You would be forgiven in thinking that the telematics market is boring, I certainly thought it was until I joined ABI Research. But in the short period of time I’ve been with the company so much has happened and it feels like if you blink you might miss something.
One company in particular that has kept us all on our toes is Omnitracs. Just last month we released our annual commercial telematics competitive assessment, during the course of the research we had to make several updates as the market kept changing and now just after publication we hear that Omnitracs has acquired XRS! This announcement changes everything. Together Omnitracs and XRS have well over 400,000 subscribers which means it could be 3rd in the market ahead of TomTom and Telogis.
But this isn’t the first time that Omnitracs has shaken things up. It all started in November last year; Qualcomm sold Omnitracs to Vista Equity Partners, and then in the December Omnitracs acquired Roadnet. Only in January 2014, Omnitracs sold its European subsidiary to Astrata and lost close to 40,000 subscribers. There was intense speculation in the industry and everyone was hedging their bets in terms of what Omnitracs would do next but no-one could have guessed this move of acquiring XRS. The purchase price is estimated to be $178 million and should complete in 4Q 2014.
After Omnitracs sold its European subsidiary, ABI Research knew that Omnitracs would measures to secure a more positive future. The move of acquiring XRS is quite unexpected. So while acquiring XRS will mean that Omnitracs gain subscribers it does not solve the problem of global coverage. Furthermore, Omnitracs still dominates the long-haul/ full-load trucking sector in the United States, where it pioneered the adoption of telematics with the trucking industry. The vertical sectors in which Omnitracs operates are limited to those linked to long-haul trucks, such as food distribution, oil and gas, waste management, and others. However, the XRS acquisition will not expand its business into new vertical sectors. Therefore, it might seem an unlikely partnership.
What this union does mean is Omnitracs will be gaining XRS’ expertise in mobile solutions. XRS is known for delivering software solutions that help trucking companies manage their fleets, comply with regulations, and reduce operating costs. In addition, the two businesses do have complementary solutions and combined can continue to innovate and deliver end-to-end solutions for to their customers. Furthermore, it should mean that the merging of the two businesses is relatively smooth.