SAN JOSE, Calif. — Ludovic Le Moan is under the gun to find a return on investment in the Internet of Things this year. After raising $150 million in five rounds, the co-founder and CEO of Sigfox faces a deadline of breaking even before the end of 2018.
To hit his target, Le Moan estimates that he will need to have about 10 million paying nodes on various Sigfox networks around the world. So far, he has about 4 million.
Whether he makes his target or not, since the creation of Sigfox in 2000, Le Moan has been driving a vision of creating the lowest-cost network for the Internet of Things.
Today, a Sigfox link costs about $1.20 to $2 in hardware, down from about $12 several years ago. The company’s revenue comes mainly from connection fees, currently pegged at about $5 to $6 per device per year for users with at least 10,000 nodes.
Sigfox revealed a design last year that could drop the price to 20 cents or less for a transceiver that could deliver a basic notification. And for operators with 1 million nodes or more, the Sigfox connection fees are already down to $1 per device per year.
“We started with the idea of delivering small messages in the most efficient way, and one day, it will be close to zero in hardware and transmission costs — this is my goal, one network with roaming around the world,” said Le Moan in an interview with EE Times.
Today, Sigfox is a distant third to LoRa and Narrowband-IoT (NB-IoT), a low-cost version of LTE with 2017 Sigfox shipments of less than 9,000 modules, according to IHS Markit. The market watcher forecasts that Sigfox could grow to sales of 10 times as many annual connections in 2021, but it would remain a distant third to LoRa and NB-IoT.
Sigfox depends on a single, venture-backed company and keeps its technology proprietary, noted one analyst. By contrast, NB-IoT and LoRa are based on published standards with products from multiple public companies.
The company has met the targets of its last four funding rounds by building a prototype, launching a network in France, extending it to Europe, and then going global. Its next and potentially toughest target is to break even in the fourth quarter.
Le Moan is depending on two of the hottest and most competitive markets in IoT to break into the black — asset tracking and security.
“We have 500 projects in different verticals, but revenue is mainly in security and asset tracking … for tracking containers, pallets, cars, and luggage, you can’t support a cost above $5 to $6 with a battery, transceiver, and package,” he said. “It’s tough to hit, but as soon as you reach that point, the opportunity is big — this is the first opportunity in IoT.”
One of the co-developers of the LoRa standard agrees. Hardy Schmidbauer launched his own startup that is rolling out consumer and commercial products for the market this year.
For its part, Semtech is now sampling a smaller, lower-power version of its LoRa transceiver, but it’s holding costs steady.
“At the end of the day, the market is so big, but the question is what’s the value of the data … if the module costs a dollar and the value of the data is below a dollar, there is no market,” said Le Moan. “It’s all about what customers need from the data, what value it has for them, and how to extract that value at the lowest cost.”
The biggest pain point in IoT today is in finding value from currently uncaptured data, he said. “It’s too fuzzy sometimes. We lose time talking about the wrong topics.”
Next page: Getting to a 20-cent transceiver