Cisco buys Jasper Technologies for $1.4 billion, fills cellular gap in IoT stack
Feb 04, 2016
Cisco has moved to snap up privately-held Jasper Technologies with a proposed acquisition of $1.4 billion, which Frost & Sullivan believes to be as much as 20 times the company’s annual revenue in 2015.
Describing the move as “a huge step forward” for Cisco, Rowan Trollope, senior VP IoT, said the company would now be able to offer a more complete solution. The combination would reduce complexity for enterprises and allow them to migrate with confidence from product- to service-based business models, he added.
Jasper’s Control Center SaaS platform enables enterprises and communications service providers (CSPs) to provision cellular connectivity and manage IoT devices and services. The company has built up market dominance over the last 10 years since starting out as MVNO in the earliest days of machine-to-machine (M2M). Having grown in parallel with the burgeoning market, the company productised its platform and developed the scalability that has made it a market leader.
Today it boasts over 3,500 enterprise customers and connectivity partnerships with 27 operator groups, including AT&T, NTT, and Telefonica (which formerly part-owned Jasper), among others.
Expecting to ride the coming wave of IoT growth, Jasper made no secret of its intension to launch an IPO last year. In the end that never came – the value of a pure connectivity play was likely to have been less attractive to investors than other hot growth areas such as data analytics and machine learning.
A sale to a vendor with end-to-end ambitions in IoT was therefore sure to deliver a higher return.
Cisco said it will fund the deal in cash and equity awards, with the addition of retention-based incentives. Though Jasper's revenues are not disclosed, they are believed to be in the range of $70-$75 million in 2015.
The price premium reflects the importance to Cisco of completing its IoT stack. Its existing portfolio spans fixed and wireless protocol edge gateways, data management and analytics, but it lacked the mobile wireless connectivity piece. With the projected growth of IoT devices on the move – such as cars and wearables – Cisco’s lack of a cellular platform was a substantial gap that could only get bigger.
Frost & Sullivan forecasts that by 2020 nearly 1.3 billion IoT devices will sit on cellular networks globally, generating $21 billion in connectivity-related revenue alone. Furthermore, now that the 3GPP standards organisation has accelerated ratification of LTE-based options (NB-IoT and LTE-M), cellular connectivity looks less vulnerable to disruptors in Low Power WAN (LPWAN) such as Sigfox.
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