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25 October 2019

Semtech’s cloud expansion not a landgrab, planting seeds for growth

Semtech has been on a bit of a spree recently, with a suite of announcements that show a continued focus on the utility market, as well as a new reference design for indoor networks. However, an announcement with Murata, featuring a new modem that integrated a set of Semtech-provided cloud services, caught our eye a few weeks ago, and got us wondering if this was an expansionist move.

We put it to Pedro Pachuca, Director of Wireless Products at Semtech, that there’s an argument to be made that by entering into the cloud services game, it looks like Semtech is making a bit of a power grab – trying to take a greater slice of the LoRa pie, on top of selling all the radios used to power the LPWAN protocol. We are quite cynical, after all.

Pachuca said that one of Semtech’s core business principles for LoRa is to enable the wider ecosystem, and to this end, it does not want to control the entire end-to-end solution. It understands, we were assured, that there are too many components and configurations for one company to manage, and so it is best for customers to decide what meets their needs.

This is easier in an ecosystem, diverse with choice. Semtech thinks that an initial strategy of showing how a cloud system can be implemented in a LoRaWAN network is important, however. In future, Pachuca said, it sees that the stronger cloud providers will take over, and it sounded like at that point, Semtech would not need to be involved in the cloud elements.

In terms of how that cloud system is comprised, Pachuca said there were three main sections – the join server, the device and application management services, and then the geolocation services. Semtech launched a new website that houses the documentation covering the three areas, which is available here.

Pachuca said that Semtech is essentially expanding into the application services, and is interested to see the reaction of the market here. Pachuca envisions that many of the third-party cloud environments will be quite closed, due to privacy and confidentiality concerns.

Part of the expansion is the attempt to more closely connect these cloud services with the modem itself, via the ‘seed’ software on the device. Currently, this seed is entirely separate, and is essentially encapsulated software that you could put onto any application processor that is connected to the LoRa radio itself.

From a Semtech perspective, the seed software makes it easier to sell radios, as any device sold could be essentially preconfigured to join networks and cloud environments. It would iron out a lot of the problems that arise in trying to provision and bring devices online, and as these seeds should be quite configurable, third-party cloud providers should seize on them as an opportunity.

We also raised the point that LoRa is particularly well-suited for campus deployments, where a large amount of devices within a small geographic area would be cost-prohibitive for L-LPWAN, and awkward for a PAN network like WiFi, Bluetooth, or Zigbee. So, is Semtech prioritizing campus sales?

Pachuca said that sure, campus chips are good for business, but that the Semtech vision is to create a de facto standard based on LoRaWAN that can be used globally. He added that many problems can’t be solved if customers are solving niche solutions of their own, and that a unified standard is the key to achieving billions of nodes. This would enable proper roaming in LoRaWAN, said Pachuca, but he noted that it has to coexist with other technologies.

Semtech is seeing its sales increasing, a sign of the trend to move into larger deployments, said Pachuca. To this end, Semtech has to be aware that as customers move from PoCs and trials into large deployments, they will become a lot more cost conscious, and so it has to be able to support this transition.

To this end, Pachuca says the new LLCC68 transceiver, aimed at the Chinese market, should help here. New LoRa gateway chips have been released too, which Pachuca believes will be more cost-effective for large deployments. We did ask if Semtech was seeing much demand for the largest 64-channel gateways, and Pachuca did say that there was, mostly in North America. He did note that this market was growing considerably, which is in line with what we have heard from the rest of the industry – that 8-channel gateways are more than sufficient, currently.

Returning to the Murata announcement, Semtech has added another provider of LoRa hardware, which can leverage Murata’s extensive sales channels. Of course, Semtech still gets its license fees, regardless of whether Semtech sells the chip, or Microchip, STMicro, or now Murata.

“The new LoRa-based module with an embedded modem will allow our customers to bring products to market faster than ever before,” said Samir Hennaoui, LPWA Product Manager at Murata. “The goal of this project is to provide production-ready LoRa-based hardware platforms and associated Cloud services, which abstract complexity and simplify development. We are confident that the module will also accelerate the worldwide adoption of LoRa-based devices and the LoRaWAN protocol.”