Enterprise Mobility & the Connected Worker Blog

Swedish Rugged Mobile Computing OEMs Combine with MilDef Acquisition of Handheld Group

by Rowan Litter & Emily Gove 10/7/2022

With MilDef’s recent acquisition of Handheld Group, changes are in store for both companies as they work together to expand their market presence. VDC Research Analyst Rowan Litter spoke with Handheld Group CEO Thomas Löfblad to discuss the transition.

Rowan Litter: Let’s start with the acquisition by MilDef. It’s really exciting, what was the key driver of the acquisition, and what are the effects it’s going to have on both companies going forward?

Thomas Löfblad: MilDef has very ambitious growth goals; they’ve had fantastic growth this past year and a half and won a number of large military-type frame agreements worth many hundreds of millions of dollars. They’ve done fantastically well in that area.

Because we are both companies in Sweden, we have very similar history. MilDef was founded in 1997, we were founded in 1998, and we lived in a bit of a parallel universe, because even though we are in same type of industry, we have a very small customer overlap. And in the rugged space, there are not a lot of companies like ours. Most of the market belongs to Zebra, Honeywell, Panasonic, Getac, etc. So the pickings in the size that we are and the reach and the product portfolio that we have… there are not a lot of companies like that. The fact that we have very similar backgrounds, and that we are both Swedish-based and our company cultures are very similar and easy to work with and integrate, were one key driver.

Also the fact that our product portfolio can play a large role in MilDef’s product offering going forward – they don’t have any Android offering, everything is Windows based, whereas a lot of military customers, especially when you start looking at dismounted soldier solutions, are now looking for Android or Linux devices. We have won some military business, but nowhere near where MilDef has. From an ownership point of view, we chose to go with MilDef because the fit was very good. It was a fit with a clear future path of things we can accomplish together.

RL: You touched on how this is going to open up new opportunities. Is Handheld getting more involved with military cases or is there another customer opportunity that is also presented by the merge?

TL: One of the synergies will be the cross selling of products. In our partner network that we sell Handheld products through, we have a number of military-type integrators, and a broader geographical footprint than MilDef. They’re primarily in the Nordics, UK and US, whereas we have subsidiaries, contacts, and partner networks in a lot more countries. That opens up new markets for us to bring in their products where we are already established. Vice-versa – with the deep customer relationships that MilDef has with military customers, it is bringing in our product, offering customization, and then selling through the channel. Cross selling is the lowest hanging fruit of the synergies. Moving forward, we are going to be a freestanding group of companies under one umbrella, and will continue to develop products and service customers as we have. In the longer term, there will be a synergy of coordinating product development, and getting multiple products out of the new platform, which would fit diverse requirements.

So there are synergies, and it’s also aligned with our interests as a group. Unlike recent M&A transactions in the AIDC and rugged mobile computer market, where the acquired brands were completely engulfed by the acquiring company, we expect the Handheld Group and MilDef brands and corporate identities to remain. It will be more of a joint drive, and Handheld will continue as a big part of revenues and profit moving forward. It’s exciting.

RL: That is exciting. Are there any nuances that are going to happen with the go-to-market strategy, in terms of how you’re going to reach the customers? Are you going to be leveraging each other’s distribution channels or is there anything else you’ll be doing?

TL: We’re going to take a stepped approach, and the first step will be to look at the easiest area, which is cross selling products. We each have our customers, and together we have a much larger base than each of us has separately. There are things that we can do [together] that we couldn’t do on our own.

The next step is looking at product development, and determining what we will bring to the market moving forward. In the next couple of years, there won’t be a difference in go-to-market strategy, rather it would be a joint, targeted effort on some key markets where MilDef does not exist. For example, MilDef has little footprint in the German market. In the US market, which has grown nicely for us over the last few years, MilDef has had some growth but there are combined efforts that could work, such as for military-type customers in US and Europe. Military customers tend to be conservative in choosing suppliers – for us now to go into those discussions gives us more credibility, as we are part of a military-focused IT organization.

RL: Having new capabilities or differentiators can help get you into markets like the military, and your platform is built on customization, so I’m sure for military applications, being able to tweak the product solutions goes leaps and bounds. On that subject, what is the number one differentiator that Handheld Group brings to MilDef, and vice versa?

TL: What we’re bringing to the table is a broad geographical footprint and a much broader product portfolio, both in terms of form factors and functions with sensors and scanning. One of the things we see with military organizations, especially now in Europe with the war in Ukraine, is that governments aren’t only talking about military defense, but they’re also talking about total defense with local municipalities and cities. So you’re not necessarily looking at products and IT equipment that is to be in the front line of a potential conflict, but you’re looking at scanning capabilities, handling warehouse supplies of products, communications platforms, etc. Total defense is really looking at a much broader spectrum, whereas the MilDef historical offering has been military frontline use.

The differentiator from our point of view is that we get included in a much larger context. Being for the past 20 years a family-owned business, where we’ve gone through a pandemic and supply-shortage, it’s no walk in the park to run an organization. Especially when it comes to supply chain and components, being a larger purchaser of those bits and pieces is easier. [The partnership] is like a hand in glove because there are a lot of similarities. We are taking two really good Swedish companies and we’re making a much better Swedish company.

RL: In the past, you mentioned Handheld was developing wearable solutions, and you have your own MDM software tools and accessories, which I’m sure adds a lot of value. What opportunities do you see in software development and new wearable form factors through the partnership?

TL: In total defense, you’re looking at a much broader use base of digital products. When it comes to the software side, our MDM solution is Android based. MilDef also owns a software company that does a Windows version of MDM, and they do custom software for some customers. There’s not a lot of overlap in the type of software solutions that we have, but jointly, the offering will be broader and better for both sides. We will continue to develop wearables, we see it as an exciting segment of the market, and we see a lot of traction with new companies like Proglove. We also see the users of our MDM solution consistently growing. Last year it had 5,000 users and this year it has close to 10,000 users.

RL: The total defense use case that you describe is really interesting, and will definitely be emerging given those recent events. But I’m curious, because Handheld Group is also a big player in the energy markets, like oil and gas, has MilDef expressed any interest in getting into those markets?

TL: Yes, that’s what MilDef sees as critical infrastructure, and with total defense you have power, water, all those things that build up as a risk for every country. We see now with the energy crisis, Russia has turned off the gas pipeline and all of a sudden, even in Sweden which has many alternative power sources, we’re now facing situations where we might have blackouts this winter because of power shortage. So those things are real, both from a protective point of view and also making sure that windmills do work as they’re supposed to etc. So I think those things all tie together and it’s definitely interesting to MilDef and their total offering, what they call critical defense infrastructure.

RL: It's good to see a strong partnership emerging in a time where cities are looking to the technology sector to be both connected and protected. Thank you for your insights, and we are excited to see what comes next for MilDef and Handheld Group.