Internet of Things
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Cisco has announced its intention to acquire Jasper Technologies, Inc., a privately held company based in Santa Clara that delivers a cloud-based Internet of Things (IoT) service platform to help enterprises and service providers launch, manage, and monetize IoT services on a global scale. Under the terms of the agreement, Cisco will pay $1.4bn in cash and assumed equity awards, plus additional retention-based incentives. Jasper will become a new division within Cisco – the IoT Software Business Unit – and all 385 Jasper employees will be retained.
Cisco could prove to be one of the best-positioned companies to lever Jasper’s cloud-based abilities into as many IoT devices as possible – as long as Cisco uses the Jasper Control Center as a spearhead IoT product and does not let it languish as one of the many offerings in its portfolio competing for enterprise attention. The $1.4bn valuation for Jasper is a testament to its many achievements over the past seven years and is a vindication for the fundamental utility and value of managed connectivity.
The acquisition of Jasper by a major infrastructure vendor was bound to happen. The only question was by whom? The major suppliers to the wireless communications industry had already shown their plans for IoT connectivity. Ericsson acquired the platform and IP of Telenor Connexion. Nokia (then NSN) developed and spun out the cloud platform business Cumulocity. Huawei stated that when (and if) it required strategic software platform functionality it would build or acquire the necessary elements.
But the IoT is not restricted to any one type of bearer – fixed or wireless, licensed or proprietary. And in recent years Jasper has done much with its marketing to ensure that it is perceived as a fully inclusive IoT software company, not one limited by the scope of its cellular M2M roots. It therefore makes sense that Cisco, a vendor vested in the transport of all data, not favoring any one bearer over another, will acquire Jasper. Cisco is well positioned to deploy Jasper’s cloud-based abilities into many IoT devices regardless of type, technology, price, or bearer.
Ovum has been tracking Jasper since its first commercial deployment with AT&T in 2009. Since then, we have seen 35 publicly announced contract awards for the vendor, some at the national operating company level and some at the group-wide level including America Movil and Telefonica. Jasper’s historical core competency has been in understanding the needs of the enterprise, having started life as a global connectivity provider before becoming a vendor of cloud-based management platforms.
Jasper understands the pain points of the service provider, having operated its own core network for the dedicated routing of machine-type communications, which also served as a live development environment for its Control Center connectivity management software platform. Its early status as an operator of a global virtual radio access network gave it a head start in working with carrier wholesale teams and later with dedicated M2M and IoT business units.
But this did not mean that becoming the world’s de facto standard for managed connectivity functionality would be easy. Essentially, Jasper has always retained the mentality that it is an enterprise service provider – albeit indirectly via carrier and service provider partners – and has focused on serving its customer’s customers. It has architected all elements of its product for that downstream process.
Jasper has also been instrumental in bringing an end to traditional customer-supplier relationships between service providers and vendors. It has actively sought from the start to embed itself within the long-term strategies of companies, via business models that share the risk of entering new markets through flexible pay-as-you-grow financing. The nebulous world of the IoT has now become defined by partnerships between companies that combine core competencies for mutual benefit. Having a “partner” is no longer a synonym for a lack of ability.
Jasper’s high-profile success in securing contracts with tier-1 service providers made the Control Center platform into a gateway product that other vendors used to sell-through complementary IoT-related offerings. The Control Center has been integrated with products of horizontal and vertical software vendors, including in recent years Axeda, Giesecke & Devrient, Telit, ILS Technology, VMWare, SAP, Plat.one, and Microsoft.
It is now vital to Jasper’s future, if this acquisition proceeds, that its focused specialization does not get lost within the broad reaches of the Cisco portfolio. Jasper has had the opportunity to branch into IoT verticals, but with the exception of the connected car it has resisted. The company has been firm in its commitment to connectivity and being horizontally focused in order to enable as many use cases as possible. Its marketing has been single-minded and clear of purpose. Cisco must use the Jasper Control Center as a spearhead IoT product and not let it languish as one of many offerings competing for enterprise attention.
A $1.4bn valuation for Jasper is a testament to all of its achievements. The combination of Jasper with Cisco should not result in any overlap of competency or inconsistency of vision, nor should it disenfranchise any of Jasper’s existing licensees. Based in the heart of Silicon Valley, Jasper went to market with a long-term business proposition, building a technical competency that was, at the time of its launch, unique as well as (critically) scalable over time.
Too many IoT companies, notably in the consumer sector, seek to 1) create a buzz, 2) gain venture capital funding and 3) IPO for a billion dollars, leaving someone else to work out what the actual business model for their product is meant to be. But in this respect Jasper behaved more like Amazon, creating a self-sustaining incremental business that acts as a platform for the success of other enterprises.
Jasper provided a connectivity management platform needed by an industry that, at the time, did not have an open market solution. It is a wonder that it has not been acquired sooner – although the reality is surely that Jasper has been entertaining a number of offers for several years, waiting for the right deal to emerge. Its eventual acquisition for such a high price is a vindication for the fundamental utility and, ergo, value of managed connectivity, without which there can be no internetworking to enable the Internet of Things.
M2M and IoT Platform Deals Tracker: 3Q15, TE0004-001044 (September 2015)
Jamie Moss, Principal Analyst, Consumer Technology and IoT
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