Acquisitions of IoT Geolocation Service Providers Signal New Phase of the Positioning Market

Polte, the creator of cloud-based cellular positioning for the Internet of Things (IoT), unexpectedly shut down its operations in September 2022. The company has been incorporated into Qualcomm but has stopped servicing existing customers or taking on new customers. This move ends Polte’s independent journey as a vocal pioneer of the IoT geolocation market where it had intended to supplant the capabilities of Cell-ID (CID) and enhanced Cell-ID (eCID) positioning by aiming to offer higher location accuracy with lower power consumption. It is more interesting when one puts the acquisition of Polte’s assets into context: this is not Qualcomm’s first acquisition in the geolocation market this year as the chipset manufacturer has acquired CID/eCID and Wi-Fi positioning incumbent Skyhook in May 2022. Skyhook is the hybrid positioning incumbent, relying on CID/eCID, Wi-Fi, and Global Navigation Satellite System (GNSS) to carry out positioning and offering multiple integration possibilities—from simple application programming interface through software development kits to SIM-based positioning. This acquisition was also carried out with no formal announcement.

In November 2022, Nestwave, a pioneer in hardware-free GNSS for IoT, announced the sale of its business, valued at US$18 million, to NextNav. NextNav’s business provides resilient alternatives to GNSS. Since geolocation is so important for many critical applications (automotive, E911, military, and so on), the argument is that a resilient solution is needed as a backup in case of a GNSS outage or spoof. As such, NextNav has brought positioning back to earth, building a network of terrestrial base stations in U.S. urban areas, off which its TerraPoiNT positioning, navigation, and timing system is built. TerraPoiNT not only offers a backup to GNSS but also complements it by offering better positioning in urban areas and in indoor settings where highly attenuated GNSS signals cannot reach. Nestwave will continue to serve its existing customers and partners and offer its IoT positioning services for a series of still-to-be-announced chip and module partners.

Both news events refer to independent geolocation service providers being acquired by larger companies; however, while there is some overlap in what this says about the business model for geolocation in IoT, these events are very different in nature and are worth considering separately.

Qualcomm’s Activities—Polte and Skyhook: The acquisitions of Polte and Skyhook represent an Intellectual Property (IP) acquisition. Skyhook, founded in 2003, has acquired over 650 patents in the past two decades, offering highly diverse ways of integrating hybrid location on devices and outclassing its competitors in performance. In addition, Skyhook has been investing heavily in its z-axis positioning in the past couple of years, and Qualcomm has been trying to build out as part of its Qualcomm Location Suite. Polte also has over 100 patents issued or pending and has a very valuable database of cell towers that spans more than 200 countries. This is the company’s greatest strength; this database crowd-sources cell tower information from public databases, mobile network operator databases, and base-station location mining through deployed IoT devices to continually improve data quality, location accuracy, and number of cell towers within the database. Finally, in the past two years Polte has been looking to strengthen its position to provide geolocation for 4G and 5G private network settings. Geolocation has become an increasingly important consideration in each successive 3GPP release, both for massive IoT and critical IoT, and Qualcomm’s acquisitions will give it a very broad and strong foothold in this market.

Qualcomm used to be a leader in geolocation with its Qualcomm Location Suite but has increasingly been relying on Skyhook for its location services since their initial partnership in 2008. This partnership has meant that anyone designing on Qualcomm chips would turn to Skyhook for their location capabilities. The acquisition therefore represents a more permanent normalization of this relationship. The combination of Skyhook’s cellular and Wi-Fi geolocation strengths with Polte’s advanced algorithms and database has important implications not only for IoT use cases but also for Qualcomm’s broader markets in wearables, smartphones, and automotive (where Skyhook has already played an important role).

The benefits to Qualcomm for the two geolocation service providers are a clear (if a slightly less triumphant) statement. Independently, geolocation service providers for IoT have struggled for several reasons. Possibly the most important reason is that the location-as-a-service model has been difficult to sell: original equipment manufacturers have frequently noted that end users are reluctant to pay a subscription to location services when GNSS applications are free to use. A microservices approach to IoT is a difficult sell, particularly when the goal of IoT is to provide simplicity on the technology front. Chipset and module vendors have long been the preferred partners for geolocation service providers as it makes sense for geolocation to be offered as a value-added service by one of these vendors (in the style of Semtech or Nordic Semiconductor), but not necessarily as a stand-alone business. Other reasons stand-alone service providers have struggled include a necessary low price for the geolocation service that has brought low revenues, the difficult use-case proposition of low-accuracy geolocation, and the unreliability of some approaches to IoT-network-based geolocation.

Qualcomm’s acquisitions will enable the technologies to grow within a large company that has ample resources for Research and Development (R&D) and open the technology to many more markets and applications where it can add value. Qualcomm can use this technology to expand its chip-to-cloud services while also potentially taking advantage of licensing and royalty opportunities—an area where the company has excelled previously. With a dominant market share among chip vendors, integrating and enabling these location services on all its products could make Qualcomm’s hardware platforms highly sought-after for any application requiring location. Qualcomm is aware of the future opportunities for geolocation and is positioning itself as a geolocation behemoth to target all types of applications.

NextNav’s Activities—Nestwave: Nestwave was acquired by NextNav for its IP. Counterintuitively, Nestwave was not acquired for its hardware-free GNSS IP so much as for its network-based positioning IP. While hardware-free GNSS is what the company has primarily been proposing to the market, this was only Nestwave’s focus since 2019. Initially founded in 2014, the company focused on positioning over cellular but did not push it because of other products (such as Polte’s offering) in the market and because its cellular positioning product was not ready for commercialization. Nonetheless, it has continued to remain a focus area for the company over the past three years.

NextNav’s acquisition will bring three benefits. First, Nestwave’s positioning over cellular will significantly reduce the number of base stations that NextNav has to deploy by allowing it to integrate cellular positioning into its TerraPoiNT system. Second, NextNav can improve the accuracy of its current TerraPoiNT geolocation system using its 920 MHz base stations. Third, NextNav will be able to target new markets—both geographic (Europe, Japan) and commercial (IoT and asset tracking)—where it currently does not have any significant footprint. For Nestwave, NextNav’s acquisition will allow it to grow in the United States, leveraging existing TerraPoiNT base stations for more accurate location for IoT devices and increasing the investment in its geolocation IP.

On the surface the acquisition seems to be a step away from the IoT geolocation market in that NextNav’s markets are distinctly unaligned with Nestwave’s, both commercially (NextNav targets critical applications rather than IoT) and technologically (Nestwave’s IP differentiator for IoT is its hardware-free GNSS, not its cellular positioning). But both companies appear to have IoT at least partly in mind, and the acquisition may provide a boost to Nestwave’s ability to offer a more comprehensive service using its own cellular and hardware-free GNSS IP and NextNav’s TerraPoiNT IP.

Geolocation for IoT is a difficult market to get right from a commercial perspective. IoT-specific geolocation technologies sound like a good idea to reduce reliance on power-hungry traditional GNSS, but good ideas need to be backed up by the right go-to-market channels and business model. The events described above show that the geolocation market is seen as an extremely valuable one: geolocation will be an important feature in almost all connected assets, whether mobile or stationary. On top of this, the technological approaches have demonstrated significant promise—hence the growing interest in acquiring companies or building geolocation services in-house. While the need for and the prowess of the technology are clear, the question of commercialization is still in flux.

In particular, a key question emerges from these events: Is the IoT market mature enough to support geolocation vendors purely targeting IoT? Geolocation vendors usually look to expand their total addressable opportunities because their revenue opportunities from IoT alone have been limited. While the opportunities will grow in IoT as more devices tend toward low power, as adopters refine their use cases further, and as location becomes an essential part of any connected solution and not just mobile connected solutions, these acquisitions appear to suggest that this stage of the market has not been reached yet. As such, the R&D costs cannot by fully supported by IoT alone, meaning that larger companies with broader target markets (including higher-value asset markets, such as smartphones, wearables, or automotive) are looking to take on the IP of independent geolocation service providers and apply it to a broader customer base.

These acquisitions may put a slight damper on the revenue opportunities for geolocation in the IoT market, but they are likely to strengthen the evolution of these technologies going forward. There are fundamental benefits to low-power geolocation, and the incorporation of these technologies into large companies will

• cement the importance of geolocation on all forms of assets in the future,
• facilitate R&D in these technologies, and
• create a nonintrusive business model where geolocation becomes a differentiator for those who have the IP, who can offer it to customers as a value-added service, and who can license it to other vendors to create an additional revenue stream.