It’s been quite a week for the tech sector. Some vendors are betting the farm to catch up or just to find a niche in the Internet of Things. Others are smirking as they see a return on earlier IoT investments. Jeremy Cowan reports from a volatile marketplace.
Samsung Group is throwing US$22 billion (yes, you read that right) into artificial intelligence (AI) and other new technologies, Siemens continues to buy business, IBM has opened four new testing centres to focus on security for automotive and industrial Internet of Things (IIoT) applications, Intel is focusing on chips for AI, while Sierra Wireless says “I told you so!”.
Seoul, Korea-based Samsung Group (005930.KS) has told Reuters it will invest 25 trillion won ($22 billion) in artificial intelligence, 5G mobile technology, electronic components for vehicles, and the biopharmaceutical business in pursuit of new growth areas. (Also see: Qualcomm pays $2bn as it kills plans to buy NXP but board authorises $30bn stock repurchase, insists strategy unchanged.)
D’you want chips with that?
Weakness in Samsung’s semiconductor and smartphone businesses has forced the Korean giant into a radical rethink of its development strategy. In fact, this investment is expected to be part of a 180 trillion won ($158 billion) three-year plan to create new revenue streams. There has been a long wait for evidence of Samsung’s new business direction since the heir to the industrial group Jay Y. Lee was imprisoned for bribery. He was released from jail in February on a suspended sentence.
Intel (INTC) reports that it sold $1 billion worth of Xeon AI processor chips in 2017. It too has suffered, this time from falling PC sales and is increasingly dependent on revenues from data centres that provide the computing power for mobile and web applications. These centres are said to be reliant on artificial intelligence for speech recognition and other functions.
Siemens musters $600mn for mendix
Meanwhile, Siemens (SIEGY) has agreed to acquire mendix, a provider of cloud native low code application development. Siemens will pay €0.6 billion in cash to acquire the Rotterdam-based company which helps enterprises to digitalise their operations. Low code application development platforms provide features for rapid development, deployment and execution of cloud-based applications.
Klaus Helmrich, member of the Managing Board of Siemens AG says, “Mendix is a leader in the rapidly expanding low-code segment and their platform will help our customers to adopt MindSphere even faster by accelerating cloud-based application development for the Industrial Internet of Things.”
mendix will retain its brand and continue serving customers across a range of industries with its platform and broad ecosystem and community. Siemens will invest in mendix’s independent product roadmap, “continuing (mendix’s) legacy as the most-innovative, open low-code cloud platform”.
Sierra Wireless can afford to smile
It’s fair to say that some investment analysts have been forced into a major about-turn by Canada-based Sierra Wireless’s latest financial results.
Market watchers have rapidly been changing their advice to BUY as Sierra Wireless’s Q2 Earnings results showed a year-on-year rise in total revenue of 16.4% to $201.9 million. Adjusted EBITDA (earnings before interest, depreciation & amortisation) grew by 4.7% in the same period, sending $15.6 million to the bottom line. The company’s guidance for Q3 is for revenues in the range from $198 million to $207 million, with a midpoint that is above analysts’ earlier expectations.
The company puts the results put down to a successful swing into higher margin markets such as the Internet of Things (where revenues rose 210%) and Enterprise Solutions (up 31%).
Interim CEO, Kent Thexton, described the financial performance as “solid”, while Marc Overton, SVP & general manager of IoT Services, sees strong global mobile virtual network operator (MVNO) opportunities. The Numerex acquisition is also claimed to be integrating well and this is increasing the scale of cloud and connectivity solutions. Sierra 1 – Analysts 0.
Big Blue sees Red, but in a good way
According to a report in Security Week, IBM has expanded its network of security testing laboratories.
Big Blue’s team of veteran hackers (confusingly called X-Force Red) now has four new labs to work in. The team is tasked with finding security vulnerabilities in devices and systems. The new facilities in Australia, the UK and two in the US, test the security of connected vehicles, consumer and industrial Internet of Things technologies, as well as banks’ Automated Teller Machines (ATMs).
All told, that’s a lot of cash on the move and much of it’s headed out of semiconductors and smartphones, into the Internet of Things and artificial intelligence. And those who’ve been saying the IoT is just hype may want to pause for thought.