by Mark Castleman
This week, Sierra Wireless announced acquisition of Wireless Maingate, a European company specializing in connectivity platforms and a registered MVNO in Europe. This is another move by companies attempting to become more vertically integrated.
Sierra already leads the way in the M2M module space and is a leading provider of M2M Gateways. Sierra Wireless created noise when it became the first in the space to move up the stack, adding an application enablement platform. Now with a Connectivity Platform, Sierra is nearly a 1 stop shop for M2M solution enablement.
The question I have is WHY? Why does Sierra acquire a company who competes with their customers? While this makes them a bit more vertically integrated and makes them look more like Telit, does this provide a true differentiator?
If I read things right, with revenues of $19M, just over 500,000 connections, and quite a bit of integration work, there must be some fairly cheap connections involved here. Given that a large portion of the revenue comes from low ARPU smart meter and residential alarm systems, is there really room for Sierra to exploit and grow its premium priced modules and gateways?
What’s next for Sierra? That’s almost anyone’s guess. This isn’t their first acquisition and it surely won’t be the last.
Will they continue to make acquisitions, perhaps vertical application solutions? Will they try to take out a competitor? Or do they become a threat to the carrier from a connectivity standpoint?
I’m sure many companies are salivating over the $90M in cash that was spent, and I wonder if there aren’t better deals out there for companies with the cash.
It seems to me that companies like Stream, who have connectivity-agnostic platforms and can navigate Cellular, Satellite, Low-Power WAN, and short range solutions might be a better bet.
But if you're just looking for MVNO assets and connections, there are a handful of companies, such Wireless Logic, Arkessa, and eseye, that are available and all probably wondering if they are on anyone’s dance list.