IoT M&A and Product Exits Consolidate a Fragmented Market but May Augur Trouble

Kathryn Weldon – Research Director, Business Network and IT Services – Americas

Summary Bullets:

• The last two weeks have seen unusual levels of mergers and acquisitions (M&A) activity within the IoT ecosystem and the announced exit of an IoT platform from a major vendor.

• These changes confirm a need for consolidation in an overly complex and fragmented market with a way to provide growth and longevity for vendors by enlarging product scope.

M&A

  • On July 29, Telit, a US-based provider of IoT technology solutions including hardware and management platforms, announced its intention to acquire the cellular IoT products of Thales, a French vendor of aerospace, defense, security, and digital identity solutions. These include Thales’ portfolio of wireless communication modules, gateways, and data modem cards that support 4G LTE, LPWAN, and 5G. Telit notes that the acquisition will expand its presence in new industrial IoT segments including payment systems, energy, e-health, and security. It also enhances the company’s ability to respond to demand for cybersecure IoT solutions in modules and cellular connectivity. In turn, Thales will take a 25% stake in the expanded Telit business, which will be rebranded as Telit Cinterion.
  • On August 29, Telit announced the acquisition of Mobilogix, a startup specializing in custom IoT solutions to draw customers who want to reduce complexity and time to market. Mobilogix adds device engineering expertise and resources that optimize specifications for handoff to electronic manufacturing services and OEMs and shorten time for regulatory approvals and carrier certifications. It also specializes in verticals including telematics, micro-mobility, healthcare, construction, and agriculture.
  • On August 2, US LoRa specialist and semiconductor manufacturer Semtech confirmed its $1.3 billion acquisition of Canadian vendor Sierra Wireless (i.e., a provider of cellular modules and gateways as well as cloud and MVNO services and platforms). Semtech states that the move “significantly” expands its addressable market and will double annual revenue, generating $40 million in run-rate operational synergies within 12-18 months of the deal’s closing. Semtech’s CEO noted that the acquisition is a “critical part of bringing the Internet of Everything” to life through combining the two vendors’ cellular, LoRa, and cloud services.

Market Exit

  • On August 17, Google announced the shutdown of its IoT Core platform (with a one-year lead time for customers to change providers) and a shift to relying on application and service partners to handle customers’ requirements. Google’s platform was similar to those of hyperscaler rivals Microsoft and AWS as it helped businesses and developers manage IoT devices, as well as ingest the data and use analytics to understand what the data means and leverage it to make key business decisions.

While AWS and Microsoft have a lead over Google in cloud services in general, and in enterprise-focused IoT platforms in particular, Google appeared to be gaining more traction in IoT with key enhancements during the last year and high-profile customer references. Google’s departure from the market makes one wonder about the health and growth of IoT platforms and services among all hyperscalers that had initially assumed IoT would boost their cloud service customers and revenues.

IoT ecosystem de-fragmentation through M&A seems like a positive trend for an over-complicated market in which customers still complain that they need to buy and manage separate elements from disparate vendors and may have trouble proving adequate return of investment to key stakeholders. However, IoT connection growth rates were lower than expected in 2021 at 8% (for a total of about 12 billion global connections), but lower growth has been widely attributed to the chip supply shortage and COVID-19 concerns rather than the dampening of demand.

What do you think?

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.