The latest example of industry consolidation -- the marriage of packet inspection, policy enforcement and analytics experts Procera Networks and Sandvine -- gives us a very strong hint about where some of the near-term business opportunities lie in the communications market.Read More
Private equity firm Francisco Partners, a serial investor in technology firms, snapped up Procera Networks
for US$240 million in mid-2015. (Procera agrees to $240M Sale to PE Firm.)
Now it's added Sandvine Inc, one of Procera's main rivals, into the mix in a deal valued at C$562 million (US$454 million). (Procera Completes Sandvine Acquisition.)
Sandvine is very well established, having had its technology deployed in hundreds of networks around the world -- which is one of the reasons why the combined company will use its name rather than Procera's -- but hasn't exactly set the financial world on fire: For the six months to the end of May 2017 it generated US$60.9 million in revenues and an operating profit of almost US$6.7 million.
But that's a great base for Francisco Partners to build on. It seems inevitable that the combination of Procera and Sandvine will result in a reduced overall headcount and that will result in lower operating costs, but the real focus here will be on the scale that combining the two companies delivers: more than 200 Tier 1 service providers (including 12 of the top 20 mobile carriers) and covering over 1.7 billion subscribers; over 500 enterprise customers; and more than 40 OEM partners in nearly 100 countries.
And the "new" Sandvine has its sights set on one of the core challenges facing network operators of all shapes and sizes as the Internet of Things (IoT) becomes a reality and the 4G ecosystem evolves into 5G: How to help those operators automate their network and operational processes using focused, relevant analysis of the critical data generated by network elements, applications and customers; how to do this using flexible cloud-based IT systems; and how to save and make money from the resulting increased efficiency and business opportunities.
Sandvine isn't the only company with the technology to make such promises but, importantly, what it has is focus and experience from years of identifying network data, analyzing it and presenting it in ways that are useful to their customers (the operators).
If Sandvine can make good on its promise to "accelerate" investments in "Behavioral Analysis, Automation, and Cloud solutions," and put machine learning to good use then Francisco Partners as well as Sandvine's customers should be in line for a very decent return on investment in the IoT and 5G era.