Market Insight

SoftBank further enhances IoT offering with Gemalto partnership

April 20, 2017

Julian Watson Julian Watson Principal Analyst, IoT

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Gemalto announced (on 03 April 2017) that it will provide SoftBank with its remote SIM provisioning platform, the backbone for the operator’s new eSIM offering. The new platform will enable SoftBank’s customers to remotely provision eSIMs with profiles to connect to the mobile networks of their choice. SoftBank is targeting opportunities in a range of sectors, such as connected cars, wearables, traffic management and smart meters. In the connected car scenario, customers will be able to remotely select their choice of carrier when driving into a new country.

Our analysis

Over the past couple of years SoftBank has entered into a range of partnerships to strengthen its ability to provision and manage IoT subscriptions and devices. In July 2015, SoftBank selected Jasper’s cloud-based Control Center IoT connectivity management platform. Last year it chose NEC’s CONNEXIVE platform. These partnerships enable SoftBank to meet different requirements and offer different functionalities. The partnership with Gemalto enables SoftBank to serve customers that require eSIM to support their roaming assets or for simple management of domestic assets. The Cisco Jasper deal enables SoftBank to compete with NTT DoCoMo to support the connectivity needs of enterprise customers using the Control Center platform, the largest global cellular IoT connectivity management platform. Access to NEC’s CONNEXIVE platform enables SoftBank to offer data exchange brokerage (DEB) services to its enterprise clients.

SoftBank currently connects its enterprise and consumer IoT customers through its legacy 3G and LTE networks. It is in the process of deploying a LoRaWAN network across the country and has said that it will also roll out NB-IoT and Cat-M1 to address a range of LPWAN opportunities and meet different customer requirements. It has not yet put a timetable on its NB-IoT and Cat-M1 plans, but deployment of such LPWAN networks form only part of its rapidly diversifying IoT strategy.

In the past 8 months SoftBank has acquired ARM Holdings, the leading semiconductor IP and software company, launched a technology fund that is targeting $100 billion of investment and has entered into a range of partnerships that give it exposure to areas such as autonomous vehicles, robotics, blockchain and insurance among others. As such its approach to IoT is considerably more ambitious than its operator peers, but unlike traditional telecoms players it has both a history of financing large transactions and its roots in software, content and internet services.

The acquisition of ARM gives SoftBank strong existing revenue streams, but both this and its other initiatives around IoT reflect a desire to drive greater connectivity and the development of new vertical business models. SoftBank is taking the partnership or co-investment approach in areas such as connected car, blockchain and insurance. Increasingly, these initiatives will exploit capabilities it had gained through investments it has made in areas such as fintech (SoFI) and AI (Cloudminds). Building such broad capabilities will enable SoftBank to diversify its IoT revenues more rapidly than leading operators, such as SK Telecom (South Korea) and Verizon (US) that are aggressively targeting the IoT opportunity. In 2016 SK Telecom and Verizon achieved IoT revenue growth of 40.7% and 44% respectively, but such services still accounted for less than 1% of their total revenue.

SoftBank’s key IoT developments over the past 8 months are outlined below.

  • March 2017: SoftBank units increased their investment in SB Drive Corp, which now has capitalisation of over 1 billion yen ($9.1 million). SB Drive was formed in April 2016 as a joint venture between SoftBank and Advanced Smart Mobility, a company researching and developing automated driving technologies. Under a cooperative framework with SoftBank, Advanced Smart Mobility, Yahoo! JAPAN and others, SB Drive has been conducting social trials and testing the commercial viability of fixed-route bus type community public transportation and large truck convoy-based trunk line freight transportation systems that utilize self-driving technologies. SB Drive also  has smart mobility partnership agreements with four municipalities in Japan, including Kitakyushu City and Yazu Town in Tottori Prefecture.
  • February 2017: SoftBank and Qustodio, the Barcelona-based parental control company, announced a partnership to make their internet safety and device management product for families, Qustodio Premium, available to operators across the world.
  • February 2017: SoftBank partnered with its US subsidiary Sprint and TBCASoft to develop blockchain solutions for telecoms operators. Under the plan, they will develop a blockchain platform for various services, such as secured clearing and settlement, personal authentication, IoT applications and other services.
  • October 2016: SoftBank said that it would create the SoftBank Vision Fund to invest in the global technology sector. Under the plans, SoftBank will invest up to $25 billion in the fund over the next 5 years. SoftBank also concluded a non-binding memorandum of understanding with the Public Investment Fund of the Kingdom of Saudi Arabia (PIF), under which PIF will consider investing in the Fund and becoming the lead investment partner, with the potential investment size of up to $45 billion over the next five years. SoftBank plans to bring in other investors to reach investment of up to $100 billion in the fund.
  • October 2016: SoftBank announced the launch of the humanoid robot Pepper in China. The robot has been jointly developed by Alibaba Group and SoftBank.
  • September 2016: SoftBank said that it would deploy a LoRaWAN network in Japan with partners Actility, Hon Hai Precision Industry and Semtech.
  • September 2016: SoftBank completed the acquisition of ARM Holdings, the semiconductor IP and software company, for £24 billion. ARM makes money through licensing its technology to semiconductor manufacturers, receiving royalty on ARM-based chips and selling software. In 2016 some 16.7 billion ARM-based chips were shipped. It’s strategy is based on developing more advanced processors, building market share in areas such as networking and servers and addressing fast-growing IoT opportunities such as automotive, drones and virtual and augmented reality.
  • August 2016: SoftBank launched the second round of its SoftBank Innovation Programme, seeking solutions in smart home, connected vehicles, fintech, VR, AR, MR (mixed reality) and drones.
  • July 2016: SoftBank announced a strategic partnership with Sumitomo Life Insurance and Discovery, a South African financial services firm to initiate the Japan Vitality Project. The project will lead to the introduction of insurance products integrated with Vitality, Discovery’s wellness programme, into the Japanese insurance market and the joint development of a platform for the collection of IoT-generated health data and wellness activities. Vitality incentivises policyholders to manage their wellness.

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