Verizon hopes to enhance its profile in the fleet tracking business with the purchase of Fleetmatics in a $2.4 billion all-cash deal. The Fleetmatics acquisition is expected to close in the fourth quarter of 2016.
Ireland-based Fleetmatics was founded in 2004 and has 1,200 employees and nearly 37,000 customers and 737,000 subscribers. The company develops GPS location-based employee status and mobile software.
Verizon was one of the first ones to start Telematics unit way back in 2006. It later acquired Hughes Telematics in 2012. The company has also acquired Telogis, a global, cloud-based Mobile Enterprise Management (MEM) software firm.
“Fleetmatics is a market leader in North America — and increasingly internationally — and they’ve developed a wide-range of compelling SaaS-based products and solutions for small- and medium-sized businesses,” said Andrés Irlando, CEO of Verizon Telematics, of the deal.
Verizon, alongwith Vodafone, are some of the few telecom operators which has consistently worked to secure its role in Internet of Things (IoT) ecosystem. Telecom service providers face significant challenge in the IoT space. They need to gear up to selling more than just connectivity. The main risk is that companies with more exposure in specific business verticals can potentially underscore the role of service providers. It is for this reason that the telcos would need to acquire firms (or partner with them) with strong presence in ICT space in business verticals to continue to remain relevant in the IoT space.
Telecom service providers have the option to provide end-to-end solution to their customers, which means that they would need to develop competencies of different vertical, just like Verizon’s acquisition of Fleetmatics. The other option is to provide solutions for IoT to support a range of vertical markets. For instance, they can provide supporting capabilities, such as application platform, for a range of industries.
Whatever be the option they opt for, it is clear that the service providers would be out of their comfort zone and would need to develop newer skills and core competencies. Coming few years are likely to witness more such acquisitions.