Quest for scale brings IoT players Kore and Raco together

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Machine-to-machine communications, part of the fast-growing Internet of Things, is starting to look more like the large-scale industry it’s expected to become.

On Tuesday, longtime M2M services company Kore Wireless Group said it would acquire RacoWireless, which sells software and cloud services designed to make M2M easy to roll out and use. The all-cash acquisition, for an undisclosed sum, is expected to close by the end of the year.

M2M technology has its roots in proprietary networks developed for specific industries, and it’s still provided largely by small and medium-sized vendors. But M2M is now becoming part of the so-called Internet of Things, a broader set of networking and number-crunching systems that is expected to span wearables, home networks and mass-deployed sensors.

A bigger market calls for fewer and larger companies, and industry analysts expect a wave of consolidation. The products and services available for device activation, management, application development and other parts of the IoT puzzle are still too fragmented for most enterprises, analyst James Brehm of James Brehm & Associates said earlier this year. He thinks that is holding back the growth of the industry.

Investors also see opportunity in IoT consolidation. Privately held Kore announced on Tuesday that ABRY Partners, a private equity firm focused on communications, has acquired a majority stake in the company. That investment made the Raco acquisition possible, Kore said.

“Strategic acquisitions both in advanced connectivity and richer applications solutions are an important goal, as scale and global reach are of paramount importance to our large applications and enterprise customers,” Kore CEO Alex Brisbourne said in a press release.

Kore Wireless works with mobile operators, solution providers and enterprises to build and operate M2M systems that take advantage of a variety of wireless networks. Its customers span industries including health care, utilities, fleet management and oil and gas.

RacoWireless sells software and services for deploying, operating and managing M2M systems. Earlier this year it introduced Omega DevCloud, a service designed to help developers write applications that use data from many different M2M devices.

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