By Eric Peterson | Jul 10, 2018
Radios and wireless infrastructure
Employees: about 150
Industry: Electronics & Aerospace
Products: Radios and wireless infrastructure
The move makes sense: A longtime leader in radio frequency (RF) solutions, FreeWave is pivoting to a new model that also encompasses the Industrial Internet of Things (IIoT). "In 2014, we put the I in IIoT," says Niederman.
Steve Wulchin founded FreeWave in the early 1990s. Wulchin, now a member of the company's board and co-owner (along with TA Associates, a Boston-based private-equity firm), was a first mover in the RF space. TA invested $113 million in FreeWave in 2007 in one of the largest equity deals in Colorado history.
Under Wulchin's leadership, FreeWave manufactured millions of radios and became the leading provider for the oil and gas, irrigation, and precision agriculture industries. The company has about 4,000 customers in 32 countries, including multinational companies like John Deere and Chevron. The business is split roughly evenly between OEMs and industrial customers.
But the company's products have found a home with a wide range of other users. In 2011, FreeWave provided 1,700 radios for Mexico City's smart grid, and its systems have been a part of more than 3 million hours of military drone operations without a single failure.
Niederman oversaw a 2015 reorganization of FreeWave. "We retrenched and invested heavily in people, products, and process," he says. "In 2017, we announced a bunch of leapfrogging new products and a new strategy."
The new target: "the industrial edge," meaning connectivity between sensors and the aggregation point that transmits data to the cloud as part of the so-called "fog layer."
There was another reason for the pivot. "Wall Street doesn't give a lot of strategic value to radio companies," says Niederman, noting that market caps for RF providers are typically 1X or 2X of sales.
The result of the shift is "the first ground-up, purpose-built IIoT fog layer product," says Niederman. Dubbed ZumLink and launched in 2017, the "massively scalable" technology underpins FreeWave's new strategy.
Niederman calls it "a programmable radio," and says that its open-source nature gives FreeWave a key market advantage. "It's not all about the radio, it's also about the software," he explains.
ZumLink products allow users to download, host, and run third-party applications. "You can write code on a non-industrial platform like Raspberry Pi, then drag and drop to an industrially hardened platform," says Niederman. "The ZumLink product line enables FreeWave's customers to strategically rethink their RF networks, consolidating many devices and applications into a single product with connectivity to the cloud."
As part of the pivot, FreeWave cut its catalog from 1,500 products to about 200 and streamlined production from two-plus shifts to one while increasing automation. "We manufacture 100 percent in Boulder," says Niederman.
The end result is a chance for FreeWave to disrupt the $15 billion market for programmable logic controllers (PLCs), says Niederman. He forecasts dynamic growth for FreeWave in such target markets as manufacturing, solar, and agriculture.
Challenges: "The idea of programming radios is still new," says Niederman. FreeWave is aggressively getting test units out to customers and working to introduce open-source and other coding communities to the concept. "We don't want to write apps," he explains. "We want the software community to write apps."
Opportunities: Upending the $15 billion PLC market. "In addition to launching breakthrough products that are more scalable than PLCs, our plan also invloves acquisitions of similar companies and bringing additional manufacturing into Boulder," says Niederman.
Needs: Coding talent. With Google opening a Boulder campus, competition is fierce, but Niederman says he thinks FreeWave offers an intriguing option. "Software developers will probably have more autonomy at FreeWave and work on more breakthrough technology than at Google."