consequence: A bunch of mobile Internet app providers will be able to cite iPhone as their validation, rather than as their murderer.

One such company is Novarra, which has quietly raised $50 million in new venture capital funding. Longtime backer JK&B Capital led the deal, with Qualcomm signing on as a strategic investor that will help Novarra expand into Asia. Other investors include Fort Washington Capital Investors and a direct investment fund affiliated with Colorado PERA. Novarra’s original VC – Kettle Partners of Chicago – did not re-up, as it went out of business several years ago (although it retains a small minority stake in Novarra).

Just like Apple, Novarra is focused on enabling Web accessibility on mobile phones. Unlike Apple, Novarra is not making its own handset – instead offering to convert the Web in a way that works with existing mobile phones. It’s not quite the “real” Internet (due to varying screen sizes), but is a definite improvement over traditional mobile Web apps that have been allergic to such things as rich text.

Novarra is focused on carrier clients, which it hopes will offer its service to all of their customers. The first bid win was Vodafone UK, and Qualcomm might be able to help with Asia accounts. This kind of makes it the flipside of Action Engine, a website operator-focused company that today announced its own VC round. That said, both companies are willing to play on the other’s turf. For example, Novarra recently signed a deal to provide “Web transformation” for Yahoo’s oneSearch service. 

“We knew the company was going to have a pretty steep acceleration ramp once its technology was adopted by a leading carrier,” explains Tasha Seitz, a partner with JK&B Capital and a Novarra board member. “The same thing happened when Sprint deployed Phone.com [later renamed Openwave], which we had also invested in.”

Seitz adds that she views iPhone as more of a boon than burden for Novarra, because more and more people are going to expect recognizable mobile Internet on their phones. “There are always hit products, but we’re very confident in this company. The success of iPhone has shown us that we’re in the right market.”