While the Internet of things (IoT) represents a multibillion dollar opportunity for the channel, how these technologies will find their way to market will vary widely. In fact, while it’s clear there will be lots of embedded systems, gateways and networks involved, how those devices will be managed is less clear.
Although many IT organizations will opt to deploy IoT management frameworks on premise, many will opt to manage those devices via the cloud.
For that reason, Cisco will pay $1.4 billion in cash to acquire Jasper, a provider of an IoT management framework that is delivered as a software-as-a-service (SaaS) application. Using a global network of data centers owned by 27 network carriers and cloud service providers, the Jasper IoT services are currently being used by 3,500 customers in more than 100 countries.
Acquiring Jasper represents a major step for Cisco in terms of delivering IoT technologies via the company’s service providers, said Rowan Trollope, senior vice president and general manager for Cisco’s IoT and Collaboration Technology Group.
“Much of the strength of Jasper is built on partnerships with service providers,” Trollope said. “We can extend that reach to all Cisco global service providers.”
While that may represent a significant opportunity for Cisco channel partners, solution providers are going to have to weigh that expansion against profitability, said Jeff Kaplan, managing director for THINKstrategies, an IT consulting firm that specializes in cloud applications. Having access to a SaaS application to manage IoT will clearly lower capital costs associated with building out an IoT service. However, Kaplan also noted that SaaS applications by definition are often less profitable to resell.
“IoT overall is a tremendous opportunity,” Kaplan said. “But there may not be enough margin in SaaS applications.”
In the meantime, Jasper brings to Cisco and its partners a business model based on recurring revenue that most vendors now crave. Not only does recurring revenue result in higher valuations, the cost of selling technology drops as well. In fact, Jasper CEO Jahangir Mohammed said the whole point of IoT is to make it simpler to deliver IT services at scale.
“We can deliver connected services faster and more economically,” Mohammed said. “We’re turning a product business into a dynamic services business.”
Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.