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13 March 2020

Signify gets wrong end of protocol stick, hurts itself in its own confusion

Hopefully, dear readers, you trust Riot to be straight with you, and value our take on the latest happenings in this industry and the overarching trends. When interviewing companies, we try to present what they put forward after being challenged by our questions, to remove spin and frame what has been said with some context. Well, this week, Signify, formerly Philips Lighting, has come out swinging, but entirely missed the point.

Speaking to Enterprise IoT Insights, part of RCRWireless, Jacques Letzelter, SVP of Signify’s (formerly Philips Lighting) commercial public business segment, has claimed that cellular is the only suitable protocol for connected street lighting (CSL), and targeted Telensa’s Ultra Narrowband (UNB) as an example of an unsuitable technology, because they can’t support a wider array of smart city services.

“Ultra-narrowband is appropriate for smart and connected lighting, yes; but it will be your Achilles heel if you ever want to add the sensors,” said Letzelter. “It is inappropriate for smart city use cases. Because more sensors require more bandwidth. If you have an ultra narrowband network, well, you can say [everything] is possible, but the customer experience will be poor – they won’t get the frequency of updates they need.”

We really can’t stress just how ass-backwards this perspective is – that a smart city should operate every single function on just one single technology. We have spent years exploring how LPWAN protocols would be integrated into larger business applications, and at no point has anyone ever suggested that the larger business application might be better off if it switched entirely to using that LPWAN protocol.

What’s worse is that Letzelter is setting up a dichotomy between cellular and proprietary protocols, likening it to an open versus closed standard debate without even discussing the vendor lock-in that comes with having to pick an MNO to rely on. Sure, you have a concern that a company like Telensa might be able to hold you over a barrel, but if you (the customer) are really that concerned about this, you would plump for something like Wi-SUN and run your own private network. Cellular is not the answer to that problem.

Similarly, cellular hasn’t been an answer to the CSL problem for the past five years, whereas options like Silver Spring Networks’ Wi-SUN (now part of Itron) and Telensa, and a myriad of other providers that use proprietary stacks, have been able to offer CSL projects in that period. If we are to take the view that cellular is the only way forward, then we should also be beating cellular bloody for taking so long to get to the point that it makes economic sense to use in CSL.

But perhaps the most aggravating part of the Signify pitch is that Letzelter and company are pitching LTE Cat-M as the foundation for CSL, but also selling modular designs that would let you add a different radio to support new sensors if needed – without even a hint of irony or self-awareness, it would seem. Currently, it is pitching Zigbee as a CSL-only technology, with LTE Cat-M as a smart city technology.

So, the Signify approach seems confused, at best, and perhaps there’s some benefit of the doubt to grant, in case things have been lost in translation from spoken word to printed text. However, Signify should know better, as it has its own Central Management System (CMS), the application that manages the lights for its customers, and the step to integrate the CMS with the other smart city functions is so glaringly obvious.

At nearly every level in the IoT, the integration between two devices from two different businesses or environments happens in the cloud. There might be a few edge-cases that don’t adhere to this rule, but in a smart city, arguably the most intertwined IoT scenario in which a multitude of partners and competitors have to work together and play nice, arguing that we should be trying to simplify things at the device level is painful to listen to.

These cities tend to adopt smart city applications in a staggered manner, using different vendors for different functions, as this market is not yet at the point where a single vendor could provide all the desired features. To this end, cities are going to want to be able to plug each of these applications into some sort of central cloud platform, which will orchestrate them and act as a middleman – that ‘single pane of glass’ that marketers love to harp on about.

So, from our perspective, Signify just looks plain confused – wildly swinging punches at rivals but somehow managing to connect only with its own credibility. What’s more, the market doesn’t seem to hold it in any great regard either, as its share price has nosedived in recent months.

After the spin-out in 206, Signify climbed to reach just over €35 in mid-2017, and stayed above €30 until April 2018, where it fell to €26. Falling steadily through 2018, to a low of €19, Signify managed to recover to around €24 by October 2019, at which point, it started ticking upwards to reach €32 – its best position in two years.

However, the past month has not been kind to Signify, and it has shed nearly a third of its value, to reach €22. With a market cap of €2.81bn, its not exactly a minnow, but its shareholders are not going to be happy with this tumultuous performance. Sure, the interview is probably an attempt to get the good word out, but if it continues, it may well do more harm in the long run.

The nosedive appears to be mostly a reaction to its 2019 Annual Report, which showed very little growth compared to 2018. With only a 10.4% EBITA margin, and net income of just €267mn (up from €261mn in 2018), there was not much to write home about. Given that it reported sales revenue of €6.25bn, down from 2018’s €6.36bn, you can see why the financial community fled a lighting company that can’t seem to manage to embrace the IoT opportunity.