Sierra Wireless is pinning hopes of salvation on software and bundled services increasing the appeal of its wireless modules and edge devices. A depressing performance on the stock market in recent years has prompted a rethink. Octave, the company’s newest offering, is aimed at Industrial IoT (IIoT) customers that want a simplified way to connected devices to their cloud environments.
The company’s share price has hovered around $10-15 since falling from a peak of $47 in 2015 – likely a result of the initial hype surrounding the IoT dying off, and the consequent decline of investor enthusiasm. Formerly a hardware manufacturer, the company has pivoted to focus on software development that could be bundled with its equipment.
We now know that the IoT is not going to be pioneered inhouse by individual companies for their own specific applications. Octave shows Sierra Wireless is realizing future business is not in components, but software that will ease the application of the IoT – what the company is dubbing “end-to-end IoT solution”’.
Octave promises an easily applicable “edge-to-cloud” offering to manage data generated by IIoT devices. This is likely to be more profitable than hardware components, as the IoT slowly evolves to be used by an ever-greater diversity of use cases. Although it is too early to make grand predictions, if the market responds positively in the next few months, this pivot could restore public faith in Sierra Wireless.
CEO Kent Thexton told shareholders in July that “we’ve already signed up our first Octave design wins and are receiving very positive feedback from the market. These value added IoT solutions allow us to leverage our strong position in IoT devices and drive a recurring revenue business going forward.”
Essentially, the Octave platform hopes to streamline the industrial application of the IoT for Original Equipment Manufacturers (OEMs). OEMs can merge with existing cloud environments via Octave’s cloud API, allowing them to bypass the often complex and lengthy process of integrating hardware. Octave is built on Microsoft’s Azure, but connects to the most prominent cloud platforms.
Octave allows OEMs to process, filter, store and forward readings from edge devices that can then be assembled into data streams, which users can control to ensure they are delivered to the correct system at the correct time. Device blueprints are easily managed – users can clone the configuration of one device onto multiple devices, as well as being able to reverse devices back to previous configurations thanks to device history logs.
A sponsored white paper turned up impressive stats on Octave’s efficiency potential. The report estimated a 45% saving in development costs – typically between $400,000 and $450,000 – compared with standard IIoT offerings. It also found that the edge-and-cloud approach reduced maintenance costs by as much as 75%.
The single supplier nature of Octave slashed development time by 6-12 months, it claims, accumulating a three-year benefit of $77,000 for OEMs, Sierra claims. This also reduces management costs by 30%. Overall, the report estimated a collective saving of $369,000 over three years, compared to an internal solution.
In the next three years, Sierra aims to double its recurring revenue to $200m and raise its consolidated annual revenue to $1bn. If the market recognizes the efficiencies claimed in the white paper, this may be a possibility.
The company says Octave is the only full-stack IoT package currently on the market – hardware, connectivity, and management software in a single bundle. However, technically Octave is only cloud-to-edge. The full stack package is completed by Microsoft Azure IoT Central, which Sierra Wireless announced was integrated with Octave in June this year.
The second quarter saw some sacrifices as the company pivoted to become a “device-to-cloud IoT solutions company”, as it put it. This included $14.9m in severance and $3.1m in transitional costs. This did result in some minor gains. Revenue from the IoT solutions segment increased 5% in Q2 of this year, compared with last, comprising 52% of all revenues.
The company has not abandoned hardware. As we reported in August, Sierra Wireless launched an LTE router for IoT applications, the Airlink LNX40, as well as pushing open source development platform mangOH for developers.
Once a flagship IoT company, Sierra Wireless has been plagued by a dismal performance on the stock market. CEO Thexton hopes this is about to change, saying “it is difficult, complex and time consuming to integrate wireless edge technology … Octave eliminates the complex hardware integration, certification and security concerns and allows businesses to seamlessly access their operational data in the cloud and integrate it with their IT systems.”