Verizon announced Monday that it is purchasing Sensity Systems, a company that makes IoT products for smart cities–a move that signifies a strong push into the connected community market.

Mike Lanman, senior vice president of enterprise products and IoT at Verizon, said in a press release: “Sensity is a leading provider of IoT solutions for smart communities with a strong ecosystem of partners, and this transaction will accelerate the deployment of large-scale implementations that will drive the digital transformation of cities, universities and venues.”

Sensity, which is based in Sunnyvale, CA, is a private company that has provided IoT solutions for a range of projects, including installing the sensors in Kansas City’s LED smart streetlights, as previously reported in TechRepublic. Sensity has 42 smart city installations worldwide.

“Sensity offers something that Verizon does not have, the ability to gather insights and data from different lighting infrastructure in all types of city environments, whether a street, building or public space,” said Bettina Tratz-Ryan, vice president of research for smart ecosystems and cities for Gartner CIO Research Group.

“In Gartner we predict that the street pole with lighting is the most valuable real estate on a street, given the fact that LED lighting can be mapped with other motion detectors, pollution monitors, vehicle trackers, parking systems and so on. Therefore, including intelligent lighting technology into an IoT platform that can harness and understand the lighting information in context with its environment and the data will become a very important game changer for creating the smart context in cities,” she said.

Sensity installed 121 sensors in LED streetlights in a 2.2 mile smart district in Kansas City that opened in May this year. The city uses those sensors to track what is happening on the streets in that area, said Bob Bennett, Kansas City’s chief innovation officer.

Bennett said the city looks forward to continuing to work with Sensity on the project, despite the purchase agreement with Verizon, and he’s meeting with them Tuesday to discuss where they are with the project. Sensity was a partner with Cisco on the Kansas City project.

The partnership with Cisco is up in the air with the news of the acquisition.

“The acquisition can create a competitive opportunity situation for Cisco to accelerate the rollout of smart city service environments, as Verizon as an infrastructure provider can deliver the right data from the interaction with the endpoints and sensors,” Tratz-Ryan said. “On the other hand, projects done by Cisco around harnessing data and driving service value could also be competitively done by Verizon.”

As the smart city industry grows–projected to become a $400 billion market by 2020, with 600 cities around the globe expected to generate 60% of the world’s GDP by 2025, according to McKinsey research–it’s inevitable that more companies will look to acquire firms with IoT ties.

Neil Strother, principal research analyst with Navigant Research, said he sees this as part of a long-term corporate strategy for Verizon. He said: “The fact that Verizon is buying a company with an IoT play behind it is not a surprise.”

“My view is that Verizon, like a lot of other companies such as SoftBank and Intel, and various hardware and software chip device manufacturers, are making investments in IoT companies or companies that enable end customers to do things with LED systems, or running smart buildings. There’s a recognition that how these things connect, and the data they provide and the new applications and other services that you get out of a connected city, is valuable to customers and Verizon wants to be a part of that,” Strother said.

Sensity will give Verizon a way to strategically enter the smart city environment, Tratz-Ryan said. “The acquisition of Sensity will be supporting Verizon in finding the right point of entry into the development of smart city strategy, as cities are looking for the first steps to use digitalization to build smart services in the context of intelligent streets, and the ability to look at leveraging the data collected for multiple services.”

The market will continue to consolidate because of the lack of standardization that exists and the value that IoT can bring.

“Creating those ecosystems through acquisitions enables a deeper and faster integration of those solutions and a faster rollout or proof of concept,” Tratz-Ryan said.

Terms of the transaction have not been disclosed, but a Verizon spokesperson confirmed that Sensity is being purchased in its entirety, including all employees. The acquisition is expected to close in the fourth quarter of 2016.

Three takeaways for TechRepublic readers:

  1. Verizon is making a strong move into smart city technology with the acquisition of Sensity, an IoT services provider.
  2. Sensity is currently working with Kansas City on its connected city project, providing 121 sensors in LED smart streetlights.
  3. The smart city industry is predicted to be a $400 billion market by 2020.

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