Sigfox Connect is usually one of the MAIN EVENT for the LPWAN community as the technical solutions provided by Sigfox were, in the last 5 years, the one presenting disruptive innovations around low power radio communications suporting the IoT revolution. I was usually rushing on my blog to communicate and explain how these innovations could transform our markets…
This year in 2020, I’ve made 5 days before starting to write something because, I see nothing really interesting to tell about this event, at least on the technical side. I could fill many pages on the quality of the event, starting by the backgrounds, the phone ringing in background, even on recorded conferences and the number of conferences about the same topic (supply chain). Christophe Fourtet had a great talk… for Sigfox beginner… and my preferred event’s backgrounds. But what about the yellow texts scrolling ?!? WTF !
So, I could write tons of line on this topic, but let’s try to go to the only and main announcement of this year, nothing technical, something like a company business pivot. Basically, after watching Ludovic conference, I had to refer to the only one online press post to understand what it was about. The morning keynote had some of the elements related to it but honestly I give the same to my IoT students on the first 30 minutes, so for the vision I’ve been a bit disappointed. You can check my IoT slidedeck.
Sell the France and USA networks
Sigfox has confirmed the already known direction about leaving the network operation and deployment. They are managing a group of SNO (Sigfox Network Operator). It means selling the French and American networks. And it makes sense as managing 2 networks on 72 deployed is not a durable strategy. The selling horizon seems to be short and I’m surprised to see who are going to be the buyer.
I won’t be surprise to see someone operating LoRaWan network as we see in different countries. And what will be the impact on future business of it as the SNO are on direct contact with the local businesses.
Going on the data value extraction direction
The main Connect information seems to be the new direction given for Sigfox to focus on data value extraction, which basically means stop being a neutral network and get verticality to Sigfox business. Let’s see what does that means in my point of view:
What is IoT Market today ?
Sigfox is in direct connection with the main big IoT projects they has been deployed. It’s a question of maturity of the market, the big industrial players want to test on their own instead of trusting solution provider. It’s a normal step in any technology adoption. Companies, by the past, have made their own electricity before buying it. During the rise of Internet they made their website. Before trusting ERPs they spent millions on custom software. Before going to the cloud they hosted computers and built data-center. That the same history for IoT: even if we have on the market production ready solutions, they prefer building their own one. Just because it is fun, because you don’t trust the small actors, because it is a way to say “I’m an innovator”. For this reason if you check the Sigfox Partner website listing the compatible equipment you will find about 50+ different tracking solutions, usually with limited number of features and fully redundant. Behind most of them you have a big company story of supply chain improvement, usually the same.
In a such environment, Sigfox is playing a central role: big player want to talk to Sigfox, in particular in France, because they can trust it thanks to found-rising they did and the communication you can make about innovation with a such player. Sigfox has a central role in these project. From this place they seen how many millions of Euro has been spent by the big player in IoT projects. Sigfox invested a lot in technical expertise but the communication cost is every time challenged and they only get the smaller part of the money. When IT consultant and business teams got the biggest part.
Data value extraction
This is basically what Orange, SFR, Bouygues are facing with Meetic, Youtube, Netflix… consumer is ready to pay 20€ per month for dating but will leave its network operator to pay 7.99€ instead of 8.99€ for an unlimited Internet access. The company transforming the data is getting the money. The value is extracted from the data itself it is not coming from its transport, that the reality of telecom business. But shared infrastructure are making large benefits, I won’t cry for mature telecom operators.
Objenious has already take that direction 2 or 3 years ago by using it’s network and platform to support vertical solutions. In my point of view it is a really bad business approach in a customer point of view as it locks the customers. IoT is not enough mature to be locked. But Objenious is particular: they have a direct competitor (Orange) so you can choose your business model, they have a limited territory (France) so they can target their customers and they have no dedicated existing ecosystem when they go for that business model.
By going this direction Sigfox is taking a big risk on its ecosystem: it challenges the network neutrality.
IoT Network neutrality
Where you are managing an ecosystem, you need to clearly define the boundaries between all the actors. In an IoT ecosystem, the telecom provider limit is to transport the raw data. The device maker create solution to capture the raw data and the platform provider transforms the data. Modern IoT will not separate Device-Maker / Platform providers but have Solution Provider in my point of view. I cant’ detail, this is basically 3 hours of my IoT teaching. In two words, the value is in the data transformation and you can’t be a device maker and generating enough value to make the right quality of devices with the competition level we have in the domain.
Networks have multiple customers: the platform providers and solution providers. They are addressing totally different use-cases, business segments, small markets with high added value and mass market with small added values and each of them have its own business model: service, licenses, investments…
Network get money from the quantity of connections, the diversity of the markets. Networks helps the solution providers to reach the market as it is a win-win business. Network do not select a solution provider as a favorite one, it recommends based on experience, quality and, for sure, business volume and growth.
That’s the network neutrality in an ecosystem source of trust.
Sigfox wants to go on data value extraction, what is the impact ?
When you do not have enough volume to get the telecom mass effect but you see other business taking 80% of the project’s value, when you need to find money to survive … You start going out of your role in the ecosystem and look for the short term money.
If I understand well, Sigfox wants to progress in this direction in 2020-2021. Being more and more a data transformation actor. They already start doing it with the Sigfox Agency some years ago. But at that time, the network neutrality and the focus on telecom operator and technology provider was the main activity. Sigfox Agency was more a support team to sell communication than a solution provider. Now it has been announced as primary business.
The consequence of this pivot it a big question for the Sigfox Network Operator: what role they have ? only selling connectivity and network maintenance for a small volume of subscription ? Not going on the data market and solution providing ? (most are already solution provider for local business activities).
It is also big question for the Solution Provider. Will Sigfox be a new competitor ? This competitor can play with a big part of the recurring cost: the telecom subscription.
It’s also a critical position for the Device Maker : will they continue to invest on Sigfox dedicated device if the number of solution provider decrease ? In a landscape where LoRaWan is rising… Sigfox technological advantage is in the public network coverage at first, what happen if that network expansion and technical evolution is not in the main strategy of a company switching from a telecom company to a data company ?
In simple words, a such direction is not a new one. But this direction is a complete ecosystem transformation. Sigfox has impacted its trust within the ecosystem they have created. In my experience, regarding the discussions I have with many actors of this eco-system in the previous 6-7 years, the Sigfox company is challenged by Module makers, Sigfox Network Operators, Device Makers, Solution providers … I mean, the level of trust in strategy and level of trust in decision taken for impacting each of them is really low. This announcement is one more but this one has a global impact on each of them.
The consequence will be larger than what Sigfox is expecting. As a solution provider I was trusting 100% Sigfox to succeed and built most of my solution on the unique technology. That year I’ve selected modules for my designs able to support Sigfox and LoRaWan, because this market is growing faster. Now I think I need to be less dependent of a given network, even if each technology maps a specific need. This will have a consequence on device price and market reach but it limit the risk of industrial accident. This is basically not the sense of history in my point of view. But the direction I need to take until seeing the real impact of all on my business.
Can Sigfox make a such move ?
I don’t see Sigfox stop pushing technolgy, I can’t imagine Christophe Fourter stop making Telecom and Radio stuff. I don’t see him to stop innovating. I don’t see him becoming a BI expert or data-scientist next year. I’m sure he will prefer leaving ! lol
So even if that Sigfox Connect event content was looking something like : “We still have many things to make innovation possible but we have done nothing this year and we plan nothing for next year”, the reality will be different. Competition is innovating, Amazon Sidewalk is start deploying on every Amazon echo with LoRa based technology. What will be the Sigfox business value with a global Amazon network if it success in scaling ?
Technology is the key differentiator for Sigfox, you get scalability, power efficiency, simplicity allowing ultra-low-cost IoT. IoT maturity and scaling is directly related to these innovations and this is the key factor for the IoT market growth. Killing the technological innovation in a non mature technology like IoT is killing the future exponential business in a telecom point of view.
So, I still confident even if this Sigfox Connect 2020 communication, was really negative on that point. I assume it was a decision to pass a message to investors…
A such move would make Sigfox a totally different company
This is the more interesting question, how a telecom company with Hardware and Telecom expertise can move into data business ?
On one hand, Sigfox has a field experience on working with many big industry IoT projects. They learn how to talk with business, they have a large contact portfolio and a group of sub-contracting companies for making hardware and platforms. That say, most of the resources are from the French and American SNO and not the corp. So the guy that supposed be sold with the networks. There are solutions for this. So let’s assume they fix it.
On the other hand, Sigfox is anything else than a data value extraction company. In the technical point of view, processing raw data at scale is not extracting value. The people you need in your tech teams for a such activity ( data scientist, BI, business analyst, mobile developer, IT guys…) are not the kind of profile you find in Sigfox today. It means big change in the company skill-set, loss of existing strong expertise for a replacement by new expertise, difficult to find on the market. Risk of loosing 10 years telecom/radio expert not anymore finding challenge in a such environment. Then, will a good data-scientist prefer a telecom company just switching to data business instead of Google ? Because jumping in this business is not fighting against Orange, SFR … where techs are leaving for a better life anywhere else. It is fighting against Google, Amazon, Facebook …
As a consequence even if Sigfox willingness to pivot is strong, in a short term they still rely on the ecosystem to make this business happen. With a key difference: less and less this eco-system is going to trust this partner. This is going to be a difficulty.
What would that mean in a SNO point of view ?
The point I totally not understand in this strategy is the future role of the SNO vs Sigfox Corp in the data strategy. SNO have a territory and customers are in a territory. Sigfox Corp geography is becoming France only. So how to touch the customers without the SNO ? Why a SNO should rely on Sigfox Corp for data value extraction ? They will have a better interest to take the value on their own side. And at the end, why a SNO should share value with corp ? Just my two cents.
My conclusion on this event
As you can see, I’ve never been so disappointed with a direction given like that one. Even if the “announcement” has not been really clear and if I base all of this on a single press post, more than on the CEO keynote itself. Is this a real long term strategy or a communication to investors or directors ?
I still trust in Sigfox technology and people in this company, at first the founders. I still thinking they are part of the visionaries. I think this company need to rise more money to continue in a long term strategy of technology provider, this is where they are different and strong. Unfortunately they are in France where we give a little money to startup to quickly ask them to get it back. A such company needs, at least, another 500M fundraising to support its growth and make billions. In the next 10 years, when Amazon sidewalk will dominate the market our politicians will have long discussions to tell us how we need to create a European IoT network to support our business activities and make them free of the IoT act 3.0 …
That said, as a solution provider, this new Sigfox direction reduce my trust on this network as a unique solution and makes me unsecured for my business. And this is a problem for Sigfox growth when the solution providers are not secured in their technical choices. This is what I retained from this 2020 event.