The Missing Link in The Internet of Things Ecosystem – Soracom

Soracom is one of those rare Japanese startups that has the potential to become a major global player and to change the way Internet of Things devices work.

The real deployment bottleneck in the Internet of Things is not the hardware or the software, but the connectivity. There are still relatively few inexpensive, flexible and scalable ways that IoT devices can transmit and receive data. Cellular connectivity is expensive, and WiFi is largely limited to stationary devices in homes and offices.

Today we sit down with Ken Tamagawa, CEO of Soracom, who explains his solution to this problem, and it's a good one. Soracom operates a mobile virtual network and provides widespread connectivity for IoT devices for pennies a day, and since their infrastructure runs completely on AWS their costs are significantly lower than the competition's.

Soarcom is extremely well-funded, and they are quickly expanding globally. You are going to be hearing a lot about them in the future, so let’s get to know them today.

I think you’ll really enjoy the interview.

Show Notes for Startups

What are MVNOs and why are they important for the Internet of Things Why replacing hardware with software drives innovation How Japan Taxi is taking advantage of the Internet of Things The most surprising thing about going global from Japan The future of the IoT in Japan Why play and serendipity remain important even as a company scales

Links from the Founder

Everything you ever wanted to know about Soracom Follow Ken on twitter @KenTamagawa Friend him on Facebook Check out the Soracom blog Get started with the Soracom Developer Site Safecast P2P Radiation Monitoring

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Transcript from Japan

Welcome to Disrupting Japan- straight talk from Japan’s most successful entrepreneurs. I’m Tim Romero, and thanks for joining me.

One of the most important problems of the internet of things is not the internet or even the things. The problem lies in connecting those things to the internet. In fact, much of the promise of the internet of things is based on the idea of thousands of connected devices working together. It turns out that building the hardware and writing the software has proven to be much simpler than developing an affordable, scalable, and secured network that enables these devices to communicate with home base and with each other.

Some applications use WiFi and that's a great solution for stationary devices that operating homes or offices, or anywhere else where you can be certain to have a connection. But, many devices are mobile or need to operate whether there may not be a WiFi connection. Some applications paired with cellphones and that works well for personal devices and wearable’s and things will carry around with us. But for things like sensors and inexpensive autonomous devices, well, having a cellphone plan for each of them is simply cost prohibitive. So, right now, connectivity is the real problem for a lot of internet of things applications.

Well, Soracom has a solution and a damn good one in my opinion.

Today, we sit down with Ken Tamagawa, CEO of Soracom to talk about their solution which involves slicing up mobile bandwidth and using Amazon web services as their backbone and this enables a pay as you go remote communication package for pennies a day.

We also discuss Soracom's global ambitions. Soracom is one of the few Japanese start-ups to raise a round of more than 20 million dollars and a lot of that is targeted on their global expansion. Soracom has something that is truly unique and you'll be hearing more about Soracom in the years to come.

But Ken tells us story much better than I can. So, let's hear from our sponsor and get straight to the interview.

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[Interview]

Tim: I'm sitting here with Ken Tamagawa of Soracom. Soracom is a communications platform for internet of things devices but you can explain it much better than I can. So, what is Soracom?

Ken: Okay. Soracom offers IOT connectivity platform. So, basically, many IOT solutions or devices need the connectivity sending data to the cloud. I noticed, like I was working for Amazon web services before I founded Soracom, and many, many customers wanted to send data to the database cloud but there is no ideal connectivity yet. So, we built connectivity platform on top of the AWS and that is Soracom.

Tim: Okay. You're operating which is called a mobile virtual network, right? For example, many developers will use the use of mobile phone as a connectivity device. What you guys are doing is something very different. So, on a technical level, what's happening?

Ken: So, there's many people wondering how we provide that kind of cloud-base connectivity at the MVNO- Mobile Virtual Network Operator. So, let me talk about the mobile view of this industry fast. Telecomm operator such as the NTT Docomo and other big giant players, they usually have many, many base stations or cell towers and it's going to be, I think, maybe 100 cell towers in Japan. They need to invest a lot of money to the cell towers and also they need to have big data center to host telecomm call network system. It's usually very expensive.

Tim: Oh sure! It's a massive capital investment. That's why almost any country are only going to have 2 or 3 cell operators.

Ken: Obviously, we cannot do that as a start-ups, but we found a way to provide several connectivity as MVNO. There's a way called the "Layer 2 connection" to the telecomm operator. So, we contracted with the NTT Docomo and we got Layer 2 Connection. So, in that set-up, basically, we are borrowing cell towers and we are hosting our telecomm call network system by connecting those cell towers with the physical network plan to the database code.

Tim: When you're operating virtual network, are you paying a fixed fee monthly or yearly to operate this network on top of Docomo or you're paying on like a SaaS basis or in a per packet or something like that?

Ken: This is kind of a secret though, but actually ---

Tim: You can tell me.

Ken: It's actually opened in the website. let me talk about the secret. We are paying the bandwidth fee to the NTT Docomo based on the bandwidth per month used from us, in that way we borrow the cell tower part of the NTT Docomo.

Tim: Okay. So, that's perfectly aligned with your business models. So, your cost only go up as your users and their use go up.

Ken: Right. There are several MVNO's using that layer 2 connection. The uniqueness of us, usually MVMO player, they use a layer 2 connection and they borrow the data center and they buy the hardware appliance of a telecomm call network. They need to invest, I think, 20 million USD for that part - hardware appliance and data center. But in our way, we use AWS cloud and then we build telecomm call network in software in a AWS cloud. That's our core competency.

Tim: So, in that way, since your costs were based in usage, you can price this work on products that way to your users?

Ken: Right.

Tim: So, what does it cost for internet of things developer to get started in Soracom?

Ken: So, we try to be very open and programmable and pay as you go model, like AWS. So, we sell SIM-card in Amazon.com and also our direct web channel. Once our customer get the SIM-Card, we charge 10 Yen per day. So, basic usage fee is very cheap. So, even they continue to use for months, it's going to cost 300 Yen, it's almost $3 and also, we charge data amount. So, it's a kind of pay as you go model and every month we calculate how much data they send.

Tim: There's so much great stuff happening in IOT these days and it can be hard to really understand how a platform is used. So, let's dive in into a couple of used cases that are now taking advantage of what Soracom has to offer now. So, you're working with Japan Taxi on an ad-delivery system.

Ken: Yeah. Yeah. So, before, talking about the Japan Taxi and if you looked at our customer base within one year after our launch, we already have 5,000 customers, which include an enterprise to small and medium business and also start-ups across the industries too. So, Japan Taxi is very interesting customer. They put tablet in the backseat of the taxi and they distribute as an advertisement movie for customers. So, it was interesting. Every customer average taxi ride 18 minutes I had from the Japan Taxi. So, it's a good way to provide the advertisement movies. Usually, those advertisement movies are updated, weekly or in two weeks, so, as I need to have a way to distribute latest advertisement movie, then they use Soracom and especially they use like a night time to distribute advertisement movie. We have like a cheaper price.

Tim: Oh, so the rates are different at different times or date.

Ken: Exactly. So, they take advantage of that time.

Tim: Okay. So, instead of having a data plan and a connectivity plan for each individual android tablet, they just connect to Soracom at less than 10th of the price and update the ads from a central location.

Ken: Right.

Tim: Excellent. And let's see, what else? Safecast is a very interesting project because they didn't start out with Soracom but they converted over last year.

Ken: Yeah.