Sierra Wireless moves to M2M with Wavecom buy

Wireless modem maker Sierra Wireless today announced plans to acquire French company Wavecom, which provides embedded wireless technology for machine-to-machine (M2M) communication. The acquisition will give Sierra access to the burgeoning M2M space and saved Wavecom from a hostile takeover by smartcard maker and fellow European vendor, Gemalto.

Sierra, while not necessarily the strongest potential suitor, was the white knight Wavecom needed to fend off Gemalto, said Dan Miklovic, vice president of manufacturing and industries advisory services at Gartner. Sierra agreed to purchase Wavecom in a friendly deal for $169 million (134 million Euros), outbidding Gemalto’s hostile offer. With the state of the economy, consolidation is necessary to support M2M players in growth mode, Miklovic said, and Sierra made the most sense for Wavecom.

“[It makes sense] because of the terms of the acquisition, the structures of the company and the fact that Gemalto is more into the security issues, while M2M is just a segment for them,” Miklovic said. “It’s not their business, whereas with both Wavecom and Sierra, wireless is their business. This gives Sierra a significant European presence. It poses less threat to Wavecom management in the sense that they will need Sierra management in EMEA, and Wavecom’s leadership is positioned to fill that role, whereas, with Gemalto, another European company, the duplication of management would be more acute.”

The acquisition will let Sierra continue to compete in wireless data as connectivity is increasingly built into devices rendering wireless cards less relevant. However, it will be going up against formidable competitors, namely Qualcomm with its Gobi platform. Rather than be tethered to one operator, the connectivity platform uses software-defined radio to automatically configure the module for different operators, air interfaces and frequencies on the fly. Sierra, a one-time potential Qualcomm partner, will now be competing with Dobi as it manufacturer its own chips.

“There is always this ‘coopetition’ environment where sometimes you partner and sometimes you compete,” Miklovic said. “It will depend on individual circumstances, accounts and geographies. But in reality, this is probably driven as much by management issues and the desire of Wavecom to fend off the Gemalto bid as it is by truly strategic initiatives.”