Password sync service LastPass has acquired Xmarks, the popular browser sync tool, for an undisclosed amount of cash and a share of revenues, the CEO of LastPass said last week.
Xmarks will live on as a "freemium" service, with a free service supported by a paid premium offering.
"We've been doing password sync across browsers, across platforms," said LastPass CEO Joe Siegrist. "We were already headed in the direction of synching all your data in the browser, and on every mobile phone, so it made sense to acquire Xmarks."
In September, Xmarks announced that it would pull the plug on its free bookmark synchronization service in early 2011, saying it could not compete with the services integrated into Chrome and Firefox by their makers, Google and Mozilla.
Several weeks later, Xmarks launched a pledge drive that asked users to promise to pay $10 annually. If it received 100,000 pledges, the company said it would reconsider staying in business.
In early November, Xmarks said it was close to reaching an agreement with a buyer, which it declined to reveal.
That buyer was LastPass , a Vienna, Va. firm that launched in April 2008.
Siegrist was sure he could make Xmarks profitable by touting a $12-per-year fee for a premium edition of Xmarks. "Number one, we're already [offering a premium service with LastPass]," he said. "We have enough experience that if you make a good product, you'll get three or four percent [of the users] to pay for it. We're pretty confident we can pull this off. Xmarks had no experience [with the freemium model]."
LastPass charges $12 annually for its premium service, which adds password synchronization for several smartphones, including iPhone , BlackBerry, Android and Windows Mobile. About 4% of LastPass users pay for the premium service.
Siegrist said the same mobile carrot would be used to encourage Xmarks users to pony up.
"We just launched an Android app for Xmarks," Siegrist said, adding that a revised iPhone app for the browser sync service is waiting approval by Apple.
Current users of Xmarks' iPhone app can continue to run it without moving to the premium service, but will need to pay $12 a year to receive upgrades.
Xmarks collected 30,000 pledges during its drive this fall, Siegrist said -- a third of what Xmarks said was necessary if it was to continue operations -- and those people will receive an e-mail reminding them of their pledge and asking them to subscribe to the $12 service.
At some point, LastPass will integrate the two services, but it has not set a timetable.
"Everyone else assumes that you buy into their family," Siegrist said when asked how LastPass and Xmarks can compete with the free sync services within Chrome and Firefox. "Apple wants you to stay in their family, and use MobileMe, Google wants you to stay in their family and use Android and Chrome, Mozilla wants you to use Firefox Mobile and Firefox. But people don't want to be shelved into one box, they want to be able to jump between browsers and smartphones."
Siegrist declined to provide financial details about the deal with Xmarks, saying only that it involved an up-front cash payment and revenue share payments. "We're happy with the purchase of Xmarks, and hope that people subscribe to the premium service," Siegrist concluded.
LastPass competes with 1Password on the Mac and iOS platforms, and with RoboForm on Windows.