Today (January 28, 2011), Telit Wireless Solutions and Motorola Solutions signed an agreement for Telit to acquire Motorola’s M2M modules business. This is the latest in a string of mergers and acquisitions activity in the M2M module market over the past several years that include the purchase of Wavecom by Sierra Wireless in February 2009, of Cinterion by Gemalto in June 2010, and of Enfora by Novatel Wireless in December 2010.
The consolidation underway in the industry is reflective of the increasing commoditization and price competitiveness in this market segmentthat is being exacerbated by the entrance of APAC-based module vendors, such as Huawei, SIMcom Wireless Solutions, and ZTE.
However, while the previously-mentioned acquisitions resulted in synergies in products, channels, and geographies, or enabled a fundamental change/expansion of strategic direction, ABI Research believes the Telit/Motorola deal revolves much more around achieving economies of scale benefits. Telit seeks to better compete in a more cost-constrained competitive environment, and Motorola Solutions seeks to divest itself of a non-core component level business. The combination leads to a vendor that in 2009 would have accounted for roughly 18% of the M2M embedded module market, on a unit shipment basis. (2010 market share figures will be available in a few months.) This is a good deal for both companies.
