Parag Mittal, Chief Commercial Officer, SORACOM
“Our focus is the democratisation of IoT. For me, the measure of success would be that Soracom is recognised not just for excellent commercial performance, but also for the work it has done to support the industry.”
Interview by Abraham Joseph, Editorial Director, IoT Insights
What is the origin of Soracom?
Soracom was founded in Japan in 2015 by three experts in telecommunications and cloud technologies, our CEO, Ken Tamagawa, our CTO Kenta Yasukawa and our COO Daichi Funato. We launched our service in Japan on 30 September 2015. From the onset, our objective was to develop a communications network that was optimised for IoT, with the performance and scalability to serve all customer groups. One year after launch, we had over 4000 clients. Today we have over 5000 clients.
Which specific gap did Soracom aim to exploit?
We noticed that a lot of companies wishing to deploy IoT solutions were not able to get the services they wanted. In terms of the connectivity component, in many instances devices were deployed with public IP addresses and data was carried over the public Internet. This is still the case for most installations today. We recognised that this was a major problem, especially with respect to security. This was the genesis of the idea to build an IoT-focused core network. Then, instead of focusing on selling connectivity in the traditional way, we decided to bring the core network to the cloud since all enterprises were already in the cloud.
Who owns Soracom?
Soracom is privately owned. Our investors include World Innovation Lab, Infinity Venture Partners (IVP), Pavilion Capital, Mitsui, and Mirai Creation Fund.
In which Markets does Soracom Operate?
Today, most of our customers are in Japan. In November 2016, we expanded to the US. We a small team based in Palo Alto. Currently, we are focusing on European expansion. Our launch event for Europe will be held at 4YFN at Mobile World Congress on 27th February 2017.
What are your plans for Europe?
Our initial focus will be to raise awareness. We plan to do the same ground work we did in Japan to build the Soracom brand. We plan to start our work with the developer community in different countries. We’ll also be working with technology start-ups as well as small, medium and large enterprises.
Can you elaborate on how you plan to engage with the developer community?
Our aim is to build a single developer community across Europe. Of course, we can’t do this by ourselves. We are looking to engage with passionate developers and customers to build this ecosystem. In Japan, we already have thousands of people in our user group. This is of great benefit to us, but also to our developers and end users.
Our key message to developers is that they don’t need to struggle anymore because Soracom is here and we have the offering that they’ve been looking for to enable them to deliver their solutions and services on time.
How would you describe this offering?
We designed and built our core networking software in such a way that we can transfer data securely between devices and the cloud. In essence, we are able to offer each customer their own private network and a comprehensive array of management tools. We call this the “Democratisation of IoT”. However, IoT is very much a team sport. Since our focus is connectivity solutions, we are looking to partner with others that provide other IoT components and wish to take a similar approach to serving all customers in the IoT market.
What exactly comprises this private network that you offer?
Essentially it is a software running on the cloud. Specifically on Amazon Web Services. Using this architecture we are able to build and deploy networks on a pay-as-you-go basis, in real time, depending on customer needs and to scale them very rapidly.
Presumably signals still go over copper wires, fibre and satellites. Who are your partners for this physical connectivity?
Yes, we make use of public telecom infrastructure. However, our customers’ data is routed via our core network and packet gateways, rather than over the public Internet. We operate as an MVNO in a number of countries and have roaming agreements that enable us to provide global coverage. We have the flexibility to switch between different operators in different countries and regions to achieve best price, best quality and best coverage.
Does this mean that you will be competing with mobile network operators, many of whom have their own IoT service offerings?
Given our focus, I expect that competition will be minimal. In fact, I expect that we will be collaborating rather than competing. We see operators as potential channel partners. Our partnership with KDDI illustrates this. In December 2016 KDDI launched the KDDI IoT Connect Air service, which is powered by Soracom. Additionally, KDDI is partnering with Soracom to deliver a global telematics platform for Toyota.
How easy is it for a customer to switch between operators in a country?
We have technology that enables devices to switch between operators on the fly. This is particularly important for customers for whom service availability is a high priority. We are building additional services to ensure we have the right levels of availability, quality and security to address evolving customer needs.
Is it practical to serve everyone when you enter a new market?
Yes. Our technology has been designed, developed and deployed to support this. However, in practice, when we announce entry into a given market, we will have been working with customers in that market already. In the case of Europe, we will be presenting live demonstrations of use cases along with some of our customers and partners at 4YFN (Mobile World Congress) and CeBIT. Generally, the highest priority for us when we enter a market is the democratisation component. This means launching in such a way that we can support the developer ecosystem while also offering a full range of service to start-ups, SMEs and large enterprises.
How many of your customers are offering commercial services today?
It’s difficult to quote a precise number, but despite IoT projects typically requiring extensive testing we have seen over 30% quarterly growth in few hundred accounts.
You mentioned the partnership with KDDI and Toyota. Can you name some of some of your other customers?
We have customers and partners from many different verticals. Kakaxi partners with Soracom to provide sensing equipment for farms. Personal mobility device manufacturer Whill Inc. uses Soracom for remote monitoring and management of their personal mobility devices. Safecast use the Soracom network to collect and map radiation data. Enerbrain connects buildings to cloud intelligence for energy optimisation, Omniflow delivers smart energy platforms for urban and rural areas. We have hundreds of exciting use cases across our customer base.
What are Soracom’s USPs?
We have three major differentiators. They are:
- A fully pay-as-you-go model, with no minimum commitment or contract. Our customers do not need to commit to a number of SIM cards or a specific volume of data.
- Security. Some businesses are willing to compromise on this but we are not. We can deliver device and network security on a pay-as-you-go basis for everyone across all customer segments and all industry verticals.
- Time to market. We offer APIs to our core network. Establishing a VPN connection takes minutes rather than months as is usually the case with other service providers. One of our European customers that had previously spent two months trying to get an VPN from a traditional service provider discovered that with Soracom they could have this in minutes.
What is the cost for a small developer wishing to connect 5-10 end points?
For small projects, a developer can buy Soracom SIM cards directly from Amazon’s European sites. Five SIM cards cost around $25.00 (US). For active SIMs, there is a monthly charge per SIM card of around $1.80 and data rates starting from 8 cents per megabyte for low consumption use cases.
For high volume and high consumption customers, prices drop automatically. So, what we bring is affordability on day one to get projects moving quickly and economies of scale as volume increases. The great thing is that all our services are available for smaller volumes on a low-cost pay-as-you-go basis. It is important to stress that we are not just offering a SIM card and connectivity but also a range of network services, including the highest levels of IoT security, at very competitive rates.
You raise around $30 million in the last round. Is this enough to support your current development and expansion plans?
Yes, the amount we raised is enough to support not only our US and Europe expansion but also expansion into a number of additional markets and our current technology roadmap. Our business model and our technology are designed such that we can scale elastically.
Which additional markets do you plan to enter?
We plan to serve the Middle East, Africa, South America and other parts of Asia from Japan, US and Europe. We are exploring strategic partnerships with potential operator partners in some of countries in these regions.
What additional technologies/services can we expect from Soracom over the next two years?
We will continue to enhance our range of connectivity solutions based on customer pain points. Additionally, since our core network is agnostic to the underlying access technology and we are committed to building a truly connected world, you can expect to see us offering not only cellular connectivity, but a fully integrated approach to all types of IoT networks, including low power wide area networks and satellites.
What are your ambitions for the business?
I am focused on the overall commercial success of Soracom. This means ensuring that our top priorities are correct and that we build processes that make it easy to understand the needs of customers. We believe listening to and understanding our customers is essential if we wish to be a market leader. I’d like to see Soracom become the default choice for connectivity solutions. Then, acknowledging and identifying the reasons organisations choose alternative solutions would enable us to improve. For me, the measure of success would be that Soracom is recognised not just for excellent commercial performance, but also for the work it has done to support the industry.”
How do you see the IoT market developing over the next several years?
Sticking to our competence area, connectivity solutions, among the changes I see happening are innovations in technology and business models that will lower deployment costs and allow deployments to scale more rapidly. Currently the industry faces many problems relating to commercialisation of hardware. Prices of devices have not fallen to the extent that they could have. Part of the reason relates to patents and royalties and this results in significant costs before services are fully deployed.
If you could distil your knowledge of the industry and offer advice to a specific segment of the ecosystem, which segment would you choose and what advice would you offer?
I’d choose the developer and technology start-up segments. The advice I’d offer is to pay a lot less attention to arguments about different technologies and instead focus on the specific needs of your customer and your application. For example, instead of trying to find the ideal device with the widest range of connectivity options, focus instead on the bill of materials and ways to bring down the cost of devices so that you can deploy and scale solutions rapidly.
Secondly, regarding backhaul, I’d advise that cellular is by far the best and most secure technology available currently. This is because most use cases occur where people live and work, and those areas are predominantly covered by cellular.
Finally, I’d say develop both the businesses and its underlying products and services with the future in mind. The nature of the IoT industry is such that any solution deployed today is likely to require frequent modifications, so use modular approaches that maximise future flexibility.
© IOT Insights 2017
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