There’s been a bit of a surge of M&A activity in M2M over the past year or so, which is not unusual in a growing market such as M2M, but we thought it would be useful to provide our perspective on what may lie ahead.
The most prevalent M&A activity has been largely to date in the AVL space. Leading this initiative involves companies such as Fleetmatics and SageQuest, Telogis (with Remote Dynamics and Vericom), Trimble and more recently the Danaher activities with other AVL players. Given the AVL market is over-serviced and many players do not have scalability advantages, these make sense, as long as the integration of technologies and markets can release the goals set by the respective management teams. And the technology implementations can be quite daunting.
We looked at our own acquisition in 2011 of Australia’s Mach Communications, the premier provider of M2M service delivery in Australia, New Zealand and Asia. At the time, the APAC region was facing significant M2M growth — and still is — with projections putting it nearly 50 percent higher CAGR than North America through 2018. We brought our high-availability infrastructure – our purpose-built, redundant M2M services delivery network optimized for highest availability – and the KORE PRiSMProTM Service Delivery platform to Mach’s organically-grown base of supply chain, logistics, healthcare and heavy equipment telematics customers; and to establish a connectivity footing that could handle large-scale expected growth. As network providers, both Mach and KORE understood that M2M delivery is much more than simply a “SIM card,” and that as such must be coupled with active, round-the-clock human service and support – in local time zones, with local country relationships and reliable regional network access.
The move was motivated by our extending global network presence and, since the time of the acquisition, no other specialized M2M provider has yet established the same extent of support and infrastructure in the APAC region.
We also backed this further with the acquisition of assets from a North American service provider in 2012, again with the intent of delivering global high availability to a new customer base. In both acquisitions, integration of technology and business processes was a leading consideration.
These have been largely in-segment initiatives. Similar activity we see in segments including medical devices and security applications. But what of the ‘cross-segment’, even cross-industry, activities?
Certainly the most notable was the acquisition of Hughes Telematics by Verizon. Is this going to make Verizon a telematics powerhouse? Time will tell, but the world of applications delivery is very different from that of connectivity services. Both are hard, but both need rigid attention to, and investment in, the ‘details’ if there is to be success.
Earlier this year, we saw M2M module manufacturer Telit move to acquire network services provider Crossbridge, so that it can now “bake” wireless connectivity into each of its module sets. Oddly enough, this is the reverse thinking from what we saw with Numerex several years ago, when it purchased module manufacturer Airdesk so it could combine network services and module sales into one sales cycle. Whichever is leading the charge, does this make for better margins, and more account control, or is it addressing the reality of declining hardware profitability?
And just recently, one of our M2M connectivity counterparts announced it acquired GPS tracking software maker Position Logic. The reality is that customers may begin to see this as a ‘poacher and gamekeeper’ world and could significantly alter the decision process through which they select partners.
Time will tell how many of these work out well. There certainly is a trend where the walls between application service providers, device OEMs and network service delivery providers are beginning to blend. We believe this is healthy in order to make adoption easier and faster. Ultimately, ASPs and enterprise users need to make decisions about whom they want to do business with to empower their applications.
So the real question remains: do you want the entity on which you depend for critical services (applications or connectivity) to be competing with you for the same customer? However you answer the question, it means choosing your partners carefully.
by Alex Brisbourne, President and COO
As the president and chief operating officer of KORE, Alex has over 20 years of experience in the networking and telecommunications industry, in Europe, North America and Asia. His expertise and areas of concentration center around wireless, enterprise and fixed line services. In his current role at KORE, he continually strives to improve company growth, by ensuring the M2M marketplace and KORE customers are well served by members of the KORE team worldwide.