M2M Consolidation is Coming: 3 Reasons Why it Matters To You

Posted by on October 29th, 2012

John Horn, President of RACO Wireless

(As first seen here: http://www.innovationgeneration.com/author.asp?section_id=2569&doc_id=252979&) There has been a distinct feeling in the air lately, and it has nothing to do with the weather. Like an oncoming change in season, there is feeling in the M2M industry that change is on its way.

The GSMA is reporting that the explosive growth of connected devices will support an addressable revenue opportunity for mobile operators of nearly US $1.2 trillion by 2020 and will also provide significant growth potential for the entire ecosystem.

The financial markets have quietly and wisely taken note. Earlier last month, Blackstone, a private equity giant, entered the game when it acquired home automation provider Vivint for $2 billion. Poised to aggressively compete in the connected home sector, Vivint and Blackstone look to significantly expand their footprint.

Other companies within the M2M space are also moving in this direction. In just over a year, we have seen Verizon announce their acquisition of Hughes Telematics and Telit acquire Motorola Solutions’ M2M modules business.

Announced during MobileCON™ earlier this month, my company, RACO Wireless, received a significant investment by private equity group Inverness Graham. Our intention is rapid and aggressive expansion as a complete M2M enabler.

People are no longer asking if consolidation is coming, they are now asking how fast it will happen. It won’t be an overnight phenomenon, but I do think it will move quickly.

We have seen this natural phenomenon take place so many times throughout a variety of industries, where rapid growth and innovation are followed by increased investment activity and expansion, followed by consolidation and improved scale and scope. I believe that is where the M2M industry is heading – toward consolidation – and I think it will be a great thing for the industry. Here are a few reasons why:

1. M2M Growth. Our industry is always eager to report rapid growth. If we’re really going to achieve billions of connections and subscribers and trillions of dollars in revenue, we need to create the infrastructure to allow that growth to occur. Consolidation – when done correctly –results in faster growth.

2. Value-Added Services. M2M is more than just the connection. In order to help enterprise customers take better advantage of things like shipping and fulfillment, provisioning, system integration, making sense of Big Data, customer support and much more, industry consolidation is needed.

3. Simplicity. Consolidation for the sake of it is a poor strategy. But to ensure that customers are just one or two steps away – or better, just a day away – from having a complete M2M solution, is wise.

The needs of consumers are always evolving and, in such a fast-growing market, companies need to have the scale and scope to keep up with their needs. Growth through mergers and acquisitions will be critical to a company’s ability to keep up with the market demands.

So, although you can’t stop a season from coming, you can prepare for it and embrace it when it arrives. I think that the key is to be proactive and stay focused on the demands of the market. There is no doubt that the future of M2M is bright, but it will only be such for those that are willing to innovate, collaborate and investigate all opportunities.