Q&A: The future of M2M telematics is scale and scope

Q&A: The future of M2M telematics is scale and scope

Horn joined Raco Wireless in 2011 following a near decade-long stint at T-Mobile, a period when he managed the mobile network operator’s Californian launch, the largest in wireless history. He spent his final six years at T-Mobile developing the carrier’s M2M program and go-to-market strategy. At that time, Raco Wireless became a major partner.

Founded by Rob Adams more than 20 years ago, Raco Wireless specializes in end-to-end M2M wireless connectivity solutions. These solutions include custom rate plans, tailored billing options, branding and customized wireless connectivity.

In September 2012, Inverness Graham Investments took an unspecified stake in Raco Wireless. Flush with venture capital, Raco Wireless now seeks to expand its portfolio through acquisition. In July, Raco Wireless bought Position Logic, a location-based services (LBS) specialist. And three more deals are currently being worked on.

TU’s Pádraig McGarrigle talked to Horn about Raco’s acquisition strategy, the imminence of the M2M industry’s consolidation, and how Raco Wireless is combating potential commoditization of its products and services.

How do you view the current landscape of the fleet telematics industry?

The thing that’s amazing is that fleet is probably the oldest vertical in M2M because it was the first vertical that could establish a strong ROI, even when costs were significantly higher. The savings were so tremendous. 

Fleet today is as strong as ever and still significantly growing.  We support multiple companies that are in the fleet business, and, with our acquisition of Position Logic, we can enhance those customers’ abilities to go out and add additional services.

We are absolutely firm believers in the fleet business, and I don’t see any end to its growth because there are so many fleets on the road that didn’t come off the line connected.

You’ve spoken before of the consolidation that is ready to happen in the M2M industry. Why is that trend emerging?

The industry is maturing. Size, scale and scope are going to be a more important theme than they have been in the past. It’s kind of been like the Wild West for new companies and applications. But what’s happening now is you’re getting to the point where you have Fortune 100 companies interested in this space.

M2M and the whole Internet of Things is becoming part of our normal everyday business decisions, and scale and scope are going to be important. I think that’s where the consolidation is coming, more than the fact that there are too many competitors.

So, you’re confident you have the financial muscle to make these acquisitions?

Absolutely, one of the reasons we partnered with Inverness Graham Investments was so that we would have the capital to make acquisitions.

We acquired Position Logic because that was a great move for us, and we have three other acquisitions that we are working on today. We will continue to acquire companies that will bring extra-added value to the ecosystems that we can bring to the table. We have the resources that we need, and we’re going to be very strategic with what we acquire.

From a strategic point of view, is the acquisition about chasing new business or consolidating what you already have?

It’s all the above. Everybody that is using the Position Logic platform needs connectivity. Most of the people they had as customers in 67 countries didn’t have a really good carrier solution, so we can help them dramatically.

On the flip side, we have Raco Wireless customers who are able to enhance their products and offerings through some of the applications that are contained in the Position Logic platform.

Is commoditization of your services and the fact that larger companies are getting involved in the space a worry for Raco Wireless? How confident are you that you can see off any threat of commoditization?

I’m not worried because it’s about adding value to the marketplace. We are confidently enhancing our platform every day, through enhancements on the OMS platform [Omega Management Suite, a web-based platform for M2M device management], through the acquisition of Position Logic and through other acquisitions that are coming.

A key differentiator is being able to provide total support.  We’re the only company in the industry that has 24/7 call center support – not only for our customers but also white label.

Will there be some commoditization and price pressure? Yes, but you cutback a lot of that by adding extra value, which we do every day.

Extra value costs money. Does adding the extra value impact on your bottom line, or are customers willing to pay more if they get more?

I don’t want to get too specific into margins and pricing, but I can tell you that the marketplace will pay for value. As we add and enhance our features and values, our customers are willing to pay for that. It is a differentiator – it doesn’t do any good to go after the cheapest of everything.

Is that a strategic decision you’ve taken, not to get involved in a price war?

For us, there is no reason to race to the bottom. If you have nothing to compete on, except for price, that’s what you’re going to compete on. That’s not our issue, so we’re not going to play that game. We’ll be competitive, and we’re not going to price ourselves out of the market.

When you bring the right support, the right tools and the right services, you don’t have to give your product away. 

Pádraig McGarrigle is a staff writer at TU.

For all the latest telematics trends, check out Telematics for Fleet Management USA 2013 on Nov. 20-21 in Atlanta, Georgia, Content and Apps for Automotive USA 2013 on Dec. 11-12 in San Francisco, Consumer Telematics Show 2014 on Jan. 6 in Las Vegas, Telematics for Fleet Management Europe 2014 on March 12-13 in Amsterdam, The Netherlands, and Content and Apps for Automotive Europe 2014 on April 8-9 in Munich, Germany.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013The Automotive HMI Report 2013Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.

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