CTIA 2013: Orbcomm prioritizes solutions, international expansion

Having flourished as a provider of network connectivity and devices in the asset-tracking market, satellite operator Orbcomm is ramping up activities at its newer solutions business, with international expansion a firm priority.

The company was recently named the biggest vendor of intermodal container tracking solutions by analyst firm Berg Insight, but Orbcomm (Rochelle Park, NJ, USA) is not resting on its laurels.

Having flourished as a provider of network connectivity and devices in the asset-tracking market, satellite operator Orbcomm is ramping up activities at its newer solutions business, with international expansion a firm priority.

The company was recently named the biggest vendor of intermodal container tracking solutions by analyst firm Berg Insight, but Orbcomm (Rochelle Park, NJ, USA) is not resting on its laurels.

The operator has made a string of announcements at this week’s CTIA Wireless Show in Las Vegas, unveiling its first self-powered monitoring and tracking device and a cellular-enabled electronic bolt seal, among other products.

Orbcomm’s push into the solutions area began with the acquisition in May 2011 of StarTrak Systems, a provider of tracking, monitoring and control services for the refrigerated transport market.

That was followed by the purchase of PAR Logistics Management Systems in January 2012 and in the last few weeks Orbcomm has swooped for GlobalTrak, a logistics and security specialist, and telematics company MobileNet, bolstering its credentials as a solutions provider.

Speaking to M2M Zone on the sidelines of the CTIA Wireless Show, Patrick Shay, Orbcomm’s executive vice president, says the operator has been targeting companies that don’t have the ability to scale.

“We’ve acquired four companies to date and in February this year we announced a $45 million bank loan for additional M&A.”

Takeovers were partly responsible for a 54% drop in Orbcomm’s net income, to $1.09 million, last quarter. Yet by allowing the company to expand its portfolio of solutions, they are also helping to offset the pricing pressure in its connectivity business.

“In our business, average revenue per user is going down and the only question is how fast,” says Shay. “All of the satellite network operators are in the stages of launching new networks and that will drive prices down even further.”

Last quarter, Orbcomm reported a 21.2% increase in revenues, to £13.89 million, with customer numbers rising to 777,000 from 689,000 a year earlier.

Unlike its satellite rivals, however, Orbcomm defines itself as an M2M company first and foremost, relying on agreements with cellular operators to provide dual-mode offerings that set it apart from the competition.

Its new self-powered device works on cellular networks, but Orbcomm intends to introduce dual-mode and satellite versions later this year.

While those should find a receptive audience in Orbcomm’s biggest geographical markets, and principally the US, the company has struggled to break into parts of Europe and Asia due to regulatory restrictions.

Shay, however, is sanguine about progress in this area.

“We’re in the midst of partnership negotiations on international distribution,” he says. “It’ll be pretty significant because the technology is transportable.”

Acquisitions could play a part when it comes to international expansion, too.

Indeed, they have already given Orbcomm a route into Afghanistan and Iraq, where GlobalTrak has been providing fuel-theft and monitoring services on trucks hauling diesel fuel for the US military.