Verizon will be further expanding its reach into the Internet of Things after its recent acquisition of GPS vehicle tracking company Fleetmatics. The deal was announced earlier this month to the tune of $2.4 billion, just the latest in a Verizon spending spree that leaves many speculating about the cellphone service provider’s future plans.
Verizon also purchased the connected-vehicle technology firm Telogis for an undisclosed sum recently and, perhaps most notably, bought out Yahoo’s web assets for $4.83 billion last month. The acquisitions suggest that Verizon, like competitor AT&T, is looking to diversify its range of services while digging deeper into connected technology, especially for automobiles.
Fleetmatics is a Dublin-based company with American headquarters in Waltham, MA. It builds software to track commercial drivers’ locations, fuel usage, speed, and mileage while on the job in order to improve fleet management and reduce costs. The company reported $285 million in sales last year with a projected growth rate of 15 to 20% annually.
Verizon already operates a large fleet of vehicles nationwide to provide installation and maintenance services for its FiOS package, and Fleetmatics’ technology may help them improve business in that sector.
However, the string of acquisitions together points toward a more complex, and perhaps lucrative, mission. “One of the most developed Internet of Things markets right now — and fastest evolving — is the automotive market,” said John Butler, an analyst with Bloomberg Intelligence.
Verizon not only “understands this business very well,” Butler said, but is “being smart by targeting the vehicle market — and on the commercial side.” In a still-recovering economic climate where 43% of people finance their personal vehicles, commercial fleet management poses an opportunity for future technology growth and expansion.
“It will be interesting to see how they leverage up here in coming years,” said S&P Capital IQ analyst Angelo Zino about Verizon’s acquisitions. “But I wouldn’t expect [Fleetmatics] to be the last of their deals.”