Sigfox top two see huge IoT growth, predict it will beat analyst forecasts
Sigfox’s CEO, Jeremy Prince says small can be beautiful; you don’t need to build a motorway to ride a bicycle. His company has invested €300 million in a decade rolling out a 72-country network, but in telco network terms that’s loose change. The market has matured since 2010, says Sigfox’s deputy CEO, Franck Siegel. They tell Jeremy Cowan and the Trending Tech podcast they’ve seen a “huge ramp up” in the number of Sigfox connected devices from 2 million in 2017 to 18 million now. Customers no longer ask for proofs of concept, they know it works. The market potential is huge, says Prince. “The analysts will be wrong again, but this time it will be bigger than they predict.”
Jeremy Cowan 0:04
Hi and Welcome to the latest TrendingTech podcast brought to you by IoT-Now.com, VanillaPlus and The Evolving Enterprise. My name is Jeremy Cowan, and I’m co-founder of these three websites and magazines. This week, the pod is taking a slightly different format, as we have the rare opportunity to talk to not one, but two new leaders at Sigfox. Sigfox, for anyone who’s been hiding under a rock for the last few years, is a France-based enterprise founded in 2010 to, and I quote, “connect every object in our physical world to the digital universe”. So, no lack of ambition there, then.
Fast forward 11 years, and the founders have built a global network dedicated to the internet of things based on – and this is the key – low power, long range and small data that offers an end-to-end connectivity service. Mind you, it’s taken almost Euros 300 million to do it, which has been raised from investors in Europe, the US and Asia. And, as I’m sure we’ll hear, this has been used to expand the global 0G network. Sigfox has also co-founded the IoT Valley, Europe’s first IoT ecosystem to help start-ups speed the adoption of the Internet of Things. All of this is easy to say but a hell of a lot harder to do. So, as we’ll hear, we’re going to be talking to both the recently appointed CEO, Jeremy Prince and the new deputy CEO, Franck Siegel. Gentlemen, welcome to you both.
Jeremy Prince 1:54
Thank you very much for having us, Jeremy.
Franck Siegel 1:56
Thank you.
Jeremy Cowan 1:56
Well, thank you both for making the time. Coming to you first, Jeremy, what interested you about becoming CEO at Sigfox?
Jeremy Prince 2:06
I would rather start with what interested me in joining Sigfox around three years ago, because it all sounds very new when you introduce us. But Frank and myself, we’ve been around the block for a little while. So it’s more in the continuity of what was there before. Now, as you described Sigfox, and you described it very accurately, I like to think that there were two great ideas when Christophe (Fourtet) and Ludovic (Le Moan) founded Sigfox, and they’re the ones that attracted me. First idea is, you know, we live in the world of more, more, more, more data, more throughput, blah, blah, blah. And the initial idea behind Sigfox is basically, small can be beautiful, and you don’t need to build a motorway to ride a bicycle. And I found that really, really enlightening. And the other thing that is for me, one of the brightest business ideas I’ve seen in a while; you were talking about €300 million to roll out a worldwide network, we’re in 72 countries. And for everyone that’s listening, I’m sure you’re familiar with the amounts that mobile operators invest in in networks and things like that. So that’s pocket money. But it’s in fact a bit more than that. Because it’s not only Sigfox, it’s also the Sigfox operators that have invested money in deploying the network across the world. So, when you think of Sigfox, you’ve got to think of Sigfox, but also all the Sigfox operators. So, when Sigfox is something like 300 or 400 employees, you’ve got probably twice that number with all the Sigfox operators, so that the strength and the power of the Sigfox ecosystem is huge.
That is also the idea that I loved. It’s how can a small, French start-up at the time 10 years ago conquer the world and deploy this network? Well, either it’s not €300 million you need but probably €300 billion or something, or 30 billion or 3 billion? I don’t know. And the idea there was well, why don’t we rely on people that know the country, that are funded in the country, and that are going to deploy it locally. And I think those two ideas are the two great ideas that attracted me. And then basically I was not disappointed when I joined the company and I saw the people that work there. I see my colleagues, my former colleagues, it’s really a blast. I mean it every day is pretty exciting. It’s very diverse. It’s across the world.
Jeremy Cowan 4:58
Those are always the exciting things and there are always excitements, unfortunately, in the challenges that we face. What are the challenges that you face at Sigfox at the moment?
Jeremy Prince 5:09
Like every company, we face the COVID challenge, of course, to look back at what happened recently. Less of a painful experience for us for two reasons. As as I said, we are in 72 countries. So, we are used to working remotely and using all the tools, etc. And also less of a painful experience, because although it did slightly slow things down, I think that in the in the longer term, it’s going to be an accelerator of IoT (Internet of Things) adoption, because people have discovered the need for IoT.
I mean, look at logistics. We live in some of the most advanced countries in the world, and we ran out of toilet paper. Sure, there’s something that can be done there, and that’s where IoT can help. And that’s just a joke or a small example. But everywhere, even we’re talking about going back to work, IoT people, companies are going to change the way they use offices, etc. IoT helps also, we’ve got solutions where you monitor desk occupancy, office room occupancies. So yeah, in the short term, like everyone else, it was a bit painful. But I believe that in the mid-long term, it will boost the IoT. And at the end of the day, our main challenge, I’d say it’s … analysts have always said that IoT was going to be the next huge thing with huge numbers. Once again, they were slightly wrong. For the date, it started a bit later than expected. Sigfox from day one is a technology business model built for massive IoT. So that was, for a while our challenge is, when is it going to finally take off? It took longer than everyone expected.
Good news is that now it’s really starting to pick up. Every day we see the type of customers, contracts, the size of the contracts, big guys moving in. I know you know, we work with Michelin, DHL, Nicigas Sabesp, and the size of the contracts are now in hundreds of thousands, if not millions of connected devices. Verisure, Securitas Direct. So, the main challenge is not about fighting for market shares with other technologies. I know that everyone likes that. I think that the battle is for all of us to help IoT deliver its promise, and for it to expand, for companies to embrace it, to understand the benefits. And in the longer term – and it’s not a Sigfox challenge – but we’re in a pretty nice position to address that, that challenge because we’re a very frugal technology. We at Sigfox, we’re also concerned with the fact that massive IoT means billions of devices, of batteries, of components, etc.
And we’ve seen with phones, with computers, that the impact it can have on the environment. I think that is also a challenge that collectively all the IoT players should address. And it’s clearly one that we think we’re in a good position to address and clearly in our roadmap. How do we get more ecological?
Jeremy Cowan 8:40
I think these are important points, and it’s certainly things I’d like to pick up on later, because I’m sure there’s more that we could discuss.
Frank, Jeremy mentioned that he’s been with Sigfox for some time. And I know, before you were appointed as deputy CEO, you were chief operating officer at Sigfox. I think you joined in 2018, if I’m right. What changes have you seen being the most impactful at the company since you joined in 2018? Either within or without the company?
Franck Siegel 9:12
Well, I must confess there have been a lot of changes, as you might have seen since I joined. I joined at the crossroads of the journey of Sigfox. And let me go back in time to explain what I mean. As you mentioned earlier on, company was founded by Mr. Fourtet and Ludovic Le Moan back in 2010. It’s fair to say that they not only created Sigfox, but they created the LPWA (low power, wide area) IoT marketplace, right? And when you create a company and create a space, then you’ve got to first validate the technology. And that’s what they did, Sigfox did in the first four years of its lifetime.
Then you immediately need to deliver on your promises, and the four promises of Sigfox are having a global network, being ultra-low cost, ultra-low power and being simple – i.e., being able to sign one contract in one country. And the device can move around in any countries and the customer doesn’t worry about the roaming and all those technical telco things that we all worry about when we travelled around the globe.
So, in order to deliver on those promises, Sigfox embarked on the second phase of the journey that we call internally Expansion Phase, and it was all about deploying a network across the globe. And we are now present in 72 countries, but also emulating an ecosystem of device maker, chipset maker, application, moving from when I joined around 150 certified devices to more than 1,000 certified devices that can connect on our network today.
When I joined, we were just at the end of that second phase, moving into entering into the, actually the core of the matter of Sigfox, i.e. selling connectivity. Because the core purpose of Sigfox is to deliver the data coming from a device to a customer to the entire network its OSS, and the API, and we make that data available. I joined when we were moving from this Expansion Phase to what we call the Connectivity Phase, which is all about driving customer adoption of IoT. And in order to move from that phase to another, we needed to drive multiple transformations. The first one, moving from a company selling products, base station to our partners, which are the Sigfox operators deploying, managing and owning the network in their territory. To a company selling services, i.e. connectivity services, or geolocation services.
Second transformation we needed to go through; moving from a start-up company, driven by innovation, by evangelisation of the technology, to whatever we call it, but a company at scale, because our objective, our purpose is massive IoT. And when we talk about massive IoT, we’re talking about hundreds of millions of connected devices, maybe billions one day. And then we need to automate everything, we need to be able to support the demand, the volume, asked by our customers. We need to automate everything.
Third level of transformation is Sigfox claimed to be, and it was, a global company, because it was already present in more than 50 countries and now in 72 countries, as I said, but led by French people everywhere. It’s strange for a French person to say that, but in order to be really relevant in a global market, you need to have multicultural people everywhere. And that was the third transformation in the last few years.
Last but not least, when you’ve got the promise of having a global network, then you need to deploy as fast as possible to make the world understand that there is a global network and you deliver on your promises. Therefore, in the first two phases of the Sigfox journey, it was about fast deployment, and not necessarily P&L (profit & loss), managing profitability and return.
Now, moving into the third part of the journey, we needed to shift in order to demonstrate the return to our investors. And that was also a change that we had to drive in order to change the way we were managing the company. So, I must say that, since I joined, we had 2 million connected devices on our network, we’ve got now 18 million – one, eight – connected devices on our network. We had 50 countries covered, we’ve got now 72 countries. We had less than 200 certified devices, we’ve got now more than 1,000 certified devices. We had around 300 customers, who were largely under proof of concept or pilots. And we’ve got our more than 2,000 customers, and most of them being in production. So that’s the changes that took place in the last few years. It’s a lot, but we’ve got a lot of ambition so we need to deliver on those.
Jeremy Cowan 14:30
You neatly anticipated my next question which was going to be about that change from product to service. It’s the sort of thing a lot of companies talk about, but sometimes company cultures get in the way. How does Sigfox transform from a product to a service company?
Franck Siegel 14:48
Service is all about customer engagement. The way you engage customer service or sell a product is very different. To sell services you need to understand customer needs, right? So therefore, when you engage with customer, what are your problems, your business problems, and let us work together to help you either decrease your cost or generate new revenue, new business units, new business opportunity, etc, understanding the business needs of the customer. That’s the first transformation we needed to do.
Therefore, we needed to first transform our go-to-market. and then that translate to a transformation of our portfolio, from cellular base stations hardware to selling connectivity, ie. transporting the message from a device to an API to the customer, and all changes to be transformed. Then, last but not least, it’s all about the delivery engine, it’s very different to deliver from product line hardware, and to deliver a service from a lead generation, signing of the contract, delivering the ongoing recurrent service and then getting the cash in. All that back end needed also to be transformed. And last but not least, the culture. From a very technical-oriented culture, building a product to a very customer-centric culture, understanding the need of the customer.
Jeremy Cowan 16:17
Which is being done at gallop, I guess, you know, because it’s the sort of thing that an awful lot of telcos have talked about, but I know very few that have managed it very quickly. So Jeremy, coming back to you, an awful lot of people would be quite surprised to understand that Sigfox sees itself as having emerged only fairly recently from a start-up phase, because you look at what you are now, which is a global network and multi-million dollar or euro investment, to become now what you wish to be – a global, industrialised, and ‘at scale’ company means significant changes. What changes will the customers see?
Jeremy Prince 16:58
So, for a start, we have emerged from the start-up phase quite a while ago and call ourselves, I think the new word is ‘scale-up’. But I’ve always been very fond of sport and rugby, so the importance of the team. And we were talking about rugby before we got on this call. I think the team is key, of course, but I like to think that it’s been 10 years, it’s been a long journey initiated by Christophe and Ludovic. And with a lot of people that have been working to build what we have built, and honestly, everyone can be very proud because as you said, we’ve got a global network. I think we’re the only ones that have got a global network in the IoT space where your device when your Michelin container, it can go from Le Havre to Houston or to Asia. And it communicates in the same way, you’ve only got one contract, one price. So, I think we’re the only ones that have achieved that. And it’s key to global IoT, and to the IoT taking off. I mean, when you talk massive, you think multinational companies. Multinational companies, by essence, they’re in different countries. So, I think it takes a lot of the pain away from them to have one provider, one partner that can deliver in the same seamless way in every country.
The other thing we can be very proud of is our unique platform in a way. And everyone likes to compare open technologies and closed technologies. And I know that people like to pick on Sigfox and say, ‘Oh, you guys, you’re not open’. And it’s true. It’s our technology. It’s a proprietary technology. But it doesn’t mean that we are not open. I mean, anyone that wants to build a Sigfox solution, anyone that wants to build a Sigfox device is more than welcome. And there’s no charge associated. We don’t charge anything for that. And we’ve got a huge ecosystem that Frank was mentioning, that is also key.
One of the things that has changed across the years and makes a difference and will make a difference, it’s that ecosystem. Because massive IoT is about delivering massive numbers of devices, you need to be able to produce them, too. And we don’t, our ecosystem does. It means massive amounts of data, you need to process that data, just getting data for the sake of getting data doesn’t make any sense. It’s all about transforming the way our customers operate. So you need to have also some partners in the ecosystem that can deal with that data, that can do the data crunching. So that ecosystem is also an incredible achievement, that platform is an incredible achievement. To go back to what I was saying. We are open in the way that everyone can use our technology free of charge to develop a device, etc. But one of the differentiators is that we have reacted every step of the IoT chain. So, the device we provide the library we certify, etc, etc. And like that we make sure that every step meets our standards. And I think that’s also something that’s very important.
When you’re talking massive, when you’re talking Nicigas 800,000 gas tanks that are being monitored, and they are just adding a couple of hundred thousand more, there it’s got to be totally reliable, totally simple. And we also pride ourselves in the fact we really are ‘plug and play, deploy and forget’. All that is leading really that ecosystem, that unique platform, that unique network the benefits of our technology, the simplicity of our technology, this is all leading to massive IoT, because to go back to, to my sport example, for 10 years, we’ve been running a very long race, very long. And by design, we were designed for massive IoT. And we are in a really good position we’re running at the head of the race. But now we’re getting to the final miles of the marathon where it’s all happening. It’s picking up and it’s a very exciting place to be in, we’re in the leading pack, and we can see the finish line coming. So very exciting. And we’re enjoying it. It’s a bit of stress, as you say there are challenges, but it’s great.
Jeremy Cowan 21:58
Frank, we’ve talked about the sort of the last three years, let’s look forward at the next three years. How different do you think both the market and your offering and your competitors will look in three years’ time?
Franck Siegel 22:13
Well, quite different, I think, from what it is today, in many ways. So until now, I think it’s fair to say that there was a lack of understanding of the potential that IoT could bring into the digitalisation of the companies, right? They were all sceptical because first, only a few years back, there was no network, the right class, it was no devices, no understanding of the business model that could be generated out of IoT. And on top of that, a lot of technologies that were claiming to do IoT is sometimes different type of technologies network, platform, device, chipset, etc. Everybody with the label IoT. So it was very confusing for customers to read or understand, ‘Okay, what are we talking about here?’
It’s fair to say that the market has matured, and the level of understanding of our customers about the potential, the nature of the business of IoT and the potential of the business has ramped up drastically. The proof is that in the last four to five years, we were doing a lot of proofs of concept, for large potential customers, and we’ve seen a huge ramp up in number of connected devices from 2 million when I joined the company at the end of 2017 to 18 million now. And the main reason is customers are no longer asking for proof of concept. They are coming, they know it works, they are very confident in the technology and they now are embarking directly in production things. We’ve got large customers with hundreds of thousands of devices out there connected, sometimes millions of connected devices, and they are in production. They generate more messages and more business benefit to the customer.
So, you see that now people understand from a customer point of view, and the market is maturing from a customer point of view, but also from an IoT player point of view. And because we’ve passed the technology evangelisation, people understand that it’s not about technology. It’s about use cases of bringing the data to the customer at the right price point. And there are multiple technologies with different sweet spots, sometimes better in local environments, sometimes better in indoor environments, sometimes better in outdoor and global environments, and it’s about complementing each other in order to bring the best IoT-based solution to the customer. The customers now understand that and the players in the IoT market now understand that, so you will see some movement in that space instead of hitting a head-to-head from a technology. It will be, let’s work together to give what the customer needs.
Jeremy Cowan 25:04
Frank, before I come back to Jeremy, he referenced a moment ago that many analysts predicted 10 or so years ago that the IoT would have achieved more in services and revenues by now than it has. I think that’s very fair comment. Do you believe that the IoT sector has slightly fallen short of reasonable expectations? Or were the analysts getting ahead of themselves? And if so, why is there that discrepancy? How can IoT generally be improved going forward?
Franck Siegel 25:37
First up, your initial question; I wouldn’t say that the IoT market has underperformed. That I couldn’t say. The reason, if you compare to previous technology, mobile phone, or IP internet, if you compare with Vodafone, for instance, who are based out of the UK, it took them three to four years to have their first mobile phone live. And then it took them another 10 years to sign the first 1 million subscription in mobile phones. So, in total, it’s almost 15 years – when the lifetime, for instance, of Sigfox is 10 years, and we are at 18 million connected devices in 72 countries and I come from a telco background. I don’t know any telco communication service provider that are present in 72 countries, and certainly not in 10 years. And the rest of the IoT players have also delivered such growth as well.
That’s why I’m adamant that the IoT market hasn’t underperformed. Expectations were, like every new technology, super high to generate this hype and this momentum. It might have been unnecessary, super high objectives to get the ball rolling, that’s more this kind of the coin I would say, rather than underperforming IoT market.
Jeremy Cowan 26:57
Yeah. And Jeremy, finally, in which industries, do you really expect to see the biggest opportunity for Sigfox over the next five years? I’m thinking the agriculture or maybe industrial IoT, smart cities, smart homes, connected vehicles? Or is it something else again?
Jeremy Prince 27:18
Before I get to that question, just to add to what Frank was saying, on the market: Yes, we shouldn’t downplay the performance and what has been achieved, of course, compared to what was expected, it might have taken more time, as I said. But I think the analysts will be wrong again in the way that it will probably be bigger than what they expect. And some of the drivers why it took time, there are different factors. There’s first of all, the understanding of the benefits for companies embracing it. There’s a problem – strange to say that it’s a problem – but one of the problems with IoT is that you can almost do anything. And I always like to show that pen, say I could connect my pen if I wanted to know where it is. Is it worth it? No, because buying a new pen will probably be a lot less expensive and easier. But that’s also been a problem. Initially, when you spoke to customers, they play around with technology, they go on parks, it’s a bit like bringing a kid into a candy store. He wants to try everything. How do you get him to get to the next stage, the professional stage where they really deploy something that works. So, there’s that maturity, that has been a need.
We were talking about the ecosystem with having the solutions emerging, the devices, producing them, installing them. When you sign a contract for several hundred thousand devices, you’ve got to deliver them, we’ve got to install them. It’s not like buying a phone. And you’ve also got the price points, every time the cost of a solution goes down – and when I say the cost of a solution, it’s not the connectivity that we sell that’s expensive. It’s more the device and the data crunching, the end platform – every time that goes down it opens a potential new market.
I like to use the example of DHL. We connect trolleys because the least expensive device in our ecosystem today is one Euro. But let’s say the classic device for tracking would be between €20 and €30. And on that price point, it makes sense to equip roller cages to know where they are and to have to buy and produce less makes economical sense. We have got, as I said earlier, on a frugal technology that allows us to be leading the charge on this cost part and we believe that we can reach in the coming years price points that will be close to RFID.
Jeremy Cowan 30:03
Really?
Jeremy Prince 30:04
Yes. I’m not technical, but the engineers are adamant that we can get there. But that means if you stick to DHL that’s today connecting hundreds of thousands of trolleys, when you get to that price point, you can see easily how it widens the potential market because there you’re talking of potentially connecting hundreds of millions of parcels if you wish. And so, I think all that takes time. And that’s why it’s probably taken longer than expected. But once again, I think it will be bigger. It will be bigger because of what I was saying about maturity, pricing, etc., on the classic needs, and the classic ways of transforming the business. Because if we look at the main drivers there are, for me, three drivers behind IoT.
One is operational costs; how do I improve the way I work as a company and my process? How do I reduce my costs, etc.? That’s one. The second driver can be regulatory, like we work with PwC and hotels in the US in that we work with Hilton, MGM, and Marriott, etc. They equipped the personnel with fast response buttons.
But that’s compulsory. The driver there is regulatory. When you have got a hotel, in some states in the USA that is over a certain number of rooms, you need to equip your personnel with that. And you’ve got other examples in cold chain. So that’s a driver. And that’s also I think, taken into account by the analysts.
The third driver, that isn’t I don’t think taken into account, is the one that we can’t really foresee. And I have to say, when internet was created, no one would have imagined that in 2021, some of the biggest multinational companies in the world were Google, Facebook, no one would have imagined that. And I think that IoT is also going to generate things like that, that we don’t imagine. And that’s a third driver for me. It’s being disruptive, and some companies are going to emerge and there are 99 that are going to emerge with bad ideas and are not going to work. And there’s one that’s going to be the Facebook of IoT, because you get that data that you didn’t get before. You’ve got access to that data, you can monitor things, you can track things that you couldn’t track. And I’m sure there are some bright minds, brighter than mine, that are going to come up with great ideas, great business models, and we can always already see some in our ecosystem and love to talk about them. And I don’t know if those would be the successes of tomorrow, but I like the way they disrupt traditional industries or create new business models. So that’s a third driver. And now I can finally go back to your question.
Jeremy Cowan 33:13
You kind of answered it, but it was to understand which direction, which industries might be the ones that actually see the next significant disruption.
Jeremy Prince 33:25
So yeah, I partly answered that. And also you part of your question was, where does Sigfox position itself in there? I think IoT people talk about IoT as a market, one market, it’s not one market. It’s got different segments, different types of use cases, different needs. And in front of that you’ve got different players, different technologies, and they’ve all got pros and cons.
Sigfox – you spoke about our main limit when we started – small amounts of data, little latency, if you want to build an autonomous driving vehicle, don’t use Sigfox because you’re gonna die. But with those limits come huge benefits. We’re frugal from a cost point of view, from an energy consumption point of view. We’re robust, simple and robust, so easy to deploy, no pairing, no network to operate for the customer. We’re jamming-resistant. We’re a very safe technology. We’re the only ones that have got a global network for those multinational companies. So, it’s all about looking at this market that is not one market and matching it with the right technology. People like to see it as a … they’ve watched too many Rocky movies, they always like to see a fight. But for me, it’s more about picking the right segment with the right technology. And there’s a lot of space for a lot of companies. And for us very clearly, based on the benefits of our technology, our best in class advantages on some segments, some use cases, we know that we are particularly well suited for tracking, where is my asset monitoring in what condition is my asset? Good news is they are massive chunks of the IoT market. Plus, under that you can add this layer of we’re probably one of the most secure technologies because of our broadcast model. And there are also, if you want to go into more details, Frank could say a lot better than me explain it a lot better, although I do pick a bit of it. But I haven’t got the technical background that Frank has.
So, the key message is it’s a huge market. Huge potential. I’m sure it will be bigger than what analysts predict. And they all were already pretty quite a huge market. But it’s not one market. It’s just about matching the right need with the right technology. And we’ve got tremendous advantages for some well identified segments. So we know where we’re going, or where we’re trying to go anyway.
Jeremy Cowan 36:22
Gentlemen, I’ve taken a lot of your time already. Thank you both for spending time with our listeners. Jeremy, it’s been great to have you here.
Jeremy Prince 36:29
It’s been a great pleasure, Jeremy.
Jeremy Cowan 36:33
Frank, we really appreciate your input, too.
Franck Siegel 36:40
Thank you. Thank you, Jeremy.
Jeremy Cowan 36:45
Well, guys, that’s all we have time for today. We’ll be back with another podcast very soon. In the meantime, don’t forget, bookmark IoT-Now.com for the latest global IoT news and features. And I hope you’ll join us soon for the next TrendingTech podcast. Bye for now.