M2M - The Industry
Growing up in Toronto, an annual treat was the chance to go to the CNE (the Canadian National Exhibition, or known locally as “the Ex”). It was a bunch of temporary rides that probably “just” passed safety inspection….in fact, one of the thrills for some of these rides might have been not dying!
There is one famous ride where you go backwards in a car-like ride and the announcer yells, “You wanna go faster?” In fact, a young Howie Mandel was among the people to pick up the microphone.
Why am I telling you this? Well, I think the “IoT M&A roller coaster” is about to go a lot faster….
Yesterday morning, Novatel announced the takeover of Feeney Wireless (or FW). The takeover appears to make a lot of sense, as the folks at FW will add a lot of expertise and some great product offerings. It makes you wonder….who is next? We saw a rash of takeovers in the IoT software / middleware space (notably ThingWorx, Axeda and ILS) in 2014…so, does that mean that 2015 is the year that the Hardware companies get into the game?
There are some logical pairings…
I can think of two that COULD happen, actually. The first was one that was published in the Motley Fool a couple of weeks back where they speculated about a possible alliance/takeover between Sierra and RIM/Blackberry. The logic was that Blackberry was starting to make its play in the IoT space through their QNX division and by offering some IoT building blocks, so they may wish to have their own end device as well. Personally, I think this would be a disastrous merger. The two companies are much too different to have any chance of finding the required synergies to justify such as deal.
A more logical acquirer for Sierra may be someone in the Industrial equipment space, such as GE or Honeywell. These companies have shown an inkling to get into the Big Data space, so it makes sense that they would look to a company that could help them bolster their end-device offerings today (through Airlink), as well as how to add module-based connectivity (through their AirPrime area).
One of the great turnaround success stories of the past decade in the technology space has been the re-emergence of Cradlepoint. Once thought of primarily as a consumer play to give people Internet at the cottage, they have introduced some great products that have come to dominate some particular vertical markets. They also seem to have the most “router-like” products among their peers, so.wouldn’t it make sense for Cisco to take them out? Cisco’s efforts into the world of wireless have been, well, disappointing. Does anyone remember how bad the first HWIC was? While they have come a long way, they have never made the splash into the world of IoT that they could have, despite how much their ads make it seem like they have. I could easily see CP fitting into well into the Cisco mix. They would be a great “Mobile” arm to the company and would give Cisco a much needed boost with products such as their strong device management platform.
Digi is a tougher one to match up. It is not because of their lack of product mix or lack of solid products (Digi has a ton of great products and they are among the best in the Industry). It is more about how they could fit into a potential acquirer with their unique mix of legacy products and new ones. As well, they are also the most solution oriented company, as they have a strong sensor and platform focus.
I simply could not find one company that could be considered an “obvious” acquirer, so I will go with the one that my gut would say and that would be Intel. Intel and Digi are not strangers as they have done some alliance work together with FreeScale. As well, Intel seems to be looking for a way to make a big splash (beyond what they have done) in the IoT space and this may be a good move. Finally, it would give Intel a lot of building blocks to which they could further bolster their plans to be the IoT ecosystem of choice.
However, out of the three companies, this is easily the least likely takeover to happen.
While I have had extensive interactions with all three of these companies, I do want to point out that these thoughts are only my opinion and I have no actual basis/knowledge of any activities going on with any of them in these matters. However, it does not take a crystal ball to be able to see that at least one of these companies will not exit 2015 in their current form as there is just too much excitement in our space for someone not to make them an offer (cue my bad Marlon Brando impression) “that they cannot refuse”. Like I said, buckle up, this roller coaster is about to get started…