When Sierra Wireless (TSX:SW; Nadaq:SWIR) divested its AirCard product in 2013, the Richmond-based tech company truly put all its chips at the centre of the table.
“That was a purposeful move on our part to focus the company 100% on this machine-to-machine or IoT [Internet of Things] market,” said Larry Zibrik, Sierra’s vice-president of market development.
Since then, the company has spent more than US$100 million bolstering its machine-to-machine (M2M) technology portfolio, which was recently topped off with the December acquisition of Sweden’s Wireless Maingate.
Netgear paid $138 million for AirCard, a module providing certain devices with remote broadband Internet access.
M2M, on the other hand, uses sensor technologies that allow communication between wired or wireless machines. For example, the smart meters installed across B.C. use M2M to transmit data from homes to BC Hydro.
Sierra’s customers use its M2M devices and software platforms in everything from tracking vehicle movements to monitoring patient health.
“Our job is to de-clutter the cellular environment for them,” Zibrik said. “We’re trying to make connectivity simpler.”
In March 2014, Sierra used the funds from the AirCard deal to acquire Vancouver-based M2M firm In Motion Technology for US$21 million before paying US$90 million for Maingate.
Zibrik said Maingate’s business model and expertise in Europe fit well with Sierra’s portfolio.
“We like the conditions in Europe for this type of business,” he said.
“We saw [M2M] was high-growth. Our DNA fit it well because even though it’s high-growth, it’s highly fragmented and fairly complicated.”
Since going all in on M2M, Sierra hit record revenue of $143 million in 2014’s third quarter – a 249% jump from the same period a year prior.
Meanwhile, a July 2014 ABI Research report found that Sierra, with its 34% market share, was the market leader in M2M technology for the third straight year.
Mobility giant Ericsson (Nasdaq:ERIC) estimated in another July 2014 report that there were 200 million cellular M2M devices in use by the end of 2013.
In a May 2013 report, SAP projected growth in M2M revenue would increase 23% annually through 2020. It also estimated there would be anywhere from one billion to 12 billion connected devices.
Even before selling off its AirCard assets, Sierra partnered with Rogers (TSX:RCI) and Wavefront Wireless in 2012 to create the province’s first M2M business accelerator for tech startups.
Brad Lowe, Wavefront’s vice-president of venture acceleration operations, said Sierra is a “proof point the industry is growing.”
More than 60 companies have gone through the accelerator program, harnessing M2M platforms developed by Sierra and Rogers to tackle jobs ranging from connecting retailers and customers through mobile technologies to monitoring water consumption in real time to boost environmental efficiencies.
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