WA MarketView: Mitsubishi Electric's acquisition of Nozomi Networks

Background

Japan is a key sales territory for Nozomi, and the company has been active in the region for many years, building strong local relationships, including with Mitsubishi Electric, which joined Nozomi’s Series E funding round of $100 million in March 2024. The two companies have a history of collaboration on innovations, such as "Arc Embedded," which integrates Nozomi’s OT security tools into Mitsubishi Electric’s programmable logic controllers (PLCs). This is significant – there is already familiarity between employees and shared goals.

The press release states that Nozomi will continue to operate as an independent, wholly owned subsidiary, retaining its brand, leadership, and existing operations, including headquarters in San Francisco and R&D facilities in Mendrisio, Switzerland. Both CEOs have emphasised that there will be no disruption to customer operations, product roadmaps, or partnerships.

Nozomi brings advanced AI capabilities, whilst Mitsubishi brings deep industrial networking knowledge, expertise, and resources, enabling the organisations to “co-create valuable new services” and “AI powered solutions”.

The acquisition does throw up a couple of interesting questions - how will the acquisition impact Nozomi’s autonomy in the market, and what co-creation can be expected?

Nozomi’s Autonomy

Nozomi has reported strong growth in ARR since launching Vantage in 2021, achieved through growing customer demand, increasing platform functionality and a strong partner network. In WA’s recent analysis, Industrial OT Cybersecurity Outlook, we noted that ‘Nozomi has a strong partner network and strong brand recall amongst the largest professional services firms, MSPs, and industrial OEMs.’ No other organisation was name-checked for asset discovery and vulnerability management as much as Nozomi by channel partners, CISOs and Engineering leaders.

This is not the first acquisition of its kind in the OT cybersecurity sector. Honeywell (SCADAfence), Rockwell Automation (Verve), Microsoft (CyberX), and Forescout (SecurityMatters) have all integrated similar acquisitions into their operations, with only the Verve brand still remaining. Mitsubishi Electric clearly stated in the press release that Nozomi will continue as a separate, independent organisation, with the autonomy to sell solutions through existing channel partners and OEMs.

This is where it becomes interesting. Plants are not homogeneous in design – they have been stripped down, refurbished, patched, and digitised over decades, leading to a complex mix of systems and vendors. Nozomi’s value has always been in offering a vendor-agnostic solution. Now, as part of an industrial automation vendor, will customers still view Nozomi as an impartial partner?

There is precedent for this model to succeed. Schneider Electric’s acquisition of Aveva, and later OSIsoft PI, shows that independent, vendor-agnostic software companies can thrive under OEM ownership. The next 12 months will reveal whether Nozomi faces challenges with partners and channels, but beyond the short-term dynamics lies a more strategic question: what does co-creation mean in practice, and how might Mitsubishi Electric and Nozomi leverage each other’s expertise?

Collaboration and co-creation to generate value

There are two angles. One is how Mitsubishi’s industrial solutions will evolve, and the other is how security products and services will develop.

In the short term it’s likely that both organisations will benefit from each other’s market position. Nozomi will have access to Mitsubishi Electric’s customer base. Mitsubishi Electric will have access to Nozomi’s cybersecurity capabilities.

Mitsubishi Electric & Nozomi Market Impact

The industrial OT cybersecurity market remains in an early stage of development and is not yet consolidated under a handful of dominant vendors or service providers. While players such as Cisco, Fortinet, and Palo Alto Networks have established strong positions at the IT/OT boundary, market share is still highly fragmented. Spending is rising across all security product and service segments, driven by generally low levels of customer maturity, leaving Nozomi with room for growth in its core areas as the market expands. For Mitsubishi Electric’s security business, the acquisition strengthens its managed security services portfolio, one of the fastest-growing areas of the market. Looking ahead, attention is likely to shift beyond traditional OT cybersecurity controls toward data protection and industrial applications, representing a potential future focus.

Industrial OT Cybersecurity Share of Expenditure, 2025

In the mid-term, it is likely that new products and services will emerge to address evolving customer challenges. It is Mitsubishi Electric’s intent to embed security and intelligence into its products, leveraging Nozomi’s technology and expertise. Customer value is created through providing customers with secure-by-design products and services, meeting growing customer demand and addressing future regulatory requirements. Mitsubishi Electric also references its plan to integrate Nozomi’s business assets into Serendie - their digital platform for value co-creation.

In the mid-term it is also likely that there will be a growing focus on safe, secure and trusted IoT. Mitsubishi Electric has a diversified business portfolio that includes defense & space systems, automotive equipment (including infotainment, ADAS, and electrification solutions), building systems (HVAC), and Semiconductor and Devices. The company delivers both connected products and products that enable IoT. Nozomi already has momentum in IoT, with a growing business that spans customers from defence (such as the F-35 program in Switzerland) to critical infrastructure in hospitals and airports, and large-scale deployments in smart cities, including the Paris Olympics. Notably, Serendie counts Soracom, a cloud-based IoT connectivity platform, among its limited set of innovation partners, underlining Mitsubishi Electric’s focus on IoT.

This acquisition is not only about short-term results, but also about creating new and disruptive services. As the lines between IT and OT continue to blur, industrial data will need to be secured on-prem, at the edge, in the cloud, and everywhere in between, with digital twins and cloud platforms and applications becoming part of the operational fabric. At the same time, organisations are demanding trusted operational intelligence to optimise production lines, maintenance, and energy consumption. Longer-term it can be expected that the talent and technologies from Nozomi will combine with the industrial expertise and resources of Mitsubishi Electric to deliver new disruptive services. For the purposes of this paper we have termed it Industrial Observability, requiring the collection of telemetry at scale, real-time situational awareness, and fast and automated root-cause analysis, to deliver improved performance, uptime and reliability. This is the likely direction of travel for the combined research and development organisation.

In our opinion, the acquisition and integration plan feels right, provided Nozomi is able to maintain its independence and autonomy. The greatest acquisition success stories are those where two organisations come together with a shared vision to create a business model greater than the sum of their individual parts, and the real opportunity here lies at the intersection of Nozomi and Mitsubishi Electric’s products, services, and markets. To deliver on that vision will require careful planning to ensure that Nozomi can focus on its core business whilst managing the expectations of the Mitsubishi Electric management team to accelerate its digital services.