Why IoT Platform Alliances Are Becoming an M&A Alternative
The IoT platform market in recent years has witnessed a near-constant emergence of new players, along with occasional mergers and acquisition as larger companies sought to expand their platforms in new directions.
Notable examples of M&A-driven market consolidation stretch back to at least 2013, with PTC’s acquisition of ThingWorx. Over the years, other significant deals included GE Digital’s absorption of Nurego, Meridium, BitStew Systems, Wise.io and ServiceMax (it recently sold a majority stake of the latter), Cisco Systems’ acquisition of Jasper, Microsoft’s Solair purchase, Software AG’s deal to buy Cumulocity and Google’s Xively acquisition. In many cases, these deals added capabilities to the already expansive platforms built by industrial software firms, networking and cloud providers and software heavyweights.
And that’s only scratching the surface. In a market containing hundreds of IoT platform providers, keeping track of the various offerings available is testing the sanity of enterprise customers trying to navigate the market.
“The market is loud and confusing, leading a lot of customers to hold up their hands in exasperation from all the different messaging coming from vendors,” said Daniel Callahan, analyst at Technology Business Research.
That might cause one to think that M&A only will become more frequent as platform companies focus on customers’ specific IoT needs and help them make sense of a multitude of technology choices. Some ongoing market consolidation probably would be a good thing. But Callahan suggested that large IoT technology companies positioning broad IoT platforms aimed at addressing customers’ end-to-end needs have not necessarily helped enterprises move forward with their IoT projects and strategies.
“They tried to be end-to-end initially but it didn’t work out,” he said. “It just created generic platforms that did a lot of things OK, but nothing great.” He added now there are signs that the vast IoT ecosystem increasingly will sort itself out, and put itself in a better position to address customers’ specific business problems with IoT capabilities, through deals of a different kind — partnerships.
A Focus on Bundling
The recent 2019 Mobile World Congress in Barcelona proved to be a showcase for partnerships between different kinds of IoT platform players. For example, Microsoft Azure announced alignments with SAP, Inmarsat and myDevices, Arm partnered with China Unicom and Vodafone, and Vodafone also got together with AT&T, after recently partnering with IBM. HPE, on the other hand, hooked up with the automotive supplier Continental. Companies that traditionally may have had end-to-end ambitions for IoT platforms are appearing to be taking a more practical point of view.
For example, the myDevices partnerships will help Microsoft Azure address the needs of customers using Long-Range (LoRa) WAN connectivity for IoT, as myDevices cataloged almost 200 different devices LoRaWAN devices from more than 50 hardware manufacturers. The partnership will allow these devices to send data directly to the Microsoft Azure cloud.
“We’ve been focused on simplifying IoT to help customers get started no matter where they are in their IoT journey,” said Sam George, director of Azure IoT for Microsoft. “In addition, an important part of our IoT strategy is our partner ecosystem, because of the unique, domain-specific expertise they can bring that also accelerates time to value for our customers.”