Recent acquisitions from Orbcomm illustrate the verticalisation trend highlighted in Machina Research study on Satellite M2M

12 April 2013

In April 2013, Orbcomm the mobile & satellite operator announced that it has completed the acquisition of GlobalTrak and MobileNet to further develop its M2M business. The former allows it to enter the government and military sectors providing real time situational awareness and intelligence based on M2M technologies. The latter opens the door to the heavy equipment and rail sectors where MobileNet provides fleet management services to OEMs. These two acquisitions form part of a spate of acquisitions by Orbcom. They had previously acquired StarTrak Systems which enabled them to enter the cold chain telematics market and PAR Logistics Management Systems which provided a service to monitor transport and cargo goods.

According to a new study published by Machina Research (“Satellite operators look to build vertical expertise to capitalise on the M2M opportunity”) satellite players are increasingly recognising the need to target specific verticals where demand for M2M technologies is growing.  Satellite has an obvious role to play in sectors such as transport, extractive (e.g. oil, gas and mining), agriculture, and construction where activity is often conducted in remote and isolated locations beyond the reach of terrestrial networks. Given this natural focus on particular sectors, providers of satellite services are well positioned to develop particular vertical expertise is those sectors, moving up the value chain and securing a greater proportion of the addressable revenue.

Strategies vary among satellite operators. Not all are going down the mergers and acquisition route. Others are targeting specific verticals with wholesale connectivity offerings, a more risk-averse approach. Orbcomm’s approach is a bold one, as in the short term it might position the satellite operator in direct competition with some of its wholesale customers. Ultimately, however, it provides the operator with a platform to provide end-to-end services and play in all areas of the value chain. In order to gain a foothold and ultimately succeed in the nascent M2M market, satellite players will need to develop such a verticalisation strategy. 

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