Sierra Wireless Transforming into an End to End Solution Provider

In 2019, Sierra wireless, transformed its strategy from an IoT hardware-focused company to delivering end to end IoT solutions.

Sierra Wireless is one of the few module vendors that recognize that selling IoT module hardware alone is not enough to survive and thrive. Sierra Wireless has benefited from bundling the modules with IoT solution integration/support services, middleware, software platform, application development toolkits, cloud platform, analytics, and end-to-end security.

Key Highlights from 4Q and FY 2019 Result:

  • Revenue from the IoT Solutions segment grew by 1% YoY to $377.8 million in 2019 due to growth in enterprise gateway sales of 12% YoY. Sierra Wireless has a stronghold in its gateways business as it builds connectivity modules on a merchant basis to customers such as Cisco as well as for internal consumption. However, the growth of enterprise gateways was partially offset by lower revenue from integrated IoT solutions modules.

Counterpoint research Sierra Wireless Revenue and Gross profit

  • Revenue from the Embedded Broadband segment declined 20% YoY to $335.7 million in 2019 due to lower in-module sales for PC OEM customers and networking modules. However, the decline in PC OEM sub-segment was partially offset by the higher revenue from the automotive sub-segment. Clients like Volkswagen will push the growth of the automotive sub-segment, but automotive will generate lower gross margins. In 2020, the PC OEM sub-segment will lose $55 million in revenue as its contract with Lenovo and Dell is completed.
  • In 2019, Sierra wireless partnered with Microsoft to launch, Octave, an all-in-one edge-to-cloud IoT platform with advanced data orchestration. Further, the IoT connections increased by more than 400,000 during the year and by the end of 2019 Sierra wireless had 3.6 million global connections.

Counterpoint research Sierra and Microsoft partnership

Source: Sierra Wireless
  • Sierra wireless also rolled out its Ready-to-Connect technology with out-of-the-box connectivity and cloud platform across all HL and WP series embedded modules. To ramp up the LPWA sales, modules bundled with subscription-based connectivity services. However, the growth was offset by a decline in 2G, 3G IoT module sales.
  • In January 2020, Sierra Wireless completed the acquisition of M2M Group in Australia with a total cash consideration of $20.7 million. The acquisition will lead to:
    • Increase in IoT services and solutions in Australia and Southeast Asia.
    • Boost the recurring subscription-based revenue model.

In early 2019, Sierra Wireless showcased 5G modules supporting both millimeter-wave and sub-6 GHz frequencies. These modules are now sampling with OEMs and system integrators in mobile computing, enterprise networking, and industrial IoT platforms. For Sierra Wireless, 5G will be crucial for its Airlink gateway business. In 2020, 5G IoT modules will be expensive and with a lower gross margin which will lower the impact of 5G in 2020.