Growing support for LoRa and the technologies being developed by the 3GPP is casting a long shadow over Sigfox as a viable connectivity option for Internet of Things (IoT) services that need low-power, wide-area (LPWA) capabilities.
While it would be foolish to dismiss Sigfox entirely, the French company clearly risks being marginalized in the IoT market as the world's biggest service providers throw their weight behind rival technologies.
Having completed its rollout of a nationwide LoRa network earlier this month, South Korean telco giant SK Telecom (Nasdaq: SKM) is now reported to be working on the development of a global roaming system for LoRa. According to the Korea Times, SK Telecom has already been in discussions with companies including Spanish operator Telefónica about this system, which could massively boost the appeal of LoRa by opening up new service possibilities.
What's particularly interesting about this news is that both SK Telecom and Telefónica participated in a $115 million funding round for Sigfox in early 2015. Does the recent pursuit of LoRa indicate they have lost their appetite for Sigfox?
Of course, operators frequently back more than one horse, and each may see different roles for Sigfox and LoRa. But the markets the technologies are addressing look broadly the same. And neither SK Telecom nor Telefónica appears to have done much with Sigfox so far.
LoRa has been gathering momentum in other parts of the world, too. Actility , a software company that backs LoRa, this week flagged the completion of a nationwide LoRa deployment in the Netherlands with Dutch incumbent KPN. Even more significantly, Actility has also recently teamed up with Asian hardware giant Foxconn Electronics Inc. to address opportunities in the vast Chinese market. (See IoT Startup Actility to Add 3GPP Support in 2016.)
During a conversation with Light Reading earlier this week, Actility CEO Mike Mulica became the latest industry executive to attack Sigfox. "They are a global operator and it's very difficult in their model to collaborate in the way a technology company can," he said. "If you are a vendor and want to work with them, they have to figure out how much value they want to share and it becomes a hard conversation."
Like other IoT players, Mulica clearly has a vested interest in knocking the French company. Nevertheless, the attacks on Sigfox by rivals such as Ingenu , organizations backing LoRa and members of the 3GPP community, including Vodafone Group plc (NYSE: VOD), have been unusually unrestrained. (See Ingenu Revs Up IoT Rhetoric and Vodafone to 'Crush' LoRa, Sigfox With NB-IoT.)
What is even more troubling for Sigfox, however, is the mixture of criticism and stony silence from its own customers.
Last month, following a tip-off from a source close to the matter, Light Reading reported complaints made by Nigiloc, a French startup developing tracking gadgets for bicycles, about Sigfox's technology. (See Sigfox Said to Face Customer Backlash.)
"The test we have made with Sigfox for geolocation did not conform with our quality standard," said Gilbert Wilhelm, Nigiloc's CEO, in comments emailed to Light Reading. "In mobility Sigfox has important troubles [sic] for transmitting the data."
Sigfox has responded by pointing out that Nigiloc is one of its earliest customers, remains a tiny company with just a few employees and is using Sigfox in a "mobility" scenario for which it was never intended.
But this only raises further questions. For one thing, why would Nigiloc have chosen Sigfox if it had been told the technology was not entirely suitable for its needs? Citing examples of how Sigfox might co-exist with 3GPP technologies, Thomas Nicholls, Sigfox's executive vice president of communications, described a vehicle-tracking service to Light Reading. That sounds about as mobile as it gets.
Moreover, other early customers have experienced similar disappointment to Nigiloc, according to Light Reading's source. Those include Clear Channel Outdoor, an advertising company, and French insurance player MAAF. Neither would respond to requests for comment, but Sigfox did not deny they have had problems.
Sigfox did refer Light Reading to customers including Securitas Direct and cable operator Altice , with which it claims to have good working relationships. But individuals at those two organizations did not respond when approached by Light Reading. In late June, Sigfox offered to facilitate an interview with Securitas Direct, which accounts for nearly one sixth of Sigfox's business in terms of contracted connections. That interview has still not materialized.
If LoRa is a threat, then NB-IoT and other 3GPP standards may be an even bigger one. Many cellular operators are likely to prefer technologies that use licensed airwaves to the unlicensed-spectrum alternatives of LoRa and Sigfox. They also want to use open standards, rather than proprietary technologies that drive them toward specific vendors. LoRa appears to be less proprietary than Sigfox, but neither is truly open. (See LoRa May Not Be for Long Haul at Orange.)
Sigfox could thrive by catering to the need for a much lower-cost technology than 3GPP standards will provide. It reckons the "silicon cost" of adding Sigfox to an end point will drop from about $2 to just $0.50 in the next five years, and that the equivalent cost for NB-IoT will fall from $40 to $5 over the same period. That difference will account for a huge number of business cases, according to Nicholls.
But the NB-IoT juggernaut is approaching fast. NB-IoT specifications were finally included in the 3GPP's Release 13 last month. Altair Semiconductor is expected to begin shipping NB-IoT chips in September. Actility has promised to launch a 3GPP-compatible product this year. And Vodafone plans to launch commercial NB-IoT services next year. (See Vodafone Ups IoT Stakes With 2017 Plan for NB-IoT.)
Writing off any company in such an immature market is a dangerous game. Robin Duke-Woolley, the CEO of Beecham Research, says Jasper Wireless Inc. was being dismissed as a failure back in 2008. Earlier this year, the IoT software company was bought for as much as $1.4 billion by IP equipment giant Cisco Systems Inc. (Nasdaq: CSCO).
Yet Sigfox has a lot to prove. Because it generates such little revenue from each connection, it needs huge volumes to boost sales above a reported $13.5 million last year. It refuses to say how many connections it actually supports, but is contracted to provide just 7 million globally. SK Telecom is next year aiming for 4 million LoRa connections in South Korea alone.
Clearer guidance from Sigfox on the growth of actual connections, and endorsements from some of its biggest customers, would do a lot to shore up confidence.
— Iain Morris, , News Editor, Light Reading