So what do we think about that?
- It shows how seriously Ericsson is taking M2M. It always recognised that it'll be massive, obviously. That's evidenced by the 50bn devices splash headlines that have been doing the rounds, seemingly for years. But this is really putting its money where its mouth is.
- Telenor Connexion has clearly been finding it difficult in an increasingly competitive environment. Why did Telenor sell? Rumour has it that they've been struggling to acquire new customers and keep hold of those clients that they signed up a few years ago when they were the only game in town. Now that the johnny-come-latelys (i.e. the established MNOs) are coming to the table unencumbered by roaming level pricing it's tough for Telenor to compete outside its few home markets. This deal allows them to piggyback on Ericsson's scale.
- Scale is everything in M2M. Some M2M applications naturally work well at a national level, such as utilities, but many don't, e.g. consumer electronics. The success of Jasper Wireless is evidence that multinational customers appreciate being able to port onto the same platform across multiple geographies and operators. The recently announced deal between DTAG and France Telecom/Orange was aimed at a similar desire to gain scale.
- It reinforces that M2M is a managed services play where the large vendors see a bit opportunity. Developing a platform in-house is expensive and largely unnecessary for small MNOs. Ericsson is strong in this field and always has been. It allows them to pursue smaller MNOs with a SaaS approach to M2M.
- It's good news for smaller MNOs with national footprints. Previously these guys were left behind. Now they can get in on the M2M act.
- It strengthens Ericsson ability to compete with SIs and pursue enterprise clients. We heard this at MWC. Ericsson can more effectively market vertical-specific M2M products to the end user, i.e. the enterprise. And critically, it can do this globally, with global clout.
At first glance it looks like a good piece of business for both companies. Ericsson gains some practical managed services experience and Telenor gets out of an increasingly rough marketplace. The above are just some thoughts at midnight. I'll possibly have something more once I've been able to speak with all parties.