As cloud computing and the Internet of Things (IoT) converge, the dream of a fully connected world is slowly becoming a reality.
In what could be a milestone deal for this trend, cloud giant Twilio has bought Internet of Things (IoT) firm Electric Imp, which provides a unique connectivity platform making it easier to securely connect IoT devices with data centres and third-party services through the cloud.
By absorbing Electric Imp’s expertise into Twilio’s IoT division, the purchase is expected to catalyse the development of new IoT products and services that could potentially be used by thousands of enterprises.
“This partnership brings together two critical aspects of IoT: reliable global connectivity and a mature application platform, enabling our customers to build solutions in less time than ever before – and deploy them worldwide” said Electric Imp co-founder Hugo Fiennes.
The acquisition is not only expected to help bring more IoT products to market, but also increase the rate of innovation, which Twilio CEO Jeff Lawson says has been restricted by a lack of opportunity to test real IoT business models in the wild:
“By democratizing access to cellular IoT connectivity, we’ve been able to help move things along, but many of the hardest infrastructure problems remain unsolved.” said Lawson. “With the Electric Imp acquisition, we gain the team and technology needed to make a bigger dent in the problems facing future IoT developers.”
The most pertinent problem which Electric Imp helps overcome is cybersecurity. This has become a key barrier for companies looking to connect IoT products to the cloud. As a consequence, companies with IoT security expertise are in hot demand, and are being quickly snapped up by bigger players in an ongoing landgrab.
Private equity, big tech, and professional services firms (for example Cisco, ARM, Munich Re, Software AG, Accenture) are all placing big bets on companies that can securely connect and manage IoT devices. Venture capital firm Insight kicked off the year with the $1.1 bn acquisition of IoT security firm Armis, which was followed by the renegotiated $1.6 bn deal between private equity firm Advent International and major IoT player Forescout. Since then, the market has seen a string of smaller deals, including Microsoft’s June takeover of Israeli IoT security startup CyberX.
Matt Stamp, Partner at Acuity Advisors comments:
“The strategic consolidation of the IoT sector, and acquisition by different larger tech players of capability, continues despite wider market and economic conditions. In Electric Imp, Twilio are acquiring a scaled application enablement platform which will swiftly broaden Twilio’s wider model into the connected world. We expect this trend to continue, with a number of European platforms backed by private equity likely to be in the eyes of strategic acquirors, who are looking to taking advantage of significant further enterprise growth in IoT.”
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