Amazon's IoT Slumber Ends with 2lemetry Acquisition

Well, that didn’t take long. About two weeks after I had remarked that Amazon doesn’t seem to have a lot going on for its IoT strategy, the laggard in question confirms to TechCrunch that it has acquired 2lemetry, for an undisclosed sum. So I stand corrected. That’s a savvy acquisition. For what it’s worth, when I in the same blog’s neighbouring sentence suggested that could prove this year’s real wildcard what I actually had in mind was that it might well take its already close relationship with 2lemetry soon to the next level and buy it out. Oh drama.

These days, the world doesn’t exactly have a chronic shortage of “IoT Platforms”, but to us at ABI Research 2lemetry was always one of the vendors that stood out from more marketing-driven outfits. In our market overview in Q4 2014 we highlighted the startup as one to watch this year. There are two aspects, in particular, that make it interesting:

First, 2lemetry’s ThingFabric is one of the most robust device clouds on the market, being able to support high data throughput without dropping packets. In the platform stack the device cloud is the layer that collects, stores, and brokers machine data, as well as acts on it with rules engines and complex event processing, and its robustness determines to a great extent how well the deployed systems can reliably scale up from a pilot level of, say, several thousands of nodes to hundreds of thousands and even millions. With ThingFabric, 2lemetry appears to be able to offer competitive SLAs without compromising on scalability.

Second, in its architecture 2lemetry has paid special attention to accommodating legacy protocols that most large enterprises in the industrial sector have developed in-house over the years, and telling by the company’s references it has pulled this goal off quite successfully. Despite all the C-level hype and "thought leadership" around the so-called IT/OT integration, the harsh reality often is that there are dozens of nitty-gritty retrofit issues that can make the implementation of the said vision an extremely sluggish process. A platform that can get large volumes of legacy assets connected effectively has a lot of appeal to enterprises, considering that this side of the IoT universe is typically more of a brownfield than a greenfield business.

Amazon has so far struggled to replicate the success AWS has seen in the digital-first applications in physical-first environment – and primarily because it hasn’t had capabilities to expose data from the connected products and processes in the first place. By adding 2lemetry, the firm fills many of its most serious gaps and becomes suddenly a whole different player for both enterprises and its competitors. Certain names in the latter group will now have to think even harder whether to build, buy, or partner.

Update: Further analysis on the deal and its implications is available to our clients: we have been digging deeper into the AWS angle, as well as envisioned what all this may mean to Amazon's retail business.