The Global Cellular IoT Gateway Market. M2M Research Series

Transcription

1 The Global Cellular IoT Gateway Market M2M Research Series

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3 The Global Cellular IoT Gateway Market Third Edition, 2018 by Fredrik Stålbrand

4 BERG INSIGHT RESEARCH TEAM Fredrik Stålbrand, M2M/IoT Analyst Johan Fagerberg, Principal Analyst OFFICE Viktoriagatan 3 SE Gothenburg Sweden CUSTOMER SERVICE Phone: (46) info@berginsight.com Web: Published in Sweden in October 2018 ABOUT THE AUTHOR Fredrik Stålbrand is an IoT/M2M Analyst with a Master s degree in Industrial Engineering and Management from Chalmers University of Technology. He joined Berg Insight in 2016 and his areas of expertise include cellular hardware, IoT platforms and IoT/M2M applications in the industrial markets. ACKNOWLEDGEMENTS Advantech B+B SmartWorx, CalAmp, Cradlepoint, Digi International, Eurotech, Four-Faith Communication Technology, Gemalto, Gosuncn Technology, InHand Networks, INSYS Microelectronics, Maestro Wireless Solutions, Matrix Electrónica, Moxa, MultiTech Systems, NetModule, NetComm Wireless, Option, Quectel, Robustel Technologies, Sagemcom Dr. Neuhaus, Sierra Wireless, SIMCom, Systech Corporation, Telit The author wishes to thank everyone who has assisted him with the report. Copyright 2018 Berg Insight, All rights reserved

5 THE GLOBAL CELLULAR IOT GATEWAY MARKET INDEX Index Table of Contents Table of Contents... i List of Figures... iv Executive summary M2M/IoT networking and technologies Introduction The IoT technology stack Embedding cellular technology in products and systems Cellular modules Cellular IoT gateways, routers and modems SIM solutions and embedded UICC Carrier, industry and region specific certifications Cellular IoT hardware value chain Cellular IoT from 2G to 4G and beyond G mobile networks G/4G mobile networks G-MTC mobile networks (emtc/lte-m and NB-IoT) G networks LPWA networks Cost comparison for cellular and LPWA technologies Market forecasts and trends Market forecasts The embedded cellular module market and vendor market shares Cellular module market analysis and forecasts The cellular IoT gateway and modem market and vendor market shares Cellular IoT gateway and modem market analysis and forecasts Market trends Vendors move to employ vertical integration strategies in attractive niches Few new product launches of LTE-M and NB-IoT devices i

6 THE GLOBAL CELLULAR IOT GATEWAY MARKET INDEX Vendors offer modularized devices for flexibility and upgradability Leading IoT gateway providers experienced solid revenue growth in Pace of M&A activity could pick up from low levels Company profiles and strategies Cellular IoT gateway vendors ADLINK Technology Advantech B+B SmartWorx Beijer Electronics Group Belden CalAmp Cisco Connected IO Cradlepoint Digi International Encore Networks Eurotech Four-Faith Communication Technology HMS Networks InHand Networks INSYS Microelectronics Maestro Wireless Solutions Matrix Electrónica MC Technologies Moxa MultiTech Systems NetComm Wireless NetModule Option Red Lion Controls Robustel Technologies Sagemcom Dr. Neuhaus Systech Corporation ii

7 THE GLOBAL CELLULAR IOT GATEWAY MARKET INDEX Teltonika Cellular IoT module vendors Fibocom Gemalto M2M Huawei Neoway Quectel Sierra Wireless Sunsea Telecommunications (SIMCom/Longsung) Telit u-blox ZTE WeLink (Gosuncn Technology) Other cellular module vendors Glossary iii

8 THE GLOBAL CELLULAR IOT GATEWAY MARKET INDEX Index List of Figures Figure 1.1: The core elements of an IoT solution... 3 Figure 1.2: Cost versus time diagram for cellular technology integration... 4 Figure 1.3: Examples of IoT modules... 6 Figure 1.4: Common features in cellular IoT gateways and routers... 7 Figure 1.5: System architecture for an end-to-end IoT solution... 8 Figure 1.6: Examples of cellular IoT gateways... 9 Figure 1.7: Comparison of SIM form factors Figure 1.8: Size comparison between the 4FF and MFF2 form factor Figure 1.9: Cellular hardware value chain Figure 1.10: 3GPP cellular network connections by generation (World Q4-2017) Figure 1.11: LTE-M network availability by country (Q3-2018) Figure 1.12: NB-IoT network availability by country (Q3-2018) Figure 1.13: Comparison of LPWA technologies Figure 1.14: Cost comparison for IoT technologies (2017) Figure 2.1: Top cellular module vendors, by revenues and shipments (World 2017) Figure 2.2: Cellular IoT device shipment forecast (World ) Figure 2.3: Top cellular IoT gateway vendors, by revenues and shipments (World 2017) Figure 2.4: Cellular IoT gateway shipment forecast, by region (World ) Figure 2.5: Cellular IoT gateway and modem market value, by region (World ) Figure 2.6: Changes in average selling price, by region (World ) Figure 2.7: IoT gateway shipments by cellular technology (World 2017) Figure 2.8: SmartSense by Digi cellular gateways for cold chain applications Figure 2.9: Examples of vendors offering modular device concepts (Q3-2018) Figure 2.10: Financial data for leading IoT gateway and modem vendors Figure 2.11: IoT gateway vendor mergers and acquisitions ( ) Figure 3.1: ADLINK s IoT gateways (Q3-2018) Figure 3.2: Advantech B+B SmartWorx s routers and gateways (Q3-2018) Figure 3.3: Westermo and Korenix routers and gateways (Q3-2018) Figure 3.4: Hirschmann, GarrettCom and ProSoft Technology devices (Q3-2018) iv

9 THE GLOBAL CELLULAR IOT GATEWAY MARKET INDEX Figure 3.5: CalAmp cellular routers (Q3-2018) Figure 3.6: Cisco cellular routers Figure 3.7: Connected IO s range of cellular modems and routers (Q3-2018) Figure 3.8: Cradlepoint s range of cellular routers (Q3-2018) Figure 3.9: Digi International s cellular routers (Q3-2018) Figure 3.10: Encore Networks cellular IoT gateways (Q3-2018) Figure 3.11: Eurotech s IoT/M2M architecture Figure 3.12: Four-Faith s cellular modems and routers (Q3-2018) Figure 3.13: HMS cellular IoT gateways Figure 3.14: InHand Networks industrial communications devices (Q3-2018) Figure 3.15: INSYS icom s industrial 4G LTE routers in the MRO and SCR series Figure 3.16: Maestro Wireless Solutions IoT routers and modems (Q3-2018) Figure 3.17: Moxa s industrial cellular devices (Q3-2018) Figure 3.18: MultiTech Systems cellular IoT gateways, routers and modems (Q3-2018) Figure 3.19: NetComm Wireless M2M routers and modems (Q3-2018) Figure 3.20: NetModule s cellular routers Figure 3.21: CloudGate cellular M2M gateway Figure 3.22: Robustel Technologies IoT routers (Q2-2018) Figure 3.23: Sagemcom Dr. Neuhaus cellular M2M routers (Q3-2018) Figure 3.24: Systech s SysLINK series (Q3-2018) Figure 3.25: Teltonika s range of cellular routers (Q3-2018) Figure 3.26: Fibocom embedded wireless modules (Q3-2018) Figure 3.27: Gemalto M2M embedded modules (Q3-2018) Figure 3.28: Gemalto M2M terminals (Q3-2018) Figure 3.29: Huawei embedded wireless modules (Q3-2018) Figure 3.30: Neoway embedded wireless modules (Q3-2018) Figure 3.31: Quectel embedded wireless modules (Q3-2018) Figure 3.32: Sierra Wireless embedded modules and IoT gateways (Q3-2018) Figure 3.33: SIMCom and Longsung embedded wireless modules and (Q1-2018) Figure 3.34: Telit M2M embedded wireless modules (Q3-2018) Figure 3.35: u-blox embedded wireless modules (Q3-2018) Figure 3.36: ZTE WeLink embedded wireless modules (Q3-2018) v

10 THE GLOBAL CELLULAR IOT GATEWAY MARKET SUMMARY Summary Executive summary Berg Insight defines cellular IoT gateways as standalone devices intended for connecting machines to a cellular network. These include primarily general-purpose cellular routers, gateways and modems that are enclosed in a chassis with external power supply, no display and at least one input/output port. Trackers, telematics devices and other specialised devices are excluded from this report. Berg Insight has found that 3.2 million IoT gateways and modems were sold globally during 2017 at a total market value of approximately US$ 785 million. The Americas, Europe and Asia-Pacific regional markets are similar in size in terms of shipments, accounting for about 1 million units each. The ASP on the North American market is significantly higher, primarily due to a higher share of feature-rich 4G LTE devices in the product mix. The market value of the Americas amounted to US$ 352 million, followed by Europe and the Asia-Pacific, which accounted for US$ 226 million and US$ 184 million respectively. Berg Insight forecasts that shipments of cellular IoT gateways will grow at a CAGR of 18.2 percent in the next five years to reach 8.6 million units in The IoT gateway vendor landscape is more fragmented than the cellular IoT module market. Berg Insight ranks US-based Cradlepoint as the market leader with an estimated US$ 115 million in annual revenues from IoT gateway sales. Sierra Wireless is the second largest provider with an estimated US$ 79 million in annual revenues. Top players further include Cisco, Digi International and Teltonika, which generated an estimated US$ 70 million, US$ 65 million and US$ 52 million respectively from their cellular IoT gateway businesses. The top five vendors held a combined market share of close to 50 percent in Other notable vendors are CalAmp, MultiTech Systems, Encore Networks and Systech in North America, InHand Networks, Maestro Wireless, Four-Faith, Robustel Technologies and NetComm Wireless in the Asia-Pacific region, and HMS Networks, Advantech B+B SmartWorx, NetModule, Matrix Electrónica, Eurotech, Gemalto, Sagemcom Dr. Neuhaus, Beijer Electronics Group and Option in Europe. 1

11 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Chapter 1 IoT networking and technologies 1 M2M/IoT networking and technologies 1.1 Introduction The potential market for IoT is popularly described as enormous as virtually every object could become networked. Over the past decades, adoption has spread from high value assets to medium value assets as the cost of communications has decreased. There are many ways to connect assets to the Internet. This report will focus on cellular IoT gateways, routers and modems, which typically offer the fastest time to market, by using standard interfaces and protocols to provide Internet connectivity for machines and devices. For the purpose of this report, Berg Insight defines IoT gateways and modems as standalone devices in chassis adding cellular connectivity to IoT applications. Devices are also required to run on an external power supply and have at least one input/output port and no display. Trackers, telematics devices and other specialised devices are also excluded The IoT technology stack A typical IoT solution is characterized by three core elements devices, networks and software platforms. The devices may communicate directly, or via an external networking device such as an IoT gateway or modem, through a network to a back-end server that is running a software platform, which helps integrate data into enterprise and consumer applications. There is an abundance of technologies available for connecting IoT devices to networks. Each technology has its own characteristics manifested in strengths and weaknesses. The technologies mainly vary in regard to range, data transfer speed and power consumption. Common wireless wide area network technologies include 2G/3G/4G LTE cellular communications and LPWA technologies such as LoRa, while popular local and personal area network technologies include Wi-Fi, Bluetooth, Zigbee and Ethernet. The IoT gateway can be connected to a machine or device, or act as an aggregation point for a group of sensors and actuators to manage the connectivity of these devices locally and enable cellular communication. Advanced devices also offer processing of the collected data and storage capabilities to deal with network latency. 2

12 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Figure 1.1: The core elements of an IoT solution Software platforms typically run on cloud infrastructure or inside an enterprise data centre. These solutions include various application environments and IT systems that provide functions such as device management, data management, business logic, APIs and user interfaces, as well as integration with other enterprise IT systems. IoT platforms are built to abstract a lot of common functions away from the specific application logic, thereby reducing the time and cost of developing and maintaining IoT solutions. Using connectivity management platforms, enterprises can remotely activate and manage their SIMs, monitor usage and manage costs. Device management services enable provisioning of devices and remote management of software running on devices. Application enablement platforms comprise a set of services that can be re-used across industries and common IoT use cases. These solutions are designed to simplify and accelerate the development of IoT solutions and provide developers with tools and APIs to connect devices, collect data from devices and web-based services, manage and normalise data, create rules and triggering events and run analytics. 3

13 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Embedding cellular technology in products and systems Cellular chipset technology is at the core of all devices that use cellular networks for connectivity. Cellular IoT devices thus leverage the same technology platform as other cellular devices such as smartphones and tablets. Product development at the chipset level is however complex and time consuming as wireless functions can be one of the most difficult types of circuits to design. For this reason, most developers use network ready IoT modules in standard form factors, which can be embedded on existing circuit board designs. Another option is to use certified embedded boards that can operate standalone. These are widely used in proof of concepts. Devices such as gateways, routers and modems provide the fastest time to market for integrating cellular technology and can connect to the embedded device via an Ethernet, serial or USB connection. The diversity of development approaches is reflected in the variations in the design of wireless IoT solutions for different applications. Figure 1.2: Cost versus time diagram for cellular technology integration Source: Berg Insight, Cradlepoint, Arduino, Telit and Qualcomm 4

14 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 The development of cellular devices involves extensive efforts in hardware and software design. Besides ensuring reliable product performance under varying conditions, manufacturers are also required to obtain certifications and approvals regarding product safety, EMC characteristics and equipment interoperability from government bodies, industry review boards and mobile network operators. Manufacturers of cellular hardware have extensive knowledge in these fields and can thus provide valuable products and services to their customers. Fully approved and certified IoT gateways are designed to fit projects where the available integration time is short, the production volume is low, or when upgrading legacy systems with wireless communications functionality. Integration using only Ethernet and serial connectors ensures rapid integration at a low cost. Although using an IoT gateway provides the fastest time to market, it carries the highest unit cost of the four options illustrated in Figure 1.2. On the other hand, it has the lowest design risk since the device comes fully certified. An embedded board provides a fully compliant cellular solution, including an antenna or antenna connector. These solutions comprise an attractive choice for proof of concepts and low volume projects. While the cost of an embedded board is higher than a module, the vendor has performed all necessary compliance testing and carrier certifications. Therefore, technical expertise beyond the OEM s core capabilities is typically not required. Additionally, there are a range of hardware platforms that do not strictly fall within this category, mainly intended for prototyping of cellular solutions. These include for example add-on modules and integrated modules. For high volume and space-sensitive applications, integration of cellular modules becomes more attractive despite the longer integration time and needs for end-product certification, because the solution cost per unit is reduced. For very high-volume applications, integration at the chipset level reduces the unit cost even further at the expense of much longer integration time, higher engineering cost, as well as more extensive compliance testing. Chipset designs are primarily carried out by companies with deep expertise in cellular design and provide the smallest footprint solution. Time to market is generally faster with a module as the design risk is lower. Additionally, users of modules can leverage much of the testing performed by the module supplier although some product testing is still required. 5

15 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular modules Wireless IoT modules for cellular networks are available in a wide range of form factors. The smallest modules are approaching sizes of 15 x 15 x 2 mm and weigh just over 1 gram. Several connector types are available to ensure efficient integration regardless of production volumes. Modules designed for integration in high volume applications feature BGA or LGA solder connectors for cost efficient manufacturing, while modules for medium volume production volumes usually have pin connectors. For efficient integration in low volume applications or as upgrades to existing applications, several vendors offer fully compliant embedded modules, which include an antenna or an antenna connector. Figure 1.3: Examples of IoT modules Source: Sierra Wireless, Telit and u-blox Wireless IoT modules have been designed to meet demands from diverse applications such as automotive telematics, fleet management, smart metering, payments, remote asset monitoring, industrial process control and security systems. The most important performance parameters vary between applications. For example, automotive applications require very reliable modules that are shock resistant and capable of operating in extended temperature ranges. Modules for tracking and fleet management applications increasingly feature integrated GNSS receivers. Other use cases may benefit from utilising the application processor in the module to run applications. Module manufacturers offer support for software platforms such as Python, Open AT and Java, enabling customers to create embedded applications. Additionally, most manufacturers also provide support services for over-the-air firmware updates, enabling remote upgrading of protocol stacks, operating system and embedded applications, reducing the cost of maintenance and facilitating the addition of new features to applications. This is especially valuable for deployments in products with long life cycles. 6

16 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular IoT gateways, routers and modems Devices such as gateways, routers and modems use standard interfaces and protocols to provide Internet connectivity for machines. Collectively, these devices are frequently referred to as external network devices, terminals, IoT gateways and connectivity boxes. Cellular IoT gateways and modems commonly communicate with machines using Ethernet, serial or wireless interfaces and are used in a wide variety of applications, ranging from transportation, industrial automation, remote monitoring and SCADA to ATMs, kiosks, mpos and security. For example, assets such as traffic controllers, meters and PLCs are typically connected via a serial interface, while assets such as lottery machines, ATM stations, CCTV cameras, kiosks and gaming terminals use Ethernet connectors for local communications. Many of these applications require devices to be ruggedized and able to operate in wide temperature ranges. Therefore, most manufacturers offer hardened industrial routers and gateways that operate in a temperature range of typically -30 C to +70 C and under varying power input. Most applications also have expected lifespans of ten years or more, meaning that devices need to be durable, easily maintained and use cellular bands and protocols expected to be in use for many years. Figure 1.4: Common features in cellular IoT gateways and routers Features Options Cellular module 2G 3G LTE Cat 3 or 4 LTE Cat 1 Wireless connectivity Wi-Fi Bluetooth ZigBee Z-Wave Ethernet ports WAN LAN Ports Serial USB GPIO POTS GNSS GPS A-GPS GLONASS Galileo OS Linux Windows Failover capabilities Source: Berg Insight 7

17 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Cellular modems, routers and gateways are all networking devices used to connect sensors or devices to the Internet. However, there are important differences in functionality and hardware used in modems, routers and gateways. A cellular modem is the simplest device that can be used to provide a cellular connection to one IoT device. A router on the other hand does not necessarily provide connection with an external network, such as the Internet. A router is designed to allow communication between different devices, sensors and computers in a network. In the case of a cellular router, it connects all the separate devices in the network to the Internet. A router often features a number of Ethernet (LAN) ports or some type of local area wireless technology such as Wi-Fi, Bluetooth, ZigBee or Z-Wave. Gateways have the same functionality as a router but can also handle communications with networks and devices using different protocols. For example, a router can manage a number of computers that all use IP. A gateway on the other hand can connect devices using IP with devices using LAN-based protocols such as Bluetooth or ZigBee. The gateway functions as a bridge and aggregates data from the different devices over different protocols and translates these to a common protocol. Figure 1.5: System architecture for an end-to-end IoT solution Source: Berg Insight The variations in design of different gateways and routers are also significant. Gateways and routers can be split into two categories: simple networking devices and programmable devices. Programmable gateways and routers have all of the functionalities found in the networking versions but add the possibility to run applications at the network edge. The 8

18 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 alternatives are to either add computing power at the nodes or in a central location such as a cloud or data centre. Processing power at the nodes increases costs and complexity of the end-points. On the other hand, transmitting all gathered information over the Internet via cellular connectivity requires costly data plans and a reliable cellular connection. For example, if a programmable gateway is used to monitor temperature in a freeze room in a restaurant it would be sensible to connect one or several sensors measuring the temperature, a sensor on the door to detect whether it is open or closed and an alarm to warn if the temperature rises above a threshold limit. The gateway could then be programmed to send a text message to the owner if an issue is detected, such as the door being open for too long or that the temperature is outside of the acceptable range. Additionally, the gateway could sound the alarm and adjust settings on the cooling unit. The option would be to either have intelligent sensors where each sensor sounds a warning when the temperature is too high or to transmit all information to a central position using a networking gateway. Figure 1.6: Examples of cellular IoT gateways Source: Digi International, Cradlepoint and Systech SIM solutions and embedded UICC IoT communications have special requirements on SIM solutions and comprise one of the main drivers behind the development of new technologies and standards in this area. Traditional SIM cards are sensitive to a wide range of conditions common for industrial environments including high temperature, shocks, vibration and humidity. There are two solutions that address this problem: industrial-grade SIM cards in the traditional form factors and embedded SIMs (esims). Parallel to the development of ruggedized SIMs and esims, 9

19 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 there has been a trend of miniaturization of conventional SIM cards. The first and largest SIM card 1FF is no longer used in modern devices, while the Mini SIM, or 2FF, is still used in some feature phones. The Micro SIM, or 3FF, was popularised by Apple, which integrated the SIMs in the company s iphone and ipad models in An even smaller form factor called Nano SIM, or 4FF, was introduced during 2012, measuring only 12 x 9 millimetres. Major application areas for the 3FF and 4FF form factors are smartphones, tablets and consumer electronics devices. The new esim, or MFF2, is ideal for IoT applications as it can be soldered directly onto the device s circuit board and remotely configured over-the-air. Figure 1.7: Comparison of SIM form factors Form factor Length Width Thickness Mini SIM (2FF) 25 mm 15 mm 0.76 mm Micro SIM (3FF) 15 mm 12 mm 0.76 mm Nano SIM (4FF) 12 mm 9 mm 0.67 mm esim (MFF2) 5 mm 6 mm mm Source: Berg Insight Industrial-grade SIM cards have extended lifespans and reinforced resistance to environmental factors to withstand and integrate into industrial manufacturing processes. These SIM cards can operate in temperatures between -40 C and +105 C and are available in the form factors ranging from 2FF to 4FF. The size of the SIM selected for a given product typically depends on the on the size of the device and the amount of space available to contain a SIM. For example, a small lone worker safety device featuring an alarm button and GPS may use a Nano SIM, whereas larger devices such as telematics gateways used in fleet management applications could accommodate a larger form factor. 10

20 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Figure 1.8: Size comparison between the 4FF and MFF2 form factor Source: Berg Insight esims, also referred to as embedded universal integrated circuit cards (euiccs), can be handled just like any other electronic component during manufacturing and increase the reliability of the SIM solution even further in terms of reducing malfunction due to shocks, corrosion and other environmental factors. Soldering the SIM directly onto the circuit board also prevents someone from tampering with the device and try to remove the SIM for misuse. Moreover, the technology enables integration of the esim directly in the IoT module, which simplifies the design of cellular IoT devices even further. Another advantage of esims is that they simplify the logistics process, as delivery and activation of SIM cards can be a complex and rigid process. Next generation euicc solutions IoT is driving a paradigm shift in mobile network subscription management. Traditional SIM solutions have several limitations that hold back the development of new areas of cellular communications. Device design and miniaturisation is limited to the need for physical connectors. The physically provisioning of SIMs creates logistical challenges in distribution and the lock-in effect to one MNO from the point of manufacturing puts limitations on distribution models, subscription management and commercial relationships. The biggest challenges are faced by OEMs and device manufacturers shipping products to international markets, where the final destination for a product may not be known at the time of production. Embedded SIMs, or embedded universal integrated circuit cards (euiccs), along with remote provisioning are designed to address these issues and covered in GSMA s Embedded SIM Specification. Instead of delivering a pre-configured smartcard, tied to one particular MNO, the euicc is produced with a set of standard features to enable personalisation at a later stage. This allows users to remotely provision their euiccs to connect to an initial operator 11

21 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 and subsequently change their subscription remotely from one operator to another. MNO data can be securely and remotely loaded onto the SIM at any time during the device s lifespan. The technology establishes a new order in the supply chain where a connected device can be configured for an MNO of choice in its final destination country and where euicc owners such as device manufacturers, solution providers or end-customers can remotely switch MNOs for connected devices several times during their lifespan. One of the main challenges is to maintain the same level of security as provided today in the new subscription management infrastructure. Key suppliers of euiccs and remote provisioning solutions include the traditional SIM-card vendors Gemalto, Giesecke & Devrient (G&D) and IDEMIA. The latter was formed through the merger of Oberthur Technologies (OT) and Safran Identity & Security (Morpho) in March The leading semiconductor IP supplier Arm entered the market in February 2018 with the introduction of its Kigen family of SIM solutions Carrier, industry and region specific certifications Certifications can add both considerable cost and time to the development of cellular devices. Requirements vary significantly by country and geographical region, but in general certifications of cellular devices can be divided into three categories: country or region specific certifications, carrier certifications and industrial certifications. Country and region specific certifications include for example Federal Communications Commission (FCC) in the US, Industry Canada (IC) in Canada, CE in Europe, China Compulsory Certificate (CCC) in China and Regulatory Compliance Mark (RCM) in Australia. These are government agencies or markings required to sell either electronic or cellular devices. Carrier certifications mainly apply in the US, where each MNO must approve the cellular device before it is allowed on that carrier s network. Each MNO has its own requirements and the certification costs tens of thousands of dollars but is lower when the module used is already certified. PTCRB and GCF are industry organisations that set certification frameworks and protocols for testing carried out by third party laboratories. The enforcement of PTCRB and GCF is managed by the MNOs. The last category industry certifications only applies for devices used in specific mission critical applications, mainly within the transportation and 12

22 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 healthcare sectors. Examples here are UL listing, classification or performance verification, the E-mark for devices used in buses and coaches and EN certification for railway applications. PTCRB The PTCRB was formed by MNOs on the North American market in 1997 as a wireless device certification forum for GSM devices. The organisation provides a framework for certification of UMTS and LTE mobile devices and modules for members. Membership is comprised of many North American operators, such as AT&T, Rogers, Telus, T-Mobile, Bell Mobility and Sprint, with the notable exception being Verizon. The wireless association CTIA administrates the PTCRB certification process, although actual testing is carried out by third-party accredited laboratories. PTCRB certification is required to connect cellular devices to a member carrier s network. However, the testing required for an end-product based on a certified module is considerably less extensive compared to the testing required for a device based on a chipset or non-certified module. The three main parts of PTCRB testing are related to over-the-air (OTA) performance, radiated spurious emissions (RSE) and SIM card electrical testing. OTA testing can be excepted for devices that fulfil two criteria. Firstly, the device must not be intended for hand-held use or for use against the head. Secondly, it must either have an external antenna located more than 20 cm away from the device or lack a defined antenna. OTA include testing of total radiated power (TRP) and total isotropic sensitivity (TIS). A TRP test measures the radiated power at multiple positions compared to the device whilst TIS measurers the performance of the receiver. The RSE test is a measurement of the signal strength and is carried out both in active and idle mode. The SIM card electrical testing refers to measurements of the SIM card holder and properties such as voltage drop in the power supply, rise and fall times and timing requirements. Not all parts of a PTCRB test have a pass/fail outcome. RSE and TRP tests must be passed in order for the device to be certified, but the TIS and TRP measurements taken as part of the evaluation of OTA performance do not. However, carriers are likely to enforce their own requirements based on PTCRB test results. 13

23 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Federal Communications Commission and Industry Canada Federal Communications Commission (FCC) is an independent US government agency responsible for the regulation of communications via radio, television, wire, satellite and cable. Any cellular device sold in the US must be approved by the FCC. The main pass and fail criteria include measurements of intentional and unintentional radiation. The unintentional radiation test is very similar to the idle part of the RSE test performed during PTCRB certification. Specific absorption rate (SAR) testing is an additional test of the rate at which energy from an RF electromagnetic field is absorbed by the human body. This needs to be carried out if the device is intended for use within 20 cm from a human. Industry Canada is Canada s equivalence to the FCC. The requirements for approval of cellular devices are similar to those enforced by the FCC and under some conditions, including that the original testing was carried out no more than a year earlier, an FCC certification can be used as the basis to receive approval from Industry Canada without additional testing. GCF GCF was established in 1999 and is an active partnership between mobile network operators, manufacturers and the test industry. The organisation has operator members from all major markets, but the certification is particularly useful in Europe and Asia. GCF s certification scheme covers LTE, 3G UMTS, GSM and CDMA2000 according to 3GPP standards (3GPP2 for CDMA2000). Similar to PTCRB, certification is voluntary, but network operators and retailers can require this certification. Since 2013, GCF testing can only be carried out by Recognized Test Organizations (RTOs). RTOs are GCF members that have demonstrated the experience, qualifications and systems to measure the performance of cellular devices against GCF s certification criteria. The tests are similar to PTCRB testing. Some labs offer the two tests simultaneously, as both test conformance to 3GPP standards. Again, in a similar manner to PTCRB, GCF has established a simplified procedure for certifying devices based on a certified module. For a device to be eligible, the module used must have received its GCF certification no more than three years before the connected device is certified and cellular communications cannot be the primary function of the device. Since January 2015, GCF handles all certifications previously managed by CDMA Certification Forum (CFF). 14

24 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular IoT hardware value chain Cellular baseband chipset vendors play a key role as suppliers of the underlying semiconductor technology for cellular IoT modules and devices. Qualcomm s dominance in the smartphone market extends to the cellular IoT module segment where it has long standing relations to most leading global vendors. Other manufacturers with high involvement in the IoT module market include MediaTek and UNISOC. Module vendors use chipset technology to develop complete modules in standard form factors which are easy to use for device vendors and other developers or integrators. Direct integration of chipset technology in machines requires high initial investments, generates too long lead times and is typically beyond the technical competence of for instance automotive suppliers who could potentially reduce their variable production costs with such an approach. Even when using modules or IoT gateways, many manufacturing companies rely on external development partners for integration of IoT technology in their products. However, connectivity is far from always integrated by the machine manufacturer. There are also many independent IoT solution providers that offer for instance remote tracking and remote monitoring services for different vertical markets. This category of players frequently develops IoT devices in-house. Figure 1.9: Cellular hardware value chain 15

25 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular IoT from 2G to 4G and beyond Cellular networks are the leading platforms for wireless communications worldwide, providing nearly ubiquitous voice and data connectivity for billions of people and devices worldwide. This makes cellular technologies essential for IoT communications. GSM/GPRS/EDGE is the largest global 2G standard for mobile communications, available in almost every part of the world. At the end of Q3-2017, there were approximately 3.1 billion 2G connections worldwide, representing 40 percent of the total cellular connections, down from 46 percent one year earlier. The lesser CDMA standard is primarily confined to Asia-Pacific and North America. WCDMA/HSPA that builds on GSM/GPRS/EDGE has become the leading standard for third generation (3G) mobile communications, covering the greater part of the world s population. Alternative technologies are EVDO that builds on CDMA and TD-SCDMA a domestic 3G standard developed in China. At the end of Q4-2017, there were approximately 2.3 billion 3G connections worldwide, representing around 31 percent of total cellular connections. For the fourth generation (4G) of mobile networks, LTE is emerging as the leading global standard, adopted by all leading players in markets that were previously divided between GSM/HSPA and CDMA/EVDO operators such as the US and Japan. At the end of Q4-2017, there were approximately 2.4 billion 4G connections worldwide, corresponding to around 30 percent of total cellular connections. Figure 1.10: 3GPP cellular network connections by generation (World Q4-2017) Generation Connections Market share 2G (GSM/GPRS/EDGE) 3.1 billion 40 % 3G (WCDMA/HSPA/EVDO) 2.4 billion 31 % 4G (LTE) 2.3 billion 29 % Total 7.8 billion 100 % Source: GSMA 16

26 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER G mobile networks 2G mobile networks provide almost complete coverage of most densely populated parts of the world s landmass. A handful of countries have however shut down or started to phase out 2G to allow operators to reallocate spectrum to 3G and 4G services. At the beginning of 2018, 2G still accounted for nearly 40 percent of the global subscriber base. GSM/GPRS is the completely dominant platform, while CDMA only accounted for 300 million mobile subscribers, mostly concentrated to Asia-Pacific and North America. 2G has an even stronger position in the cellular IoT segment. At the end of 2017, there were an estimated 456 million 2G cellular IoT connections worldwide, corresponding to a market share of 70 percent. GSM/GPRS has regional market shares of percent in the greater part of the world. The main exceptions are the US, Japan, South Korea and Australia where the transition to 3G/4G is either underway or complete. CDMA remains a significant 2G technology for IoT in the US and is also being introduced in some European countries as a dedicated platform for mobile data communication in the 450 MHz frequency band. The EC- GSM standard could potentially extend the lifespan of 2G networks for cellular IoT. So far there have however been no announcements of commercial deployment plans in any part of the world G/4G mobile networks 3G/4G mobile networks are available in virtually all major population centres in almost 200 countries worldwide. By 2020 the combined market share is projected to reach more than 70 percent, driven by the growing penetration for smartphones. 3G took ten years to reach the 1 billion connections milestone. 4G reached 1 billion connections after six years at the end of By 2020, 4G is expected to be the dominant technology in Europe and North America, accounting for percent of all mobile network connections. 4G will also account for around one third of the connections in Asia-Pacific and Latin America, with local market share of up to 80 percent or more in the most advanced countries. The Middle East & Africa, where the deployment of 4G networks in some cases have not even started, will lag behind with market shares in the range of percent. 17

27 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 3G and 4G networks accounted for an estimated 14 percent and 15 percent respectively of cellular IoT network connections at the end of The US and Japan were the first major adopters of 3G technology for IoT communications as the countries began shutting down 2G services. In addition, 3G has gradually penetrated the high-end segment of the IoT market worldwide in data intensive application segments. Since 2014, there has been an accelerating uptake of 4G, driven by demand in the global automotive industry and non-2g markets. The leading US mobile operators have engaged actively to facilitate the transition by upgrading their 4G networks to support LTE CAT-1. Berg Insight expects that 4G will increasingly replace 3G in the IoT market over the coming years, as the price difference between the technologies diminishes. Figure 1.11: LTE-M network availability by country (Q3-2018) Country Australia Belgium Japan Mexico Netherlands Taiwan Thailand Turkey UAE United States Singapore South Korea Spain Operator(s) Telstra Orange KDDI AT&T KPN APTG AIS Turkcell Etisalat AT&T, Verizon Singtel SK Telecom, Korea Telecom Telefónica Source: Berg Insight and GSMA 18

28 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER G-MTC mobile networks (emtc/lte-m and NB-IoT) 3GPP Release 13 marked a new era in mobile communications by introducing a new category of standards for machine type communications. Initially the category comprises two 4G standards, emtc/lte-m and NB-IoT and one 2G standard, EC-GSM. emtc and NB-IoT are based on LTE and can be implemented by mobile operators in their existing 4G networks. In many cases, networks can be upgraded through a software update. The process can however also be more complicated, depending on the existing network infrastructure. Radio frequency bands in use for NB-IoT range from 700 MHz to 2100 MHz. Pre-commercial trials of LTE-M and NB-IoT started in late 2015 and ramped up globally in the following year. South Korea was the first country where commercial LTE-M services were launched by SK Telecom and KT in early 2016, followed by the US where AT&T and Verizon had live services at the end of the year. AT&T reported full nationwide coverage for LTE-M in May KPN, Orange and Telefónica launched the first LTE-M services in Europe during China Unicom, Etisalat, KDDI, NTT Docomo, Singtel, Softbank, Telstra and Turkcell are other examples of mobile operators that are adopting the standard. NB-IoT rapidly gained strong traction in the global mobile operator community. In Europe, Vodafone and Deutsche Telekom that were actively involved in the pre-standard development phase have been joined by Orange, Telefónica, Telecom Italia, EE and Telenor among others in the growing camp of mobile operators supporting the new standard. Vodafone started to switch on commercial services in the Netherlands, Ireland, Germany and Spain in Deutsche Telekom launched in Germany and the Netherlands in Q and plans to extend coverage to an additional six European countries. Telefónica expects to launch commercial NB-IoT services in both Europe and Latin America, while other players will wait for the additional features included in 3GPP Release 14 before moving ahead with commercial deployments in 2018/2019. Verizon and T-Mobile USA will launch extensive rollouts in In Asia-Pacific, nationwide rollouts started in China, Singapore and South Korea in China Mobile, China Unicom and China Telecom began launching NB-IoT services in selected regions during the year and target nationwide coverage by KT and LGU+ have deployed nationwide networks in South Korea. In Singapore, M1 launched the first commercial service in August Telstra and Vodafone provide NB-IoT services in Australia. Etisalat in the UAE and Turkcell and Vodafone in Turkey are the first operators to offer commercial NB-IoT services in the Middle East. 19

29 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Figure 1.12: NB-IoT network availability by country (Q3-2018) Country Australia Austria Belarus Belgium China Croatia Czech Republic Finland Germany Greece Hong Kong Ireland Italy Netherlands Norway Poland Slovakia Singapore Sri Lanka South Korea South Africa Spain Taiwan Turkey UAE Operator(s) Telstra, Vodafone Deutsche Telekom Velcom Orange China Mobile, China Telecom, China Unicom Deutsche Telekom Vodafone DNA, Elisa, Telia Deutsche Telekom, Vodafone Deutsche Telekom Three Hong Kong, China Mobile Vodafone Telecom Italia, Vodafone Deutsche Telekom, Vodafone Telia Deutsche Telekom Deutsche Telekom M1, SingTel Dialog Axiata, Mobitel Korea Telecom, LGU+ Vodafone Telefónica, Vodafone APTG, Chunghwa Telecom, FarEasTone Turkcell, Vodafone Etisalat Source: GSMA 20

30 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER G networks 5G networks based on the recently released NR radio specifications are still in the early prototype stage. KT performed one of the first large scale trials during the 2018 Winter Olympic Games in Pyeoncheng, South Korea. The operator plans to launch a commercial 5G network in Verizon launched its first commercial 5G service in the US in October 2018, while AT&T has announced plans to launch commercial 5G services in select US cities later in the year. The latter will use mmwave spectrum ( GHz) for the deployment that will first cover Atlanta, Dallas and Waco. China Mobile plans 5G trials in 2018, followed by precommercial test services in 2019 and full-scale deployment starting in LPWA networks Low power wide area (LPWA) networking is based on the utilisation of unlicensed ISM-band radio frequencies and low power radio transmitters to create networking solutions optimised for low hardware cost, long battery life and ubiquitous coverage. There is always a trade-off between cost and power consumption on the one hand and network performance on the other, which needs to be balanced according to the needs of a specific application. LPWA networking was first developed for the earliest telemetry applications and has later evolved into progressively more advanced technologies using the latest wireless networking techniques. Today there are two main forms of LPWA technologies. The first is proprietary or semiproprietary technology platforms created for specific application areas such as smart metering or SCADA (supervising control and data acquisition). The largest deployments connect millions of nodes through point-to-multipoint or mesh configuration. In recent years, there have also been initiatives to create open standard LPWA networking platforms, optimised for wireless IoT communication. So far LoRa and Sigfox have gained most support, with wide area network rollouts planned or underway in multiple countries. Sigfox operates in 36 countries (deployed or being rolled out) and expects to expand its network to include 60 countries before the end of LoRa networks have been rolled out in a number of countries. In Europe, Orange, Bouygues Telecom, KPN, Proximus and Swisscom are rolling out nationwide networks across a footprint covering 100 million people from the North Sea to the Alps. In Asia-Pacific, SK Telecom completed the first nationwide LoRa network rollout in the region in June In September 2016, Softbank announced plans for a similar rollout in 21

31 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Japan. China, India and Thailand are other major Asian markets where large-scale deployments of LoRa are underway. Senet is the first dedicated LoRa network operator in the Americas, while Comcast is the first established telecom operator to endorse LoRa in North America. LoRa is also gaining traction in the Middle East & Africa. South Africa s FastNet was among the founding members of the LoRa Alliance and began deploying a regional network at the end of Figure 1.13: Comparison of LPWA technologies Technology LoRa Wi-SUN NB-IoT Weightless-P Data capabilities kbps kbps <100 kbps kbps Ingenu Sigfox 10 kilobytes per device and day 12 bytes messages, 140 times per day Source: Berg Insight Wi-SUN and Weightless are significant standards for general purpose LPWA and smart grid communications respectively. In December 2015, Silver Spring Networks announced its Starfish public wireless IoT network service based on the Wi-SUN standard. The networks feature up to 1.2 Mbps in speed, 10 millisecond latency and up to 50 miles in point-to-point range. The first Starfish metropolitan area networks have been launched in major cities across the world such as Bristol, Chicago, Copenhagen, Dubai, Glasgow, Kolkata, Melbourne, Mexico City, Paris, San Francisco, Sao Paolo, Singapore and Washington, D.C. As described above, the leading established players in the mobile industry are launching the NB-IoT and LTE-M standards to cover the need for LPWA networking. The GSMA supports the efforts through the Mobile IoT Initiative, supported by AT&T, Alcatel-Lucent, Bell Canada, China Mobile, China Telecom, China Unicom, Deutsche Telekom, Ericsson, Etisalat, Huawei, 22

32 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 Gemalto, Intel, KDDI, Nokia, NTT Docomo, Ooredoo, Orange, Qualcomm, Sierra Wireless, Singtel, Telecom Italia, Telefónica, Telenor, Telstra, u-blox and Vodafone. A complicating factor in the standardisation of LPWA is the broad scope of technologies. LoRa, Wi-SUN and other technologies based on the standard have complete networking stacks and support data rates of up to kbps. Sigfox and Ingenu are optimised for sending and receiving very short data messages. This implies that the LPWA market will either remain divided into two distinct segments, served by separate technologies, or a converged technology platform supporting disparate use-cases. NB-IoT could potentially become a platform for achieving some level of interoperability between different technologies in the LPWA space Cost comparison for cellular and LPWA technologies There are significant differences in hardware cost for IoT communications devices. Cellular is the most expensive technology. During 2017, the average cost for modules in Western markets were in the range of US$ 5 15 for 2G, US$ for 3G and up to US$ 50 for 4G LTE. The price of 2G modules has decreased rapidly and sold for as low as US$ 5 in Europe and the Americas. Domestic pricing in China was even lower with 2G modules sold for as little as US$ 2. LTE Cat 1 and LTE-M are designed to reduce the cost of 4G LTE modules to the current levels of 3G and 2G respectively over the coming years. LPWA and WLAN/WPAN chipsets are considerably less expensive, although the cost of industrial-grade communication modules can be in the same range as 2G/3G modules due to small volumes. Proprietary RF-chipsets may cost in the range US$ 2 4, while standard Wi-Fi and Bluetooth chipsets cost around US$_1. Bluetooth Smart and chipsets cost around US$ 0.50 in high volumes. Cellular has a strong overall market position for automotive, industrial, smart grid, security, as well as other enterprise and government applications. Mobile networks offer wide area coverage and high performance in populated areas. HSPA/LTE meets the most demanding requirements, enabling IP-based broadband speed communications at almost any location. For less demanding applications, 2G remains a solid low-cost platform in most world regions. Over the coming years, IoT optimised versions of LTE promise to offer a sound migration path from 2G to 4G LTE with maintained hardware cost. In the longer term, the new NB-IoT 23

33 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 1 technology may overcome the limitations in terms of cost and power consumption that limit the adoption of cellular technologies in constrained and cost sensitive high-volume applications. Figure 1.14: Cost comparison for IoT technologies (2017) Technology Cost per device LTE Cat 3/4 US$ HSPA US$ GPRS US$ 5 15 Proprietary RF/LPWA US$ 2 5 Wi-Fi/Bluetooth Classic US$ /Bluetooth Smart US$ 0.5 Cost targets for new technologies LTE Cat 1 US$ LTE-M US$ NB-IoT US$ 5 10 Source: Berg Insight 24

34 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Chapter 2 Market forecasts and trends 2 Market forecasts and trends 2.1 Market forecasts The cellular IoT module and IoT gateway markets are closely related as virtually all cellular IoT gateways and modems include a cellular module. The focus of this report is the market for IoT gateways and modems, but vendor market shares and market forecasts for the IoT module market are also included. The M2M module market is less fragmented than the IoT gateway market. The three largest IoT module vendors account for 46 percent of the market, while the corresponding figure for the IoT gateway and modem market is 33 percent. In terms of shipments, Berg Insight expects the cellular IoT gateway and modem market to grow at a slightly lower rate than the cellular IoT module market The embedded cellular module market and vendor market shares Berg Insight estimates that global shipments of embedded cellular modules increased by 76 percent in 2017 to reach 237 million, fuelled by exceptional volume growth in China. Annual module revenues for the three largest market players Sierra Wireless, Gemalto and Telit grew by 7 percent to US$ 1.2 billion, with the total market value reaching approximately US$ 2.5 billion. Sierra Wireless was the number one supplier of cellular IoT modules by revenues. Including cellular products for the PC and networking markets, Sierra Wireless sales of embedded modules reached US$ 511 million. Gemalto was in second place with module sales of US$ 354 million, followed by Telit at US$ 306 million. SIMCom more than doubled its shipment volume compared to the previous year and ranked fourth with US$ 269 million in cellular IoT module sales. Quectel recorded the highest revenue growth at about 160 percent, reaching IoT module sales of US$ 236 million. Sierra Wireless, Gemalto and Telit shipped in the range of million units each, with considerably higher ASP due to a higher share of 3G/4G LTE devices. SIMCom and Quectel ranked first and second by volume, shipping 43 million and 36 million units respectively. 25

35 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Figure 2.1: Top cellular module vendors, by revenues and shipments (World 2017) Company Sales (US$ m) Market share Shipments (m) Sierra Wireless % 18 Gemalto % 26 Telit % 21 SIMCom % 43 Quectel % 36 u-blox % 8 Huawei % 8 ZTE WeLink 90 4 % 6 Other % 71 Total 2, % 237 Source: Berg Insight The global cellular IoT module industry is going through a major transformation. Firstly, as a result of developments in China and secondly due to the increased number of new entrants that has emerged following developments in the LPWA domain. The domestic Chinese market leaders SIMCom and Quectel both doubled their shipments in 2017 and have become the undisputed global market share leaders by volume. Behind them, other Chinese vendors such as Huawei, ZTE WeLink, Neoway and Fibocom have seen their module businesses expand significantly. China is also the scene for significant M&A activity. ZTE offloaded its cellular IoT business to Gosuncn during 2016 and At the same time, Sunsea Telecommunications emerged as a new major industry player through the acquisitions of Longsung and SIMCom. While there has been some consolidation among the larger suppliers, the long tail of companies with activities in the market for cellular IoT modules is growing. A number of new players have been attracted to the market, particularly in the emerging NB-IoT segment. Examples include Nordic Semiconductor, Foxconn and WNC. 26

36 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular module market analysis and forecasts The 3GPP family of cellular technologies are positioned as high to mid-range technologies in the IoT market. Standard 3G and 4G LTE devices meet the requirements of demanding applications in automotive and other data-intensive application areas. 2G and cost optimised 4G LTE similarly match the requirements of somewhat less demanding applications, especially if mobility is required. LTE-M and NB-IoT push the boundaries of cellular IoT to include battery powered devices and a wider range of low-cost devices. Berg Insight believes that the main strength of 3GPP technologies in the IoT market is the mature ecosystem, which has evolved over decades and currently produces hundreds of millions new connected devices per year. The rapid standardisation of NB-IoT has proven the strength of the 3GPP ecosystem and verified its ability to create new networking platforms based on the needs of the industry. In the coming years, Berg Insight expects a major transformation of the ecosystem, accelerated by policies of the Chinese government. China s Ministry of Industry and Information Technology (MIIT) has set a national target of 600 million NB-IoT connections by To achieve the target, yearly shipments of NB-IoT devices must grow from around 20 million in 2017 to more than 300 million in Berg Insight believes that the target is realistic and will be achieved through an active policy to replace 2G. The Chinese mobile operators offer subsidies and organise centralised tenders for NB-IoT devices to grow demand and the public sector, including state-controlled enterprises, will specify NB-IoT as the connectivity technology in public tenders. As a result, the price for the basic chipsets shared by all types of 4G LTE devices will drop dramatically, resulting in lower module prices for both LTE-M and NB-IoT. At the same time, demand for 2G chipsets and modules will disappear, prompting suppliers to refocus their businesses on 4G LTE. The transformation will affect not just the Chinese market, but also the global market where cost remains the foremost barrier for IoT customers to move from 2G to 4G LTE. These dynamics will also accelerate the deployment of NB-IoT and LTE-M among the mobile operators in response to growing demand. 27

37 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Berg Insight estimates that global cellular IoT device shipments increased by 82.2 percent in 2017 to million. Growth was fuelled by an exceptional market expansion in China, where the mobile operators more than doubled their combined subscriber base in IoT. Until 2023, shipments of cellular IoT devices are forecasted to grow at a compound annual growth rate (CAGR) of 23.2 percent to reach 1,112.5 million units. Asia-Pacific is the largest geographic market with a regional share that is expected to increase from 66 percent in 2017 to 74 percent in By 2022, Berg Insight believes consumer products will surpass automotive devices as the largest device category. Figure 2.2: Cellular IoT device shipment forecast (World ) Millions Europe Americas Asia-Pacific Middle East & Africa Total ,112.5 GSM/GPRS/EDGE CDMA/EVDO WCDMA/HSPA LTE CAT LTE CAT LTE-M NB-IoT NR (5G) Total ,112.5 Source: Berg Insight 28

38 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 The cellular IoT technology landscape is in a phase of rapid transformation. Developments in China accelerate a global shift from 2G/3G to 4G technologies. As the initial focus for 5G will be high-bandwidth applications, Berg Insight believes that 4G will become the preferred platform for industrial IoT in the foreseeable future. The move from 2G to 4G began in North America with 3G as an intermediate technology. The region has seen a rapid uptake of LTE CAT-1 since 2017 and CAT-M starting in 2018 at the same time as GPRS and CDMA are fading away. Europe will begin to see adoption of LTE CAT-1 in 2018, followed by an accelerated uptake of LTE-M and NB-IoT in China is moving fast from GPRS to NB-IoT in the mass-market segment with deployments expected to exceed 100 million units by the end of At the same time there will also be fast-growing demand for LTE CAT-1 and LTE- M, as well as LTE CAT-3+. 2G and 3G will be in steady decline in all developed markets with demand shifting to developing countries with limited availability of 4G networks. Berg Insight expects that 5G will become commercially available for IoT applications in Early adopters will include the automotive industry The cellular IoT gateway and modem market and vendor market shares Berg Insight estimates that global shipments of cellular IoT gateways and modems reached close to 3.2 million units in 2017 at a total market value of US$ 785 million. Purpose-built devices for fleet management and asset tracking applications are excluded from the figures according to Berg Insight s definition of IoT gateways and modems, found in section 1.1. In 2017, US-based Cradlepoint was the market leader with annual revenues from cellular IoT gateway sales of approximately US$ 115 million and a market share of more than 14 percent in terms of sales. Other significant IoT gateway and modem vendors with market shares between 6 and 9 percent include North America-based Sierra Wireless, Cisco, Digi International and CalAmp, as well as Lithuania-based Teltonika. The North America-based companies achieved annual shipments in the lower hundreds of thousands at an average selling price ranging US$ The low-cost IoT gateway vendors Teltonika and Chinabased InHand Networks recorded the highest revenue growth and are also the leaders by volume. The two companies shipped an estimated 500,000 and 280,000 devices respectively, at an average selling price close to US$ 100. In contrast to the North American market, the European and Asian markets are more fragmented with a large number of small and medium sized players such as HMS Networks, Maestro Wireless, Four-Faith and Robustel Technologies. 29

39 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Figure 2.3: Top cellular IoT gateway vendors, by revenues and shipments (World 2017) Company (US$m) Sales (US$) Market share Shipments Cradlepoint 115 * 14.6 % 250,000 Sierra Wireless 72 * 9.2 % 265,000 * Cisco 70 * 8.9 % 150,000 * Digi International ** % 142,000 Teltonika 52 * 6.6 % 500,000 * CalAmp % 157,000 InHand Networks % 280,000 HMS Networks % 100,000 Maestro Wireless % 135,000 Four-Faith % 120,000 * Robustel Technologies % 125,000 Advantech B+B SmartWorx % 55,000 Multitech Systems 18 * 2.3 % 100,000 * NetModule % 15,000 Matrix Electrónica % 63,000 NetComm Wireless 12 * 1.5 % 40,000 * Encore Networks 10 * 1.3 % 30,000 * Eurotech 8 * 1.0 % 25,000 * Systech 6 * 0.6 % 30,000 * Gemalto % 50,000 Dr. Neuhaus 5 * 0.5 % 12,000 * Option % 10,000 Beijer Electronics Group 4 * 0.5 % 8,000 * Other % 510,000 Total % 3,170,000 * Berg Insight estimate ** Includes the Accelerated Concepts business Source: Berg Insight 30

40 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Cellular IoT gateway and modem market analysis and forecasts Berg Insight has revised its market size estimates and forecasts from the previous version of this report due to the exclusion of the China-based manufacturer SIMCom, which operates a major ODM business and provides customized devices primarily to MNOs. In 2017, the Americas was the largest market both in terms of revenues and shipments. Annual shipments in the region amounted to almost 1.1 million, where North America accounted for the vast majority of the units sold, although Mexico and Brazil also are significant markets for a number of vendors. In 2017, annual shipments on the Asia-Pacific market reached close to 1.0 million units, on par with the European market, although the average selling price in the region is the lowest globally. Cellular IoT gateway and modem sales in the Middle East and Africa region are so far limited but growing. Berg Insight estimates that about 120,000 devices were shipped to this region during Figure 2.4: Cellular IoT gateway shipment forecast, by region (World ) Thousands Europe 970 1,130 1,320 1,530 1,750 2,000 2,270 Americas 1,080 1,230 1,400 1,580 1,770 1,990 2,230 Asia-Pacific 990 1,300 1,670 2,110 2,610 3,170 3,770 Middle East & Africa Total all world regions 3,170 3,820 4,570 5,430 6,400 7,470 8,640 YoY growth rate 22 % 20 % 20 % 19 % 18 % 17 % 16 % Source: Berg Insight Berg Insight expects healthy growth for the cellular IoT gateway and modem market in the next six years. Globally, annual shipments are forecasted to grow at a compound annual growth rate (CAGR) of 18.2 percent, reaching annual shipments of 8.6 million units in The Asia-Pacific region is expected to experience the highest growth rate at a CAGR of 24.9 percent. Annual shipments in Europe and the Americas are forecasted to grow at a CAGR of 15.2 percent and 12.7 percent respectively. 31

41 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Even though the regional markets are similar in size in terms of shipments, they vary significantly in terms of value as a result of the differences in the product mixes sold in the respective markets. The Americas was the largest market in 2017, valued at US$ 352 million. The European and Asia-Pacific markets however grew faster than the Americas, at a doubledigit growth rate. The Asia-Pacific market achieved the highest growth rate at 27 percent. Asia-Pacific is a vast and diverse region comprising countries with very different economies. The region has a very large manufacturing industry which will be increasingly automated and connected during the forecast period, leading to an increased use of cellular IoT gateways and modems. The market values of the European and Asia-Pacific regions were US$ 226 million and US$ 184 million respectively in Figure 2.5: Cellular IoT gateway and modem market value, by region (World ) US$ million Americas Europe Asia Pacific Source: Berg Insight The average selling price in North America is significantly higher than in Europe and Asia- Pacific, primarily due to a higher rate of feature-rich and 4G equipped devices in the product mix. Berg Insight believes that the higher rate of feature-rich devices in the product mix is likely due to the high certification costs by the MNOs in the region. Certifying a cellular device for Verizon s and AT&T s networks in the US can for instance cost up to US$ 50,000. This 32

42 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 disfavours companies from having broad portfolios of devices, as the certification budget grows in proportion to the number of products. Certain customers are thus likely paying for features that they do not need. Moreover, the certification costs possibly also limit the presence of small vendors on the US market. Berg Insight estimates that the average selling price of devices sold in the Americas amounted to approximately US$ 330 in The average selling price has been comparatively stable during the last three years. The average selling price of devices sold in Europe has declined from about US$ 250 in 2015 to roughly US$ 230 in Figure 2.6: Changes in average selling price, by region (World ) Americas Europe Asia Pacific Source: Berg Insight In contrast to North America, the product mix in Europe contains a higher degree of simple network devices with 3G and even 2G connectivity. Additionally, low-cost manufacturers such as Teltonika has increased their market share and customers are also more willing to buy devices from Chinese vendors. The average selling price on the Asia-Pacific market was stable from 2016 to 2017 and some manufacturers even experienced an increasing average selling price during the period, as 4G LTE devices makes up an increasingly larger share of the product mix. In , the average selling price in the region was about US$ 170. Similar to Europe, vendors in Asia on average produce more low-end devices compared to their North American peers. If only considering the country of origin of the manufacturer, the difference is even more obvious. The average price of devices provided by Asian vendors is 33

43 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 around US$_140, compared to close to US$_200 for European vendors and well above US$_300 for North American vendors. Figure 2.7: IoT gateway shipments by cellular technology (World 2017) 10% 2G 29% 3G 4G LTE 61% Source: Berg Insight More than 60 percent of the devices sold globally during 2017 used 4G LTE as the main standard. 3G technologies accounted for roughly 29 percent, while 2G technologies represented approximately 10 percent of devices sold globally. The use of 2G modules in IoT gateways and modems is expected to decrease further and Berg Insight estimates that sales of 2G devices will be down to less than 5 percent of the global market in Sales of new 2G devices on the North American market were close to zero. In contrast, the use of 2G devices is expected to remain at a higher level in Europe and parts of Asia in the short-term as there are no immediate plans to close down 2G networks in many of the countries in these regions. In the mid-term, Berg Insight however expects LPWA technologies to capture a significant market position in market segments characterised by low bandwidth applications at the expense of 2G also in Europe and Asia. 34

44 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER Market trends The development of wireless network technology is continuously increasing the number of possible use cases for cellular devices. For low bandwidth applications, LTE Cat 1, LTE-M and NB-IoT provide a pathway for replacement of 2G and 3G installations but also open new opportunities to connect low-value assets. Higher categories of LTE address the growth in demand for data hungry applications such as video monitoring and passenger Wi-Fi in public transport vehicles. 5G cellular network technology will allow for deployments of cellular technology where the bandwidth requirements cannot be fulfilled today, such as in industrial Ethernet and wireless local area networks Vendors move to employ vertical integration strategies in attractive niches As the market for IoT solutions matures, customers in various market verticals are becoming more demanding in terms of product integration. IoT gateway vendors have in the past differentiated their offerings by adding connectivity services and software platforms for device management, security enhancements and other horizontal services. Several industry players are now moving to create strategies for specific vertical markets and have even introduced complete solutions including IoT gateways, peripheral hardware and applications. Vertical integration strategies have for example been applied by vendors such as Digi International, Sierra Wireless, InHand Networks and Option often involving acquisitions. Digi International has aggressively pursued acquisitions in the cold chain market. In , the company purchased Bluenica Corporation, FreshTemp, Smart Temps and Temp Alert, which all specialise in remote temperature monitoring and management. Digi International s SmartSense by Digi offering comprises cellular gateways, sensors and software and is marketed to the food service, transportation, education, healthcare and pharma, and industrial markets. Sierra Wireless acquired Numerex in late 2017, thereby adding complete solutions for asset tracking, tank monitoring and offender monitoring to its portfolio. The Numerex business is now part of the company s IoT Services segment. Option, which holds a strong position in the smart building segment, acquired Crescent in Q4-2017, a holding company comprising a number of operating companies active in smart LED public lighting, as well as IT services and contracting. The acquisition will enable Option to provide integrated solutions for smart city applications. Other examples of companies that to some 35

45 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 extent have pursued vertical integration strategies include InHand Networks in powerline monitoring and smart vending, HMS Networks in remote machine access and Eurotech in public transport. Figure 2.8: SmartSense by Digi cellular gateways for cold chain applications Source: Digi International A great amount of professional services and system integration efforts are still required to build and deploy an IoT solution. While large customers typically have the capabilities to integrate devices into their system architecture in-house, small and medium-sized firms turn to system integrators when investing in IoT solutions. By offering IoT gateways together with peripheral hardware and application software, tightly integrated into a complete solution, vendors are able to better address the needs of customers in various industries. These solutions reflect the maturation of the IoT market and facilitate the growing trend away from time-consuming in-house developed and bespoke IoT solutions Few new product launches of LTE-M and NB-IoT devices Networks optimised for IoT such as LTE-M and NB-IoT are currently being rolled out by carriers across all major geographies. AT&T and Verizon launched nationwide LTE-M 36

46 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 networks in the US in early 2017 and countless MNOs across Europe and the Asia-Pacific region expect their networks to be fully operational during Apart from easing the transition from 2G to LTE networks, LPWA technologies are expected to open up new opportunities to address greenfield opportunities among low value assets in the industrial, utilities, building, smart city and agricultural market verticals. Besides applications that make use of digital content such as imagery or video, the data requirements of most IoT applications is low even at the gateway level. New product releases of LTE-M and NB-IoT devices have however been limited. Encore Network launched the first LTE-M series of routers certified for Verizon s LTE network in the first quarter of Maestro Wireless followed by introducing a new series of industrial modems in mid-2017, featuring LTE-M and NB-IoT connectivity. US-based MultiTech Systems, which holds a strong position in the nascent LoRa gateway market, announced the availability of its first modems based on LTE-M and NB-IoT technologies in September The LTE-M devices were approved for use on the AT&T LTE network in January Advantech B+B SmartWorx and Systech Corporation along with several other manufacturers plan to introduce devices featuring cellular LPWA technologies during the coming year. It should however be noted that many device manufacturers, including early adopters, are taking a cautious stance amid the LTE-M and NB-IoT network rollouts, citing needs for reliability before committing to volume shipments. More broadly, the deployment of LPWA devices is restricted by the existing coverage area, as the technologies are deployed on 4G LTE towers Vendors offer modularized devices for flexibility and upgradability Different industries and applications require vastly different IoT device features, in terms of number of physical ports, wireless options and levels of ruggedization. Ports typically include up to 10 Ethernet connections as well as serial, USB, GPIO and POTS. Wireless LAN connectivity is included in many gateways and routers. Common WLAN technologies varies between vertical markets but include for example Wi-Fi, Bluetooth and Zigbee. Adding features increases cost and size of a device, so ideally only the IoT modules and ports required by the specific application are desired to be included. As a result, manufacturers usually take one of the following two approaches. The vendor can offer a large number of different device models or alternatively a small number of models that instead easily can be 37

47 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 customized. The latter can be done through a modular approach where the device has builtin slots intended for expansion cards. Figure 2.9: Examples of vendors offering modular device concepts (Q3-2018) Companies Advantech B+B SmartWorx HMS Networks Systech Cradlepoint Accelerated Concepts (Digi) Option Eurotech Encore Networks Matrix Electrónica MultiTech Systems Moxa Robustel Technologies Source: Berg Insight A number of companies including Advantech B+B SmartWorx, HMS Networks, Moxa, MultiTech Systems, Option, Robustel Technologies, Encore Networks and Systech offer solutions where for example Ethernet and serial ports as well as cellular and other wireless interfaces can be added to the device. This type of solution also allows for the customer to upgrade or alter a device after purchase by adding or replacing expansion cards, thus lowering the total cost of ownership of an IoT solution. Eurotech offers expansion modules that are separated from the gateway and enclosed in a separate casing. These expansion modules connect to the gateway through USB and SMA connectors. The ReliaCell expansion module is offered in several versions including for example 4G LTE Cat 3 and 4 with UMTS/GSM fall back. Eurotech s additional expansion modules ReliaIO and ReliaLORA were released in Q for extended I/O capabilities and LoRaWAN connectivity. The US-based companies Cradlepoint and Accelerated Concepts (now part of Digi International) offer devices with plug-in modems that are upgradable for higher categories of 4G LTE and in the future, 5G Leading IoT gateway providers experienced solid revenue growth in 2017 The leading providers of cellular IoT gateways and modems vary significantly in size, ranging from major global players with extensive international presence through distributors to vendors with a regional focus, mainly active on one or a few national markets. Annual 38

48 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 revenues from IoT gateway and modem sales are often subject to major fluctuations due to significant one-time purchases related to large projects that are not repeated. High volume projects are common in sectors such as energy and retail. In 2017/2018, most manufacturers experienced strong revenue growth. Figure 2.10: Financial data for leading IoT gateway and modem vendors Company Turnover 1 Growth 1 EBITDA 1 Market cap 2 Advantech US$ 1,401 m 5.6 % US$ 240 m US$ 4,622 m Sierra Wireless US$ 692 m 12.4 % US$ 54 m US$ 669 m CalAmp US$ 366 m 4.2 % US$ 52 m US$ 709 m ADLINK Technology US$ 337 m 11.5 % US$ 24 m US$ 327 m Digi International US$ 182 m % US$ 14 m US$ 343 m Beijer Electronics Group US$ 141 m 7.5 % US$ 11 m US$ 129 m NetComm Wireless US$_134 m 68.9 % US$ 15 m US$ 78 m HMS Networks US$ 133 m 24.3 % US$ 29 m US$ 772 m China Healthcare US$ 82 m % US$ -11 m US$ 39 m Eurotech US$ 65 m -1.6 % US$ 2 m US$ 143 m InHand Networks US$ 33 m 58.5 % US$ 6 m US$ 102 m Matrix Electrónica US$ 21 m 26.6 % N/A N/A Option US$ 6 m 24.6 % US$ -1 m US$ 20 m Connected IO US$ 2 m % N/A US$ 2 m 1 Financial year ended 2017/2018; 2 October 2018 Source: Berg Insight The Taiwan-based industrial computing specialist Advantech generated annual revenues of about 1.4 billion, up 6 percent from the previous year. Its cellular gateway business obtained through the acquisition of B+B SmartWorx generated revenues of roughly US$ 19 million. Sierra Wireless grew revenues by more than 12 percent, and its Enterprise Solutions business, which includes IoT gateways and modems, increased annual revenues by 42 percent to reach US$ 102 million. The increase in revenues of the Enterprise Solutions 39

49 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 segment was primarily driven by the acquisition of GenX, a US-based provider of in-vehicle cellular devices for the transportation market, in Q CalAmp, a leader in the transportation market, grew by 4 percent in the financial year ending in February The company now looks to broaden its offering to address new vertical markets. In its financial year ending in September 2017, Digi International s annual revenues decreased by 10 percent, primarily due to significant sales to large customers in the prior fiscal year. The industrial automation focused companies ADLINK Technology, Beijer Electronics Group and HMS Networks generated annual revenues of US$ 337 million, US$ 141 million and US$ 133 million in 2017 respectively. Companies with annual revenues under US$ 100 million mainly include a number of Europe and Asia-Pacific based vendors. Notably, InHand Networks and Matrix Electrónica grew rapidly in Pace of M&A activity could pick up from low levels The pace of merger and acquisition activity on the IoT gateway market has been low in the past years, averaging roughly one major acquisition per year since Berg Insight is of the opinion that the number of deals could pick up in the years to come as the industrial markets gradually adopt edge computing solutions and emerging cellular technologies such as NB-IoT, LTE-M and 5G. These trends significantly widen the addressable market for cellular networking solutions, with its inherent security features, but also make the IoT gateway a more central component in the IT infrastructure of enterprises and governments. Additionally, the industry remains fragmented and characterized by smaller players targeting regional markets, especially in Europe. Notable deals in recent time include Digi International s US$ 17 million acquisition of Accelerated Concepts, a provider of 4G LTE networking equipment with close ties to AT&T. In July 2018, HMS Networks purchased the embedded control and M2M communications specialist Beck IPC for 5 million (US$ 6 million), thereby adding embedded controllers, as well as the com.tom gateway series with the associated cloud portal to its portfolio. During 2016, HMS Networks acquired the much larger company ewon for 30 million (US$ 35 million). The ewon product line today make up the company s core offering in the cellular IoT gateway market. 40

50 THE GLOBAL CELLULAR IOT GATEWAY MARKET CHAPTER 2 Major deals in 2016 further include Advantech s US$ 100 million acquisition of B+B SmartWorx, which cellular router business originates from B+B SmartWorx s purchase of Conel in Other notable acquisitions include Belden s acquisition of ProSoft Technology in 2014 and Siemens acquisition of RuggedCom in Figure 2.11: IoT gateway vendor mergers and acquisitions ( ) Company Acquisition target Date Beijer Electronics Group Korenix July 2010 Red Lion Sixnet October 2011 Siemens RuggedCom January 2012 B+B SmartWorx Conel March 2012 Sierra Wireless In Motion Technology March 2014 Belden ProSoft Technology July 2014 Silicom Connectivity Solutions ADI Engineering October 2015 Advantech B+B SmartWorx January 2016 HMS Networks ewon February 2016 Digi International Accelerated Concepts January 2018 HMS Networks Beck IPC July 2018 Source: Berg Insight 41

51 Chapter 3 Company profiles and strategies 3 Company profiles and strategies 3.1 Cellular IoT gateway vendors IoT gateways and modems are provided by a range of companies mainly based in North America, Asia and Europe. North America-based Cradlepoint, Sierra Wireless, Cisco and Digi International are global market leaders with a combined market share of more than 40 percent in terms of revenues. Major vendors headquartered in North America further include Advantech B+B SmartWorx, CalAmp, Encore Networks, MultiTech Systems, Red Lion Controls and Systech Corporation. In Europe, there are a number of small and medium-sized vendors such as Beijer Electronics Group, Sagemcom Dr. Neuhaus, Eurotech, Fältcom, HMS Networks, INSYS Microelectronics, Matrix Electrónica, MC Technologies, NetModule, Option and Teltonika. Providers of IoT gateways based in the Asia-Pacific region comprise ADLINK Technology, Four-Faith Communication Technology, Huawei, InHand Networks, Maestro Wireless, Moxa, NetComm Wireless, Robustel Technologies and Ursalink. Additional vendors not included in this report are Bentek Systems, Brioconcept, CartaSense, Coniugo, Franklin Wireless, Garderos, Janus Remote Communications, Logic Supply, MB Connect Line, Nexcom, OpenGear, Racom, Schildknecht, Secomea, Shenzen E-Lins, Silicom Connectivity Solutions and Ventus. Vendors offering IoT gateways connected by satellite instead of cellular technology fall outside the scope of this report. Examples of satellite-based IoT gateway vendors are Quake Global, Hughes and ViaSat ADLINK Technology ADLINK Technology was founded in 1995 and is a provider of embedded computing products and services. The company has its headquarters in Taiwan and has more than 1,800 employees across offices in Asia, Europe and North America. ADLINK s operations are divided into five main areas: IoT solutions and technology, embedded platforms and 42

52 modules, networking, communication and public, design and manufacturing, and healthcare. In 2017, the company generated annual revenues of TWD 10.7 billion (US$ 337 million), up 11 percent year-over-year. In Q4-2015, ADLINK acquired PrismTech, a US-based provider of software platforms for distributed systems. PrismTech was rebranded into ADLINK s IoT Solutions and Technology Group in November 2017 and now provides professional services along with connectivity and industrial IoT solutions bundled with ADLINK s IoT gateways. ADLINK s IoT gateways do not feature cellular connectivity as standard. However, all three series have two mini PCIe slots and a USIM slot, making it possible to easily connect the device by inserting a cellular module. All devices are 4G LTE compatible and the MXE-110i and MXE-210 series also support LoRaWAN. The compact gateways offer a small footprint and can be provided in ruggedized versions with extended operating temperatures. The MXE- 210 functions both as a gateway and embedded controller to bridge the gap between operations technology and information technology data interchanges. The device is compliant with a wide range of protocols such as Modbus, EtherCAT, DDS, MQTT and CANOpen. Remote data access and analysis functionality is available via ADLINK s SEMA cloud. The company s IoT gateways are intended for a variety of industrial IoT applications including industrial automation, transportation, facility management and smart city. Figure 3.1: ADLINK s IoT gateways (Q3-2018) Product series Description MXE-110i Compact gateway, 2 mpcie slots, 2 USB, 2 COM ports MXE-200/200i Compact gateway, 2 mpcie slots, HDMI, 2 USB 2.0, USB 3.0 MXE-210 Compact gateway, 2 mpcie slots, 2 USB 2.0, 2 USB 3.0, 2 COM ports Source: ADLINK Technology In 2017, the embedded platforms and modules segment, which includes IoT gateways, generated revenues of TWD 4.0 billion (US$ 125 million). ADLINK Technology is a member of the Intel IoT Solutions Alliance that promotes interoperable solutions designed to accelerate 43

53 the deployment of intelligent devices and end-to-end analytics. The company has experienced a steady growth in revenues between 2011 and 2016 with a yearly revenue growth of between 6 and 25 percent. ADLINK Technology is active worldwide with sales in APAC, North America and EMEA. In 2017, APAC accounted for 40 percent of the revenues, followed by North America at 39 percent and EMEA at 19 percent. China was the single largest market in APAC, with close to 33 percent of the sales in this region, equivalent to 13 percent of the global sales Advantech B+B SmartWorx Founded in 1983, Advantech is a Taiwan-based provider of embedded systems and automation products. The company employs about 7,800 people across 23 countries and generated revenues of TWD 44.4 billion (US$ 1.4 billion) in 2017, up 6 percent year-over-year. Advantech acquired the industrial networking vendor B+B SmartWorx in Q The transaction value amounted to roughly US$ 100 million. B+B SmartWorx, previously known as B&B Electronics, was founded in 1981 and specialises in providing intelligent connectivity solutions at the edge of networks in remote and demanding environments. As part of Advantech s Industrial IoT Group, B+B SmartWorx operates as Advantech B+B SmartWorx and lead Advantech s new Intelligent Networking Business sector in developing smart networking products. The company s headquarters are located in Illinois with EMEA operations based in Ireland and the Czech Republic. An additional engineering site is located in California and production takes place in the US and Europe. Advantech B+B SmartWorx has earlier acquired several other businesses to strengthen its product range. Most notably was the acquisition of Conel, a developer of wired and wireless connectivity technology, in The Conel acquisition lay the foundation of Advantech B+B SmartWorx s cellular router and gateway business. Product portfolio The company s product range includes networking routers and programmable gateways for communication with wireless networks that use LTE, HSPA+, UMTS, EDGE or GPRS technology. The SmartStart family of cellular routers are available with a LTE Cat 4 or LTE Cat 1 modem. The GPRS/EDGE routers in the ER75i V2 series offer two expansion ports to add for example Ethernet, RS-232 and RS-485 interfaces. The SmartSwarm 351 series of industrial 44

54 gateways enable users to integrate data from remote assets into industrial IoT applications such as dashboarding, analytics or predictive maintenance. The gateway translates data from SCADA systems in real-time as it is being sent to IT systems and offers a variety of filters to control the flow of data on an event-driven basis. Cellular devices sold on the North American market are certified by PTCRB as well as major MNOs including AT&T, Verizon, Telus, Rogers and Sprint. In Europe, devices are available with E-mark certification for the transportation segment. SmartWorx Hub is the company s software platform for device management. The solution enables users to remotely modify configuration parameters, upgrade installed firmware and applications as well as view detailed network information. Figure 3.2: Advantech B+B SmartWorx s routers and gateways (Q3-2018) Product Description SmartStart 4G LTE routers, Ethernet, RS232, I/O, Wi-Fi * SmartFlex 4G LTE routers, USB, 5 Ethernet ports, I/O, Wi-Fi *, Serial *, GPS SmartMotion Multi-mode 4G LTE routers, USB, 2 Ethernet, I/O, Wi-Fi *, GPS LR77 V2 Multi-mode 4G LTE routers, 2 Ethernet, Wi-Fi * UR5i V2 UMTS/HSPA+ routers, 2 Ethernet, Wi-Fi * ER75i V2 GPRS/EDGE routers, USB, Ethernet, 2 optional ports, Wi-Fi * SmartSwarm 351 Multi-mode 4G LTE industrial gateways, USB, 2 Ethernet, serial, Wi-Fi * * Optional Source: Advantech B+B SmartWorx Business strategy Advantech B+B SmartWorx products are sold in over 60 countries worldwide through an extensive network of partners in Europe, Russia, South America, Mexico, India and Australia. Since the acquisition, focus has been on leveraging Advantech s geographical footprint to expand in the North American and Asian markets. Today, Europe represents roughly 80 percent of the company s cellular gateway and router sales, followed by the MEA region and the Americas which account for approximately 10 percent each. Advantech B+B SmartWorx entered the US market in 2013 and has introduced products intended for the Chinese, South 45

55 Korean and Australian markets in The company primarily employs an indirect sales model although products are sold through direct and industrial sales channels on the North American market. The cellular routers and gateways are used in market verticals such as utilities, industrial, retail and transportation. In 2017, Advantech B+B SmartWorx sold approximately 55,000 cellular devices worldwide and revenues from sales of routers and gateways were US$ 19 million. Around 60 percent of the routers and gateways sold in Europe were 3G devices. 4G LTE and 2G devices accounted for 25 percent and 15 percent of sales respectively. Only 4G LTE and 3G routers and gateways were sold on the North American market and the technologies represented 80 percent and 20 percent of sales respectively. Advantech B+B SmartWorx intends to release devices featuring LTE-M connectivity in the coming year Beijer Electronics Group Beijer Electronics was founded in 1981 and is based in Sweden. The group provides hardware and software solutions for industrial automation and data communication via its subsidiaries Beijer Electronics, Westermo and Korenix. The businesses Westermo and Korenix offer a range of wireless networking solutions, including cellular routers, gateways and modems intended for industrial applications. The two companies were acquired in 2008 and 2010 respectively. Beijer Electronics Group is present in 17 countries and has approximately 700 employees. Annual revenues amounted to SEK 1.2 billion (US$ 141 million) in Westermo offers communication infrastructure products for control and monitoring systems used in mission critical applications. Products include a wide range of Ethernet switches, routers, modems and converters. Wireless solutions include Wi-Fi access points as well as industrial cellular routers and modems built for harsh environments. Korenix provides industrial networking and computing solutions including wireless solutions, switches, network embedded computers, PoE interface cards and I/O products. The JetWave Series consists of a wide range of industrial WLAN and cellular devices such as Wi-Fi access points/bridges and 3G/LTE wireless IP gateways for applications in industrial automation, electricity transmission/distribution and railway. 46

56 Figure 3.3: Westermo and Korenix routers and gateways (Q3-2018) Product Westermo MRD-455 MRD-405 MRD-355 MRD-315 MRD-305-DIN Description 4G LTE/HSPA/UMTS/EDGE industrial router, Serial, Ethernet, dual-sim 4G LTE/HSDPA/HSUPA/GPRS industrial router, Ethernet 3G HSPA/UMTS/EDGE industrial router, Serial, Ethernet, dual-sim 3G HSUPA/HSDPA/UMTS industrial router, Serial, Ethernet 3G HSPA/UMTS/EDGE industrial router, 2 Ethernet, dual-sim Korenix JetWave 2311 JetWave 3420 JetWave 3320 JetWave 2316 JetWave 2714 JetWave G LTE/UMTS/HSPA+ industrial gateway, Wi-Fi, 2 Ethernet, dual-sim 4G LTE/UMTS/HSPA+ industrial gateway, Wi-Fi, 2 Ethernet, Serial 3G UMTS/HSPA+ industrial gateway, Wi-Fi, 2 Ethernet, Serial 4G LTE industrial gateway, Wi-Fi, 6 Ethernet, USB 4G LTE industrial gateway, Wi-Fi, 2 Ethernet, dual-sim 4G LTE/UMTS/HSPA+ industrial gateway, Wi-Fi, 2 Ethernet, dual-sim Source: Westermo and Korenix Beijer Electronics Group s primary focus is direct sales to OEMs and system integrators. A network of distributors and brand label partners complement the direct sales efforts. Europe is Beijer Electronics Group s largest market and accounted for 59 percent of the revenues in 2017, followed by Asia and North America which each made up 19 percent of total revenues. Westermo generated annual revenues of SEK 461 million (US$ 54 million) during the year. Key segments include rail transportation, energy, marine, mining and process industry. Korenix s revenues in 2017 amounted to SEK 104 million (US$ 12 million). The largest segments were surveillance, followed by transportation, infrastructure and utilities. Examples of major clients include Bombardier, Progress Rail Locomotive, Toshiba, ABB, Swarco, Energotest and Lufkin Automation. 47

57 3.1.4 Belden Belden is a manufacturer of networking, connectivity and cable products. Headquartered in Missouri, the company employs roughly 8,800 people worldwide and has manufacturing and other operating facilities in Brazil, Canada, China, Japan, Mexico and St. Kitts, as well as in various countries in Europe. Belden is listed on the New York Stock Exchange and generated annual revenues of US$ 2.4 billion in 2017, up 1 percent year-on-year. The company operates its business under two segments: Enterprise Solutions and Industrial Solutions. The Industrial Solutions business provides high performance networking components and machine connectivity products. Industrial Solutions include physical network and fieldbus infrastructure components and on-machine connectivity systems customised to end user and OEM needs. A key part of Belden s strategy includes acquiring companies to support its growth and product portfolio. The cellular IoT gateways are provided under the brands Hirschmann, GarrettCom and ProSoft Technology, which were acquired in 2007, 2010 and 2014 respectively. Belden s range of industrial routers and gateways are purpose-built for industrial applications where hardened, industrial-grade solutions are required to deliver high-performance routing, while ensuring network security. Industrial cellular routers marketed under the Hirschmann brand include both 3G and 4G LTE devices that feature dual SIM slots for carrier redundancy and two Ethernet ports. Devices can be delivered with a rich set of interfaces such as serial, USB, digital I/Os and an integrated GPS module. The cellular GarrettCom devices in the Magnum DX940 series can be configured with up to six Ethernet ports and four serial ports. Both devices operate at a temperature between -40 C to +85 C without open vent holes or fans and provide a reliable way to deliver connectivity over a cellular network to assets such as utility substations, roadside traffic controls, energy generation locations and transportation depots. The Prosoft Technology subsidiary specialises in solutions that enable heterogenous automation control equipment to share information and transfer critical control data through wired and wireless connectivity. The ICX35-HWC features 4G LTE connectivity and supports industrial network protocols such as EtherNet/IP and Modbus. Belden and its subsidiaries provide a number of different tools for device management, enabling users to monitor, configure and update devices remotely. 48

58 Figure 3.4: Hirschmann, GarrettCom and ProSoft Technology devices (Q3-2018) Product Hirschmann OWL 3G series OWL LTE series OWL LTE M12 series Description 3G industrial router, 2 Ethernet 4G LTE industrial router, 2 Ethernet, Serial, USB, GPS, I/O 4G LTE industrial router, 2 Ethernet, Serial, USB, GPS, I/O GarrettCom Magnum DX940 Magnum DX940e 3G industrial router, 6 Ethernet, 4 Serial 4G LTE industrial router, 6 Ethernet, 4 Serial ProSoft Technology ICX30-HWC ICX35-HWC 3G industrial gateway, Ethernet, Serial, GPS, I/O 4G LTE industrial gateway, Ethernet, Serial Source: Belden Belden targets customers in market verticals such as discrete manufacturing, process facilities, transportation and energy. The Industrial Solutions business, which sells industrial routers and gateways along with a wide range of other network components, accounted for US$ 1,032 million of yearly sales in The products are sold directly to industrial equipment OEMs and through a network of industrial distributors, value-added resellers and system integrators. Important partners include major industrial companies such as Rockwell Automation and Schneider Electric. During 2017, approximately 47 percent of Belden s sales were to customers outside the US. Customers of the company s wireless devices include AVAD Industrial, Boss Automation and ThyssenKrupp CalAmp CalAmp is a leading provider of wireless communications solutions for a broad array of vertical market applications and customers. The company was founded in 1981 and has been publicly traded since CalAmp is listed on the NASDAQ stock exchange. The company 49

59 had 840 employees and generated revenues of US$ 366 million in the fiscal year ending in February CalAmp is headquartered in California and has manufacturing locations in the US and China. The operations are divided into two segments Telematics Systems and Software & Subscription Services. These segments accounted for 83 percent and 17 percent of total revenues respectively in fiscal The Telematics Systems segment offers a portfolio of wireless data communications products which include asset tracking units, mobile telematics devices as well as fixed and mobile wireless gateways and routers. The Software & Subscription Services segment offers cloud-based application enablement and telematics service platforms. The company s solutions are used in mobile resource management, public safety as well as industrial monitoring and control applications. In March 2016, CalAmp acquired the stolen vehicle recovery solutions vendor LoJack. Figure 3.5: CalAmp cellular routers (Q3-2018) Product Vanguard 400 Vanguard 600 Vanguard 3000 Vanguard 5530 Vanguard 5530MC LMU-5530 LMU-3640 LMU-4200 series LMU-4520 Description Industrial 4G LTE IoT gateway Broadband 4G LTE cellular router Multicarrier 3G cellular router Broadband 4G LTE cellular router Multicarrier broadband 4G LTE cellular router 3G/4G LTE broadband router/tracker Telematics gateway, 4G LTE Telematics gateways, 4G LTE or HSPA/EDGE/GSM/GPRS Telematics gateway, HSPA/EDGE/GSM/GPRS Source: CalAmp CalAmp offers industrial routers and gateways in the Vanguard series and telematics gateways in the LMU series. The industrial routers in the Vanguard series are ruggedized to better withstand harsh conditions. All routers have a built-in 4G LTE modem except for the Vanguard 3000 which is a 3G router that can use either CDMA or GSM bands. The Vanguard 50

60 5530 has a high precision GPS intended for mobile applications and optional Wi-Fi. This router comes in two different versions: 5530 and 5530MC. In addition to the functionality of the 5530, the MC version also provides multi-carrier availability. The telematics gateways in the LMU series are designed to support enterprise customers needing a wide range of wireless connectivity, vehicle interfaces and peripheral interconnections. The LMU-5530 is a 3G/4G LTE broadband router that features GNSS tracking using GPS, GLONASS and QZSS. It also contains an accelerometer for 3-axis g-force measurements and cellular gateway functions. DeviceOutlook is the company s cloud-based software platform for managing and configuring connected devices. The most important market verticals for CalAmp s devices are transportation, electric utilities, oil and gas, smart grid and smart cities. The company markets its products and services both through direct and indirect sales channels. Sales staff is distributed across the US and additional sales personnel are based in Latin America, the Middle East and Europe. In fiscal 2018, the company s revenues were derived mainly from customers in the US, representing about 73 percent of total revenues. CalAmp ships well over 2 million devices annually and reached over 730,000 unique subscribers across all of its SaaS and recurring service platforms at the end of fiscal Since its inception, the company has sold over 20 million telematics devices and related connected products. Revenues generated from the cellular routers and gateways business amounted to US$ 99 million in fiscal Berg Insight estimates that the Vanguard series and the mid-tier telematics gateways in the LMU series each accounted for roughly half the revenues. Annual shipments in fiscal 2018 amounted to an estimated 539,000 units Cisco Cisco is a global technology company that provides IP based networking products and services related to the communications and IT industry. Headquartered in California, the company was founded in 1984 and employs 72,900 people across 400 offices worldwide. In the financial year ending in July 2017, annual revenues amounted to US$ 49.3 billion, up 3 percent from the previous year. Cisco s products and technologies are grouped into four categories including Infrastructure Platforms, Applications, Security and Other Products. In addition to its product offerings, Cisco provides a broad range of service offerings including technical support and professional services. The company is increasingly delivering its 51

61 technology and services to customers as complete solutions within cloud, video, mobility, security, collaboration and analytics. In May 2017, Cisco acquired the software-defined wide area network (SD-WAN) specialist Viptela for US$ 610 million, extending its existing portfolio of SD-WAN solutions that includes Intelligent WAN (IWAN) and Meraki SD-WAN. Figure 3.6: Cisco cellular routers Cisco 809 Cisco 819 Cisco 829 Source: Cisco Cisco s 807, 809, 819 and 829 series of Integrated Services Routers are fully integrated with Cisco IOS software and specifically designed for M2M communications. The 807 and 809 industrial routers are compact multimode 3G and 4G LTE wireless routers, designed for deployments where space, heat dissipation, and low power consumption are critical factors. The 829 router is primarily intended for applications in the transportation industry and is available in 4G LTE and dual 4G LTE models with Wi-Fi connectivity and GPS. The company s 819 router comes in both a 3G and 4G LTE model, although the 3G model is about to be discontinued. This model also offers the widest range of options out of Cisco s range of devices. The 819 router features optional Wi-Fi and is available in both a ruggedized and a non-hardened version. All routers feature Ethernet and serial interfaces, which can be used with Raw Socket, protocol translation, and IOx applications to provide connections to local RTUs for SCADA transport and RTU management. The 809 and 829 series also offer capabilities to extend the connectivity to include LPWA access using the Cisco Interface Module for LoRaWAN. The IOx application environment combines Cisco s networking operating system Cisco IOS and Linux OS and enables IoT application execution on the gateway level. Cisco IOx is supported by the company s range of industrial routers. In June 52

62 2017, the company introduced the device and data management platform Cisco Kinetic. The platform allows enterprises to extract data from devices, manage gateways, compute data on edge and fog nodes, convert data formats and define data flow policies. The platform includes a wide variety of protocol adapters to support data acquisition from different devices. Cisco s Infrastructure Platforms product category, which include the company s cellular routers along with a wide variety of switching, routing and data center products, accounted for US$ 28.3 billion of annual revenues in fiscal List prices for the cellular routers range US$ 1,100 1,900. Cisco s largest geographical market is the Americas which accounted for 59 percent of the annual revenues in 2018, followed by the EMEA region and Asia-Pacific, which accounted for 25 percent and 16 percent respectively. Cisco has field sales offices in 95 countries, and the company sells its products and services both directly and through a variety of channel partners such as system integrators, service providers, resellers and distributors Connected IO Connected IO (CIO) develops hardware, software and cloud-based services that connect machines and products to the Internet. The company was formed in 2013 when the US-based mobile operator Verizon contracted CIO to design and build one of the company s earliest iterations of its cellular modems, the LT1001. This device was the starting point for the company s entrance on the M2M market. Since then, the company has signed collaboration agreements with AT&T, Verizon, T-Mobile and Vodafone. CIO has its operations based in the US and was listed on the Australian Securities Exchange in March 2016 through the reverse takeover of Leopard Resources. Annual revenues in 2017 amounted to AUD 2.4 million (US$ 1.8 million), up 364 percent from the previous year. The company s M2M hardware portfolio comprises two product lines: cellular modems and cellular routers. Most devices offer 4G LTE connectivity with automatic fall back to 3G and 2G. The devices are often used for failover applications when machines lose their primary Internet connectivity. The LT1002 is a semi-rugged and low-cost cellular modem designed to work on Verizon s 4G LTE network. The device features a micro USB interface for data connectivity to an M2M host processor or PC. The latest Linux-based ER2000T family of programmable cellular routers feature 4G LTE Cat 1 and Wi-Fi connectivity and are certified by mobile 53

63 operators including Verizon, AT&T and T-Mobile. The devices are intended to connect assets such as digital signs, POS-terminals, vending machines and security cameras for monitoring, control and failover applications. CIO s modems and routers can be configured and monitored using the CIO cloud management portal. Figure 3.7: Connected IO s range of cellular modems and routers (Q3-2018) Product ER1000 series ER2000T EM1000 series LT1002 Description 4G LTE router, 2 Ethernet, automatic 2G/3G fall back 4G LTE Cat 1 router, 2 Ethernet, Serial, Wi-Fi 4G LTE modem, micro USB, automatic 2G/3G fall back 4G LTE modem, micro USB Source: Connected IO CIO has rapidly amassed a number of well-known companies to its customer base including The Red Cross, Coca-Cola, Burger King, Sonos, Verizon, AT&T, the Cisco subsidiary Cisco Meraki and LG Electronics. The company holds a strong relationship with Verizon but has also signed collaboration agreements with AT&T, Vodafone and KORE Wireless to promote its products to their customers. Products are also sold directly to equipment manufacturers, as well as through system integrators and resellers. The devices are primarily used in markets such as retail, digital signage and vending. Annual shipments amounted to an estimated 9,000 units in Cradlepoint Cradlepoint is a leading provider of cloud-based 4G LTE networking solutions for distributed and mobile enterprises. Founded in 2006, the privately-held company is headquartered in Idaho and employs about 600 people worldwide. Cradlepoint has development centers in California and Canada as well as additional sales offices in the UK, South Africa, Australia and Japan. Annual revenues have increased at a CAGR of about 30 percent during the past three years and reached an estimated US$ 150 million in In March 2017, the company completed a US$ 89 million Series C round of funding. Investors include for example TCV, 54

64 Sorenson Capital and The Caprock Group. The capital will be used to expand product initiatives in software-defined networking, advanced 4G LTE and 5G connectivity, as well as enterprise IoT. Software has become a central part of Cradlepoint s offering, following major internal investments and the acquisition of the SD-WAN specialist Pertino in late The company s NetCloud Platform was introduced in July 2016 and includes software-defined networking and network function virtualization technologies obtained in the Pertino acquisition. In January 2018, Cradlepoint introduced a new subscription model based on a series of NetCloud Solution Packages that each combine hardware, software and support. The packages became the exclusive model to purchase the company s products in May Product portfolio The series of NetCloud Solution Packages include a range of 4G LTE cellular routers for branch, mobile and IoT networking. The routers in the COR range are intended for IoT and mobile applications and enclosed in ruggedized casings. The compact routers in the COR IBR200 and IBR600 series are ruggedized devices designed for IoT and M2M applications with operating ranges of of -20 C to +60 C. NetCloud Solution Packages with the ruggedized COR IBR900 router are built for mobile networks in police and first responder vehicles, utility and service vans, and environments where reliable mobile connectivity is required. The router supports carrier aggregation with LTE-A and features Wi-Fi, Ethernet ports and active GPS. The COR IBR1700 is the company s most ruggedized series of routers with the operating temperature stated as -30 C to +70 C. The gateway supports LTE-A and active GPS and has 2 SIM-slots and dual-modem dock option. Connections include a USB port, 5 LAN/WAN ports, one USB port, two cellular and one active GPS antenna connectors and an RS-232 serial port. All devices in the COR range have Wi-Fi as an optional feature. Cradlepoint s routers in the AER series are designed for branch networks. All devices feature dual modem capabilities and are enclosed in metal housings apart from the AER1600 series. Routers in the AER2100 series and the AER3100 series have two integrated dual modems compared to one embedded and one integrated in the AER1600 series. AER3100 is the most advanced device in the series and comes with 12 LAN ports, 1 WAN port, 1 GB memory and 1.2 GHz processor. 55

65 Figure 3.8: Cradlepoint s range of cellular routers (Q3-2018) Product Description AER1600 4G LTE-A router, 5 Ethernet ports, Wi-Fi *, embedded/integrated modem AER2100 4G LTE-A router, 5 Ethernet ports, Wi-Fi *, dual modem AER2200 4G LTE-A router, 10 Ethernet ports, Wi-Fi *, dual modem AER3100 4G LTE-A router, 13 Ethernet ports, Wi-Fi *, dual modem COR IBR200 4G LTE router, 1 Ethernet port (LAN), Wi-Fi *, GPS, I/O COR IBR600B 4G LTE router, 2 Ethernet ports, Wi-Fi *, dual-sim, I/O COR IBR600C 4G LTE router, 2 Ethernet ports, Wi-Fi *, GPS, dual-sim, I/O COR IBR900 4G LTE-A router, 2 Ethernet ports, Wi-Fi *, GPS, dual-sim, I/O COR IBR1100 4G LTE-A router, 3 Ethernet ports, Wi-Fi *, GPS, dual-sim, I/O COR IBR1700 4G LTE-A router, 5 Ethernet ports, serial, Wi-Fi *, GPS, dual modem, I/O ARC CBA850 4G LTE-A router, 2 Ethernet ports, GPS, Wi-Fi * * Optional Source: Cradlepoint The NetCloud Platform comprises solutions to enable connectivity, security, device and network management and integration into various applications. NetCloud Manager is a cloudbased management solution that is offered together with the company s gateways and routers, which in turn run the NetCloud OS. The NetCloud Perimeter service provides an alternative to traditional VPN technology and allows customers to create a virtual overlay network as well as segregate different users and groups for additional security. APIs and an SDK are furthermore offered to enable integration with enterprise applications as well as to allow developers to build custom applications and vertical solutions. Business strategy Cradlepoint s solutions are employed in market verticals such as transportation, retail, healthcare and government. The newly launched NetCloud Solution Packages are divided into three categories: branch, mobile and IoT. The packages are available in one-, three- and five-year terms and all hardware products sold as a component of the NetCloud Solution 56

66 Packages are covered by a 3-year hardware warranty. Additionally, the company extends the hardware warranty to a limited lifetime warranty as long as the device is under a continuous subscription. The IoT NetCloud Solution Packages range US$ depending on term length and device type, while the NetCloud Solution Packages with COR mobile routers span US$ 549 1,809. Prices for NetCloud Solution Packages with AER routers range from US$ 489 to US$ 1,639. Cradlepoint s customer base includes 40 percent of fortune 1,000 companies, 75 percent of the world s top retailers and 25 of the largest cities in the US. In total, more than 1.7 million units have been shipped to 20,000 customers across more than 50 countries to date. Sales are carried out through a 2-tier distribution channel where Synnex and Ingram Micro distributes devices to VARs, value added resellers, system integrators and managed service providers. Additionally, the company works closely with Verizon on early 5G deployments and announced the Pathway to 5G for Business program together with the operator in September Under the program, Cradlepoint and Verizon will provide business customers with a 5G trial program based on Verizon s 5G broadband Internet service and Cradlepoint s NetCloud service and AER2200 router. In 2017, cellular router shipments reached approximately 250,000 units and Berg Insight estimates that the cellular router business generated revenues of about US$ 115 million during the year. North America is the company s largest market, followed by the EMEA region Digi International Digi International was founded in 1985 and is a leading provider of M2M and IoT connectivity products and services. Headquartered in the US, the company employs 515 people and has 13 regional sales offices and engineering facilities located throughout North America, Europe and Asia. In the financial year ending in September 2017, annual revenues amounted to US$_182 million. The company provides a broad range of embedded and external networking products, solutions and services to vertical markets such as energy, fleet management, transportation, healthcare, industrial automation, retail and smart cities. In recent time, the company has completed a number of acquisitions within the temperature monitoring segment to expand its SmartSense by Digi offering, previously known as Digi Smart Solutions, that was formed through the purchase of Bluenica Corporation in October Acquisitions in include the US-based companies FreshTemp, SMART Temps and Temp Alert. 57

67 In January 2018, Digi International acquired US-based Accelerated Concepts for US$ 17 million. Founded in 2006, Accelerated Concepts specialises in 4G LTE networking equipment. The acquisition complements Digi International s existing cellular product line with compact and low-cost LTE routers and network appliances. The company has retained the Accelerated Concepts brand. Product portfolio Digi International focuses solely on 3G and 4G LTE devices. The Digi range of programmable cellular gateways and routers are divided into two main series branded TransPort and Connect. Transport is a family of routers intended for commercial, industrial, retail and transport applications. At the lower end, it starts with the TransPort WR11 3G/4G LTE cellular router. The WR11 is available in both a commercial and an industrial version, where the industrial version has a ruggedized metal case with an extended temperature range suitable for remote machine monitoring, manufacturing automation, kiosks and ATMs. The plastic version of the WR11 is often used in POS-terminals and other retail applications. Digi TransPort WR21 is the most popular product in Digi International s product range. It has 2 Ethernet ports and provides primary and backup wireless connectivity over LTE and HSPA+ networks. In the high-end market segment, the company provides the dual module LTE-A TransPort WR65 with dual Wi-Fi radios, as well as security, firewall and VPN functions. The Connect family is Digi International s series of gateways. Apart from the ConnectPort X4 family of LTE and HSPA+ cellular gateways, the Connect series also includes batterypowered gateways such as the Connect Sensor+. The devices are certified by major mobile operators in North America and internationally, including AT&T, Verizon, Sprint, Bell, Rogers and Vodafone. All of Digi s devices are Python programmable. Devices offered under the Accelerated Concepts brand include compact LTE routers for primary or backup enterprise connectivity. The 6310-DX, 6330-MX and 6350-SR routers are powered by the company s suite of plug-in LTE modems. This modular design enables customers to choose cellular connectivity speeds that best fit their business requirements and needs, as well as upgrade to newer LTE standards without replacing their routers. The modems feature dual SIM card support and automatic switching between different cellular carriers. The Digi Remote Manager enables users to centrally manage, monitor, configure 58

68 and update connected devices. Digi International also provides end-to-end solutions for the food service, transportation, education, healthcare and pharma, and industrial market verticals via its SmartSense by Digi offering. Figure 3.9: Digi International s cellular routers (Q3-2018) Product Digi TransPort WR11 TransPort WR21 TransPort WR31 TransPort WR44 R TransPort WR44 RR TransPort LR54 TransPort WR64 ConnectPort X4 Family Connect Sensor+ Description LTE cellular router LTE multicarrier cellular router LTE multicarrier cellular router LTE multicarrier cellular router, Dual Wi-Fi, GPS LTE multicarrier cellular router, Dual Wi-Fi, GPS LTE-A multicarrier cellular router, Wi-Fi, Serial LTE-A multicarrier cellular router, Dual Wi-Fi, GPS, Serial, USB LTE or HSPA+ cellular gateway, ZigBee, Serial, Ethernet, I/O, USB Battery-powered LTE cellular gateway Accelerated Concepts 6300-CX 6310-DX 6330-MX 6350-SR * Optional LTE cellular router, Ethernet LTE-A multicarrier cellular router, Ethernet LTE-A multicarrier cellular router, Wi-Fi *, Serial, Ethernet, USB LTE-A multicarrier cellular router, Wi-Fi *, Ethernet Source: Digi International Business strategy Digi International markets its products through a global network of distributors, system integrators and value-added resellers as well as directly to OEMs. Direct sales accounted for roughly 39 percent of total revenues in fiscal 2017, while sales through indirect channels 59

69 accounted for 61 percent. The company has over 200 global distribution partners. Important distributors and clients include for example Synnex, Arrow Electronics, Mouser Electronics, Novotech and Digi-Key and key partners include AT&T, Bell Mobility, NXP, Telit, Rogers, Sprint and Verizon. The recently acquired Accelerated Concepts business maintains a strong relationship with AT&T. The largest geographical market is North America which accounted for 65 percent of total revenues in fiscal 2017, followed by EMEA and Asia which represented 22 percent and 11 percent respectively. Hardware product revenues and service revenues represented 92 percent and 8 percent of the total revenues respectively. Revenues generated from gateway and router sales were approximately US$ 47 million in fiscal 2017, compared to US$ 48 million in 2016 and US$ 59 in Accelerated Concepts had annual revenues of an estimated US$ 18 million in Prices for devices across the Digi and Accelerated Concepts product lines range US$ Berg Insight estimates that Digi International, including the Accelerated Concepts business, shipped approximately 142,000 cellular devices in fiscal 2017, with an average price of more than US$ 450. Target markets are retail, transportation and critical infrastructure applications, where the latter includes industrial, government, energy and telecom applications. The acquisition of Accelerated Concepts allows Digi International to penetrate the enterprise market and better address retail applications such as POS systems, mobile kiosks and digital signage Encore Networks Encore Networks was founded in 2002 and currently employs more than 50 people. The company is based in the US and manufactures commercial enterprise and industrially hardened routers. Much attention is given to compatibility with legacy protocols, which is particularly useful for power, water, and oil and gas utilities. More recently, Encore Networks has been making inroads into other industries and application areas including security, gaming, business continuity and failover connectivity, out of band management, transportation, video surveillance and digital signage. Encore Networks offers two lines of programmable cellular routers: the Bandit series and the EN series. Four different models are available in the EN-series, starting with the low-cost, LTE- M EN-400 router, which became the first LTE-M router to be certified on Verizon s 4G LTE network in early The EN-1000 router features a LTE Cat 1 module, while the company s 60

70 flagship model EN-2000 uses a LTE Cat 4 module. The EN-2000 is available in both a nonhardened and a ruggedized version, which also supports one RS-232 and one RS-485 interface. The EN-4000 has a modular design with slots for up to three expansion cards. Using expansion modules, users can customize the device to contain up to nine Ethernet ports, dual 3G or 4G LTE cellular modules, DSP, T-1/E-1 CSU interfaces, fiber optical links, Wi-Fi or additional serial ports. The cloud-based device management system branded encloud allows users of EN series routers to remotely monitor and manage their installed base of EN routers. encloud displays key information reflecting the current status of EN routers and provides tools to deploy configurations and firmware updates. An premisesbased version of the system was introduced in June 2018, called ensite. Devices in the Bandit series feature integrated router, firewall, terminal server, serial-to-ip conversion, legacy-protocol conversion and IPsec VPN functionality. Bandit 2 and Bandit 3 have modular designs, allowing for customization of ports, industrial or utility hardening as well as wireless connectivity. Bandit devices can be delivered with 2G, 3G or 4G LTE cellular modules. Figure 3.10: Encore Networks cellular IoT gateways (Q3-2018) Product EN-400 EN-1000 EN-2000 EN-2000 IR EN-4000 Bandit 2 Bandit 2 C2C Bandit 3 Description LTE-M router, 2 Ethernet ports LTE Cat 1 router, 2 Ethernet ports LTE Cat 4 router, 2 Ethernet ports, optional Wi-Fi LTE Cat 4 router, 2 Ethernet ports, optional Wi-Fi, RS232, RS485 LTE/HSPA+/EVDO router, 5 Ethernet ports, Wi-Fi, expansion slots Modular router, 2 Ethernet ports, RS232 LTE/EVDO/HSDPA router, Ethernet port, serial port, analogue modem port Modular router, up to 9 Ethernet ports, up to 6 serial ports Source: Encore Networks The majority of the sales are through resellers, but the company also retains a small direct sales force. The primary market is North America, followed by Latin America and Europe. The company has increased its presence on the Latin American market notably in recent time, 61

71 primarily in Mexico. Moreover, Encore Networks entered into a distribution agreement with the IoT managed service provider Wireless Logic Group in mid-2017 to develop reseller channels in the UK and Germany. Berg Insight estimates that the company shipped about 30,000 cellular routers during Approximately 95 percent of the devices sold were delivered with a 4G LTE cellular module, while the remaining 5 percent used 3G connectivity. The EN series retail from approximately US$ 180 for the entry level EN-400 router, up to more than US$ 600 for the modular EN The cost of Bandit products varies depending on the installed modules, but typically exceeds US$ 1,200. In August 2017, Encore Networks announced a deal with Connected Solutions Group that will utilise the company s EN-series of 4G LTE wireless routers to provide business continuity and failover support for numerous applications including retail, restaurant, transportation and home offices. The company has also entered a partnership with Axis Communications that specialises in network cameras. Initially, Encore Networks EN-2000 IR featuring Wi-Fi will be used inside Axis Communications T98 family of security camera cabinets Eurotech Eurotech is an Italy-based technology company that specialises in embedded computing platforms and sub-systems. The company was founded in 1992 and has 300 employees across Europe, North America and Asia. Eurotech is listed on the Borsa Italiana Stock Exchange and generated annual revenues of _60 million (US$ 65 million) in The company s product portfolio comprises industrial embedded hardware such as gateways, servers, control systems and boards, as well as high-performance computing systems and software solutions. Product portfolio Eurotech offers two series of IoT gateways: ReliaGATE and DynaGATE. The ReliaGATE series is mainly intended for industrial applications and is suitable for connecting sensors, actuators, meters and devices to enterprise applications. The two automotive-grade IoT gateways in the DynaGATE series were released in late 2017, featuring integrated LTE Cat 1 modems, GPS, Wi-Fi and BLE, as well as E-mark and SAE/J1455 certifications. Industrial gateways in the ReliaGATE series for example include the rugged, high-performance ReliaGATE 10-20, which offers a variety of communications interfaces including cellular, Wi-Fi and Bluetooth. The device also includes interfaces for wired connectivity such as Ethernet, CAN bus, analog and 62

72 digital I/O, as well as up to four serial ports and three USB ports. The IoT gateways can be delivered with 2G, 3G or 4G LTE integrated cellular connectivity, but for smaller deployments a ReliaCELL cellular adapter can instead be fitted to the gateway. ReliaCELL is already certified and is hence suitable for deployments of 100 devices or less, where certifications otherwise will be time consuming and expensive. In October 2017, the company furthermore introduced the expansion modules ReliaIO and ReliaLORA for extended I/O capabilities and LoRaWAN connectivity. Eurotech s devices are Java programmable and run the Everyware Software Framework (ESF). ESF is a commercial, enterprise-ready version of Eclipse Kura, an open source framework designed for IoT gateways. Eclipse Kura itself is based on an early version of ESF that was donated to the project by Eurotech in ESF adds advanced security, diagnostics, provisioning and remote access, and supports protocols such as Modbus, S7 and OPC-UA. Apart from using open source software, Eurotech is also flexible to adapt both hardware and software according to customer specific requirements. Figure 3.11: Eurotech s IoT/M2M architecture Source: Eurotech 63

73 Business strategy Eurotech s IoT strategy is centred around the ability to provide a complete IoT stack that includes hardware, embedded software and middleware. Eurotech employs an open and standards-based approach to IoT and is deeply involved in the Eclipse IoT community, which it co-founded together with partners in Much focus is given to providing solutions that reduce time-to-market and total cost of ownership for customers. The company has a longstanding partnership with the open source software provider Red Hat and integrates Red Hat s middleware technologies in its embedded software and IoT platform offerings. Additionally, Eurotech entered a partnership with VMware in 2017 to add VMware s technology to its IoT gateways and edge controllers. The company s presence is strongest in the industrial manufacturing, transportation, medical, energy and defence sectors. Solutions are sold both directly to OEMs, as well as via system integrators, VARs and distributors. Primarily, a direct sales model is employed in the transportation sector. In 2017, key geographical markets comprised the US that accounted for 42 percent of total revenues, followed by Japan and Europe, which represented 40 percent and 16 percent respectively. Berg Insight estimates that annual revenues generated from the sales of IoT gateways amounted to approximately 7 million (US$ 8 million) in Annual shipments amounted to an estimated 25,000 units. The company s cellular IoT gateways are mainly used within the market verticals transportation, energy, industrial, medical, utilities and retail. Customised and highly ruggedized devices have also been supplied to the defence industry and government first response units. Additionally, the company sells the ESF platform to third-party manufacturers that integrates the solution in its devices. In Q1-2018, Eurotech partnered with AAEON Technology Europe, which is now integrating Eurotech s ESF in its Industry 4.0 Gateways Four-Faith Communication Technology Four-Faith Communication Technology was founded in 2008 and is headquartered in Xiamen, China. The company specializes in the design and manufacturing of wireless communications products. The product range includes cellular modems, routers, RTUs and gateways, as well as ZigBee products for industrial applications. Many of the company s devices can be configured with a combination of cellular, ZigBee, Wi-Fi and GPS connectivity. Four-Faith has branches in Hong Kong, Beijing, Shanghai and Shenzhen, and two factories 64

74 for production and assembling. The company employs about 500 people and annual revenues were in the range of CNY 250 million (US$ 36 million) in Four-Faith offers a wide range of 2G, 3G and 4G LTE modems and industrial routers. The portfolio includes more than 20 unique models. The compact modems are available with cellular connectivity and a combination of serial and I/O interfaces. The industrial routers in the F-R100 and F-R200 series come in IP30 metal housings and can be configured with 4G LTE connectivity with fall back to 3G networks. The devices also feature dual SIM card slots, Wi-Fi and GPS, as well as Ethernet, serial and GPIO interfaces. The company has also launched a range of cellular IoT gateways that support LoRa connectivity. Customisations are offered to meet special demands. Four-Faith s cellular products are used within a wide range of fields, including transportation, environmental protection, smart grid, industrial automation and retail. Figure 3.12: Four-Faith s cellular modems and routers (Q3-2018) Source: Four-Faith Communication Technology In 2017, Four-Faith s cellular modems and routers business generated roughly CNY 150 million (US$ 21 million) in revenues from an estimated 120,000 units sold. China comprises the company s main market and revenues derived from international markets account for roughly 35 percent of total sales. Apart from the Asia-Pacific region, important geographical markets internationally include South America, the Middle East and Europe. The indirect sales 65

75 channel accounts for the majority of the sales. The company has authorized distributors for local markets worldwide and a sales service network with presence in more than 50 countries. Customers include for example Citibank, Claro, Verizon, Turkcell, True, Telcel, Conred, Ecolab and General Electric HMS Networks HMS Networks is an independent supplier of products for industrial communications and IIoT applications. Founded in 1988, the company is headquartered in Sweden and has technology centers in Germany, Belgium and Spain. Branch offices in 14 key markets are responsible for sales, marketing and local support. HMS employs more than 540 people and the company is listed on the NASDAQ Stockholm Stock Exchange. Annual revenues in 2017 amounted to SEK 1,183 million (US$ 133 million), up 24 percent year-on-year. The company produces network interface cards and gateways for linking different networks under the Anybus, IXXAT and Intesis brands, along with products for remote monitoring and control under the ewon brand. The main part of HMS Networks cellular router and gateway business originates from the acquisition of the Belgian remote access industrial communication specialist ewon in Q The company also acquired Spain-based Intesis Software in mid-2016, a provider of communication gateway solutions for building automation. Recent acquisitions include the purchase of the German embedded control and M2M communications specialist Beck IPC for 5 million (US$ 6 million) in July Product portfolio The range of products offered under the ewon brand include industrial remote access routers, industrial gateways and a cloud VPN connectivity software platform for industrial automation applications. The solutions connect industrial machines to the Internet and enable remote access and monitoring for applications such as remote maintenance, predictive maintenance, remote services, asset management, remote metering and multi-site building management. HMS main cellular industrial communications devices marketed under the ewon brand comprise the Cosy and Flexy router series as well as the Netbiter gateways. ewon Cosy 131 is an Industrial VPN router designed to offer easy remote access to machines and installations at customer facilities. The Cosy 131 is offered in five different configurations with LAN, LAN/cellular or LAN/Wi-Fi connectivity. The ewon Flexy 200 and Flexy 205 are modular industrial IoT gateways for connecting remote devices in industrial 66

76 environments. The Flexy 200 is a data collection gateway with routing functions between LAN, WAN and serial sides and enables remote access to devices located on the LAN side or on the serial side of the Flexy. The base Flexy module has 4 slots for which the company offers a wide range of extension modules and extension cards enabling Ethernet, serial, Wi-Fi and cellular connectivity. Similarly the new compact Flexy 205 gateway offers a wide range of extension cards and is suitable primarily for data-intensive applications. Devices in the Flexy family include functionality for web-based configuration and built-in scripting tools for customisation. The gateways are also compatible with the cloud VPN connectivity backoffice solution Talk2M, which enables users to manage and connect to their machines remotely. ewon Netbiter is a pre-packaged solution that enables users to monitor, control and supervise the performance and operation of remote equipment and installations via Ethernet, GSM, GPRS or 3G networks. The ewon Netbiter solution consists of the ewon Netbiter cellular communications gateways and device management services via Netbiter Argos or PTC s ThingWorx. Figure 3.13: HMS cellular IoT gateways ewon Flexy 200 ewon Netbiter EC350 Source: HMS Networks Business strategy In 2017, HMS Networks sold an estimated 100,000 ewon branded cellular routers and gateways, generating annual revenues of SEK 231 million (US$ 26 million). Factory automation is HMS Networks most important market. The company is also present in 67

77 verticals such as building and process automation, power and energy as well as transportation and infrastructure. The largest geographical market is the EMEA region, accounting for 61 percent of total revenues in 2017, followed by the Americas and Asia, which accounted for 21 percent and 17 percent respectively. HMS Networks customers range from large automation vendors to manufacturers of devices and machines, as well as system integrators and end users. The sales models vary depending on the customer, market and product line. In addition to its direct sales channel, the company sells its solutions through a network of around 300 distributors across 50 countries. Revenues generated from direct sales and sales via distributors accounted for 70 percent and 30 percent respectively in HMS has in total more than 3 million wired and wireless installations at companies such as Siemens, Rockwell Automation, Schneider Electric, Sony, Panasonic, ABB and Hitachi. The ewon products are predominantly marketed and sold through distributors and target customers are system integrators, machine builders and OEMs. The largest customer segment is currently machine builders and OEMs and clients include ABB Robotics, Proseal UK and DISA Industries InHand Networks InHand Networks is a publicly listed company in China that specialises in wireless communications solutions for industrial IoT applications. Founded in 2001, the company has today close to 300 employees, of which roughly 100 people are engaged in R&D activities. InHand Networks products and solutions include industrial routers, gateways, modems and Ethernet switches. Annual revenues in 2017 reached CNY 229 million (US$ 33 million), up 58 percent year-on-year. In addition to its headquarters in China, the company has operations in the US and Germany. InHand Networks also works with distributors across Europe, Asia- Pacific, Middle East and Africa. The company s cellular devices are to a significant extent designed for industrial applications. The 2G, 3G and 4G LTE modems are compact, lightweight and ruggedized units that operates in wide temperature ranges. Similarly, the 3G gateway InGateway601 is a compact device measuring only 45x90x80mm with an operating temperature of -20 C to +70 C. The InRouter series of cellular routers includes both 3G and 4G LTE products featuring 1 5 Ethernet ports and optional Wi-Fi on select models. 68

78 Figure 3.14: InHand Networks industrial communications devices (Q3-2018) Product Description Industrial modems InDTU332G 2G GSM/GPRS cellular modem, 2 serial ports InDTU332W 3G WCDMA/GPRS cellular modem, 2 serial ports InDTU332L 4G LTE/WCDMA/GPRS cellular modem, 2 serial ports Routers InRouter900 InRouter901L InRouter611-S InRouter615-S 4G LTE industrial router, dual-sim, 2/5 Ethernet ports, optional Wi-Fi 4G LTE Cat 1 single-port industrial router Compact entry-level 4G LTE single-port industrial router, Wi-Fi Compact entry-level 4G LTE industrial router, 5 Ethernet ports, Wi-Fi Industrial Gateways InGateway601 Compact 3G CDMA/EVDO/HSPA+/UMTS single-port gateway Source: InHand Networks The Verizon-certified InRouter901L model was introduced in 2017, featuring a 4G LTE Cat 1 module. The routers support programming in Python and come with an integrated firewall and VPN protocols. The company s modems are low cost devices, while the routers and gateways are considerably more expensive with prices of up to several hundred US dollars. The range of devices are certified with country specific certifications including CE, CCC, FCC, RCM and IC required in Europe, China, the US, Australia and Canada respectively. The routers and gateways are also certified by PTCRB, Verizon, AT&T and T-Mobile in the US and approved by China Mobile, China Unicom and China Telecom in China. The web-based device management platform InHand Device Network includes functionality for remote management and monitoring of InHand Networks routers and gateways as well as third-party devices. 69

79 Cellular modems, routers and gateways account for the lion s share of the company s business, generating revenues of approximately CNY 210 million (US$ 30 million) in Annual shipments amounted to an estimated 280,000 units, of which roughly 20 percent featured a 4G LTE module, while 2G and 3G devices accounted for the remainder. The solutions are used in applications such as smart grid, smart vending, industrial automation, self-service terminals, intelligent transportation and digital signage. Both direct and indirect sales channels are used, and customers include major industrial companies such as Siemens, ABB, Schneider Electric, SKF, Philips, GE and Rockwell Automation. InHand Networks is a Rockwell Automation Encompass Product Partner and part of Schneider Electric s Collaborative Automation Partner Program. The main market is China, followed by Europe and North America. The company has in recent time increased investments in its international subsidiaries to expand its presence overseas, primarily in Germany and the US. Moreover, InHand Networks views that cloud-based solutions will become an increasingly important part of its product strategy in the coming years and has already introduced integrated solutions for powerline monitoring and smart vending. Integrations with major third-party device management platforms such as Microsoft Azure and AWS IoT has also been added. The InRouter900 series of industrial routers were certified for Microsoft Azure IoT in mid INSYS Microelectronics INSYS Microelectronics specialises in professional communications, security and test systems. Founded in 1992, the company is headquartered in Germany with additional offices in the Czech Republic and the UK. The operations are divided into three divisions: INSYS icom, INSYS locks and INSYS test. The INSYS icom division develops industrial data communications systems for applications ranging from factory automation to environmental monitoring. The product portfolio comprises modems, routers and gateways in LAN, VDSL/ADSL and cellular versions, Ethernet switches, embedded modules, as well as connectivity services and VPN solutions. The company s range of cellular routers and gateways feature LTE, HSPA and GPRS connectivity for remote access to industrial automation equipment. The routers and gateways are ruggedized to withstand harsh environments and run the operating system icom OS. The integrated Linux environment icom SmartBox allows users to execute scripts and programs 70

80 directly on the devices based on containers. INSYS icom provides software packages to support industrial multi-protocol environments. Supported protocols include for example MQTT, Modbus, S7, CODESYS and OPC UA. Cloud connectors to popular cloud services such as Microsoft Azure and AWS IoT are also available. Additionally, the devices can be integrated with the company s VPN service. The icom Connectivity Suite is a managed service for VPN and SIM management, which enables functionality such as advanced group management, connection control and network monitoring. Figure 3.15: INSYS icom s industrial 4G LTE routers in the MRO and SCR series Source: INSYS icom INSYS icom supplies solutions to companies in various industries including energy, industrial automation, utilities, infrastructure and transportation. The division also targets system integrators and automation specialists. INSYS icom currently has 70 sales and distribution partners worldwide and has reached an installed base of millions of devices including both wired and wireless solutions Maestro Wireless Solutions Maestro Wireless Solutions designs, manufactures and sells modems, routers, gateways, GNSS receivers and tracking devices under the Maestro and Falcom brands. It is a subsidiary of the Hong Kong-based China Healthcare Enterprise Group (former Telefield International), an Electronics Manufacturing Services (EMS) provider and distributor of consumer electronics products with HK$ 662 million (US$ 82 million) in revenues and 1,600 employees. 71

81 Maestro s products are intended for applications such as industrial automation, SCADA, smart metering, vehicle tracking and fleet management. Headquartered in Hong Kong, the company was founded in its current form in 2006 but designed and sold modems under the Fargo Telecom brand already in Maestro has an additional 10 offices in the US, India, Germany, Spain, China and Japan. The company currently has around 100 employees and an installed base of more than 1.5 million active devices worldwide. Figure 3.16: Maestro Wireless Solutions IoT routers and modems (Q3-2018) Product Modems M110 Series M G M G CDMA M100 3G M100 CDMA plus M100 2G Description Industrial 2G, 3G, LTE Cat-1 or dual LTE-M1/NB-IoT cellular modems HSDPA, A-GPS, digital I/O x 2, RS-485, USB CDMA X, GPS, digital I/O x 2, RS-485, USB HSDPA, A-GPS, digital I/O x 2, RS-232, USB CDMA X, GPS, digital I/O x 2, RS-232, USB GSM/GPRS, digital I/O x 1, analogue input x 1, RS-232 Routers E220 Series 3G, LTE Cat-1 or LTE Cat-4, ruggedized, failover E210 Series 3G, LTE Cat-1 or dual mode LTE-M1/NB-IoT E200 Series HSDPA or HSPA+/CDMA2000 1X/EV-DO Rev A. Source: Maestro Wireless Solutions Maestro s range of industrial communication devices consist of modems and routers intended for tough environmental conditions. The modems are running Sierra Wireless Open AT Application Framework. By adding protocols and accessories developed by Maestro, the software has been adapted to make the modems suitable for usage with industrial equipment including electricity meters, lifts, alarm systems and programmable logic controllers. Sierra Wireless is also the main supplier of the modules for Maestro s modems and routers. The 72

82 company s cellular routers are divided into three series: E220, E210 and E200. The devices are designed for mission-critical industrial applications and come with cellular, WAN, LAN and Wi-Fi connectivity. The new E210 series is available with either a LTE Cat-4, LTE Cat-1 or dual mode LTE-M/NB-IoT module for integration into low-bandwidth IoT applications across verticals such as energy distribution, wastewater management and industrial automation. The E200 series is available with either HSDPA or HSPA+, while the E220 series comes with either 3G, LTE Cat-1 or LTE Cat-4. The E210 and E220 series also features serial interfaces. The routers have functionality for automatic failover and over-the-air (OTA) updates. Load balancing features are also included so that bandwidth can be allocated separately to single devices when multiple devices are connected. The D2Sphere device management services allow customers to monitor, diagnose, control and update the devices. Information such as signal strength, geographic location, battery state, temperature, device firmware and software versions can be remotely monitored, stored and presented to manage quality of service and prevent downtime. Maestro shipped an estimated 135,000 cellular modems and routers during The main markets were Europe, Southeast Asia and North America. In terms of shipments, Europe and Asia accounted for approximately 45 percent and 30 percent of the volume respectively. The remaining 25 percent were sold in North America. The sales model varies from region to region, and devices are sold both through direct and indirect sales channels. The company works with approximately 50 distributors worldwide, of which three have global presence. In the US, about 80 percent of the devices are sold via distributors, whilst in Europe only 50 percent of the units are sold through this channel. Maestro holds a strong position in the energy segment and customers include major industrial companies such as Siemens, Mitsubishi, Schneider Electric and ABB. During 2017, about 60 percent of the modems and routers sold were 4G LTE devices, 30 percent were 3G and 10 percent were 2G. Maestro s routers and modems are sold for around US$ 100 for 2G versions and about US$ 250 for 3G models. The 4G LTE Cat 4 devices have list prices of around US$ Matrix Electrónica Matrix Electrónica is a privately-owned company with headquarters in Madrid and offices in Barcelona, Lisbon, Chicago, Dubai, Cairo and Lima. Founded in 1991, the company started by distributing electronics components and has designed its own products since Matrix 73

83 Electrónica is part of the Flexitron Group, which includes also the engineering company IoTBlue and Interfacom, a provider of solutions for taxi cars and better known for its brand Taxitronics. The IoTBlue business works closely with Matrix Electrónica and launched the IoT platform Cervello Device Manager in late The Flexitron Group employs 210 people and about 65 of them work at Matrix Electrónica. Cellular modems, routers and gateways are offered under the MTXM2M brand. Matrix Electrónica also supplies electronic equipment, modules and components for developers, system integrators and manufacturers. In 2017, annual revenues reached 20 million (US$ 21 million) for Matrix Electrónica alone and 37 million (US$ 40 million) for the Flexitron Group. Matrix Electrónica s cellular hardware portfolio comprises two product lines: modems and gateways. The devices come in 2G, 3G and 4G LTE versions and are based on Gemalto s Cinterion modules. The design is modular, allowing for a high degree of product customisation. The MTX series of cellular modems are programmable in Java but are commonly delivered with the company s MTX-Tunnel firmware, which includes protocols and tools for remote control and metering applications. The company s gateways come with Embedded Linux or the proprietary MTX-Titan firmware. Device, data and rules management functionality is available in the Cervello Device Manager. The multi-tenant platform can be deployed on public cloud infrastructure or on-premises and supports protocols such as MQTT, CoAP, HTTP, BACnet and Modbus, thereby enabling integration with third-party devices. Matrix Electrónica s devices are PTCRB certified after testing carried out by 7Layers. Matrix Electrónica also offers devices with CE and FCC certification and has had devices certified by network operators such as AT&T, Verizon, Telefónica, T-Mobile, Vodafone, Orange and Wireless Logic. Matrix Electrónica s modular product concept enables the company to offer highly customized solutions, both in terms of hardware and embedded software. The company primarily employs a direct sales strategy and target companies in sectors such as energy, utilities, industrial automation, smart vending and building automation. Matrix Electrónica has been particularly successful in the energy vertical and has supplied its modems for several high-volume smart metering projects in Europe and the Middle East. Pricing spans depending on for example the cellular module used, level of ruggedization, type of processor, wireless connections and number of ports. The introduction of the Cervello Device Manager 74

84 in late 2017 allows the company to offer fully integrated solutions spanning hardware, embedded software and middleware. The IoT platform is offered with a usage-based pay-asyou-grow model based on a number of metrics such as the quantity of connected devices and data usage. The company s US subsidiary was opened in early 2018 and started to generate revenues in the second half of the year. The Australian market was also entered during the same year. In 2017, Matrix Electrónica sold close to 63,000 cellular gateways and modems, generating 12 million (US$ 13 million) in annual revenues. The European market accounted for roughly 50 percent, while the Middle East and the rest of the world accounted for 40 percent and 10 percent respectively MC Technologies MC Technologies was founded in 1948 and is headquartered in Hannover, Germany. The company has about 40 employees and generates annual revenues of 15 million (US$ 17 million). MC Technologies acts both as a reseller and manufacturer of wireless communications products for industrial IoT applications. The main product categories are routers, industrial computers, gateways and wireless modules, as well as connectors and cable assembly solutions. MC Technologies also provides professional services to help customers integrate wireless technology in customised OEM solutions. The range of cellular products includes close to 45 different devices ranging from basic 2G terminals to 4G LTE routers and industrial computers. MC MRL is the flagship industrial router with 4G LTE connectivity, 2 SIM Card slots, metal housing and a stated operating temperature of -25 C to +75 C. The new MC100 is a Linux-based industrial gateway that features a 3G or 4G LTE module, as well as Ethernet, serial, USB and GPIO interfaces. Additionally, both 3G HSPA+/UMTS and 4G LTE industrial computers are offered. All LTE models are downwardly compatible with HSPA+/UMTS/EDGE/GPRS. The company s main partner for cellular modules is Gemalto and the largest single market is Germany which accounts for 70 percent of total sales Moxa Founded in 1987, privately owned Moxa is a Taiwanese company that offers solutions for industrial networking, computing and automation. Annual revenues are in the range of US$_250 million and the company employs more than 1,000 people. Moxa has its design and engineering headquarters in Taiwan, but the sales and marketing headquarters are now 75

85 located in the US. In total, the company has 12 different branches with the additional offices located in Brazil, China, France, Germany, India, Russia, South Korea and the UK. Moxa s products enable manufacturers to connect legacy equipment to control systems, monitor harsh environmental conditions at production facilities in real-time, and convert data between proprietary and open protocols. The portfolio contains over 1,800 products across five product lines: Industrial Ethernet Solutions, Industrial Computing, Serial Connectivity, IP Surveillance and Remote Automation. Figure 3.17: Moxa s industrial cellular devices (Q3-2018) Product series Modems OnCell G2111/G2151 Description Industrial quad-band GSM/GPRS modems Routers WDR-3124A OnCell 5104 Industrial HSPA wireless routers Industrial five-band GSM/GPRS/EDGE/UMTS/HSPA cellular routers Gateways OnCell G3470A-LTE OnCell G3150A-LTE OnCell G3110/G3150 OnCell G3111/G3151 OnCell G3111/G3151 /G3211/G3251 Industrial LTE cellular gateways Rugged LTE serial/ethernet-to-cellular gateways Advanced five-band GSM/GPRS/EDGE/UMTS/HSPA IP gateways Compact five-band GSM/GPRS/EDGE/UMTS/HSPA IP gateways Compact quad-band GSM/GPRS IP gateways Source: Moxa Moxa s range of industrial cellular devices include routers, gateways and modems. The industrial gateways in the OnCell series are available in 2G, 3G and 4G LTE versions with serial and Ethernet interfaces. The devices come with a rugged hardware design and meet 76

86 stringent industry standards such as ATEX Zone 2 and IECEx, making them suitable for applications in hazardous locations. Secure VPN communications is also provided in both server and client roles. Network protocols such as IPSec, GRE and OpenVPN are supported to facilitate secure and reliable connections between two networks. The company s new OnCell G3150A-LTE gateway is designed to provide continuous connectivity and features dual SIM slots and power inputs, which ensure power redundancy and connection reliability. The OnCell Central Manager solution enables users to access, configure, manage and monitor devices remotely. Additionally, the company offers a number of modular devices, mainly embedded computers and remote I/Os with Mini PCIe sockets to fit optional cellular modules. Moxa targets companies in market verticals including factory automation, transportation, oil and gas, energy, maritime and mining. The company primarily sells its solutions through system integrators and distributors in more than 70 countries worldwide. Additionally, Moxa has established a global service network to be closer to customers to better understand their needs and respond faster to their requirements. A direct sales model is employed for strategic accounts. The company holds a strong position in the Industrial Ethernet market, and works with many of the large industrial automation companies. Cellular solutions account for a small share of Moxa s business. At the end of 2017, the company had shipped more than 50 million devices worldwide to date MultiTech Systems MultiTech Systems was founded in 1970 and is headquartered in the US with an additional EMEA office in the UK. The company designs, develops and manufactures communications devices. MultiTech offers a comprehensive portfolio of M2M products and services for connecting physical assets to business processes in order to deliver enhanced value. Additionally, the company is a founding member of the LoRa Alliance and highly active in the LoRa ecosystem. MultiTech is privately held and generates annual revenues in the range of US$ 75 million. Including its subsidiary Connected Development, the workforce comprises roughly 250 employees. 77

87 Figure 3.18: MultiTech Systems cellular IoT gateways, routers and modems (Q3-2018) Product Series MultiConnect Conduit MultiConnect Conduit IP67 MultiConnect rcell 100 MultiConnect rcell 500 MultiConnect Cell 100 MultiConnect ecell MultiConnect AW/AEW Description Modular gateway, 2 accessory card slots, 1 Ethernet, 2 USB IP67 rated, ruggedized version of MultiConnect Conduit Router, 1 Ethernet port, serial Router, 4 Ethernet ports, USB, serial Modem, serial or USB Low-cost Ethernet router HSPA+ analog-to-wireless converter Source: MultiTech Systems MultiTech offers solutions and networking products for wireless industrial automation applications such as wireless failover, wireline replacement, remote monitoring and control, facility automation and secure data transfer. The company offers a variety of external and embedded modems and gateways to enable cellular, LoRaWAN, Wi-Fi, Bluetooth and GPS capabilities. Cellular networking products include modems, SMS servers, USB modems, wireless converters and programmable IoT gateways. These devices can connect virtually any serial or wireless device to the Internet or IP network for remote monitoring, control and configuration. MultiTech s routers are simple networking devices while the gateways are programmable. The gateways cost between US$_300 and US$ 500. The MultiConnect Conduit series was released in 2015 and is a modular gateway series with two slots for accessory cards. Accessory cards can be used to add for example USB, serial, Ethernet or GPIO ports as well as LoRaWAN, Bluetooth, Wi-Fi or GNSS. The option to use IBM s graphical drag-and-drop interface Node-RED or mlinux Yocto makes IoT application development possible for users with varying experience. MultiTech s DeviceHQ is a cloudbased device management solution that simplifies and scales the management of the company s networking devices. It allows users to remotely monitor, upgrade and configure an entire device population from a single location. A suite of security services has been added to enable device authentication, certificate management, end-to-end encryption and 78

88 software-defined wide area networking. The DeviceHQ also provides an application marketplace, allowing users to browse, customize, build and deploy IoT applications. MultiTech Systems also offers lifecycle management for M2M/IoT solution services covering engineering, design, development, manufacturing and support. MultiTech Systems has in recent time transitioned from an entirely horizontal strategy to more proactively define and target use cases in its core markets including healthcare, energy, transportation, smart city and agriculture. Moreover, direct sales activities have grown to account for close to half of total sales of the traditionally channel-focused company that maintains a global network of distributors and resellers. The main markets are North America and Europe, followed by APAC where Australia is the main market. In terms of shipments, North America and Europe accounted for 60 percent and 20 percent of the sales in 2017 respectively. Berg Insight estimates that the company shipped around 100,000 cellular modems, routers and gateways during 2017 at a total value of US$ 18 million. Approximately 50 percent of the routers sold were 3G, 40 percent were 4G LTE and 10 percent 2G. Virtually all gateways sold were 4G LTE devices. The range of routers are available in 2G, 3G and 4G LTE versions, starting at US$ 225 for a low cost 2G model and ranging up to US$ 400 for the most expensive model. The device management services provided in DeviceHQ are available for free. Offering already certified devices is an important part of MultiTech System s market strategy. The company s products have certifications from more than 30 carriers in over 80 countries including AT&T, Verizon, Rogers, T-Mobile and Sprint in North America. The range of routers and gateways include models with CE, GCS, RCM and PTCRB certifications. Certification services are also offered when required to provide certified devices on any market. While being a pioneer in integrating LoRaWAN technology in its range of gateways, MultiTech Systems also has initiatives related to LTE-M and NB-IoT. In September 2017, the company announced the availability of its first modems based on LTE-M and NB-IoT technologies in the MultiConnect Cell 100 series. The LTE-M devices were approved for use on the AT&T LTE-M network in January

89 NetComm Wireless NetComm Wireless was founded in 1982 and is headquartered in Australia with additional offices in the US, the UK and New Zealand. The company has been listed on the Australian Securities Exchange since NetComm Wireless is a provider of broadband products to ISPs and telecommunications carriers, with its main focus on the development of fixed wireless technology. Operations are divided into two segments: Telecommunications Infrastructure Equipment and IIoT, and Broadband. The former specialises in fixed wireless broadband, fibre and cable to the distribution point technologies, and wireless M2M/IoT. Annual revenues generated by the 220-employee strong company reached AUD 182 million (US$_134 million) during the financial year ending in June 2018, up 69 percent year-on-year. Figure 3.19: NetComm Wireless M2M routers and modems (Q3-2018) Product Description NTC G serial modem NTC-140 4G LTE industrial M2M router, GPS NTC-140W 4G LTE M2M router, Wi-Fi, GPS NTC-400 4G LTE Cat 6 Industrial M2M router, dual Wi-Fi, GPS NWL-25 4G LTE light industrial M2M router NTC G UMTS/HSDPA/HSUPA M2M router series, GPS * * In some models Source: NetComm Wireless NetComm Wireless offers a range of cellular modems and routers intended for IoT communications. The industrial devices are rugged and designed to work in a wide span of temperatures. The most heavy-duty devices, for example the NTC-400 router has a metal casing and a stated operating temperature between -30 C and +70 C. The device features a 4G LTE Cat 6 module and dual band Wi-Fi for high speed applications. Connectivity options vary significantly between the routers, but can for example include Ethernet, Serial, USB as well as digital and analogue I/O ports. Additionally, the NTC-400, NTC-6200 and NTC-140 come with built-in GPS. The latter is further available in a Wi-Fi version called NTC-140W. All 80

90 routers come with an embedded Linux-based OS and SDK. The devices also feature a range of standard protocols for integration into third-party device management platforms. A number of carriers, including Verizon, STC, Telstra, AT&T, Rogers, Spark and NTT docomo have certified one or several of NetComm Wireless cellular routers. The company s main markets comprise Australia and New Zealand, which combined accounted for 74 percent of total sales in fiscal 2018, while revenues derived from international markets accounted for the remainder. NetComm Wireless markets its wireless IoT products through several different channels but maintains strong relationships with a number of major MNOs. Vodafone has been offering white-labelled devices provided by NetComm Wireless since The partnership originally only included a router branded Vodafone MachineLink 3G. During 2015, Vodafone launched a pentaband modem and router branded MachineLink 3G Plus that also includes GPS, USB 2.0 and RS-232 ports as well as external antennas. The cooperation between NetComm Wireless and Vodafone was extended in June 2016 with the release of the 4G LTE version of MachineLink. NetComm Wireless is also an official IoT hardware partner to Deutsche Telekom and has provided the MNO with its NTC-6200 router. In June 2017, the company announced an IoT device supply agreement with Telefónica. Under the agreement, NetComm Wireless will supply a range of 3G devices including its NTC-6200 router and its NTC-3000 modem. Additionally, devices are distributed through channel partners such as ACTE Solutions and Sphinx in Europe and Arrow Electronics in North America. In May 2018, the company entered into a partnership with Ericsson and its devices now integrate with the Ericsson IoT platform via the LwM2M protocol. During fiscal 2017, revenues from the Telecommunications Infrastructure Equipment & IIoT business segment amounted to AUD 157 million (US$ 115 million), which apart from cellular modems and routers includes telecom infrastructure equipment such as fixed wireless broadband as well as fibre and cable to the distribution point technologies. Telecom infrastructure equipment account for the lion s share of the segment s revenues. Berg Insight estimates that modem and router shipments amounted to roughly 40,000, generating annual revenues of about AUD 16 million (US$ 12 million). 81

91 NetModule NetModule was founded in 1998 and is headquartered in Switzerland with additional offices in Germany, Hong Kong and Australia. The privately-held company specialises in communications products for the transportation, public transport and industrial sectors. The offering comprises hardware and software products, as well as professional services. Since its founding, NetModule has evolved from a pure provider of embedded professional services for large customers to mainly a product company. Today, products account for about 90 percent of total revenues, while services account for the remainder. The headquarters in Switzerland mainly handles development, production control and administration, while the German subsidiary is the main revenue driver, accounting for roughly two-thirds of annual revenues. The Hong Kong branch serves as a location for sourcing in Asia and provides support and monitoring of manufacturing by contract manufacturers in China. NetModule has 55 employees and generated annual revenues of about 16 million (US$ 17 million) in Figure 3.20: NetModule s cellular routers NB800 Source: NetModule NB1600 NB2710 The company s new NB800 series of compact industrial IoT routers are intended for costsensitive connectivity applications and feature 3G/4G LTE cellular connectivity and a VPN protocol suite including OpenVPN and IPsec. Customisations can also be provided by using the NB800 OEM platform which allows customers to choose from a variety of wireless modules including LTE, UMTS, Wi-Fi, Bluetooth and BLE. The industrial routers in the NB1600 series are primarily designed for stationary applications in harsh environments and are available with optional LTE, UMTS, CDMA and WLAN. The routers provide multi-wan- 82

92 LAN-communications and functions such as data acquisition, protocol conversion, local data processing and storage. The vehicle and railway router series are designed for mobile communications in buses, trams and trains enabling features such as remote data access, passenger Wi-Fi and in-vehicle voice communications. The vehicle routers come with E-mark certification required for vehicle electronics and electronic components in the EU. Similarly, the railway routers are EN50155 and EN45545 certified. NetModule uses carrier certified PCI express mini modules, but typically does not have its routers certified with single carriers. The remote management system NetModule Connectivity Suite allows for remote device management, auto-setup of VPNs and over-the-air firmware updates. Netmodule s main markets are transportation and industrial automation. Single unit prices for the company s routers range 240 4,000, with cellular routers starting at approximately 300. On average, the IoT routers are sold for approximately 300, industrial routers for roughly 500, vehicle routers for around 1,000 and railway routers for 1,500 and above. Common user applications include condition monitoring and remote access in the industrial sector, and asset tracking, e-ticketing, transmission of passenger information, infotainment and video surveillance in the transportation market. Europe is the company s largest geographical market making up more than 80 percent of the router sales, followed by Australia and the US. NetModule sold 15,000 cellular routers in 2017 through distributors, system integrators and OEMs. Annual revenues from router sales amounted to about 13 million (US$ 14 million). NetModule offers both 3G and 4G LTE routers, but today virtually all new sales are 4G LTE. Customers include for example Siemens, Philips, ABB, Volkswagen, Mercedes, Bombardier, Stadtwerke Ansbach, Jungfrau Railways, Vodafone, Swisscom, REMTEC and Phoenix Contact Option Option is a provider of wireless M2M solutions. The company was founded in 1986 and has its headquarters in Belgium, with additional offices located in Europe, the US and Australia. Option provides networking hardware devices, engineering services and solutions. The company employs about 40 people and is listed on the NYSE Euronext Brussels Stock Exchange. Annual revenues in 2017 amounted to 5.2 million (US$ 5.9 million), up 25 percent year-on-year. The operations are divided into two business units: Products and 83

93 Engineering Services. In Q4-2017, Option announced the acquisition of Crescent, a holding company comprising a number of operating companies active in smart LED public lighting as well as IT services and contracting. The acquisition will enable Option to provide integrated IoT systems and solutions for smart city applications. Additionally, Option holds a partnership with the telematics company Danlaw in the connected vehicle market segment. Figure 3.21: CloudGate cellular M2M gateway Source: Option Product portfolio Option s current business is divided into two segments: Products and Engineering Services. The company s range of gateways are part of the CloudGate solution platform. The CloudGate hardware range consists of 4 cellular gateways and one Ethernet-only device. The series include one 4G LTE Cat 3 version and three 3G models intended for the Americas, EMEA and Japan regions respectively. The 3G gateways come with standalone GPS in addition to A-GPS whereas the LTE gateway supports A-GPS and A-GLONASS. All four gateways have an Ethernet port and two SMA antennas for WWAN and GPS. The operating temperature is -30 C to +70 C. The 3G device intended for the US market is certified by a range of MNOs including AT&T, T-Mobile, Sprint, Verizon, Bell Mobility, Telus, Aeris, Telcel, Entel and US Cellular. The 4G LTE device is so far certified by AT&T, T-Mobile, Sprint and Verizon. The 3G gateway intended for the Japanese market comes with certifications from Telec, Softbank and NTT docomo. The gateways can in a modular fashion be altered by 84

94 adding different expansion cards. Currently, approximately 15 cards are available, providing for example connection to interfaces such as RS-232, RS-435 and CAN-bus or wireless connections such as LoRa, BLE and Zigbee. Option s LuvitRED software agent includes support for standard protocols such as HTTP, MQTT, AMQP, Modbus, KNX and BACnet. LuvitRED also provides a visual configuration tool, allowing for the user to design and configure applications in a drag and drop manner. Business strategy The CloudGate business generated 3.5 million (US$ 3.9 million) in sales during 2017, up 57 percent year-on-year. Berg Insight estimates that Option shipped 10,000 cellular M2M gateways in 2017, up from 8,000 in During 2017, roughly 60 percent of the cellular gateways sold were 3G devices, while 40 percent were 4G LTE devices. The CloudGate business is part of the Products business segment, which also includes devices and embedded solutions. Option however intends to shut down its devices and embedded solutions business during In total, the Products business segment generated annual revenues of 3.7 million (US$ 4.2 million) in Engineering Services accounted for 1.6 million (US$ 1.8 million) of total revenues. Option s main markets are Europe and the Americas. In 2017, Europe accounted for 52 percent of total revenues followed by the Americas at 46 percent and APAC at 1 percent. The company s range of partners include system integrators, value-added resellers, application platform providers, distributors and network operators. Direct and indirect sales activities each account for roughly 50 percent. The printed circuit board assembly is outsourced to Jabil Circuit s plant in China. Component purchase, production, testing, quality control and logistics are also handled by manufacturing companies. Smart building comprises Option s most important market vertical. The company is also active in markets such as smart city, retail, transportation, energy as well as surveillance and security Red Lion Controls Red Lion Controls specialises in communications, monitoring and control for industrial automation. Founded in 1972, the company is a wholly-owned subsidiary of UK-based Spectris since the early 1980s. Spectris is listed on the London Stock Exchange and supplies instrumentation and controls for industrial applications. In 2017, Spectris generated annual revenues of 1.5 billion (US$ 1.9 billion) and employed 8,700 people in over 30 countries 85

95 worldwide. Red Lion Controls is part of Spectris Industrial Control segment along with Omega Engineering. The segment accounted for 263 million (US$_325 million) of total revenues in 2017, up 6 percent year-on-year. Red Lion Controls is headquartered in Pennsylvania and has more than 400 employees at 15 locations spread across the Americas, Asia-Pacific and Europe. The product portfolio comprises two product lines: Industrial Automation and Industrial Networking. Previously, products have been offered under the product brands Red Lion, N-Tron and Sixnet, but today Red Lion is the main brand used. N-Tron and Sixnet were acquired in 2010 and 2011 respectively. Both companies were providers of industrial Ethernet switches. In addition to switches, Sixnet offered cellular M2M and automation solutions whereas N-Tron also acted as a wireless product provider. Product portfolio The Industrial Networking product line include Ethernet switches, Wi-Fi radios, cellular routers and RTUs, as well as protocol, media and serial converters. The majority of the routers in the company s Sixnet series IndustrialPro SN-6000 support 4G LTE networks with fall back to 3G. The routers are rugged and designed for harsh environments with their intended use in communications between for example SCADA servers, RTUs, PLCs, remote I/O, cameras or industrial sensors. The routers feature up to five Ethernet ports and have a USB port, RS-232 port and support for Serial-to-IP communications. Power supply is given through a Molex connector with a DC current between 8 and 30 V. Red Lion s routers have wide operating temperatures of -40 C to +75 C. The devices come in different models intended for different wireless carriers. The product range includes routers that are approved by carriers such as AT&T, Bell Mobility, Sprint, Telus and Verizon as well as a number of generic models. Red Lion s range of cellular M2M hardware also consists of the RAM 6000 and 9000 series of rugged cellular RTUs. The 9000 series features 4G LTE connectivity and all devices are available in a Wi-Fi version. The 6000 series consists of both 4G LTE and 3G enabled devices. Over-the-air firmware updates are possible for the entire range of cellular devices. All LTE routers also have multi-carrier use with pre-loaded firmware for five different mobile carriers. The SixView Manager solution is designed to be used with Red Lion s cellular devices and enables users to remotely access, configure and manage critical device information. 86

96 Business strategy The vast majority of Red Lion s devices are sold through its network of more than 1,000 distributors worldwide, but the company has also a small proportion of direct sales to OEMs. The main market is North America followed by Europe. The devices are designed for industrial automation, where key markets include automotive, oil and gas, food and beverage, water and wastewater, packaging, power and energy, electronics and transportation. In September 2015, Red Lion established an IIoT Innovation Center, which houses engineering, product and sales teams focused on developing IIoT solutions. Key to this initiative is providing industrial automation products that connect disparate systems and enable communications across a wide variety of industrial protocols. In Q2-2017, the company added support for the MQTT protocol in its cellular routers and RTUs to simplify implementations with pre-configured profiles for the AWS IoT, Microsoft Azure, Cumulocity IoT and Nokia IMPACT platforms. Red Lion is also a certified device partner of Telit and its devices can be integrated with Telit s devicewise for Factory IIoT platform. The company employs a cloud agnostic strategy to support the customer s platform of choice Robustel Technologies Robustel Technologies was founded in 2010 and is headquartered in Guangzhou, China with additional branch offices in Germany, Australia, Japan, the UK, the Netherlands and Hong Kong. The company provides industrial cellular routers, gateways and modems, as well as software for managing its devices. The product portfolio also includes solutions for applications in a variety of market verticals including retail, energy, security, industrial automation, building automation and transportation. The company has about 150 employees. Robustel s routers run the Linux-based operating system RobustOS, which includes basic networking functionality and various protocols. Various connectivity options are supported including 2G, 3G, 4G LTE, LoRa, Wi-Fi and Bluetooth. The models also include interfaces for Ethernet, USB, RS-232 and RS-485, VPN capabilities and dual-sim functionality. The company s SDK enables users to run application software on the devices. M1000 is a family of cellular wireless M2M modems for bridging industrial connections and protocols with TCP/IP and cellular networks. The modular MEG5000 LTE gateway comes with three plug-in cards supporting various interfaces to meet the demands of industrial IoT applications. Prices 87

97 for the company s cellular products range US$ The devices are compatible with Robustlink, a cloud-based device management platform that enables remote monitoring, remote configuration and over-the-air firmware upgrades of the company s devices. The platform also includes dashboarding and alert capabilities. In addition, the products support third-party IoT platforms from Microsoft, Software AG, PTC, Telit and Exosite. Figure 3.22: Robustel Technologies IoT routers (Q2-2018) R2000 Router R3000 Lite Router Source: Robustel Technologies In 2017, the company shipped about 100,000 cellular gateways and modems, generating US$ 20 million in annual revenues. Robustel Technologies has shipped over 500,000 cellular devices in total since the start in The company primarily employs an in-direct sales model. Via its distribution network, Robustel Technologies targets mobile operators, device manufacturers, machine OEMs and integrators. Customers include mobile operators such as Vodafone, Telefónica, Orange and AT&T, as well as industrial companies such as Siemens, ABB and Swarco. The company has shipped products to more than 100 countries worldwide and the company s largest markets are Europe and Asia-Pacific followed by Latin America and North America. In Q1-2018, Robustel Technologies joined the Microsoft Azure Certified for IoT program and its products can now be delivered pre-integrated with Azure cloud services. 88

98 Sagemcom Dr. Neuhaus Sagemcom Dr. Neuhaus is a German company based in Hamburg with a production facility in Rostock. It was founded in 1979 and provides hardware and solutions for M2M data communication. The product range consists of smart meters, M2M routers, smart metering gateways and modems for remote meter reading. Approximately 40 percent of the company s 100 employees are engineers. Sagemcom Dr. Neuhaus is a wholly-owned subsidiary of Sagemcom since Sagemcom is a global group with 4,000 employees in more than 50 countries and annual revenues of 2.1 billion (US$ 2.2 billion). Sagemcom Dr. Neuhaus alone generates annual revenues of about 18 million (US$ 20 million). Figure 3.23: Sagemcom Dr. Neuhaus cellular M2M routers (Q3-2018) Product TAINY iq-3gds TAINY iq-4gds TAINY EMOD-L3 TAINY EMOD-V3 TAINY HMOD-L3 TAINY HMOD-V3 TAINY GMOD-S3 Description 3G HSPA router, firewall, VPN, optional 5-port switch 4G LTE router, firewall, VPN, optional 5-port switch Quad-band GPRS/EDGE router, firewall, USB, 2-port switch Quad-band GPRS/EDGE router, firewall, VPN, USB, 2/5-port switch GPRS/EDGE/UMTS/HSPA+ router, firewall, USB, 2-port switch GPRS/EDGE/UMTS/HSPA+ router, firewall, VPN, USB, 4-port switch Low-cost GPRS modem, serial RS-232 Source: Sagemcom Dr. Neuhaus Sagemcom Dr. Neuhaus series of M2M telemetry devices are branded TAINY and includes six different cellular routers, one modem and the TAINY SwitchingCenter which provides standard infrastructure for IP Telemetry. The TAINY series was first introduced in The routers are designed for cabinet installation with high security and redundancy features including a hardware-fixed integrated firewall and capabilities of setting up a VPN tunnel. The most recently added models to the family are the IQ-routers running a Linux OS. All routers can be delivered with an optional switch with up to five extra Ethernet ports. 89

99 Sagemcom Dr. Neuhaus works mainly with local integrators but has some sales directly to end-customers in the utility sector. Product development and production is handled in-house, making it possible to also customize devices according to customer specifications in addition to offering an off-the-shelf range of routers. The company s main market is Germany, followed by the rest of Europe, the Middle East and Africa. Apart from its cellular routers, Sagemcom Dr Neuhaus also offers a range of specialised cellular modems designed for remote meter reading and gateways used for smart metering applications Systech Corporation Systech Corporation is a privately held company with close to 50 employees and headquarters in the US. The company manufactures its products in the US and India, while final assembly, testing and order fulfilment are performed exclusively in the US. The company is also represented with a sales office in the UK and has a number of sales branches on the domestic market. Founded in 1981, the company started out with addressing input and output requirements for multi-user computers and later moved on to provide modem banks. Today, Systech offers network device solutions for IoT/M2M applications with a special focus on connecting legacy equipment. Systech has taken a modular approach to its gateways. The company s series of Linux-based gateways SysLINK are in the standard form fully functional modems and routers but can be expanded with a range of modular and optional cards. These optional cards are usually installed before shipping but can also be installed on location. The models in the SysLINK series varies from each other mainly by the number of modules supported, CPU and the number of available slots. The popular SysLINK SL-1500 has 2 module slots, up to 2 Ethernet ports and 1 USB port. Additional connectivity options are provided through the optional cards, which includes modules for 3G and 4G LTE cellular connectivity as well as Wi-Fi, ZigBee, Z-Wave and Bluetooth. Modules that adds serial and POTS ports are also available. The SysLINK gateways comes with a Linux operating system, enabling programming in for example Java, C, C++, Python and Lua. Since August 2016, all new SysLINK gateways come with SysScript Lite, the freemium version of SysLINK s scripting software SysScript. SysScript is designed to allow for non-technical personnel to perform IoT programming in a drag-and-drop environment. Systech also provides a number of remote management tools at no cost for modifying network settings, as well as installing and updating operating system 90

100 modules and software. The SysLINK gateways are certified by industry organisations including PTCRB and GFC as well as by a range of MNOs such as AT&T, Verizon, Sprint and Rogers. Systech provides a number of remote management tools at no cost with its gateways. Apart from the SysLINK series, the legacy IPG-series is still available. The IPG devices are intended for simpler applications such as retail and POS-terminals, tank level monitoring and ATMs. Figure 3.24: Systech s SysLINK series (Q3-2018) SL-500 SL-600 SL-800 Source: Systech SL-1000 SL-1500 SL-2000 Systech has to date sold over a million gateways. The gateways are primarily used in segments such as retail and point-of-sale, building automation, healthcare, energy management, as well as remote monitoring and control for enterprise and industrial applications. Systech s main customers are VARs, OEMs and system integrators. Devices are 91