Why Is the GNSS Industry Changing Shape?

By Tony Murfin.

As consolidation of GNSS and related companies continues throughout the industry, it may be useful to look at some of the notable steps taken by some of the key movers and shakers. Trimble, Hexagon, and recently u-blox have used an acquisition strategy to accelerate their growth. As companies are absorbed and product lines merge, it’s interesting to look at where some companies came from and where they might be headed.

Acquisitions, mergers, IP and product-rights buy-outs, and joint ventures — all signs of consolidation in the GNSS Industry — are everywhere nowadays. Its not unusual to hear of someone absorbing someone else, or two or more organizations joining together to take on a particular market segment; we hear these reports almost every week. Now that the industry is becoming more mature, start-ups-that-were are becoming acquisition targets for the bigger fish as they become profitable or have unique technology and/or market access.

The industry’s acquisition machine — Trimble — had apparently already acquired four companies by June during this year alone. Since 1989, according to Trimble’s website, the company has acquired 47 companies, bought four company IP/product-rights, and formed seven joint-ventures (JVs) — some of the most notable recent JVs being with agency-companies in Russia and China.

Trimble’s BD920-W3G receiver and communication module, part of Trimble’s GNSS OEM portfolio.

If we think back over the years at how we may have gasped at some of the companies Trimble acquired, some still stand out to me — maybe more so because they may have had personal impact, or because I was close to the market segment at the time:

• The Spectra Precision Group acquisition in 2000 helped Trimble become a leader in positioning solutions for the construction, surveying, and agricultural markets, and brought laser and other optical capability to the emerging industry leader.
• In 1990, when Trimble became the first GPS company to go public on NASDAQ, we all recognized that the GNSS industry had arrived.
• When Trimble and Caterpillar formed their joint venture in April of 2002, we knew that ag and machine control would never look the same again. They went on to strengthen this JV with another in October 2008.
• I was working on inertial/GPS integration in Canada in June of 2003 when Trimble acquired Applanix Corporation — also Canadian and market leaders in integrating inertial navigation systems (INS) and GPS technologies.
• The acquisition of Pacific Crest in January 2005 really shook the differential and RTK wireless link requirements of the GNSS industry. Where were we going to buy our wireless links now?
• Acquisitions continued through the intervening years, but in May of 2009, the JV between Trimble and the China Aerospace Science & Industry Academy of Information Technology (CASIC-IT) signaled a significant change in the Chinese market and presumably gave Trimble a leg up to address Compass. This was followed by another JV for the Chinese railway segment.
• An equally market-changing JV followed with the Russian Space Systems Rusnavgeoset which was announced on June 1, 2010. Our own commercial efforts in Russia at the time cooled very quickly as a consequence.
• I was working on an article on Locata and its ground-positioning infrastructure in the summer of 2011, and the earlier Trimble acquisition in October 2010 of the similarly functioning Novariant Terralite assets created a great deal of conversation during those discussions.
• The recent April 2011 acquisition of Ashtech’s technology, resources and facilities has established an enviable foothold for Trimble in Asia, Europe, and Russia, and significantly added to its technology inventory. Who would have ever thought during the early days of GNSS that Ashtech would eventually become part of Trimble?
• And just as I got immersed into the world of unmanned vehicles, Trimble’s April 2012 acquisition of Gatewing in Belgium has the potential to influence the market for unmanned aerial vehicles (UAV) for photogrammetry and rapid terrain mapping applications.

Since 1999, Trimble’s revenues have grown from approximately $270 million to more than $1.6 billion in 2011, so its not hard to see how they have had sufficient “fuel” to maintain their aggressive acquisition strategy, and to continue to expand their extensive technology and product portfolios.

Alongside this GNSS acquisition marathon, the rest of the industry appears to be ultra-conservative, but there are several other stories which we might want to consider.

With headquarters in Stockholm, Sweden, and London, UK, Hexagon has subsidiary companies around the world, and has become a leading global provider of integrated design, measurement and visualization technologies.

When Ola Rollén joined around 2000 and became president and CEO, he identified measurement technologies as a focus area, and subsequently the Hexagon acquisition strategy has gone on to pull a significant portion of our industry into the Hexagon family. With 13,000 employees in more than 40 countries, net sales are reported to be around €2.2 billion ($2.8B US).

Hexagon’s focus has been on high-precision measurement technologies, which also rapidly provide access to large amounts of complex data via engineering and geospatial “visualization” software. As the Hexagon’s website says, an extensive range of products and services work together to provide a constant flow of data, and transform raw data into useful information and actionable intelligence. Acquisitions form part of Hexagon’s long-term growth strategy.

The Hexagon foray into our neck of the GNSS “measurement” business really seems to have begun in 2005 with its acquisition of Leica Geosystems in Switzerland. Leica has become one of the big movers in geomatics/survey, and has capabilities that reach across almost every industry that has the requirement to measure anything, and GNSS has become only one portion of the technology involved.

However, as the relationship between Leica and NovAtel grew over time, it was probably inevitable that Hexagon would want to have the source of a significant part of Leica’s GNSS receiver technology within the Hexagon/Leica group. So this was cemented in 2007 as Hexagon acquired NovAtel along with 15 other measurement-related companies. Notable other GNSS companies acquired in those 2007 acquisitions included Allen Precision Equipment in the U.S. and Elcome Technologies in India.

Then in 2010 one of the largest acquisitions in the industry followed when Hexagon brought Intergraph into the company bull-pen at a cost of $2,125M US. Today, Intergraph geospatial products include industry-leading desktop GIS, remote sensing, and photogrammetry software, as well as the synthesis of these technologies in server-based products specializing in data management, spatial data infrastructure, workflow optimization, web editing, and web mapping.

Heavy stuff, but the recent acquisition that caught my eye was the purchase of Fastrax in Finland by Swiss u-blox. Founded around 2000, Fastrax has provided the market with ultra-low power, high-sensitivity, small form-factor GNSS modules which have helped revolutionize the market and facilitate the explosion in mass-market positioning and tracking applications. This was ongoing virtually in parallel with u-blox’ development efforts — the company released its first surface-mount GPS receiver in 1998. Fastrax brings a seasoned team of GNSS experts to u-blox, as well as new products and technologies such as multi-GNSS modules with integrated GPS/GLONASS antenna.

In the late 1990s, u-box management saw that there would be a major market for low-cost GNSS module solutions and set out early to establish its own in-house semiconductor IP. This has led u-blox to become a leading fabless semiconductor provider of embedded GPS/GNSS receiver chips and modules for the consumer, industrial, and automotive markets. As it succeeded with this strategy, u-blox set out on a parallel activity with embedded wireless 2G and 3G modules that work seamlessly with their positioning products to support applications such as vehicle and asset tracking, which rely on a tight integration of the two technologies.

u-blox’ MAX, NEO, and LEA-7 GPS/GNSS modules support all available satellite positioning systems.

Their market has evolved so that today u-blox addresses fleet and asset management, vehicle, marine and personal navigation systems, consumer electronics, smartphones, recreational devices, industrial machine-to-machine (M2M) and security systems, and industrial precision timing. Products include both chips and modules based on u-blox 7, the company’s seventh generation GNSS satellite positioning platform with extremely low power consumption and really fast acquisition time. The company’s global positioning receivers are compatible with GPS, GLONASS, Galileo, QZSS, and Compass, and also support the WAAS, EGNOS, and MSAS satellite based augmentation systems.

Since the company’s founding in 1997, u-blox’ GNSS R&D strategy had been organic and internally driven, and remained that way through its IPO in 2007 on the SIX Swiss Exchange, until its first acquisition in 2009 of Italy-based NeonSeven. That acquisition added wireless 2G/3G module know-how to the company’s IP. That’s a long time on their own, during which they established a large customer base that today has grown to more than 3,500 OEM manufacturers worldwide in the consumer, automotive and industrial markets. The company estimates its products are currently integrated into more than 10,000 types of devices used by 40,000,000 people and machines around the globe.

Additional purchases in the wireless domain quickly followed, with San Diego-based Fusion Wireless (CDMA modules) acquired in 2011, and UK-based Cognovo and 4M Wireless (4G chip and stack technologies) in 2012. This has allowed u-blox to quickly accelerate growth in the wireless modem market. And then with the u-blox acquisition machine fully primed, u-blox brought the complementary GNSS capabilities of Fastrax on board in October 2012.

But why go after Fastrax now? Well, clearly profitable with 2011 revenue of $133M US, u-blox has achieved the structure and capabilities to achieve a higher growth rate. Fastrax gives them the means to grow even “Faster”. Fastrax modules exploit the best of four leading GNSS chip vendors and include advanced antenna modules, something the company did not have prior to the acquisition. Its products complement u-blox’ existing product and technology portfolio and will benefit from u‑blox’ economy of scale. Adding u-blox’ advanced R&D capabilities, semiconductor technologies, global sales channels, established supply chain, and high-volume manufacturing capabilities provides customers a more attractive choice, while streamlining operations and lowering costs. At a purchase price of $13M US, u-box may have found an ideal, cost-effective way to accelerate its business expansion.

This is just a snapshot of some notable and recent consolidations that our industry has experienced. There are other acquisitions and mergers, maybe on a larger or smaller scale which have already happened, and even those which are probably being negotiated right now. We should expect this to continue, and hopefully our industry will become stronger and the careers of the people in it will thrive.

Some acquisitions don’t work because the adjustments required by the organizations are too big, too difficult, and as a consequence too costly to overcome. But good groundwork and hands-on research prior to the deal means most acquisitions are between compatible organizations, and integration is successful and everyone benefits. But as everyone hopes in the acquisition business, the sum of every acquisition has the potential to be significantly larger than its constituent parts. Let’s hope there are more of these positive benefits as we move forward with the evolution of the GNSS industry.

Tony Murfin
GNSS Aerospace