As an engineer that grew up in Kansas, I admit that I don’t find farming to be too exciting. I’d usually rather talk about how hackers are taking control of toasters and launching denial of service attacks on unsuspecting targets, or how Disney uses the Magic Band IoT device to lower costs and grow revenue. However, the Industrial IoT (IIoT) world is becoming difficult to ignore.
In fact, Accenture estimates that by 2030, the Industrial IoT (IIoT) market could be worth $7 trillion to the U.S. alone. IIoT is frequently defined as IoT applications not used in consumer devices. IIoT are all of the things that are not consumer IoT, which are the fitness trackers, home cameras, and home automation products. IIoT could be a network of sensors to manage logistics in a factory, control watering on a farm, or monitor machine health in an electric utility or water treatment plant. Generally, IIoT systems are more critical in nature than their cousins in consumer IoT. Nobody ever died because their Fitbit wasn’t working, but when the power or water go out, people notice.
The value in IoT is in finding a way to sell people more stuff, rent people more stuff as a service, ensure public safety, or save costs. The rest are just details. Industrial IoT lands mostly in the “saving costs” category. What I like about the Industrial IoT is that its uses are very practical and sometimes those are the markets that grow steadily over a long period of time, and tend to flame out less quickly. IIoT is market that will continue to grow steadily for the foreseeable future.
The following are some interesting examples of IIoT in practice (Click on the image below to start the slideshow):
M&A Deals in Industrial IoT
Depending on how you define Industrial IoT or “IoT” in general, there are some familiar firms making acquisitions and some surprises. Not surprisingly, over the last two years Microsoft leads the pack with eight acquisitions, followed by Cisco with four buys and Apple with three.
Cisco’s $1.4 billion acquisition of IoT specialist Jasper is one of the best known. There are also countless acquisitions in the software stack that are related to IoT, helping companies manage the data that these devices generate, but not necessarily pure IoT. Think Oracle, SAP, Salesforce, Amazon, or companies related to managing Cloud and IaaS. This also doesn’t include semiconductor deals, since they have been acquiring each other on a historical level and that is another story in itself.
Private Equity firms are also very active in the IoT and Industrial markets. Over the last two years we saw almost 300 deals, led by leading PE firms like Thoma Bravo (8), Apax Partners (6), Carlyle Group (6), and Vista Equity (4).
Industrial electronics firms are becoming much more active in acquiring technology firms, especially those with tie-in to IIoT. Over the last two years, Trimble acquired 12 companies, GE (12), Verizon (7), Honeywell (4), Emerson Electric (4), and Deere & Company (4), according to S&P Capital IQ.
Those looking to exit or seek a large investment would be wise to look at a couple of different sectors for buyers and investors – more general software and hardware vendors looking to add more industrial vertical solutions, private equity firms that are increasingly pursuing deals in the IIoT market, and industrial electronics companies that are seeking to beef up their technology platforms through acquisition.