M2MEnterprise IoT


IoT 2016 Merger and Acquisition Activity Accelerates

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Report Summary:

Mergers and Acquisition (M&A) activity in the Internet of Things (IoT) and related segments including the connectivity and wireless markets hit an all-time high in 2015. Activity continues unabated, with no signs of slackening.  In the first four months into 2016, the M&A activity is already matching and may eclipse the pace set in 2015, which was a record breaking year both in terms of the number and value of acquisitions.

The biggest M&A deal of 2016 to date, so far is the February announcement that Cisco was buying Jasper Technologies IoT services’ platform for $1.4 billion. But the year is still young and more high level acquisitions will undoubtedly follow.

The most desirable acquisition targets are companies whose core competencies are concentrated around analytics, security, connectivity platform capabilities and services. And within those product categories IoT vendors are especially eager to acquire companies in hot vertical segments including:

  •  Automotive
  • Consumer Wearables
  •  Healthcare
  • Industrial IoT
  • Manufacturing
  • Retail
  • Smart Home
  • Transportation

The frenetic pace of the M&A activity reflects the plethora of initiatives in the IoT space: new product introductions, partnerships and standards efforts all of which are generating demand and increasing mainstream deployments.

The rapid rate of development in the high technology industry in general and in the IoT segment specifically is also accelerating M&A activity. Many vendors feel they cannot wait years for internal research and development (R&D) initiatives to reach their full revenue potential and they fear rivals will overtake them. A targeted acquisition is often the surest and quickest way to gain immediate entre, market share and credibility into a specific IoT market segment and stay ahead of or at least abreast of the competition. Acquisitions – assuming they are successful, and there are no guarantees -- offer the potential for vendors to swiftly segue into new, emerging markets that offer greater immediate and long-term strategic growth opportunities.

The rise in IoT mergers and acquisitions over the last two years is also indicative of the mounting pressure confronting nearly every data and telecommunications vendor to generate new sources of revenue as sales from traditional core product lines contract. 

Changing market dynamics have created a surge in IoT M&A activity.

At the end of 2010, the industry counted a scant one dozen acquisitions in the then fledgling IoT market. By the end of 2015, SA estimates there were 81 mergers and acquisitions, a nearly seven-fold increase in five years (See Figure 1). Also notable is the increase in the worth of the companies being acquired.  It’s true that top tier IoT vendors may still purchase niche startups just out of stealth mode for relatively modest prices of $50 million, $100 million or $200 million (US dollars) for a promising IoT product, engineering talent, plus a valuable patent portfolio (present or future). But M&A deals of $1 to $2 billion are increasingly common and mega-billion deals – like Intel’s purchase of Altera for over $16. Billion, is no longer a rarity.

The value of the IoT deals indicates the lengths to which the major vendors will go to maintain their current leadership positions and secure their place in the IoT firmament over the next three-to-five years. Additionally, the celerity with which the deals are occurring mirrors the quickening pace of IoT product rollouts and adoption.     

This in turn means that IoT vendors must deliver end-to-end solutions.

Organic in-house research and development (R&D) initiatives are still very much a necessity. So, too are strong patent portfolios, innovative engineering teams, broad partner ecosystems and deep service and support organizations.   

However, a well targeted merger and acquisition provides vendors with immediate tactical and strategic opportunity to gain market share, increase their customer base, boost revenues and advance IoT goals and increase influence. A focused M&A has the added benefit of consolidating the industry and reducing the number of competitors. 

IoT is a burgeoning market. And one of the hallmarks of its emergence will be a continued, high level of M&A activity as the major players all jockey for position across the various vertical market sectors. That said, the success of individual mergers and acquisitions is not guaranteed. IoT vendors must still perform due diligence to ensure that they purchase companies whose IoT technologies fill a specific product need and is a good business fit.  

Table of Contents

1.       Executive Summary  4

2.       Introduction  7

2.1     IoT Investments, Partnerships and Standards Efforts Accelerate  8

2.2     Microsoft: Power through Partnerships  8

3.       Recapping Top 2015 Mergers and Acquisitions  10

3.1     Amazon buys IoT Platform Start-up 2lementry and Dash Button  10

3.2     NXP acquired Freescale Semiconductor for $16.7 billion  10

3.3     Qualcomm Closed $2.4 billion deal for Cambridge Silicon Radio (CSR) 10

3.4     Intel bought Altera for $16.7 billion and Cognitive Computing vendor Saffron  11

3.4.1       Intel Acquires Saffron for Cognitive Computing, Analytics Play  12

3.5     Sierra Wireless acquired Accel and moves further into M2M Managed Services  12

3.6     Bosch acquired ProSyst, beefed up IoT Middleware Platform   13

3.7     PTC Builds further in IoT, adding Machine Data and Predictive Analytics Company ColdLight for $105 Million  13

3.8     Cisco Acquired ParStream to Bolster Analytics Offerings  14

3.9     IBM Bought the Weather Company  14

4.       M&As Off to a Fast Start in 2016  15

4.1     Brocade Bids $1.5 Billion for Ruckus Wireless to Get an “On Ramp” to the Wireless Edge  15

4.2     Cisco Expands IoT Stake with Four Acquisitions  16

4.2.1       Cisco Acquires Jasper for $1.4 Billion  17

4.2.2       Cisco Purchases CliQR, App-Defined Cloud Orchestration Platform Vendor 18

4.2.3       Cisco Buys Israeli-based Leaba Semiconductor for $320 Million  19

4.2.4       Cisco buys Synata  19

4.3     Harman Buys TowerSec, Expands Stake in IoT Automotive Vertical to Secure Connected Cars  20

4.4     IBM Goes on IoT Buying Binge, Bolsters Healthcare, Cyber Security Analytics and Services Capabilities & Makes Cloud-based Enterprise Video Play  20

4.4.1       IBM Buys Iris Analytics, Real Time Transaction Fraud Detection Firm   22

4.4.2       IBM Acquires Ustream, Streaming Video Company  23

4.4.3       IBM Purchases Truven Health Analytics, Maker of Cloud-Based Healthcare Data Analytics, Insights for $2.6 Billion  23

4.4.4       IBM Buys Cyber Security Firm Resilient Systems, Incident Response Platform  24

4.4.5       IBM Purchases Optevia  25

4.4.6       IBM Buys Bluewolf Group, Specializes in Salesforce Cloud Services  26

4.5     Intel and Wind River Boost IoT Automotive and Over-the-Air Content Initiatives with Arynga & Yogitech Acquisitions  26

4.5.1       Intel’s wholly owned Wind River subsidiary Acquires OTA Platform Vendor Arynga, 27

4.5.2       Intel Acquires Italian Chipmaker Yogitech to Boost IoT Safety in Self-Driving Cars, Robots  27

5.       Conclusions  28

6.       Contact the Author of This Report 29

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