Vendor acknowledges unable to overcome market fragmentation and “only tapped into a limited part of the value chain”
Ericsson and Aeris Communications have signed an agreement for the transfer of Ericsson’s IoT Accelerator and Connected Vehicle Cloud businesses.
The transaction includes the transfer of Ericsson’s assets and employees in its IoT business to Aeris. Ericsson also intends to support Aeris with transition services and will acquire a small stake in the company. The transaction is expected to close in the first quarter of 2023.
Fragmentation and losses
The IoT business, with 2022 full year forecasted net sales of SEK 0.8 billion (€73,430,216), has been the key driver of the losses in Business Area Technologies and New Businesses in Ericsson’s Enterprise segment.
The transaction will eliminate quarterly losses of SEK 0.25 billion. Ericsson said in a statement, “The divestment, related cost and other portfolio optimizations will lead to a negative one-time EBIT impact of SEK 1.1 billion in Q4 2022, of which 80% being cash and the majority occurring in Q1 2023.
“The IoT business will be transferred to Segment Other in Q1 2023 in anticipation of closing of the transaction, with an expected EBIT loss of SEK 0.25 billion during the first quarter.”
Åsa Tamsons, Head of Business Area Technologies & New Businesses at Ericsson, said, “Despite significant investments to address the fragmentation of the IoT market, Ericsson has only tapped into a limited part of the value chain, limiting the returns of such investments. The combined business will offer an unparalleled IoT platform for enterprises and new revenue streams for communication service providers, ultimately benefiting Ericsson’s customers. Aeris is a good home for our IoT business.”
What’s up for transfer?
Ericsson’s IoT Accelerator is used by more than 9,000 enterprises to manage more than 95 million connected devices with 22 million eSIM connections globally. These enterprises and connections plug into Ericsson’s ecosystem of more than 35 network operators that provide global cellular IoT connectivity.
Ericsson claims that its “Connected Vehicle Cloud is the most complete connected car platform on the market today, with frontrunners in automotive IoT using it to connect six million vehicles and counting across 180 countries”.
Aeris specialises in providing businesses with “intelligent” cellular IoT connectivity. Its solution stack is brought to market through channel partners, network operators (including Softbank, Vodafone and AT&T) and direct sales organizations.
Its Intelligent IoT Network targets industry sectors such as transportation, energy, automotive and healthcare, offering network operators the opportunity to make money from new services on top of connectivity enabled by IoT Accelerator.
Combined Aeris’ and Ericsson’s IoT platforms will connect over 100 million IoT devices worldwide, covering 190 countries. Ericsson says this will make Aeris a market leader in IoT, generate strong market synergies, and further simplify IoT for 9,400 enterprises by providing them with a global platform with secure, reliable, and intelligent IoT solutions.