The month of February was busy with over $3.4 billion in investment. We saw a flurry of quarterly earnings, consolidation in the fiber world, partnerships for the future of secure networks, continued leadership exodus from a major incumbent chipmaker, and large funding deals in AR/MR and autonomous vehicles.
- Earnings Reports – SSNI, NSSC, SLAB, ACLS, CY, SWIR, AIRG
- M&A and Investments – LMOS, ZAYO, IDTI, NOK, ELUXY, TTCNF, GE, AAPL, F
- Partnerships – QCOM, NOK, GE, ERIC, TEL, TTCNF
- People Moving – INTC
- Companies You Should Be Watching – TYPE, VUZI
- Private Funding
We continue to see an increasing amount of hype surrounding the Internet of Things, and similar to our coverage last month, we’re finding more use of IoT as a buzzwords than with well executed, Smart Systems strategies. Why? The Internet of Things is based on acquiring and then monetizing data. Whether this data comes from hardware or software, it takes a significant amount of time and patience to make money from this strategy. For comparison’s sake, let’s think of data monetization like the process of profiting from the Internet.
It starts with the high capex requirements to install infrastructure that can share volumes of data in real time, such as fiber networks or value added network services (e.g. private LTE or NB-IoT), both of which are quite similar to the emergence of ethernet for networking technology in the 1980’s. Next, even more capital is required for adding low power sensors that enable devices to collect and transmit data, much like those dial-up modems that would connect us to AOL online. Finally, investments in software must be made to organize and secure data into a product that people will want to purchase, similar to any search engine or internet browser. And only once all these pieces are in place, companies along each step will begin to see a return on the money they’ve invested in the IoT.
This past month, we’ve watched the companies investing in their strategies get punished by the market because of the time required to build long-lasting, recurring revenue models, and conversely, companies mentioning the IoT with minimal investment are praised for adapting to this secular trend. Our goal is to parse out the imposters and highlight the ditch diggers. The Internet represents one of the most successful examples of the benefits of sustained investment, and the IoT will not be different.
Earnings Reports Trends: We continue to find that Wall Street lacks the patience to invest in pure play IoT companies building recurring revenues, but they also salivate at the first signs of participation in the internet of things. Here are the earnings reports we analyzed:Harbor Research believes that a whole new generation of wireless networks for sensor-enablement, mobility and edge intelligence technologies are emerging that will drive significant productivity and efficiency gains. Based off recent player moves, it would be safe to assume that the technology specialists agree.
Private Funding: Uptake raises at a $2B valuation, Desktop Metal funds a Series C with an eclectic group of strategic investors, and Salesforce leads ServiceNow’s path to solving the “traveling salesman problem.” Others:
- AR/VR: Daqri, Lytro, 8i
- Platforms: Uptake, ServiceNow, Enbala, SlamData, Jumper
- 3D Printing: Desktop Metal
- Medtech: Sense.ly, SigTuple
- Smart Buildings: Kinestral Technologies
- Autonomous Vehicles: ClearMotion, Waymo