By focusing on the specific -- but very large -- low-end portion of the expansive Internet of Things market, Sigfox continues to extend its reach through partners, geographically and via an array of customers and use cases. Earlier this month, for example, Sigfox unveiled plans to deploy its network across 100 US cities this year.
That's not to say that others don't compete in the low-power, wide-area (LPWA) network arena, using unlicensed spectrum to target the multiple low-energy, cost-efficient IoT solutions or verticals entering the world. Although it's typically described as proprietary, Sigfox freely licenses its intellectual property, says Allen Proithis, president North America at the French-based company. On the other hand, Sigfox charged, competitor LoRa -- which usually underscores the openness of its approach -- is "entirely proprietary and owned by Semtech." (See: LoRa Alliance Defends Tech Against Sigfox Slur.)
The battle doesn't end there. Others -- including Vodafone and the NB-IoT standard, as well as Weightless, which is backed by ARM Holdings and Accenture, among others -- are entering the IoT fray. (See: The Wolf at Sigfox's Door.)
Everyone, it seems, wants the spoils of this multi-billion-dollar war. But with so many business cases reliant on IoT, with so many disparities among requirements, and with different demands in battery life, cost and device intelligence, among others, there's plenty of room for multiple approaches, says Proithis. Indeed, Sigfox does not compete with high-speed, costlier IoT solutions, he says, and often partners with providers of those solutions.
Read on for more insight from my phone interview Allen Proithis, president North America at Sigfox. (The interview has been edited for space.)
Alison Diana: Is there a number or percentage of devices that Sigfox has to reach to become the de facto standard for IoT -- or is that even your goal?
Allen Proithis: That's an interesting question. I don't know that we have a particular point where we say, "This number is successful, this number is not." As you know it's a huge but very emerging industry. I think the constant cadence of success -- both in terms of country coverage, in terms of subscriber ads -- there is a probably a pretty wide band of success there for us.
We're less competing directly with this person or that person -- it's really more that people have been reading about IoT for a number of years now, so people have been reading with an increased pace about the potential around this stuff but as it always goes, the technologies are just really catching up and I have another theory: The more immature the industry, the more you see success lower in the stack first and then, over time, success tends to work its way up the stack.
AD: Where does your biggest opportunity lie?
AP: There is a great opportunity for us to connect billions of things that are under-served by current technologies. It's not that current technologies don't do a great job. It's that current technologies are made for a very different purpose... When you add in the user experience and the price point, we're designed for a very specific set of characteristics that allows billions of things to participate in IoT that otherwise could not. Frankly, it's mostly complementary to existing cellular technologies.
IoT: Room for Many
AD: Why aren't the two technologies competing?
AP: It's the whole approach in that we've designed what we're doing from the ground up to be the low-cost, low-power leader. So it's not all things to all people. We're not going to stream video. We're not going to stream jet engine data. But there are billions of these things out there that are really stupid things, to be frank, but yet their data has value.
It sounds really stupid but we learn from smart city applications that if you know when the trash can is full and you only go pick up the trash cans that are full, you knock 30% to 40% off your trash collection costs for an entire city. So you don't need to be streaming LTE speeds for that.
In fact, not only is the hardware cost going to rule that technology out, not only is the multi-service cost going to rule that technology out, but the battery life of a couple of days or a week or even if you tweak it a little bit longer than that will rule that out. It's not that those technologies aren't good. They're actually excellent technologies that we use every day. But they're made for a completely different purpose.
So we're addressing that market of things that really don't need a lot of data, that really cannot participate unless you hit a really sharp price point. At scale, at volume right now, we're doing deals -- depending on the amount of data you need going up and down -- literally less than $1 per year per device for service. That then can become so inexpensive it allows lots of things to participate.
AD: That price point must enable a lot of new IoT implementations?
AP: You simply bake it in what you're doing because the insurance or the optional to have it for later is so [small] you actually are better off putting it in than not putting it in. That's the point we're getting at right now.
AD: What about interoperability for solutions that need or may need to cross capabilities: They might require low spectrum as well as some high-power, battery-hungry IoT technologies?
AP: From a data standpoint, the customer's data goes wherever the customer wants the data to go. There's not any issue there. From a connectivity use-case perspective, what we're finding is about half of what gets deployed is standalone Sigfox connectivity.
The other half tends to be where we're partnered with another connectivity... We're partnered with Wi-Fi or 3G or 4G in the same physical solution and you may use us 90%, 95% of the time to get all the great benefits from Sigfox, but when you need to do that firmware update -- we just don't provide enough data and it's not what we're designed to do -- but if you need that capability, you simply put us alongside some other technology. So that 5% of the time you need that fat pipe, you turn it on for what you need and you then turn it right back off again. So you get most of the advantage of us but still having that additional flexibility. We're seeing that today.
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AD: Could you please expand on the business arrangements you have with partners?
AP: There are channel partners for service and there are a variety of ecosystem partners. Ecosystem are things, whether it's a chip, a module -- anything on the hardware side. We basically give our [intellectual property] away for free under license. We're not trying to monetize that. It's one of the things that separates us from competitors on that level. We think there's no way that you get to a market of -- pick whatever industry figure you want with tens of billions in it -- unless you have the whole industry working toward it. You can see the European catalog online now and the FCC catalog will be online I think next quarter. On the device side, it's provide choice, drive cost down [and] have lots of choices on the chip side, on the module side, on the device side.
AD: Who are your partners on the services side?
On the services side, there are a couple different types of partners. On the network side we tend to partner on an exclusive basis per country. Think of us as a franchisor, they're the franchisee. They have an exclusive franchise in that country. They pay a franchise fee. They buy the base stations but they get the sites, they put the networks in for the end customer. There are very, very few exceptions to that, one of which is the US. The US is such a strategic market. It's the only market outside of Europe where we intend to be the operator long-term and, in this case, the operator's role doesn't change it's just that Sigfox is playing more than one role.
For go-to-market, though, we are very channel-oriented and so we haven't announced all our channels yet. We've announced some big ones. If we sold 99% of our deals through channels we'd be very, very happy. There are so many people adding value on a vertical basis that it would be silly to think any one party could access all that market or all those customers. We're really big in terms of channels for go-to-market.
AD: How did you choose the first 100 US cities?
AP: The first 10, 12 cities are basically major cities where we knew we had to have a presence because there's so much going on there. San Francisco we started with because it's one of the few big cities that truly gets high tech and it's in their DNA. We have a great partnership with the CIO and VP of Innovation there and they want to keep an environment of being a leader in high tech.
In terms of the rest of the cities, it'll be a mix of the big cities you'd expect but, frankly, there's a lot of other stuff I would never even pick... It's really being driven by a lot of specific market demand for specific applications [like agriculture]. We're working with a number of people looking to do a variety of soil sensor applications where it used to be they used these sensors for moisture... There are things like that which end up driving geographical coverage and there's not even a city there.
AD: Sigfox and LoRa have been in a pretty public battle recently. What happened, from your perspective?
AP: For the last 18 months, although it's gotten better for the most part lately, LoRa decided -- before I even got to the company, I was watching this; I've only been here eight months -- but someone at LoRa decided they needed to make an enemy up. But it's a technology that's a hardware-first approach that does not have a business model wrapped around it. You cannot sign a LoRa agreement with one small player and then have it work with the other dozen small players around the country or around the world. It doesn't work.
I really don't think this is the way to go about building a business -- is to pick fights with people-- but rather show real customers.
AD: You also expanded into Brazil: What sort of future growth plans do you in terms of geographical expansion, given your resources?
AP: I have a very specific idea of how we're going to expand and it's not particularly, 'we're going to do this region or that region,' because we're expanding in all regions, but doing Lichtenstein versus some larger countries isn't really going to help you a whole lot unless we have a very particular opportunity there. So I think you'll see us expanding aggressively. The nice thing about the way we expand -- because, again, in almost every country we expand in, we're expanding with partners -- the partner in that country is the one installing the base station, finding the sites and towers and getting the customers.
We're not trying to do this all from Sigfox. We actually have experts from that particular market who are doing it for that market. While certainly one cannot expand infinitely in a month, our ability to expand goes far beyond the average company because of the way we're doing it.
The other thing I would add is usually building networks is one of the most capital-intensive things in the world but because the network partner in each market is actually funding the build-out for their country, we actually are cash-flow positive when we launch that country unless we are the network operator in that country. For most every country in the world we are cash-flow positive when we launch that country. We're not spending our own money for building the network.
AD: Where do communication service providers fit?
AP: Telcos are realizing how complementary we are to everything, which is great. It changes in every country. Most of the time it’s not going to be the traditional operator just because they're optimized for a particular thing and not doing the new, exciting thing. But it gives us a pretty good ability to expand.
AD: IoT is certainly one way Tier 2 or Tier 3 operators can differentiate themselves.
AP: They all come from a connectivity perspective and they're all struggling to figure out where they want to be when they grow up. Some are smartly adding a lot of value and pre-packaged value on top of connectivity. Others are really struggling with how they're going to play, so I think they're better positioned than almost any player out there. But I could say the same thing about social, mobile apps, mobile payments and they were really unable to really capture those.
— Alison Diana, Editor, The New IP. Follow her on Twitter @alisoncdiana or @The_New_IP.