App Analytics Startups Flurry & Pinch Media Merge

Mobile application analytics startups Flurry of San Francisco and Pinch Media of New York are in the process of merging their operations, according to Flurry CEO Simon Khalef. The new combined entity will be called Flurry Media and will maintain offices in both locations. Here is a breakdown of the deal and what it means.

Deal Details

Khalef explained that both companies were of roughly equal size and as such, this is a merger of equals. As part of the deal, Greg Yardley, founder of Pinch Media, will be the VP of products at the new company, which will have 20 employees in New York and San Francisco. Khalef is going to be the CEO. Pinch Media’s stockholders including FirstRound Capital and Union Square Ventures will own Flurry Media stock going forward.

Flurry started out focusing on providing mobile email on feature phones but changed its business to mobile analytics over a year ago. It’s backed by venture capital firms Draper Fisher Jurvetson and Draper Richards. The combined entity, the new Flurry, will seek fresh capital in the new year, Khalef said. “Both of us are small companies and both were seeing similar growth,” said Khalef. “We were always fighting it out amongst each other; this makes is easier.”

“They had expertise in audience and ad-optimization while we are good at e-commerce optimization,” he added. It makes perfect sense that the two companies throw in their lot together. As a combined company, Flurry and Pinch Media analytics software will be running on more than 80 percent of all iPhone, iPod touch and Android handsets and will track some 1 billion mobile application user sessions per month. These two companies’ code is integrated into more than 8,000 live applications in Apple’s App Store

Going forward, the company will leverage consumer insight gained by tracking usage on four out of every five iPhone OS devices and two out of every three Android OS devices to accelerate revenue generation for application developers, Khalef said. The new Flurry is going to be ramping up its operations and boost hiring as it tries and develop its business model.

What do I think?

I’ve been a big believer in the mobile app marketplace and always thought the big winners of this shift to mobile apps would be the guys who would either own the platform or those who would develop tools for this emerging ecosystem.  Analytics were part of that “toolset.” That was precisely our logic behind including Greg’s Pinch Media in our Mobilize 08 Startup LaunchPad. It’s good to see the company grow and merge with Flurry.

It’s smart for the two to combine at this moment, rather than wait. Instead of fighting with each other, they can quickly bulk up and become big players in this marketplace. As Khalef pointed out in a chat yesterday, “We are going to build services on top of the free analytics services and that is a clear value proposition.” Agreed.

If they continue at their current pace, the new company can easily become a 800-lb gorilla in the app analytics space. That would make it even more attractive, both as an investment and as an acquisition target. Anyone from Microsoft (s MSFT) to Nielsen to comScore can be a ultimate buyer for these guys. However, if the company continues to develop e-commerce and advertising products that leverage all the data it collects, then it can become a much bigger player –- like the Omniture of the mobile world.