Semtech’s Design Partner Program for LoRa Triples amid Growing Demand for Differentiated Hardware Solutions

In April 2019, Semtech announced that its Design Partner Program had nearly quadrupled from seven design services partners in September of 2018 to 26 partners. Internet of Things (IoT) solutions providers such as Kerlink and Laird Connectivity join Semtech’s existing design partners, which include Gaussian Labs and Occam Technology Group. Semtech’s Design Partner Program is aimed at connecting end users, system integrators, and developers to streamline deployment of long range (LoRa)-based Internet of Things (IoT) solutions. In April 2019, Semtech also announced the release of LoRa Basics which is aimed to assist developers in further simplifying IoT development using open source software along with its LoRaWAN Academy aimed at further expanding the LoRa developer ecosystem by offering free educational modules for students, engineers, developers, and enterprise.

The significant expansion of the partner program in less than a year along with the significant push towards developer outreach is indicative of end user demand for not just differentiated IoT hardware solutions, but also solutions that leverage LoRa’s long range and low power capabilities. There are several competing Low-Power Wide Area (LPWA) solutions, and Semtech is ensuring that there is a vibrant ecosystem of partners, developers, and end users collaborating to deploy LoRa-enabled solutions. Semtech’s push also serves as a sign for other hardware providers that in order to meet the growing demands of end users, hardware providers need to offer differentiated devices that implement emerging connectivity technologies.

Along the crowded IoT value chain, firms such as Semtech provide some mix of hardware, connectivity, and value-added services and work with partners to fill in the gaps. ABI Research has analyzed 547 service providers operating along the IoT value chain as part of its ongoing SI/VAR and Partner Program IoT Ecosystem Market Data report and has broken down their product and service offerings into hardware, connectivity, and value-added services categories. Of these companies, 36% offered hardware in the form of device design services, sensors, and other communication devices; 12% offered connectivity services; and 84% offered some sort of value-added service, either standalone or in addition to their other offerings.

Of the 36% of companies offering actual hardware devices, 33% offered only hardware without any additional value-added services. The remaining two-thirds of hardware companies offered some sort of value-added service to complement and differentiate their hardware solutions. On the other side of the value chain, only 29% of companies that provide value-added services offer hardware in addition to their value-added solutions. Hardware companies are more than twice as likely to offer software platform services to differentiate their product line than a value-added services company is to provide hardware to differentiate its services. By adopting Software-as-a-Service (SaaS) business models and collaborating with partners to differentiate IoT solutions, hardware providers like Semtech are able to accrue both upfront device revenue and recurring service revenue.

While it may have seemed late for the launch of another partner program in the already crowded field of IoT partner program ecosystems, Semtech’s success reveals that there is a gap in the industry between what end users actually want and what solutions are currently available. It is crucial for IoT solutions providers like Semtech to differentiate their product line with increasingly customizable value-added services through partner engagements. As the number of connected devices and sensors continue to grow, and their manufacturing processes are refined, hardware devices and their physical features risk becoming increasingly commoditized, driving down the cost of these devices. This price pressure will force device manufacturers to turn to other value-added services and product features like supporting emerging connectivity technologies in order to differentiate and attract end users and developers to their product line and corresponding IoT ecosystem.

Additionally, Semtech’s efforts to develop its ecosystem are aimed at driving demand not just for LPWA solutions, but for LoRa solutions in particular. Semtech owns the Intellectual Property (IP) behind LoRa and has successfully deployed it as a viable connectivity technology for LPWA networks. ABI Research forecasts that the number of LoRa connections will grow from nearly 33 million in 2019 to over 287 million in 2024 at a CAGR of nearly 54%. This will account for nearly 40% of all non-cellular LPWA connections, significantly outpacing those of competitors such as Sigfox, Ingenu, and other proprietary LPWA network technologies. From 2019 to 2024, approximately 85% of LoRa connections will be used in either energy management or asset tracking applications, and Semtech has already successfully leveraged partnerships through technology solutions vendors to provide vertical-specific solutions such as smart water metering and smart city solutions that target these markets. By further expanding its LoRa ecosystem of partners and developers, Semtech will expand its base of end users and successfully deploy hundreds of millions of connections over the next five years.