Why is the price of GPRS module as low as ten yuan? My experience in the localization process of IoT module

The development history of the entire communication module is a history of the localization of core semiconductor components.

From France's Wavecom, Germany's Siemens, Canada's SIERRA, to Simcom, Quectel, Hezhou and other Chinese manufacturers, the author reviews this interesting and slow process from the perspective of the industry. It is also a direct microcosm of the localization process of China's communication chip industry.

(This article describes the GPRS module, which has the longest development history. WiFi and Bluetooth modules are not within the scope of this article.)

[[234173]]

1. Wavecom: The founder of IoT modules

Wavecom is a French company founded in 1993 and is the pioneer of communication modules.

There are two major events in the communications industry related to Wavecom:

• First, the first batch of Chinese mobile phones were assembled with Wavecom modules. In 1999, TCL ordered 200,000 GSM modules from Wavecom (each costing more than RMB 1,000), and later ordered millions of modules. This approach got rid of the technical barriers of overseas brands, ushered in an era of mobile phones, and led a wave of trends. Soon, Bird followed suit and cooperated with Sagem in the same way. If a big shot writes a history of mobile phone development, this section is an important chapter that cannot be erased.
• Secondly, Wavecom not only perfected the AT commands, but also launched the openat architecture which is popular in the industry. This architecture is still widely adopted by various module manufacturers. It opens a virtual channel inside the module, and the module's application software sends AT commands to itself through this virtual channel to complete the request and response of GSM services.

Currently, the secondary development methods of all modules are almost the same, including the currently popular Luat secondary development architecture, which also uses virtual channels to send AT to complete network functions.

In other words, more than a decade ago, Wavecom's business philosophy and technical architecture were already very advanced, which fully demonstrates the strong strength of the old capitalist country.

In 2006, Wavecom acquired Sony Ericsson's M2M division for 32.6 million euros (39 million U.S. dollars). M2M is actually a communication module. At that time, the term IOT did not exist yet.

You see, at this time, Wavecom has built itself into a wealthy giant by relying on a small communication module.

No matter how the situation develops, Wavecom's position in the industry will never be erased. It can be said that without Wavecom's foundation, there would be no booming development of the module industry, and no glory of China's first generation of mobile phones.

The acquisition of Sony Ericsson's module business was the climax of Wavecom's development. In the following years, with the intensification of industry competition and the gradual explosion of the Chinese market, a number of excellent Chinese companies were born. European giants could not maintain high growth in the communications industry. Wavecom sold all of its modules to Canada's Sierra Wireless for a high price of US$275 million at the end of 2008. Since then, Sierra has become the world's largest module industry leader, which has continued to this day.

In 2007, before this acquisition, the global market share of communication modules was as follows: Siemens ranked first with 27%, Wavecom with 25%, Simcom with 13%, and Motorola with 8%.

2. Siemens: A successful example of market-oriented operation

In the communication module market, Wavecom is the founder of the entire market, but in terms of influence on the entire market, Siemens is second and no one dares to claim first. If industry veterans were asked to review the classic models of communication modules, few people would be able to name the Wavecom model (the Wavecom module model is not well named, usually with four numbers and letters, such as Q2403A, which is difficult to remember), but Siemens' TC35, TC35i, and MC55 models are still often mentioned, so much so that these module models have been sought after in the second-hand market for many years.

Many of the older generation of telecommunications equipment tycoons often talk about how they spent more than 1,000 yuan to buy a Siemens module, made a device and sold more than 100 units, earning more than 100,000 yuan. Immediately, another tycoon will say that the Siemens module I bought earlier cost more than 3,000 yuan each, and the device sold for 10,000 yuan each!

In stark contrast, now in 2018, a GPRS module with more complete functions and industrial-grade quality costs less than 20 yuan.

Siemens is a very old company founded in 1847. Siemens launched the first communication module in 1996.

As a brand of old capitalism, Siemens has a high level of marketing. It has made full use of distribution channels. At that time, whether it was Avnet or other leading agents or traders of all sizes, as long as you had a stable supply of Siemens modules, you would have a money-printing machine. The reasons for this are: first, the failure rate of Siemens modules is very low; second, there are too few domestic module models and the quality level is still somewhat different. Therefore, Siemens modules have basically become synonymous with M2M modules.

At that time, the module generally had a connector. There was a female connector on the user motherboard, a male connector on the module, and four holes on the motherboard. Just snap the module on, pass the four copper sheets protruding from the module shield through the holes on the motherboard, and then flatten the copper sheet, and the module is fixed on the motherboard. In this way, if the module is defective, it is very convenient to replace. This way of use fully demonstrates that the module is indeed a very expensive component. In 2018, no manufacturer will use such an inefficient processing method. The module is either LCC package or LGA package, and users can directly use SMT technology for mass production.

However, no matter how powerful the old imperialism was, it could not resist the development of socialism with Chinese characteristics. As the technological level of Chinese technology companies improved, the advantages of Siemens modules gradually disappeared, and Siemens, as usual, split and sold its business.

Venture capital fund Cinterion acquired Siemens modules in 2008, and began to outsource module product development and production to Chinese manufacturers for OEM and ODM. As operational difficulties increased, Gemalto, the world's largest SIM card manufacturer, acquired Cinterion for 163 million euros in July 2010.

Gemalto's merger with the second largest module manufacturer seems to achieve the effect of one plus one greater than two, because SIM cards and communication modules are the two core components of the IoT system and are rigidly needed components. However, in fact, the development is not smooth, and Gemalto has not performed as expected in the market. At the end of 2017, Air France acquired Gemalto for 4.76 billion euros. It seems that the European giants are really unable to play in the communication market.

3. SIERRA: A master of capital operation

It was also founded in 1993. At the beginning, it was not a module company, but a solution system integration company, especially in wireless network cards.

At the end of 2008, Sierra spent 275 million US dollars to acquire Wavecom, and in 2012 it acquired Sagem for 44.9 million US dollars. Later, Anydata (a company that makes CDMA modules) was also acquired by Sierra. However, the acquisition of Anydata was too small, and it is difficult to find the acquisition details on the Internet.

Before 2007, Sierra had little voice in the industry, while Siemens Wavecom and China's Simcom were doing very well in the industry called M2M (machine to machine), and their market shares were constantly evaluated by data analysis agencies.

Although Sierra has been the leader for 10 consecutive years, there is really not much story to tell about Sierra. One reason is that it mainly relies on mergers and acquisitions and has no decent innovation. Another reason is that the company's operating route is too stable. It focuses on the high-end automotive and industrial markets, avoids competition in the mid- and low-end markets, and places the supply chain in China to control costs. At the same time, it uses system integration to provide industry services and control risks.

Although Sierra always claims to be the world's number one in module shipment share, it has been difficult to make a strong connection between communication modules and Sierra over the years. Let's temporarily regard it as a continuation of Wavecom.

4. Telit: A master with clear positioning

The company was founded in 1986 and began to focus its business on M2M in 2003. It also started to develop and sell communication modules, and once occupied a portion of high-end users in the Chinese market.

In 2010, Telit acquired Motorola's communication module business. Since 2015, Telit has gradually withdrawn from the Chinese market.

Telit was once synonymous with high quality and launched a cloud platform business called M2MAir in Europe. This advanced concept was not promoted to China. It may be that Telit is too small to bear the huge promotion costs in the Chinese market, which is a pity.

Currently, Sunsea already holds approximately 14% of Telit's shares. Whether it will further acquire Telit in the future is a matter of speculation.

5. Motorola: An old brand that can’t adapt to the new situation

As a long-established communications giant, it is indeed unusual for Motorola to not have a module business. Motorola modules entered China very early and entrusted a Chinese company called Fibocom to do sales in China.

In that era, Motorola modules were synonymous with giants. Despite the small investment, they still had a certain market share. But they never made much of a splash.

After Motorola was acquired by Telit, it terminated its cooperation with Fibocom, so Fibocom began to make its own brand of modules, opening another new chapter for domestic modules.

6. Sony Ericsson, Sagem, BenQ: They have made their presence felt in the market

The reason why Sony Ericsson started to make modules is not very clear, but 10 years ago, M2M was indeed a trend, although not as hot as the current IOT, but it was a global trend after all. After a few years of involvement, Sony Ericsson found that the module business was not its strong point, so it sold the entire business to Wavecom.

Sagem is also a French company that does both home appliance and communications business. Sagem's modules were first sold to Bird, which used this module to make a fighter jet in a mobile phone. Later, Sagem was the first to launch an industrial-grade module with a temperature range of -40 to 85 degrees. However, Sagem's strategic investment in modules was too small, and the market promotion did not improve. Later, it simply sold the module business to Bird, and the home appliance business to TCL.

Although BenQ has not been in the module business for a long time, strangely enough, BenQ modules are still well-known. Many people in the industry know about BenQ's module business, which may be related to the strong execution of the Taiwanese company. Later, BenQ modules were only in business for a few years. Due to inexplicable quality problems, the module business finally failed and BenQ completely withdrew from the industry.

7. Simcom: The pioneer of domestic brands

Simcom has been involved in the module business since 2003 and is a well-deserved leader in domestic modules. The core team of Quectel, which later rose to prominence, was also separated from the Simcom team.

Although there is a company called Youth Network that may have developed the module earlier than Simcom, the module of Youth Network has not yet been mass-produced and shipped, and the team was disbanded for unknown reasons (perhaps the boss thought the money was making too slowly), so it can be directly ignored.

The English name of Simcom is so well chosen that the industry rarely mentions its Chinese name, SIMCom. If you call this team SIMCom, it means you are not a veteran in the module industry.

Simcom did not develop its own modules at first, but chose to be the agent of ITM100 modules from UK's TTPCom. Unfortunately, the delivery of this module could not keep up and the quality was very average. So the Simcom team took a desperate step and started to develop their own modules. From this time on, the glorious chapter of China's communication modules really began.

The first module launched by Simcom was called SIM100. The quality of this module was so poor that the main responsibility of Simcom's technical support engineers was to travel around to upgrade the module software for customers. The industry still has stories of Simcom's engineers going deep into the mountains and wilds of customers to upgrade modules. This is very similar to how Huawei expanded its business in the early days of its founding!

After several years of hard work, Simcom has accumulated R&D capabilities and launched the SIM300 module, a milestone communication module. SIM300 not only truly opened up the domestic market, but also began to be sold overseas, established stable overseas channels, and truly captured a considerable market share. Although it encountered a patent lawsuit against Siemens modules, it did not affect Simcom's conquests. By 2007, Simcom's global market share had ranked third in the world, occupying 13% of the market share.

When talking about the SIM300 module, we have to mention China Mobile's wireless fixed-line business. In the first two years after the launch of the SIM300 module, it was difficult to gain a foothold in the M2M market, but at this time, China Mobile's wireless fixed-line business began to flourish. Simcom made a single-module wireless fixed-line solution based on the SIM300 module, replacing the previous technical architecture of a CPU plus an overseas brand module. This is definitely a disruptive industry innovation, and this kind of technological innovation that is closer to the market can only flourish in China. Technological disruption and the expansion of the wireless fixed-line market have created the beginning of the brilliant performance of the SIM300 module.

The SIM300 module is the first communication module in China with shipments reaching tens of millions.

In June 2005, Simcom's parent company, Morningstar Technology, was listed in Hong Kong, but due to the lack of long-term strategic planning, its stock price has not improved.

In the following years, domestic communication module brands gradually rose, Simcom gradually lost the fighting spirit of the early days of the business, and its performance growth became increasingly stable. The boss also chose to sell strategically. After selling to u-Blox and Yiwei failed, he had an affair with Taiwan's ASE, and finally sold to Sunsea Telecom by mistake, becoming a brother company of Longshang. The twists and turns in this story are enough to write a book. It should be pointed out that Simcom's parent company, Chenxun Technology, did not sell the module factory. In the process of processing modules, this factory gradually formed its own accumulation of Industry 4.0. Although Chenxun Technology has withdrawn from the module business, it is believed that they will continue to make a difference in intelligent manufacturing, which is the so-called Industry 4.0.

8. Quectel: Dare to bet and gain momentum

Quectel Communications was founded in 2010, and its founding team came from the Simcom module team.

Since its inception, Quectel has placed module quality and service at the top of its priority list. In just four years, it has established its module brand and reputation, and is now on par with Simcom.

Interestingly, the investor in the early days of Quectel was the son of the boss of Simcom, so Quectel and Simcom were actually brother companies. However, at some point when Quectel was initially building its brand, the angel investor's shares were mysteriously sold, and Quectel and Simcom no longer had any blood relationship. There are various versions of the details circulating in the industry, so I won't describe them in detail here.

With its strong business strategy and technical service execution, as well as good product reputation, Quectel is currently the largest communication module company in China, and is the leader among domestic module companies in terms of both number of employees and sales. However, due to the lack of further room for imagination, Quectel's operational risks are gradually increasing, and it remains to be seen where it will go in the future.

9. Longshang: One of the oldest domestic brands

Longshang was founded in August 2006 and was one of the earliest teams in China to make modules. It was acquired by Sunsea Telecom in 2017.

In the first three years of its establishment, Longshang focused on GSM wireless fixed-line business. With an A7000 module, it used the high level of software to maximize the performance of Infineon's (today's Intel Mobile division) ULC2 chip, and realized ultra-low-cost wireless fixed-line solutions with very low-configuration peripheral devices. This technical architecture was at least 2 years ahead of the industry, almost monopolizing the entire wireless fixed-line market, and also eroded the wireless fixed-line market share of the sim300 module, even though Simcom later launched the SIM300W of the mtk platform. This brings up another topic, how MTK chips have gone from being despised to becoming a benchmark in the module industry, and how RDA main chips have gradually replaced MTK chips to become the representative of domestic chips for modules. This is a microcosm of the gradual localization of the main chips of IoT modules.

After achieving a leap in the market with wireless fixed-line phones, Longshang quickly entered the WCDMA and EVDO modules, and later began the research and development of 4G modules, and once occupied the first place in the 4G module market. Unfortunately, Longshang's senior management kept changing, causing a sharp decline in operating efficiency, and eventually had to be sold to Sunsea Telecom at a low price, which made people sigh endlessly.

10. Huawei module: one of the few unsuccessful businesses

It is impossible to verify the year when Huawei started making communication modules, but this business is still ongoing, but the market share is almost negligible.

Huawei's module business was one of the synonyms for high-quality modules eight years ago, but the module business was so insignificant within Huawei that as module competition intensified, Huawei's modules basically withdrew from the stage of history.

Moreover, because the chip platforms selected by Huawei modules are always very outdated or even obsolete chips, we once suspected that Huawei's module part was mainly used to clear Huawei's mobile phone chip inventory.

[[234180]]

The reason why domestic modules are becoming more and more popular is largely because module manufacturers have engineers who provide close technical support to customers, but Huawei's modules basically have no technical support, and users can complete the development process just by reading the manual, which is very similar to Siemens. Huawei's quality control system also ensures that Huawei's module quality still has some advantages for a few years.

However, as the competitiveness of other module brands gradually increased, the module quality of domestic module manufacturers continued to improve and even surpassed Huawei, and the technical services became more personal, so the advantages of Huawei modules gradually disappeared. To date, Huawei modules are almost invisible in the market.

In most areas, Huawei leaves almost nothing wherever it goes. In the context of Huawei's cloud-pipe-end strategy, it still gave up the commanding heights of the Internet of Things, the communication module. It must be said that there is still a big gap between ideal and reality. Even as powerful as Huawei is, it can only choose to surrender in the face of the bottomless pit of technical services.

11. ZTE (Gaoxinxing) modules: better than Huawei

As a giant company, ZTE Corporation has incubated a subsidiary called ZTE IoT to get involved in the module business. Although this business does not account for a large proportion of ZTE's internal revenue, it still plays an important role in the Internet of Things industry. ZTE IoT has a complete module product line with good quality, and its agent policy is also sustainable, so it once occupied a good market share.

In July 2017, Gosuncn IoT acquired ZTE IoT and made an important layout in the IoT market. After the acquisition, ZTE IoT's brand was also changed to Gosuncn IoT.

Gosuncn IoT still has a good reputation and strength in the communication module market.

12. Fibocom: A unique expert

Quectel should be considered an outlier in the module industry. It used to be an agent for other people's modules. After creating its own module brand, it no longer developed agents and relied entirely on direct sales, so its market penetration rate has not been particularly large.

The industry knows very little about Quectel because they basically do not do any publicity, just like the Western Region masters in Jin Yong's novels.

[[234181]]

In 2017, Fibocom went public quietly, becoming the first and currently the only independently listed module company. After going public, although it spent RMB 30 million to acquire a module company called Nuokong, it still adhered to its own characteristics in channel management and did not make any essential expansion moves, showing the restraint and rationality of the management team. The future prospects of Fibocom are bright.

13. Aetvi: A short-lived benchmark in the segment

Aitevi is a module subsidiary of Wingtech Communications. The company only existed for more than three years and was deregistered at the end of 2013. However, in TDSCDMA, an industry that marks the first independent Chinese standard, Aitevi has an indelible significance.

In 2009, China Mobile started to launch TD wireless fixed-line business. With the core R&D team of Longshang wireless fixed-line, Aitewei developed the smallest TD module, model 0188, based on Spreadtrum's TD chip and RDA's extremely low-cost TD amplifier. The software of this module is functionally configurable. After the user puts forward the functional requirements, the test engineer can release the software version with the configuration tool without the need for the software engineer to modify the software, which truly achieves extremely fast customer service. Soon, 0188 monopolized the entire TD market with its efficient technical service model and almost became synonymous with TD module.

Unfortunately, with the decline of TD networks, ATV also withdrew from the stage of history, becoming a typical example of a flash in the pan.

Aitevi's R&D team continues to create new glories in this industry.

14. Hezhou: Creating value for customers is the best way

The Hezhou team is a branch of the R&D team of Longshang and Aitewei. The team is characterized by strong technical innovation capabilities and always pursues the ultimate user experience of products. The Luat secondary development architecture launched by Hezhou has become popular all over the country in just one year, and even many foreign developers are participating. Therefore, some people call ESP8266, EMQTT, and Luat the three hot spots of the Internet of Things.

The biggest advantage of the Luat module is that it is easy to develop. Engineers can create a typical IoT application solution in just a few days, completely getting rid of the lengthy development cycle of traditional MCU plus module AT commands.

What's even more amazing is that Luat provides source code for various typical application scenarios, as well as various implementation libraries for TCP, UDP, MQTT, HTTP, HTTPS, SSL, and FTP. It also connects to typical cloud platforms and opens source code, including Alibaba Cloud, Tuya Cloud, and oneNet.

Compared with Arduino, which is more suitable for designers to make hardware prototypes, Luat is more suitable for the customization of the overall communication solution of the Internet of Things, and can be quickly mass-produced. Therefore, its development speed far exceeds that of Arduino and has become one of the hot spots in the Internet of Things industry.

15. Conclusion

The communication module is such a core device that most IoT practitioners call it a chip. It does look like a chip and is much smaller than INTEL's PC chip. In recent years, with the development of the IoT, the demand for modules has exploded rapidly. Domestic modules have gradually dominated the market with their high quality and personal service advantages, and their prices have gradually dropped to less than 20 yuan. On the other hand, the module development process of whichever company is more standardized and fool-proof will have a rising share.

With the rapid development of China's economy, in the next few years in the field of Internet of Things, a BAT-level enterprise will be formed, and this enterprise is likely to stand out among the communication module enterprises!