Robin Duke-Woolley, the chief executive of Beecham Research, met Thomas Seiler, the chief executive of u-blox, a provider of wireless semiconductors and modules for consumer, automotive and industrial markets, at the CTIA show in September 2016. They discussed emerging low power wireless technologies, the direction of the industry and u-blox’s future plans.
Robin Duke-Woolley: u-blox’s cellular IoT module business has been growing rapidly over the last few years, but unlike your competitors in this market you have decided not to go up the solution stack to connectivity and IoT platform services?
Thomas Seiler: Yes. We all have our different strategies. We want to stay with our core technology. Insofar as we are different we are not only making modules; we also make chipsets so we own the core technology for whatever we do for GNSS, for Cellular, and for Short Range. We want to do that because our aim is to put the technologies into the hands of our customers who buy the modules, but we also want to supply technology that we understand and can both support and make for the long run for these customers.
If you buy chipsets from a third-party and then they decide on what is finally the functionality, you are not providing your customers with any differentiation. That is not what we want to do and we learned that very early in the life of our company. That was the key reason why we started to make the technology ourselves.
We have the capability to make integrated circuits and I think that’s very viable and valuable for the market. Of course our customers depend on us and they want to be sure in the long run it’s also something that they can depend on because we make the technology right and because we make a long-term roadmap. That of course takes their wishes into account and their needs. Doing that has worked out very nicely for us and our customers over the last twenty years.
RDW: You’ve taken more of an intercept strategy for cellular modules, because you’ve not gone substantially into 2G and not that much into 3G. Is your main focus on 4G and beyond 4G?
TS: That’s correct when we look at that today. Of course, we have not been building cellular modules for twenty years – we only started doing so in about 2010 and by that time 2G and 3G were well established so that it did not make sense to invest in chipsets for technology that had already matured. To go for LTE was the right decision in 2012 for us so we can create solutions for the categories of releases that LTE is going to offer.
RDW: You’ve recently announced an agreement with Ingenu, so does that mean you’re committed to proprietary solutions as well as to more standard solutions?
TS: First and foremost, we are a company making wireless technology. Cellular modules have their rules and regulations, in particular certification – effectively standards, that are part of the game but as things are evolving there are of course solutions that are more proprietary that do not follow these rules which are looking to become leaders in the market. We cannot know what the final landscape will look like – nobody knows that. So for sure, there are very viable solutions that are outside of the licensed spectrum and we just want to provide a set of solutions to our customers, a range of possibilities so that they can make what is best for whatever their application is. This is the reason why we also reached agreement to make RPMA products for Ingenu.
RDW: So are you just going to make products for Ingenu, or are you considering others like LoRa, or SigFox?
TS: Today we have announced Ingenu and nothing else. Whether they are the most successful or not is for the market to decide. We believe, technology-wise, that they have a lead, because the coding scheme is very robust and they have the capability of FOTA (Firmware Over-The-Air) that is of course a very essential feature to maintain the system. This is not delivered by the competing solutions in the unlicensed space.
RDW: Then there are Cat M1 and Cat NB-1. Do you think that those will be successful in the market? Are you looking to provide for those in competition with Ingenu products?
TS: Yes – they will be successful. Most M2M solutions can be very well maintained with the capability of 2G. But now with LTE, I think that becomes even more interesting because the various categories respond better to what real applications need with regard to data throughput capacity and latency as well as power consumption. So I would say that solutions based around LTE or LTE-M have a bright future and a better one than 2G or even 3G can deliver, because LTE is made for data transmission – not for voice.
RDW: How do you see the low band, the low power, wide area market taking off? Do you think that’s going to be a very rapid development? Could it be something that will surpass the standard cellular module market?
TS: There’s a good chance that this is going to grow rapidly. I think LPWA has distinct features I’ve mentioned already – low power, very good range – and of course cost-wise it’s interesting. So you can deploy solutions that until now you were unable to deploy. For example, you can easily place fire detector sensors into the forests that live for ten years from a battery. You cannot make such a solution available with 2G or 3G. So there is a lot more that is now feasible and doable.
RDW: What do you think will happen with SIM cards when Cat M1 and Cat NB-1 are taken up in volume? Do you think that we’ll continue to have SIM cards or do you think the market will move more towards embedded SIM?
TS: Most likely it will all be embedded SIM. Of course the SIM card is a nice thing to help providers own the customer – that’s what the operators like – but in my opinion, it’s inconceivable if these go into much broader scope and much higher quantities. There is also the price point where the embedded SIM is cheaper and of course much more appropriate than a SIM card and its holder. The world will change to integrated solutions.
RDW: Can you say a bit more about where you think the sort of applications are for Cat M1 and Cat NB-1 that is different from the cellular that we’ve had so far? There’s a lot of talk about very high volumes of IoT products out there, but we’re not going to do that if we just replace the current cellular modules with cheaper ones in the same sort of products. Do you have a view about that and what sort of applications are likely to come about?
TS: There are so many things around us that are not connected. That of course feeds the hypothetical market for things that are connected to the internet and finally it’s a matter of price points that will lead to decisions about where does it make sense and where does it not make sense. Does it make sense to connect that lamp above us or does it not make sense? Does it make sense to connect this switch on the wall or not?
Of course, we have seen the technology price points always going down and the penetration increasing. In the end it’s the contribution of everybody in this industry that finally makes all these solutions and I think it’s all about the solutions for delivering all these numbers. It is that there are so many different solutions that will make the market.
RDW: What do you think is realistic as a cost target for these low cost modules? Also, do you think that we’ll have Cat M1 and Cat NB-1 in the same module or do you think that they’ll be in separate modules?
TS: Of course you can always combine them into one module but whether that makes sense for cost efficiency is debatable. An application has a certain requirement for bandwidth or for latency and that s fine and therefore there are good reasons why you need both. People say they only want one module for covering five different types of applications but that is rather unlikely. It is not a single technology. Of course it is conceivable that some technologies can be highly integrated, like Wi-Fi, and there is a need to reach these sorts of price points.
RDW: What sort of price point do you think is viable for that technology?
TS: Probably below USD 10 in that sort of range.
RDW: When you’re in the market are you talking to end-users like auto OEMs and others about their requirements?
TS: We talk to end-users as well but mainly the OEMs to find out what their requirements are and what their future need is. We of course have roadmaps for those discussions and those are essential for long-term success. About one third of our business is in the auto space and by that we mean first of all electronics for the aftermarket. We have a very strong position in everything that is positioning in the car but more and more we have cellular and short range.
RDW: Which sectors in particular represent your main business?
TS: First of all, more than 60% of our business is in industrial sectors. Probably a third is in vehicles, primarily after-market solutions for telematics, for insurance and for asset security. We have a strong presence for everything that is on wheels, but we are equally well-positioned for infrastructure. We say that we make solutions for the things that really matter, because infrastructure is necessary for mobility and requires high quality and high functionality and this is what we are positioning for in the market.
RDW: Which are the most important markets for you, geographically?
TS: We do about half of our billings in Asia and about a quarter each in the Americas and Europe. There is a very wide mix of applications and we have a high diversity of customers. We have 5,700 customers worldwide. We are not dependent on one customer – no one is the big one. The biggest is 8% of the business.
RDW: Do you provide a lot of technical support to your customers?
TS: Absolutely. Our sales force is divided between commercial and technical people on a 1:1 ratio so we make sure our customers have very good support. We help them with design and moving them into production flawlessly because it is in our interest of course for customers to go quickly to production.
RDW: Is it fair to say that you initially established your customer base through positioning products and cellular modules that have been added to that rather than creating a customer base for them from scratch?
TS: Of course, we started with GNSS – that was our first activity. That was how the company was founded and anything we have added was a new line of products or a new technology that was nicely cross-selling into the existing customer base. So we have maintained the customer base but we have delivered more and more different solutions and products into their hands
RDW: How do you see the future?
TS: I think what has been the past I now also see as the future. By that I mean that we will continue the same as we have always been, growing on a large scale through many ways and solutions and applications. As a result, we are becoming more diversified. We are not dependent on one outcome or one hyped or killer application but rather being very well connected to many different areas where our technology applies. I think our future growth comes from the continued development of making our technology better and making it even better tuned to our customers. Also, we expect to stay very much in hardware and not move into services or software. We will not compete with our customers. We are a maker of technology – we make it in the form of chipsets and we package it into modules for easy access to our customers. This is our role.