Zebra, Motorola, and the Internet-of-Things Reality

What is Happening?

This week Zebra Technologies, a $1B maker of RFID devices, sensors, barcode scanners, and other asset identification and protection devices and systems, announced plans to acquire the Enterprise business (including the Symbol business unit) of Motorola Solutions to, as stated on the Zebra website:

“…combine the complementary offerings of two industry leaders in asset tracking solutions to create a market leader in enterprise asset intelligence for the Connected Age. Motorola Solutions’ mobile platform captures real-time data about physical assets, people, and transactions across the enterprise. Zebra’s enabling technologies provide visibility into business operations for deeper insights and smarter decision-making. The companies’ shared commitment to innovation will help customers harness powerful technology trends like the Internet of Things (IoT), location and motion sensing and mobile enterprise cloud computing.”

On the surface, this appears to be yet another conceptual IoT play, helping to illustrate the scope of “things” that can be, will be, and are being interconnected to enable more business data, insight, and improvement. The total acquisition price is put at $3.5B – to date, one of the larger investments or acquisitions in the name of the “internet of things.” Zebra is borrowing more than $3B to make it happen, and only putting up about $200M on its own – expecting significantly increased revenue to pay off the deal in as little as three years.

Given that the two firms combined right now average about $3.5B in annual sales, that’s a big bet on the future of the IoT, especially in the relatively mundane-but-huge, and increasingly competitive, enterprise asset management marketplace. That kind of wager typically implies that either spending is getting out of hand in a bubbling market, or – more likely in this case – that  even the most traditional technology and services providers see significant and immediate promise in otherwise ordinary markets, and are willing to put big money where the promise lies.

Why is it Happening?

Zebra is pursing this acquisition for several reasons, including more than doubling its revenue stream and customer base, acquiring a library of more than 3,700 Motorola patents (an increasingly valuable competitive necessity), and expanding its ability to do business in more ways and in more markets – Motorola’s Enterprise business is seen as a leading brand in mobile IT and data capture communications technologies and services.

Beyond the specifics of this deal, however, Saugatuck sees the Zebra news as a significant sign that the IoT concept enables or delivers substantial business value right now, especially in industrial-scale efficiencies. There are potential money savings for enterprises by improving the information and analyses of their devices, equipment, people, and transactions including areas such as:

  • Asset management
  • Inventory/resource management
  • Machinery conditions, use, operations, progress reporting
  • Location tracking
  • Transaction capture

And we see massive opportunity in the IoT concept as regards more potential business improvement. The data from billions of sensors, and billions more devices that could be used as sensors, can be used in real-time and batch-processes analytics for BI and CPM throughout and between most types of business. What seems like a significant, or at least potentially high, investment risk by Zebra – $3.5B with most of it financed – is very likely to be seen as a bargain in the industry a few years down the road – if all goes well.

Market Impact

That’s where things get potentially complex and challenging – not just for Zebra, not just for its competitors like Johnson, Honeywell, and GE, but also for any user enterprise looking to take advantage of what seem to be relatively mundane applications of sensor, reporting, and networked business IT.

When considering thousands, millions, or billions of devices providing real-time and stored data to be used in business process management and improvement within even a single enterprise, we also have to consider what’s required to get things working. Then the IoT concept gets expensive and complex, because they require at least the following in order to deliver significant business in a sustainable fashion over time:

  • Reliable, affordable, and scalable networking capabilities involving a variety of spectra;
  • Big Data/BI/CPM applications tuned to accommodate a wide, wide, world of data types, even within a single silo of business function/operations;
  • Integration will generally be via API rather than at the data, device, or OS level – and that requires different ways of buying IT, and thinking when it comes to security; and
  • There just aren’t enough cross-platform, cross-industry standards to enable a single true IoT in one industry, let alone the world.

Cloud-based platforms will emerge and grow pretty rapidly as the above complexities drive buyers, and many providers, toward the most affordable, scalable, and widely-available resources. But even then, most such platforms are much more likely to be built around specific types of technologies, industries, and operations.

That’s because the realities of IoT adoption – including in the types of operations and markets that Zebra is in – will almost certainly follow the same development, adoption, and integration patterns that we saw with PCs, client/server, web commerce, and Cloud, to wit: specific tasks/user groups, then specific areas/departments, then lines of business, all within industry-focused silos of technologies that share only a fraction of technologies, standards, security, and governance.

Because of this, Saugatuck believes that we will see a rapidly-emerging, rapidly-evolving business future that utilizes, then soon depends upon, the IoT concept. But we are very unlikely to ever see a true, single “Internet of Things.”

The future is almost certainly multiple “internets of internets of things,” including hybridized IT environments down to a very granular level. For IT providers, this means that there will be massive ranges of development, integration, and management opportunities. For IT buyers, this means another series of important challenges regarding standards for adoption and use, and especially more wrinkles in business IT security. For both, it means a quickly-escalating need for learning, because as the Zebra-Motorola deal indicates, the IoT idea is in play, and quite likely, in your business.

Bruce Guptill

About Bruce Guptill

Saugatuck SVP and Head of Research Bruce Guptill’s research and expertise focus on the changing business of IT includes software and services, collaborative IT, web commerce, telecom, and electronic marketplaces. His work for enterprise IT and business clients includes total cost of IT ownership, and business planning for new types of IT. And his insight and guidance on IT vendor channel management, market identification and development, and buyer behavior analysis has enabled hundreds of established and startup IT providers to find, enter, and profit from new and traditional markets, while helping to guide user enterprise leaders toward optimal IT procurement and vendor management. In addition to multiple decades of IT industry and market strategy development, Guptill holds an MBA in marketing and finance, and a BA in the psychology and business of mass media communication. Married with three children, Guptill resides on Cape Cod in southeastern Massachusetts, and is a lifelong fan of the Red Sox, Patriots, Celtics, and the University of Connecticut Huskies.