Zebra Technologies' $3.45 billion purchase of Motorola Solutions' enterprise business is really a bit play for the "enterprise Internet of things" where asset tracking as well as the data thrown off from it lead to business advantage.
The purchase makes a lot of sense on many levels, but it's worth noting that Motorola Solutions' larger enterprise unit could give Zebra indigestion. Zebra has $1 billion in annual sales compared to Motorola Solutions enterprise unit, which has $2.5 billion in annual revenue.
Zebra is using $200 million in cash and $3.25 billion in debt to fund the deal.
The debt load and size differential could be worrisome, but strategically the deal makes sense. Zebra specializes in RFID systems and bar codes to track inventory as well as analytic software. Motorola Solutions' enterprise unite adds mobility to the equation as well as strength in manufacturing and logistics.
The two companies together will be the front end of asset tracking as well as sensor networks and be able to utilize that data thrown of from RFID, mobile devices and bar codes.
For Zebra, which is primarily based in the retail and health care verticals, the acquisition transforms the company. The combined company will have 20,000 channel partners, a global footprint and 4,500 patents around the world. Overall, Zebra is going for an end-to-end position with enterprise asset tracking.
What's unclear is whether Zebra can effectively integrate Motorola Solutions' enterprise unit, a chore that will go well into 2015, and then integrate the moving parts. Both businesses are linked, but largely have different product cycles.
Meanwhile, it's unclear whether the mobility tools provided by Motorola Solutions will outlast smartphones in the enterprise. Sure, there's something to be said for rugged enterprise class devices, but smartphones will take some of those business tasks over.
And finally, the Zebra-Motorola Solutions deal seems to be hardware heavy. The real value may not be the endpoints the new Zebra will dominate but the analytics and big data software in the middle yielding insights. If Zebra can't be an analytics software player, it could struggle.
The enterprise Internet of things is really only worth the business insights thrown off by all of those sensors and assets.
Zebra did outline a cloud-based Internet of things platform called Zatar, which features device management and even home pages for things like vending machines.
My bet is that Zatar will be critical to the integration of Zebra and Motorola Solutions. Without it, the combined company is a conglomerate of end points throughout the enterprise chain.