As IoT Startup Particle Pushes LTE Connectivity, A Scalable Channel Program Remains Elusive

Particle boasts that its Internet of Things hardware, software and connectivity platform is the most widely used in the industry, with 140,000 developers building products using Particle across 8,500 companies. But despite the success the San Francisco-based startup has experienced so far, that hasn't translated over to the company's channel ambitions — at least yet.

After telling CRN in 2016 that the company would use some of its $10.4 million Series A funding round to grow Particle's channel program "substantially," CEO and co-founder Zach Supalla said on Monday that the plan hasn't worked out to the company's original expectations.

"It hasn’t become a primary part of our sales strategy yet, and we're just waiting and watching to see when […] we're in a good place for us to invest more deeply," he told CRN.

[Related: 2018 Internet Of Things 50 ]

Particle, whose customers include Keurig, Ideo and Engie, announced on Tuesday a new all-in-one solution for IoT devices running on LTE networks. Supalla said the company's new Series E hardware, which includes Particle's cloud device cloud service and operating system, will enable LTE-connected devices at production scale as cellular carriers begin sunsetting their 2G and 3G networks, which some IoT devices currently rely on.

By allowing connectivity to LTE Cat M1 networks, the company promises IoT deployments with lower costs, longer battery life and improved connectivity range, which improves the economic feasibility of applications, such as distributed sensor networks for agriculture.

While Particle has been working with some systems integrators, most of the company's sales so far have been direct, Supalla said. But despite the company's inability to find a scalable channel sales model yet, he "fundamentally believes" that the channel will eventually make up most of Particle's sales in the long term.

One of the largest obstacles to getting there has been a lack of IoT expertise on the part of resellers, Supalla said. "On the software side, we haven't yet met a systems integrator or other variations that have real knowledge and experience here," he added.

That means there's a "huge opportunity for channel partners who develop a true expertise in IoT," the CEO said. For the roughly dozen systems integrators the company works with now, Supalla said Particle has had more success with those who have greater expertise with hardware. He believes firms focused on hardware are better poised to seize the opportunity, especially since IoT is rooted in embedded systems development.

This need for resellers to play a larger consulting role is largely driven by the wide range of customer needs, Supalla said. This also means it's hard for Particle to build a one-size-fits-all solution.

"IoT is young enough and the demand of customers is nascent enough that it's tough to package up a solution in a way that is effective for broad-based channel sales," Supalla said.

One of the systems integrators that has had success with Particle is Computer Aid, an Allentown, Pa.-based IT services firm that used Particle's asset tracker to help school systems keep track of their buses.

"CompAid has existing relationships with organizations that could have outfitted us with the necessary hardware for this application. But in the end, we had to take price and practicality into consideration. The Particle solution was much better for us economically and it works very well," Peter Balestrini, a senior solutions architect at Computer Aid, said in a Particle case study.

Reed Wiedower, CTO of New Signature, a Washington, D.C.-based solution provider and Microsoft Azure IoT partner, told CRN that one of the obstacles faced by young IoT vendors like Particle, which was founded in 2011, is the question of whether the company will be around long enough to support long-term IoT deployments.

Particle is also one of many IoT vendors, which includes some companies that are more established and better capitalized, Wiedower said.

"If you're pushing a large number of units, you have to mentally or financially make a commitment that if it turns out the company isn't providing security or software updates, there has to be a switching cost," he said.

Supalla said what sets Particle apart from competitors is the fact that it provides the hardware, software and connectivity aspects of IoT in one platform, which "mean's it's more reliable, more secure, easier to use, and more affordable than any of the alternative solutions." The company's competitors include Telit and Sierra Wireless for hardware and Ayla Networks and Arrayent for software.

While Supalla understands the significance of vendor risk for partners, he said that risk isn't unique to startups. In fact, he said, it's more of a risk for larger companies "who might not go out of business but might kill IoT initiatives if they aren't immediately successful." He pointed to Intel discontinuing its Edison, Joule and Galileo compute modules for IoT as an example.

"That puts us in a unique position where we are 100 percent focused on IoT, and will therefore never 'kill' our IoT product lines, but are well-funded and late-stage enough to have already navigated past the typical early-stage startup risks," he said. "We're not going anywhere."