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Mobile & Wireless
Kyocera Wireless exits M2M space
Closes CDMA wireless module division to concentrate on handset market
by Doug Allen
Kyocera Wireless' CDMA module vendor has decided to exit the M2M space, according to general manager of its M2M business segment Dena Fledderjohn. The M2M division will be closed down, the victim of the parent company’s decision to refocus on the CDMA handset business and eliminate any non-core business initiatives (see M2M: Creating a Connected World ).
“Today’s challenging global economy has intensified competition in the very competitive wireless handset industry,” Fledderjohn was quoted in an M2M Magazine news flash.
“The company needs to organize and streamline their global telecommunications presence. Kyocera had to make some very difficult decisions on how they are going to select and concentrate their efforts moving forward. And M2M really did not fit into the model and the focus of the company on handsets.”
Fledderjohn went on to point out that the company had briefly explored the idea of selling off the M2M division rather than simply shutting it down, but was directed by its parent company to resolve the matter by March 31, the end of Kyocera’s fiscal year. That left little time to find a suitable buyer, or assemble a mergers and acquisition committee to put together the best deal.
The move, while not necessarily readily predicted, makes some sense given Kyocera’s competitive status and ability to compete more globally, according to ABI Research senior analyst Sam Lucero.
“This says more about Kyocera Wireless Modules (KWM) position and strategy in the M2M industry than it does about the viability of the M2M industry itself,” explained Lucero. “KWM was a respected player, but they had a focused niche strategy revolving around CDMA modules sold primarily in North America. Apart from the fact that CDMA modules carry a price premium relative to GSM/GPRS modules [which can pose] a [sales] challenge, CDMA itself is largely a North American market phenomenon. The other CDMA players (Sierra Wireless/Wavecom, Motorola Wireless Modules, and Telit) all have GSM/GPRS module product offerings and are active on a global, not regional, basis.
“So, in the context of the Kyocera parent company having to evaluate the resources it has to devote to the Sanyo handset acquisition and competing in the handset market more broadly, relative to the opportunity it had with the KWM division, it is not hard to see them making the decision to “hive off” the KWM division," Lucero continued. "This decision process was probably influenced by the high degree of separation between the US KWM division and the Japanese Kyocera parent company. Reportedly, the Kyocera parent did not even use KWM modules for a Japanese telematics offer it had at one point in Japan using CDMA technology. In other words, there were likely some cultural/organization issues involved as well.”
This should have a moderately positive impact on Sierra Wireless/Wavecom, Motorola Wireless Modules and Telit, which are the other key CDMA players, and therefore should lessen pressure on prices temporarily in the North American market. This should have minimal impact on GSM/GPRS sales; application developers are primarily deploying because of network characteristics and pricing, not on module availability.
According to Lucero, leading CDMA vendors Sierra Wireless/Wavecom, Motorola Wireless modules and Telit should all benefit from this fit of market consolidation. Fewer players may also mean less pricing pressure for North American equipment deployments, although GSM/GPRS sales will probably remain roughly the same, since application developer deployment is more impacted by network characteristics and pricing, not module availability.
“This should have minimal impact on deployments: Kyocera has only recently (within the past six months or so) introduced its newest products and should be able to hand its customers off to other vendors in an orderly fashion. In terms of R&D or innovation, I think the Kyocera technology was good, in terms of features such as antonymous GPS and cost-optimization for CDMA (which is a major issue for CDMA modules competitively against GSM/GPRS), but I don’t think that Kyocera shutting down shuts off a major avenue of innovation in the M2M market.”
Fledderjohn was also quoted as saying “The market’s going to survive without us as Kyocera, but I think you’ll see some of the legacy and the participation we had I this industry will continue,” somewhat cryptically.
But Lucero feels despite the companies' promised efforts to work with partners to acquire the Kyocera customer base and streamline the transition to a new vendor, Kyocera is, for all intents and purposes, now a non-entity in M2M.
“I believe at most some of the Kyocera IP might be purchased and integrated into other companies’ products, but I think the shut-down of KWM as a going business concern is pretty definite at this point.”
And as for any fallout from Kyocera’s exit on the M2M market overall?
“I don’t think that other outright shut-downs of M2M divisions or companies are likely in the near term, despite the current difficult economic conditions and the long-term competitive threats to the module vendors as a distinct level of the industry. However, I think more M&A activity, as with the Wavecom purchase by Sierra Wireless, is certainly possible.”
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