Why would Aeris be successful where Ericsson failed?
Lets’ unpack this.
As the world goes through a reorientation and reimagination, established tech giants are seeking to focus on their core business and cutting-off loss-making adjacencies, with layoffs or strategic divestments.
It is prudent for Ericsson to focus on more of its core businesses. Thus far, despite significant investments, Ericsson has only been able to focus on “a limited part of the value chain”, limiting the returns of such investments.
IoT represents a fragmented market. IoT players are focusing on either vertical-specific market approaches (e.g. Kore Wireless focus on Life Sciences), or focusing on attaining scale (e.g. Aeris).
The famous David and Goliath story, one of my favourite of all times, comes to mind. While traditionally large companies acquire smaller ones and attain new tech or market strengths, it is slightly unusual to see small company acquire an established giant.
Aeris is much smaller than Ericsson’s IoT accelerator business. The Ericsson IoT business acquisition provides Aeris with complementary strengths, and a comprehensive tech stack to potentially attain scale – with new customers, new geographies, and new revenue generation opportunities. Ericsson holds a small stake in Aeris. This would potentially benefit Aeris with access to Ericsson’s guidance, as well as, access to its current and potential IoT clients – post transaction closure in Q1 2023.
If the acquisition goes through well, Aeris is on track to become a potential IoT market leader with a strong IoT tech stack, comprehensive offerings, and potentially new revenue streams for communications service providers.
All said, Aeris would need to work on its go-to-market messaging and market outreach strategy. It would need to ramp-up on its brand awareness and bolster its brand equity with the integrated Ericsson offering.