A preliminary market battle has been brewing over the past year between technologies to connect IoT devices via wireless wide area networks. These cellular-type networks allow very low power battery devices to transmit small amounts of data over several miles, a solution highly suitable to many types of IoT devices such weather sensors and smart meters. Entrants in this market include Sigfox, LoRa, and Neul. (In addition, standards organization IEEE is developing the 802.11ah wireless networking protocol for distances up to a kilometer.)
Sigfox announced on June 15 that Samsung’s Artik IoT platform would integrate Sigfox support. Also, noted in the press release, but given less attention, was that Samsung’s venture capital arm is investing in Sigfox. The size of the investment was not disclosed. (See Sigfox press release here.) In February of 2015, Sigfox announced that it had secured from a variety of venture capital firms an investment round totaling $115M, reportedly the largest single VC investment round ever in France, Sigfox’s home country. (See Sigfox press release here .)
Thus far, Sigfox has been the only long-range low-power wireless solution already deployed in commercial operations, with several hundred thousand devices connected. It has networks in place in France, as well as in Spain, Portugal, the Netherlands, parts of the UK, and a number of cities around the world, most recently, in the San Francisco Bay area of the US.
LoRa—developed by Semtech—has the backing of IBM, Cisco, and Microchip among the members of the LoRa Alliance, and its initial deployments are imminent.
UK-based Neul is still in its demonstration phase, but the company was acquired for 15M British Pounds in September 2014 by Chinese telecommunications equipment giant Huawei.
VDC won’t attempt here to compare the relative technical merits of these long-range low-power wireless systems, but from a market standpoint, it is clear that Sigfox is leading the pack. And it’s tempting to think that an investment by Samsung will propel Sigfox into an insurmountable lead. But we’re not yet ready to draw that conclusion. Some points for consideration:
- Although the Samsung name will undoubtedly give a significant shot in the arm to Sigfox’s marketing efforts, without knowing the size of Samsung’s investment, we can’t assess the extent of its impact on the ability of Sigfox to get its networks deployed more broadly.
- Long-range wireless solutions face the chicken-and-egg problem of needing the network infrastructure (antennas and backhaul) in place to persuade manufacturers to develop products using the technology, while needing products coming to market to warrant investment in the infrastructure.
- As one of the world’s largest makers of electronic products, Samsung has the potential to dramatically increase availability of Sigfox-compatible devices if it so chooses. Thus far, however, Samsung hasn’t committed to using Sigfox in anything other than its Artik IoT platform.
- Samsung also makes cellular networking equipment, although that represents a relatively small part of its overall business. (Samsung does not publicly disclose revenue for the segment.) By contrast, two-thirds of Huawei’s entire business ($31B out of $46B in 2014) is derived from cellular networking equipment, mostly sold in China and the EMEA region. While either company could conceivably foster widespread installation of long-range low-power networks through technological investment and pricing strategies, it’s unclear which would have greater motivation to do so.
- LoRa has some heavyweight backers as members of its Alliance, but such membership has not yet yielded investment that will produce meaningful numbers of either chickens or eggs. [Note: the day after this blog was posted, the competition has ramped up, as LoRa startup Actility announced that it had received a $25M round of VC funding led by Ginko Ventures, with participants including telcos KPN, Orange, and Swisscom, as well as Foxconn, the world's largest contract manufacturer. See Actility press release here.]
In the meantime, Samsung’s investment positions Sigfox with a larger lead in the race for long-range low-power wireless networks. But it’s a long way to the finish line.
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