INTEGRATIVE INSIGHTS
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About the Authors:
David Gearhart, CFA
Senior Vice President
David Gearhart has worked in finance and investment for two decades and joined First Analysis in 2011. He works with entrepreneurs as an investor and as an advisor on growth transactions to help build leading Internet of Things and e-commerce software businesses. He has played a key role in building First Analysis’ Internet of Things and e-commerce franchises and is a thought leader in his sectors, having authored several widely read white papers. He supports First Analysis' investments in CoolR Group, EdgeIQ, Freeosk and SmartCommerce. Prior to joining First Analysis, he was an accountant with The Northern Trust Co. and an options broker with American Option Services. He earned a bachelor’s degree from Purdue University with a concentration in economics and finance and his MBA at DePaul University with a focus on finance and entrepreneurship. He is a CFA charterholder.
Howard Smith
Managing Director
Howard Smith has nearly three decades of experience at First Analysis, working with entrepreneurs as an investor and as an advisor on growth transactions to help build leading technology businesses. He leads the firm's work in the Internet of Things, cybersecurity and internet infrastructure sectors. He also built the firm's historical franchises in call centers and computer telephony. His thought-leading research in these areas has been cited for excellence by the Wall Street Journal and other publications. He supports First Analysis' investments in EdgeIQ, Fortress Information Security, ObservIQ, Tracer and VisiQuate. Prior to joining First Analysis in 1994, he was a senior tax consultant with Arthur Andersen & Co. He earned an MBA with honors from the University of Chicago and a bachelor's degree in accounting with highest honors from the University of Illinois at Urbana-Champaign. He is a certified public accountant.
First Analysis Internet of Things Team
Howard Smith
Managing Director
David Gearhart
Senior Vice President
Matthew Nicklin
Managing Director
First Analysis Quarterly Insights
Internet of Things
Shift to condition monitoring to finally drive connected pallet adoption
February 1, 2023
  • The first generation of IoT solutions for wirelessly connecting pallets focused mainly on the value of the pallets themselves, only tracking location. This approach failed to gain traction because it offered insufficient return on investment, addressed too small a portion of the market, and suffered from high up-front costs and ongoing technology maintenance costs.
  • A second generation of IoT pallet technology is emerging that overcomes these shortcomings. These solutions monitor the conditions pallets - and more importantly, their cargoes - experience on their journeys through supply chains. By monitoring conditions, such as temperature, vibration, shock and humidity, these solutions provide information that helps manufacturers, distributors, and shippers preserve the products pallets carry, which are typically much more valuable than the pallets themselves.
  • We expect these solutions' broad and substantial appeal to help drive strong growth for companies providing second-generation pallet IoT solutions, and we profile several such companies.

TABLE OF CONTENTS

Includes discussion of eight private companies

Pallets: A pillar of modern logistics

Massive opportunity explains continued interest in digitizing pallets

Connected pallet 1.0: The first generation of connected pallet technology

Why connected pallet 1.0 failed

Connected pallet 2.0: More than just location tracking

Why connected pallet 2.0 will succeed

Characteristics useful in predicting success

Representative companies

Serving a more palatable IoT pallet solution

IoT index remains range-bound

IoT M&A: Notable transactions include Vivint, Noonlight, Compology, Sierra

IoT private placements: Notable transactions include Memfault, Blues Wireless, Netradyne, and CoolR

Pallets: A pillar of modern logistics

Pallets are critical to logistics given the efficiency they enable: Nearly every industry handling physical goods uses some type of pallet for shipping and storage, typically packing multiple products on each pallet, to reduce handling and loading times and help manage and protect products as they move through supply chains. Major pallet users include the food and beverage, retail, electronics, pharmaceutical and chemical industries. Pallets are so pervasive it's unlikely their use will change anytime soon.

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