France has placed significant emphasis on the Internet of Things (IoT) and connected objects as part of its Nouvelle France Industrielle (New Industrial France) initiative, a plan to drive the country's economic growth by supporting 'industries of the future'. Government support for such forward-looking industries has also been reflected by the emergence of IoT companies that are now punching well above their weight on the international stage.
One such company is Sigfox. Established in 2009, the company was an early leader in the area of low-powered wide area (LPWA) networks for IoT deployments. The company builds these low-energy, low-cost wireless networks to connect all manner of objects such as electricity meters, smartwatches, and washing machines, providing the infrastructure that underpins the IoT.
To date, Sigfox networks have been, or are being, deployed in nine European countries. It covers France, Spain, the UK, and the Netherlands, while its networks are being rolled out in Luxembourg, Portugal, Belgium, Denmark, and the Czech Republic.
The company also plans to cover 10 US metropolitan areas (San Francisco, New York, Boston, Los Angeles, Chicago, Austin, Houston, Atlanta, Dallas, San Jose) by the first quarter of 2016, and will announce further partnerships in Europe, Asia, the US, and South America in the coming months.
Its long-term ambitions are global. "We work with the global ecosystem as well as with local ecosystems around the world," said Thomas Nicholls, Sigfox EVP.
According to Machina Research, one of the key prevailing trends in IoT in 2015 has been the increasing interest from telecoms operators in deploying LPWA networks alongside existing 3G and 4G networks. Sigfox along with Huawei's Cellular IoT and Long Range (LoRa) technology have so far emerged as the front-running technologies.
Aapo Markkanen, principal analyst at Machina Research, said it is safe to expect that there will be space for various different LPWA alternatives, including both Sigfox and LoRa, and noted that they are not necessarily directly competitive.
"Sigfox relies on quite much lower data rates than LoRa, and by the same token it can then offer better network coverage per gateway and longer battery life per endpoint, if compared like-for-like. The merits of these technologies to the operator partner depend largely on what kinds of IoT applications they want to target," Markkanen said.
Sigfox has built up momentum, and interest in LoRa is now growing. Indeed, companies in Sigfox's own backyard such as carriers Bouygues Telecom and Orange have opted for LoRa. The attraction, according to Orange, is that LoRa is regarded as a more open technology "which allows us to deploy our network and be interoperable to create an ecosystem of the IoT".
Sigfox's response to the LoRa challenge is typically robust and shows that the company adopts a competitive attitude where LoRa is concerned.
"LoRa is a proprietary radio technology that cannot scale to an operated network. It is more suitable for small-scale private networks. Sigfox created the LPWA space and is still to this date the only operated LPWA network available. LoRa and other technologies have not proven suitable for similar deployments," Nicholls said.
Markkanen noted that "openness" is a relative term, and said it provides an intriguing angle to the LPWA market.
"With LoRa, there's that open-sourced networking protocol, LoRaWAN, which is something that evidently appeals to many incumbent operators. From their point of view, rolling out LoRa with an ecosystem partner like Actility comes with less commercial risk than striking a revenue-sharing deal with Sigfox."
On the downside, semiconductor supplier Semtech is driving the chipset side of the LoRa business.
"In other words, if a company wants to build chipsets that are compatible with LoRa then it needs to have a commercial licence with Semtech. As things stand now, Sigfox is a more appealing choice to chip makers in that sense. Product manufacturers and enterprises that plan to buy into an LPWA technology, then, will have to weigh the pros and cons of these approaches when assessing the involved level of risk," said Markkanen.
Funding and the future
In February this year the company raised funding of $115m from companies including Telefonica, NTT DoCoMo, SK Telecom of South Korea, France's Air Liquide and GDF Suez, Eutelsat, and US hedge fund Elliott Management. Existing investors Elaia Partners, iXO PE, Partech Ventures, and Idinvest also participated in the round.
At the time, the company said the extra funding was expected to finance network rollouts in the US, Latin America, Japan, and South Korea, following the signing of commercial agreements in these markets. Total funding raised to date now amounts to $150m, Nicholls said.
Since then, it has been reported that the company is seeking further funding of at least $200m and a Nasdaq listing in 2017. Sigfox CEO Ludovic Le Moan told Bloomberg that there is a "real opportunity today to be a leader in the Internet of Things space because there is nobody with a network to cover the whole world. The plan for Sigfox is to have global coverage."
Nicholls said the company was unable to say anything specific with regard to potential upcoming fundraising rounds or its IPO strategy.
Sigfox's approach is to partner with companies that then become a Sigfox network operator and provide the infrastructure and technical aspects of the network, provide subscription-based connectivity, and work closely with Sigfox as well as IT developers and device makers to integrate the Sigfox protocol into a wide range of applications. Nichols added that investors, manufacturers, radio infrastructure operators, and telecoms infrastructure and service operators all fit the profile of a Sigfox network operator.
For example, the company recently announced a partnership in the Czech Republic that will see T-Mobile Czech Republic and SimpleCell Networks roll out a Sigfox IoT network throughout the country by installing around 350 base stations on standard mobile base stations by the end of 2016. In the first half of next year, both partners intend to launch Sigfox in a number of regions and start selling products that don't require full nationwide coverage.
Looking ahead, Sigfox believes it should be possible to "connect anything". However, it warns that the manufacturing, distribution and management of IoT products need to be further simplified in order to achieve scale, and "enable the long tail of everything from small apps to large-scale killer apps," Nicholls concluded.
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