Cisco-Jasper deal should make enterprise IoT safer

The $1.4 billion acquisition could bring a lot of the pieces into a one-stop shop

Cisco Systems' planned US$1.4 billion acquisition of Jasper Technologies could make it easier for enterprises to build businesses around services instead of products.

While the Internet of Things includes sensors and devices that enterprises can use to better run their operations and cut costs, it can also give them whole new business models.

Much of Jasper's business is connecting the products companies make to mobile networks. It sits between enterprises and mobile operators, doing the complicated work of tying IoT applications to network connections. Cisco builds a lot of the gear on the network side of that equation, plus higher-level smarts like analytics on the other end that can make IoT more effective and profitable.

Bringing their capabilities together will simplify deployments that currently involve lots of different companies and pieces of software, the companies say.

"It gives the customer everything they need, essentially, to build a connected business," said Rowan Trollope, Cisco senior vice president and general manager of the IoT and Collaboration Business Unit, on a conference call to discuss the deal.

Cisco plus Jasper doesn't necessarily cover it all, Machina Research analyst Isabel Chapman said.

"It does position Cisco strongly in the connectivity support and connectivity platforms space, but ... those platforms don't comprise the entire IoT platforms stack," Chapman said.

Still, Cisco and Jasper are ambitious to take on a transformation that could change whole industries. It's already happened in businesses like copiers, where some manufacturers don't sell hardware to the customer but instead charge them to use the machine. Jasper's cloud service makes it possible to monitor use of the machine and whether supplies need to be replenished.

The concept gets sexier with consumer products like cars: Connected cars are becoming platforms for multiple services that customers pay for throughout the life of the vehicle. General Motors said last year it expects to reap $350 million in profit over the next three years from an LTE connectivity deal with AT&T. The company is also exploring car-sharing services that could take the place of selling each vehicle to one customer.

The complexity of bringing together all the pieces to make this happen has slowed enterprises' progress toward an IoT future, Cisco's Trollope said. Cisco claims adding Jasper to its ranks will fill in a big piece of the puzzle.

The companies said there's essentially no overlap between what the two of them do and lots of room to turn it all into more than the sum of its parts. But there's one aspect of the deal that could become awkward.

Cisco announced a broad partnership with Ericsson late last year in which the companies will supply complementary parts of carrier and IoT networks. The Jasper acquisition looks likely to put Cisco in competition with Ericsson's Device Connection Platform, a product that does much the same things as Jasper's platform, analysts said.

"It's hard for me to imagine that Cisco and Ericsson will collaborate on IoT connectivity management if they have competing solutions now," MachNation analylst Steve Hilton said.

Cisco's Trollope seemed unfazed. No one vendor will be able to serve all types of customers through all service providers, he said. "This is a really big market."

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