M2M Acquisitions and the Price of Growth

The topic of acquisitions in the M2M market has featured in several company announcements and several of my discussions with industry players. In late June Avista Capital Partners completed its $253m acquisition of Telular Corporation, an M2M event monitoring and reporting service provider.

During the month of May, the CEO of Sierra Wireless was quizzed about his company’s acquisition intentions by financial analysts at a Global TMT Conference organised by Jefferies, an investment bank. Following its divestiture of a non-core business unit to focus on M2M, Sierra Wireless holds about $160m on its balance sheet. Of this, about $100m is being earmarked for M&A initiatives. So, what are some of the considerations that will determine how these funds might be deployed?

M2M Corporate Initatives - Strong H1-2013

Over the first half of 2013, there has been strong evidence that companies in the M2M market are continuing to implement a range of business strategies to capture new M2M service and revenue opportunities. Specifically:

• the number of corporate initiatives is more than double that for the corresponding period in 2012

• the market is no longer entirely driven by supply-side companies; several enterprises have strategically embraced M2M connectivity and have either partnered with mobile network operators or they are taking the lead role in developing new services

Prices and Value of Consumer Data

The topic of personal data has interested me for a number of years because it is at the heart of new approaches to marketing and service development based on connected devices. I have written about the commercial potential of personal data from a business model perspective [1] for the GSM Association and introduced the concept of Stewardship and Platform Innovator strategies for companies in the mobile eco-system.

I was therefore pleased to see the Financial Times (FT) publish a series of articles on consumer data. Accompanying this series is an interactive calculator [2] that allows readers to determine a price for their personal data based on pricing benchmarks supplied by a data broker. After filling in the options for my own profile - in terms of demographics, family and health, property, activities of interest, and consumer behaviors - it appears that the price for my personal profile is about US$0.80.

2G or not 2G?

In a filing with the Securities and Exchange Commission earlier this year, AT&T announced a plan to shut down its 2G network by 2017. This event formally confirms the fact that companies need to plan their connected device offerings on the basis of (more expensive) 3G modules (although it should be noted that AT&T had already adopted a '3G only' modules strategy for quite some time).

Several M2M service providers, including Aeris, Sprint and RACO Wireless, subsequently highlighted their commitment to existing, second generation networks and the M2M applications these are able to support. In essence, connected-device companies were being asked “why should they employ more costly 3G modules when (low data rate) M2M applications can be implemented with far less expensive 2G modules?”

Developing IoT Privacy as a Value Proposition

Companies offering services based on connected devices will increasingly have access to significant amounts of highly granular data about consumers and their connected devices. This trend is heightening privacy-related concerns about the way that such data might be used and the potential for consumers to be harmed.

The U.S. Federal Trade Commission’s recently launched an inquiry into privacy and security implications of the Internet of Things. In the commentary below, I outline my views of the key issues from a business perspective. One key consideration is to demonstrate the economic value that companies are currently capturing by combining consumer data from multiple sources.

I also highlight the fact that there will be beneficial as well as harmful uses of private data. While consumers should be protected against harmful scenarios, policy makers and business organizations that have an interest in the long-term viability of the IoT market also need to ensure that consumers are not ruthlessly exploited under apparently beneficial situations. Through this perspective, concepts of trust and stewardship related to the use of private data can be developed into new and appealing value propositions.

Verizon M2M - revised priorities?

My attention was recently drawn to Verizon’s recruitment activities in the M2M sector. I was intrigued by the profiles and the roughly 130 positions Verizon has been trying to fill notably when these are viewed against the acquisitions it made as part of its M2M strategy. More on this will follow after a recap of Verizon’s initiatives.

M2M service provider metrics

This note is part of my occasional series dealing with business metrics for the M2M sector. On this occasion I examine a few operational benchmarks for an M2M service provider. In this case, I have drawn on data for Numerex in the US which is one of a few publicly quoted entities in the M2M market.

Numerex was established in 1992 and has focused on wireless connectivity since 1999 after divesting its wire line business to BT. The company recently passed the 2m connections milestone during Q1-2013. While this connections base is small in relation to the M2M business units of the large mobile operators (many of which fall in roughly the 5–10m range) it serves as a useful reference point for business planning, performance benchmarking and investor due diligence insights. These are highly topical in the present climate where companies are expanding their M2M operations; this earlier post on building a billion dollar M2M business, for example, has been the most read item on this site in recent months.