Cradlepoint reinvents its business model around IoT routers and services

Internet of Things services provider Cradlepoint has enjoyed considerable success shipping its enterprise M2M routers to customers looking to provide both primary and redundant LTE connectivity to their assets. This week, the company has unveiled a reinvented business model, which bundles its cloud services into its new IoT-focused routers, in a move to create a stickier offering.

The new family of LTE routers, the IBR200 range, is the basis for a reinvention of the Cradlepoint model, which will see the company bundle more of its software and services with the hardware – in the new NetCloud Solution Packages, and their subscription-based model.

It’s a big change, but one that is becoming more common among hardware providers – which see the commoditization of their products looming, and are looking to shore up against encroachment by offering services on top of their hardware.

CMO Todd Krautkremer explained that Cradlepoint has gone largely under the radar, since its founding in 2006, despite becoming a dominant provider of 4G enterprise routers. With widespread deployment across a number of verticals, Cradlepoint has three main classifications for its offerings: Branch, Mobile, and IoT Networks.

The new IBR200 is aimed at the last of those, with Branch Networks encompassing buildings, and Mobile Networks covering vehicles. Branch deployments often encompass redundant connections for systems, should the wired broadband connection fail, but will also cater for things like ePOS, security cameras and digital signage – thanks to the router’s WiFi and Ethernet capabilities.

The Mobile Network offering has proven popular with vehicle fleet operators, as well as first responders and mobile command centers. Again, these routers are bridging the in-vehicle devices, such as cameras, telematics systems, and medical equipment, to the NetCloud cloud via LTE networks. The IoT Networks offering encompasses digital signage, industrial plant deployments, smart city applications, and things like kiosks, ATMs, and lockers.

Krautkremer said a good example of Cradlepoint’s success in Mobile were the buses running in New York’s Three Boroughs, which use Cradlepoint to power signage, security cameras, the payment systems, and telematics. Starbucks is a good example customer for the Branch, using Cradlepoint to provide 4G failover for its payments systems, and an emerging and diverse range of customers are taking hold in the IoT sector including smart city projects in San Antonia and Plano, Texas, snow plow systems in Staten Island, signage in Times Square, and also powering Red Box’s kiosks.

The new bundle approach, Krautkremer explained, provides the device management platform and associated support, along with the hardware. This leads to customers in the first tier of the bundle getting access to features that they would previously not have had. As Krautkremer put it, the basic ‘Good’ tier now includes elements that used to be in the ‘Better’ and ‘Best’ skews – which helps with customer retention.

The CMO said that upselling was tricky in the old model, where features were typically viewed as costs by their users, rather than as potential value adds. The new approach should see customers more easily add extras to their packages, such as analytics systems, using the familiar subscription model of other cloud services – rather than the perpetual licenses old.

With access to the additional features (which were previously behind a paywall), the stickier offering has managed to score a retention score that Krautkremer said was in the high-eighty and low-ninety percent ranges, depending on the sector. This success of the bundle approach showed that the customers recognized that the value was in the software, said Krautkremer, who added that the opening price of the IBR200 package would be around $400, with the subscription requiring renewal fees on a 1, 3, or 5-year basis.

The CMO said the bundled approach was a power sales tool for new customers, and recounted a customer win that saw a financial customer deploy its routers for an in-store digital signage project, as it allowed the marketing department to bypass the IT department – which was very slow to react, and didn’t sound particularly supportive. As the routers were effectively out-of-band, completely separate from the customer’s existing networks, they were not encumbered by legacy technologies or approaches.

Krautkremer said that the new IBR200 supports LTE-M, and will support NB-IoT in the future. He added that Cradlepoint was taking a wait-and-see approach for LoRa, saying that there was some interest in using it for campus-based applications, and that there were 3G offerings in the portfolio, should an application require it.

As for the cloud side of things, the NetCloud service runs on Cradlepoint’s cloud, which is built on public cloud infrastructure. It provides the dashboard in which customers manage their devices, and houses extensions to enable third-party integrations and applications.

The system would let a developer publish an application for Cradlepoint’s routers, such as telemetry monitors or a data parser for cold-chain monitoring, for example, which the customer can use for edge-processing functions. Krautkremer said that these were early days for the approach, and that Cradlepoint was focused on building the third-party ecosystems before it looked to change the model to monetize those relationships – but it’s an option that is on the cards.

The routers themselves should have plenty of processing overhead to run such applications. The entire Cradlepoint portfolio is ARM-based, running NetCloud OS (a closed Linux environment), with quad-core and other multi-core designs the typical configuration. For connectivity, Cradlepoint uses a range of modems from Sierra, Telit, and Intel – with the choice changing depending on the category of LTE needed. In terms of expandability, the IBR200 family features GPIO ports, to allow developers to hook up their own IoT devices to the router.

Security is another key concern, and Cradlepoint is providing its Perimeter Security as the on-device answer. An interesting feature is the option of a Software-Defined APN, which effectively makes your router not publicly addressable – to prevent people being able to reach out remotely to it, as easily as they might have been able to. This could also help the MNOs tackle the ongoing issue of IPv4 address shortages, which are also exacerbated by the low availability of IPv6 support, according to Krautkremer. This approach means you don’t have to leave ports or firewalls open on the device, to access the routers remotely.

As for Cradlepoint’s success in the IoT, Krautkremer said it had seen surprising growth in the first-responder section, which he described as the perfect blend of people, things, and places. The company is prioritizing IoT projects, identifying them as big opportunities and growth areas.

He added that Cradlepoint was seeing a shift in its customers, as they adopted IoT projects – shifting from having different teams for each of the Branch, Mobile, or IoT deployments, to a single team that was responsible for a unified system. This is especially so in smart cities, according to Krautkremer, and while iron-clad security is still all too often a pie-in-the-sky ambition, he is confident that it will eventually become pervasive.