Interview of Ludovic Le Moan, CEO of Sigfox, conducted by Manuel Nau, Managing and Editorial Director of IoT Business News, on January 9th, 2020.
That’s the magic of the IoT: connecting objects in an intelligent way and at very low cost opens up many opportunities in a multitude of sectors.
IoT Business News: Sigfox has recently announced impressive achievements with 15M+ objects registered and 1500+ customers by the end of 2019. What have been the drivers for such a growth? What markets are showing the strongest adoption of your service?
Ludovic Le Moan (Sigfox) : At Sigfox we have an ambitious growth plan with the target of reaching 1 billion connected objects by 2023. We believe that only a few markets have the potential to reach massive scale in a reasonable time frame i.e within the next 2-3 years and asset tracking is clearly one of them. We estimate that when reaching maturity, the asset tracking applications will represent 80% of the total volumes of the IoT market in this time window. This market opportunity is huge and there are many high potential and scalable projects everywhere in the world, awaiting to be initiated. We have invested a lot of time and energy to address this segment and we have demonstrated that our solution has everything needed in terms of performance, reliability and price to make any asset tracking project fly.
We have already signed and served very large projects in this field such as the DHL roll cages tracking project -which should reach 700k units deployed in the near future- Michelin, Airbus, PSA, Amadeus… showing that this is not only a vision but a reality.
After nearly 10 years on the market we are now convinced that the success of an IoT project is driven by quick and certain ROI. And to achieve this the market needs a reliable and low-cost IoT connectivity solution. If you combine low-cost connectivity hardware with a low-cost network access, while keeping your promises on quality of service and battery life, you can make projects fly! And this is available now.
We strongly believe that we have everything on the table today to enable massive IoT projects and reach our target of 1 billion devices connected to our network in 3 or 4 years from now.
IoT B.N. : So far your ambition was to offer an interconnected network dedicated to the Internet of Things with a worldwide footprint. On its side, the adoption of LoRa has been mostly driven by a large number of PAN (Private Area Network) projects. By launching the Sigfox PAN service, do you intend to compete more directly with LoRa?
Ludovic Le Moan : The launch of our PAN solution has been decided in response to specific and promising market opportunities we could not address with our managed network offering.
Considering the lifespan of their projects some of our prospects were willing to invest and operate their own network infrastructure and therefore their business model was built on CapEx rather than OpEx. On other strategic projects, the demand was to be able to manage the data security from end to end without going through our data hosting and processing infrastructure. And the last driver was to answer the demand from a few cities to deploy and run their own IoT network.
We believe that the PAN option indeed makes sense for some projects and we are now able to address more market opportunities with this option. Nevertheless, our conviction is that a global network approach where resources and costs are shared between millions of users is the best option to offer a very low-cost and reliable connectivity solution for everyone. For the decision makers, this means a much quicker ROI. And a quick ROI is the key to scaling up and deploying connected objects by millions. Nevertheless, the good news, is the volume effect brought by the global network drives down the price of objects which remain the same for the WAN or PAN offers.
IoT B.N. : In a recent report Strategy Analytics has recently stated that today LoRa dominates the unlicensed LPWA IoT market (in number of connections). With the high-potential industrial projects signed by Sigfox over the last year, do you expect Sigfox to catch a bigger part of the total market in the future?
Ludovic Le Moan : I must say I am very surprised by those numbers. To reach such numbers with industrial devices you need to rely on strong suppliers being able to support liabilities for a project. When you deploy one million devices, for at least 6 years of autonomy, who will support the reliability risk including autonomy if you don’t work with tier one suppliers? I am not aware of such partnership agreements with Lora. If they exist, this is good news for Sigfox also. With a quick and easy software adaptation within the device firmware, those projects could switch to Sigfox!
On our side we are focusing on large industrial projects with a real potential of deploying at massive scale. And we don’t see LoRa very much on those opportunities, because you need a single network without borders, run under a single contract. Indeed, the business equation is generally hard to solve. The big IoT projects require very low-cost connectivity solutions. Through our silicon partners we are able to offer Sigfox-compatible chips at $0.2. At CES this year, one of our partners has launched the cheapest IoT tracker in the world. It is based on Sigfox and is offered at $1! On top of that, for large volumes we are able to offer a yearly network subscription at $1/object with a guaranteed level of service. As far as I’m aware, Semtech is the unique source for LoRa-compatible chips, in the range of $4 and then you can hardly find a network operator able to offer the same subscription rates as Sigfox, not mentioning that you don’t get a global footprint with LoRa networks. Lora is a good technology but not for the same market.
The playground is large for the collection of data from the physical world. It is a large opportunity we can all address, and the efforts done by the LoRa Alliance help in this direction. On our side we are glad to see the market growing, whatever technology is behind.
At the end of the day, the only question a customer should ask is: “what is the cost of extracting and collecting data, at scale and for the entire lifetime of my project, and with the level of service expected?”. Protocols and other concerns are not relevant. The cost of data extraction and collection has to be lower than the expected benefits.
IoT B.N. : NB-IoT has joined the LPWA scene and it is supported by a large community of network operators across the world. What will be the Sigfox competitive advantages to fight against this solution?
Ludovic Le Moan : The evolution of the standards for licensed LPWA technologies validates our initial statement: the IoT market needs ultra low-cost and low-power connectivity solutions. But despite the progresses made with the latest standards like NB-IoT, our solution keeps the advantage on both power consumption and price. And this is easy to check.
Battery life is really critical for most IoT projects because it is very expensive to send someone out in the field to change a battery, more expensive than the total subscription cost for the entire project life. And if the battery life is not the one that was expected this can completely jeopardize the financial viability of the project.
Therefore, one of the critical points to check is how many messages I can really send on my battery life. And this is where you need a deterministic solution. As far as I know, only Sigfox can guarantee this.
IoT B.N. : Focusing on your corporate developments, where are you today in terms of size of the company and turnover? Are you on track to achieve your goals in terms of break even and profitable growth? Do you have any plan to go public (IPO)?
Ludovic Le Moan : Today we are 450 people worldwide and the service is available in 70 countries through our own network or through our SNO (Sigfox Network Operators) partners. We experience a very rapid growth on the number of objects connected to our network and we should reach breakeven by end of 2021. Then we plan to go public beginning of 2022.
IoT B.N. : What will be your priorities in terms of market development and innovations for 2020?
Ludovic Le Moan : We will still be focusing on the asset tracking opportunity. This market is to be taken in a large acceptance. Supply chain management for example falls under this category. We are working on pallet tracking projects which can be easily scaled up and replicated in many different sectors. And this is feasible because we have managed to lower the cost down to less than 10$ / object tracked, including the tracker and the total subscription fee for 5 years, meaning the cost is less than 2$/object/year all included!
In 2020 we will also be deploying projects using our “bubble”. This is a low-cost proximity detector, which extends the possibility of asset tracking. For example, it is going to be used in airports for luggage tracking. The bubble can “wake-up” a Sigfox tracker embedded in a luggage and can provide valuable location information. Many new services, like insurance on luggage integrity, are emerging around this type of solution. That’s the magic of the IoT: connecting objects in an intelligent way and at very low cost opens up many opportunities in a multitude of sectors. Our objective is to help our partners push the price of Sigfox-compatible trackers even lower to reach a few $ cents. At this level of price there is no more barrier to connect any object, anywhere…