U.S. telecom behemoth, Verizon Communications Inc. (VZ – Analyst Report) is forging ahead with its new growth and innovation plans in the Internet of Things (IoT) space. The company recently entered into a partnership with Qualcomm Technologies, Inc., a subsidiary of Qualcomm Inc. (QCOM – Analyst Report) , the largest manufacturer of wireless chipsets. This partnership will see Verizon’s IoT platform, ThingSpace, being integrated into Qualcomm Technologies’ MDM9206 Category M LTE modem.
The IoT collaboration news was released at CTIA Super Mobility 2016 in Las Vegas. Reports state that the ThingSpace IoT platform will be available for original equipment manufacturer (OEM) integration on MDM9206-based solutions around the beginning of 2017.
Verizon ThingSpace and Qualcomm CAT M
Internet of Things (IoT) is basically the networking of physical devices, vehicles, buildings and other items that are embedded with electronics, software, sensors and network connectivity, which enables these objects to collect and exchange data. ThingSpace is Verizon’s global IoT platform which enables developers to build and manage applications throughout the globe.
Qualcomm’s Category M1 or CAT M is a network generated by the companies to allow devices stay connected with each other. It also offers long battery life and better coverage for long communication range.
Objective of the Deal
The joint initiative intends to deploy Qualcomm’s CAT M on Verizon’s 4G LTE network for serving various IoT services including asset tracking, security and industrial control. The main purpose behind the merger is to simplify IoT applications, to deliver next-generation IoT products and services along with less power and lower bandwidth, reduce IoT cost of connecting devices to the LTE wide-area network and to help developers and businesses operate easily with their connected devices on 4G LTE network. Earlier, connecting IoT devices to the LTE network was much more expensive than connection to other technologies such as Wi-Fi, Bluetooth, Zwave or ZigBee. The tie-up is also expected to help companies deal with the two major issues of IoT – firmware management and diagnostics handling. Verizon also claims that it will soon launch more IoT solutions for electric, water and gas companies and cooperatives using Qualcomm chips. Additionally, other applications such as device security and sensor data visualization are expected to emerge as a result of this merger.
Bottom Line
This partnership is expected to benefit both the companies. On one hand, Verizon will provide tough competition to other major U.S. wireless carriers such as AT&T Inc. (T – Analyst Report) and startups such as SigFox that deliver wireless connections for smart devices at subsidized prices in the IoT space. On the other hand, signing a deal with one of the leading telecom players in the U.S. is a prudent move for Qualcomm.
Zacks Rank and Stocks to Consider
Qualcomm has a Zacks Rank #2 (Buy), while Verizon has a Zacks Rank #3 (Hold). Better-ranked telecommunication stocks include NTT DOCOMO, Inc. (DCM – Snapshot Report) which carries a Zacks Rank #1 (Strong Buy) You can see the complete list of today’s Zacks #1 Rank stocks here.
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