Zebra Technologies' proposed $3.45 billion all-cash acquisition of Motorola Solutions' enterprise business opens the door to a channel battle royale in the emerging Internet of Things market, according to solution providers.
Zebra, which had $1 billion in sales last year, is buying a $2.5 billion business with robust mobile computing and data capture communications technologies and services. Motorola’s $2.5 billion in pro forma revenue last year did not include its iDEN portfolio of wireless communications products, which also are not part of the Zebra deal.
The blockbuster acquisition, which has been approved by both companies’ board of directors and is expected to be complete by the end of 2014, will create a new Internet of Things giant with a combined 20,000 channel partners in more than 100 countries. Approximately 4,500 Motorola employees will join Zebra once the deal is completed. The acquisition also brings Zebra thousands of critical Internet of Things sensor and bar-code patents.
The battle for the hearts, minds and technology prowess of solution providers that are building the next generation of senor-based solutions has begun, said Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based solution provider, No. 266 on CRN's Solution Provider 500 list of the top solution providers in North America by revenue.
Other companies have armed themselves as well for the Internet of Things market, with $39 billion diversified behemoth Honeywell’s move seven months ago to purchase Intermec, a provider of RFID and data capture solutions, for $600 million.
Venero expects both Zebra-Motorola and Honeywell Intermec to double down on solution providers to build out new Internet of Things solutions.
"From a VAR perspective, both those organizations are going to be looking at companies like Future Tech in a different light now that they are in the Fortune 500 class of companies," he said. "They are going to be looking at the channel much differently. This Internet of Things market is no longer a niche play for them."
Zebra CEO Anders Gustafsson said in a statement that the deal is transformational, positioning the company "as a leading technology innovator, with the accelerating convergence of mobility, data analytics and cloud computing."
Zebra and Motorola, meanwhile, have significant channel footprints.
Venero said he expects Zebra to provide more robust channel terms and benefits in the wake of the Motorola deal. "Without a doubt they are going to double down on the channel now," he said.
Future Tech already has seen more aggressive channel investment and support from Honeywell Intermec, according to Venero and, in fact, just closed a major international deal by teaming with the company. "[Intermec has] been in our office multiple times since Honeywell acquired them," he said. "Before that, our interaction with them was very limited. We are now seeing tighter alignment with the channel. Before the Honeywell acquisition, their channel engagement was spotty."
The challenge for Zebra is going to come from swallowing an organization that is more than twice its size, said Venero. "There are a lot of challenges they face integrating the companies," he said. "The hope is as they integrate the two organizations that there are no missteps that set them back."
According to CRN’s 2014 Partner Program Guide, Motorola Solutions had 3,642 partners in North America with 112 channel field sales reps. Zebra had 467 partners with 48 channel field sales reps, according to the 2013 Partner Program Guide.
Venero said both Zebra and Intermec emerging as Fortune 500 class companies changes the dynamics for customers and solution providers. "The Internet of Things market is here," he said. "This is a huge opportunity for partners and, more importantly, for customers looking to take advantage of new solutions to increase sales and improve customer satisfaction."
PUBLISHED APRIL 15, 2014