Merger and acquisition activity and a ramp in partnerships will continue at pace throughout 2016. Connectivity and big data analytics are integral parts of a managed service, but investments will continue in all areas, from devices at the edge of the network through to back-end investments in software and infrastructure. What is clear is that for the industry to move forwards, there will be a continued need to reduce the number of partners in an IoT deployment, reduce the level of complexity and demonstrate a clear return on investment to customers deploying an IoT project.

In this context, the acquisition of Jasper by Cisco is not only win-win for both parties, but also for the IoT space more broadly.

Jasper’s first mover advantage and longevity in the IoT PaaS space means it is far more valuable than other platforms that lack the scale, service provider partners and enterprise customers that Jasper has managed to secure. Jasper recognized early on that in order to support its enterprise customers, it needed to tightly integrate with service provider networks. This strategic decision helped them create an expansive recurring revenue-based business model that offers more breadth and reach than any other PaaS player in the IoT space.

Jasper benefits by finding a much needed home at a good price. Continuing to pursue an ever diminishing pool of carriers, while at the same time being unable to serve the richer demands of its enterprise customers was not a viable long term business strategy. As part of Cisco, Jasper will have deep reach into a number of verticals and provide a much more “joined-up” offering for the increasingly richer demands (e.g. analytics, enterprise integration) of enterprise customers.

Cisco fills a gap in its portfolio-a rich cellular IoT PaaS offering with real global scale, to complement its rich networking business. Moreover, Cisco gets Jasper’s extensive list of customers and partnerships with service providers and a foothold in the Connected Car market. This opens up more opportunities in Cisco’s direct and indirect networking/IT channel business, expands Cisco’s service provider business.  Services are one of the most lucrative and profitable areas within IoT and offer consistent, recurring double digit profit margins.

It is unlikely there will be much friction with existing partnerships. It may however strain those alliances in which the service provider is seeking to provide significant added value to customer beyond connectivity such as Cisco’s relationship with Vodafone. However, in partnerships where there is a very tight integration with Jasper e.g. AT&T, it may actually enhance the relationship.

For much more detail, the report "Cisco Strengthens Scalable and Interoperable IoT Offering with $1.4 Billion Jasper Acquisition" is available to subscribers of Strategy Analytics' IoT Strategies service.