IoT operator Sigfox is confident that competing LPWAN technologies are no match to its own offering at this point. An exclusive interview with Thomas Nicholls, EVP of communication at Sigfox.
We can count the days without an announcement on Low-Power Wide-Area Network, a market that is expected to grow at a compound annual growth rate of 93.01% between 2016 and 2022, according to Infoholic Research. So now the race is on among the likes of Sigfox, LoRaWan and NB-IoT.
France’s Toulouse-based “internet of things” operator Sigfox believes, however, that it has a unique position in the LPWAN market. Furthermore, comparing Sigfox with LoRa or NB-IoT is like comparing apples and oranges: there are multiple solutions and there is ample room for various actors and solutions.
“The most important thing for people to understand is that the IoT base is huge and there will be multiple types of connectivity. Also, it is crucial to understand the positioning of the different solutions and here nobody has a similar positioning as Sigfox,” Thomas Nicholls, EVP of communication at Sigfox, told Industrial IoT 5G Insights. “There will not be one actor winning everything because the different accesses cater for different types of applications. And there are many use cases that can only be addressed by other solutions than Sigfox.”
No one can match Sigfox offering
So, while competing solutions will co-exist, not one matches what Sigfox can offer, according to Nicholls. He views NB-IoT as a complementary solution to Sigfox, and said that the cost of integrating NB-IoT in an end-point is 10 times as high as with Sigfox. In addition, it has yet to be standardized and hit the market.
“It costs $40 per end-point today since you have to use traditional LTE modules. Prices will drop over time, maybe over the next five to 10 years. But it will still be significantly more expensive than Sigfox,” said Nicholls.
As for LoRaWan and Ingenu, he believes these solutions can only succeed in the private network space.
“We are yet to see one country covered with LoRaWan or Ingenu and we do not really believe this will happen. The models are flawed for public networks but fine for private networks,” said Nicholls. “Saying that Samsung is rolling out a LoRa network with SK Telecom is an exaggeration. Samsung is a gigantic organization with one division that sells network equipment. They of course sell to anyone that wants to buy their equipment, including SK Telecom,” he added.
The Sigfox executive suggests that a fair comparison to Sigfox should look at four different elements: service type, coverage, energy consumption, and subsection and end-point connection costs.
“Using that type of comparative approach, you will find there is no one that can match the Sigfox offering … Some vendors are confusing the market by saying they have competing offers, when in reality they either have a very different offer or are in such an early stage that they do not yet have a commercially available offer,” Nicholls said.
Ongoing expansion
Truth be told, Sigfox can boast a 1.3 million-square-kilometer coverage across 20 countries. But to stay ahead of its competition, it must keep moving fast. The company recently announced a nationwide rollout in Finland, which should be completed by spring. Sigfox is also expanding its IoT network to 100 U.S. cities.
“We do not see any actor in the market that can compete with us. And lots of big customers are waiting for us to have deployed nationwide or Europe-wide. It is still a blue ocean market for us,” said Nicholls.
Yet, the company has been reported to have faced a customer backlash. Light Reading reports that bicycle tracking gadget company Nigiloc has joined in the criticism earlier expressed by Sigfox rivals and was one of a number of Sigfox customers to have terminated their planned Sigfox rollout due to “bad coverage and failing technology.”
In an unrelated comment, Nicholls told Industrial IoT 5G Insights that “there are additionally some actors in the market with an interest to slow down the market. It is a common strategy for large organizations to slow down disruption in order to figure out how to best react.” He added that Sigfox’s job is to stay focused on execution and not get distracted.
Sigfox chooses new countries to cover based on a number of parameters, but also addresses incoming opportunities from potential Sigfox Network Operators as they arise. The end goal is to build out a complete worldwide network, Nicholls explained.
Acquisitions could also come into play as part of the company’s growth strategy, “but we are not in the process of acquiring anyone right now,” Nicholls said.
Sigfox’s low ARPU business model
Traditional operators have massive overheads and competing in the low average revenue per user segment might prove more difficult for them, something of which Sigfox believes it can take advantage.
“Sigfox focuses on the use cases that only support a very low ARPU. These use cases are not addressed by current or future versions of the cellular networks or by the ways in which those networks are deployed and managed. It is a very complementary offer,” Nicholls said. “If you look at evolutions such as NB-IoT, then you’ll quickly notice that there is still a gap in pricing, especially on the end points, and in energy consumption. There will also be many use cases that combine Sigfox and cellular.”
The operator’s business model is simple: provide a global connectivity solution. Data subscriptions are provided to the distributors, which the company calls Sigfox Network Operators, and they in turn sell connectivity to various channels, including consultants, vertical experts, MNOs.
“It is a pyramidal mode that relies on efficient partnerships,” said Nicholls.
Eying an IPO
Sigfox had revenue of $12 million in 2015, triple 2014 revenue. That number is expected to grow significantly this year as well. The company also will be doubling its number of employees in 2016. Being in an expansion phase, the IoT operator is not yet profitable and is planning another important round of financing in the near future.
“The round will most likely drive us to the IPO we are planning in the coming years,” said Nicholls.
Sigfox’s business model is all about volume and, according to Nicholls, the company can reach profitability despite the “ridiculously small amounts of money by subscription” it makes.
“It takes only a couple of large deals per country for that country to be profitable. Other actors trying to enter the operated low power connectivity space have instead high expenses and more complicated organization; it is more difficult for them to live in a very low ARPU world,” he said.
IIoT news recap: BMW teams up with Intel and Mobileye; LG Uplus to establish smart city infrastructure in Goyang; Automotive security specialist Trillium secures Series A funding; Today’s forecast: Wireless IoT applications in industrial automation worldwide
Autonomous driving: BMW teams up with Intel and Mobileye
BMW, Intel and Mobileye have signed a Memorandum of Understanding whereby the three companies are to collaborate on self-driving car technology development.
“With our collaboration, we aim to define an automotive industry standard that is state of the art for autonomous driving. And we have agreed with our partners to make our cooperation open to other companies,” said Klaus Fröhlich, member of the board of management of BMW AG, Development, in a statement. Automated driving solutions developed by the partnership will be brought into series production by 2021 with the BMW iNEXT.
Smart city: LG Uplus to establish smart city infrastructure in Goyang
The Korean Ministry of Science, ICT and Future Planning has chosen LG Uplus and the city of Goyang to establish an IoT-based smart city, The Korea Times reports.
“We will develop IoT-based converged services and work to solve pending issues in urban areas by tapping into our open smart city platform technologies,” said LG Uplus’ IoT service division head Ahn Sung-joon in a statement. A model complex support center will open in Goyang by August to encourage IoT service providers to take part in the project.
Today’s startup: Automotive security specialist Trillium secures Series A funding
Japan-based Trillium, a startup specialized in anti-car hacking technology, has secured Series A funding in a financing round led by venture capital firm Global Brain Corporation. The funding will be used to “accelerate field testing of the company’s technology in commercial vehicles, expand the breadth of collaboration with automotive OEM and Tier 1 manufacturers and extend its technologies and solutions to adjacent industrial markets in need of IoT cybersecurity,” said Trillium in a statement.
Today’s forecast: Wireless IoT applications in industrial automation worldwide
Analyst firm Berg Insight expects shipments of wireless devices for industrial automation applications, including both network and automation equipment, to reach 18.3 million by 2021, up from 4.8 million units worldwide in 2015. The market will grow at a compound annual growth rate of 25.1% over the forecast period.
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