IoT Connectivity Revolutionizes OEM Electronics

What leads a family-owned, electronic board solutions company in northern Italy to become a connected device company and a Multi-IMSI pioneer?

For most of its 42-year history, Micro Systems offered its customers hardware solutions.

Developing connected devices became an obvious choice when Francesco Melegoni, who championed the company’s entry into the world of IoT, realised the potential value IoT could add for customers who were struggling with implementation.

Francesco Melegoni, Sales Accounts Manager, Micro Systems joins Nick on the podcast to discuss:

• Why a complicated supply chain doesn’t have to thwart entering the IoT market.
• Why smart devices need to become more self-sufficient.
• How Micro Systems has expanded its business over the last 10 years by building connectivity into their electrical boards.

Tune in to hear about smart device improvement opportunities and how IoT is helping product companies enter services.

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Transcript

Intro: You are listening to IoT Leaders, a podcast from Eseye that shares real IoT stories from the field about digital transformation swings and misses. Lessons learned, and innovation strategies that work.

In each episode, you’ll hear our conversations with top digitization leaders on how IoT is changing the world for the better. Let IoT Leaders be your guide to IoT, digital transformation and innovation. Let’s get into the show.

Nick Earle: Hi. Welcome to the latest episode of the IoT Leaders podcast with me your host, Nick Earle. CEO of Eseye. Today, we’re going to Northern Italy. And we’re going to a small company with just over 40 employees, that really is at the sharp end of innovation. And you will hear a great story about how they decided to solve a supply chain problem in electronics. And how they became the first mover in Multi-IMSI. How they became the first mover in pulling together different components of the electronics boards that already exists within machines and the IoT modules, and the modems into one board. And how they now are planning to bring device management to a completely another level across multiple cellular networks, across multiple different radio access types. And have basically their vision that in the future, the device controls the connectivity. It’s all about the device.

It really is a great case study. Francesco is a member of the company, and the person who has spearheaded a lot of this innovation. And he tells the story in his own words. Including a very good case study on Fassi Cranes, one of the world’s top crane manufacturers. And what they have done to launch a crane as a service, which is a case study on our website. And it’s a fascinating story that his company, Micro Systems did for them.

So without further ado, let’s get started with my podcast with Francesco from Micro Systems. Francesco, welcome to the IoT Leaders podcast.

Francesco Melegoni: Hello, Nick. Thanks for having me.

Nick Earle: You’re very, very welcome. And we’re going to get into device management and IoT. But actually before we do that, there’s a very interesting story about the company that you work for, which is Micro Systems.

I know you’re based in Northern Italy. I believe that it’s a family controlled business. So maybe we could just start there. You introduce yourself, and tell us a little bit on the story of Micro Systems.

Francesco Melegoni: Yeah. I’m Francisco Melegoni, and I look after sales and marketing at Micro Systems. We develop custom-built electronic boards for OEMs. Our customers are producers of professional ovens, refrigerators. floor scrubbing machines, cranes, or packaging machines. And we develop for them, the electronic boards that control the functions of the machines. And also, the user interface. All the electronic boards are custom-made for them. So we take care of the hardware and software design. And also, we take care of the production of the electronic boards. So physically produce, test it. And delivered to them.

And this is the company from 1984, with Micro System. Then back in 2013, so 10 years from now, we start developing complete IoT ecosystems. We gave to this new offering, a new name. A new commercial brand that is Hyperspace. And with that brand, we developed all the components of an IoT solution. So from the data gateway that take the data from the machines and send it to the cloud, to the cloud storage. And to the web portal. Or the app, to interact with the system.

Nick Earle: So maybe if I can just lay that out again, so that the listeners can see exactly what you just said. So you started in ’84. And really for, if I’ve got my maths right, about 30 years almost, the company was really just doing the controller boards for the machine. So I guess that would be not IoT, but controlling the sensors in a machine. And that board would be used I guess for maintenance purposes or whatever, to get diagnostics of what’s going on inside the machine. Is that essentially what the controller board that you’re referring to would do?

Francesco Melegoni: Yeah. It is correct. Our electronic boards installed in the machines of our clients are the brain of the machine, and control all the different parts. All the different functions. We basically are the electronic department of our clients. Because, the electronic is something really complicated. And they don’t have the skill-

Nick Earle: They don’t have the skills to develop.

Francesco Melegoni: So they ask us to develop the project.

Nick Earle: Excellent. And then you said that in 2013, you decided to go into IoT. Now I know IoT was just emerging. You could argue IoT’s been around for a long time. But it really as an industry, started to pick up about 2011. But could you share, what was the… Because I think you were personally involved in that, as I understand.

Francesco Melegoni: Yeah. Absolutely.

Nick Earle: So you championed it within the company, right?

Francesco Melegoni: Yeah.

Nick Earle: So what was the motivation for you to say look, we can do more than just these electronic boards?

Francesco Melegoni: Yeah. We sold something really interesting, and something with a great potential. The IoT and the IoT name didn’t exist at the time. So the first board was named remote assistance board. Everything was related to the remote assistance of an electronic voice of a machine. But then after we realized that the IoT is a mean to deliver to the final customer, services to improve the quality of how the clients work with the machine and use the machine. We put together all the skills required to develop all the different parts, because we immediately saw that IoT was complex.

And the OEMs, our clients, were struggling to dealing with many different suppliers. So one for the electronic boards, for the data gateway. Another for the web portal. So we decided to take care of all the different components.

Nick Earle: And so it’s worth actually just mapping out your supply chain, which you hinted at there. Because, there’s quite a few people in the supply chain. So you’re making the boards. But you are selling the boards not to the end user, but to OEMs. The OEMs are then assembling several components together, including yours. They could be then selling them onto a distributor, I guess. And then the distributor is selling them onto end users.

And then ultimately, the products get used by a customer. A company. An enterprise. So actually, it’s quite a fragmented supply chain. And you had steered clear of the connectivity. You really were letting other people further down the chain, do the connectivity. Because connectivity as I said earlier, has been around for a long time. But you were steering clear of the connectivity up till that point. Is that because you felt that… You mentioned it was complicated. And therefore, you really didn’t think you were the right company to do the connectivity. Because, the current solutions were too complicated?

Francesco Melegoni: Yeah. And we knew that the supply chain is very long. And when the supply chain is very long, you have to deliver a product that is very resilient. And is very reliable from the beginning. Because, nobody will take care of them at the end of the supply chain. If you are in control of all the different parts of the IoT, it will be much better. You will be able to deliver a more robust solution. And into this solution, Eseye played a great role. Because, we saw that the best connectivity mean was the cellular one. Because, the wifi is always dependent to the client.

If the final user don’t set up the wifi properly or maybe change the password or anything else, there is no more connectivity. But the cellular one is independent. But the cellular connectivity involve the SIM cards. The SIM cards parts.

10 years ago we were asking, how is it possible to manage thousands of machines with thousands of SIM cards, and thousands of contracts? And our client were asking the same. And they were really scared about managing SIM cards. Their idea was to ask the final customer to pay for the SIM card, and to put-

Nick Earle: To push the problem to the final-

Francesco Melegoni: Follow the line. Yeah. But this is not good. Because if the final user don’t do anything or don’t put the SIM card, there is no connectivity. And so, there is no IoT. There is no smart services. There is no remote assistance. We found out that having a great SIM card, having a great partner for the SIM was key to success. Eseye come to us with the perfect solution to manage thousands of SIM cards. It was the API integration into web portal.

So when the OEM deliver the machine to the client, the OEM activate the machine on the web portal. And automatically, the web portal through API, communicate with Eseye. And activate the same thing where the machine arrive to the end of its life. The machine has been taken out from the web portal. And the web portal automatically deactivate the SIM cards. And the customer, or the OEM doesn’t have to pay for the traffic. Yeah.

Nick Earle: It’s interesting that you used that date, 2013. Because 2013 was when we became the first MVNO in the industry globally, to offer Multi-IMSI. And actually… So you were one of the first people to A, ask for that. And our relationship… We always do the full disclosure on these podcasts. So our relationship between the companies started in 2013, and you were one of the first customers to use the Multi-IMSI facility.

And it’s interesting the way that you described the benefit is that not only did it simplify things for the end user in that, they didn’t have to… It was built in. It simplified things for the OEM. Maybe go backwards in the supply chain. In that, it was a simple API activate, deactivate, suspend. Or whatever type facility. And all the contract management will be done automatically in the cloud. And from your point of view, it allowed you to go into a totally new business, which is IoT connectivity.

And if I recall, our very first project… I think you’ve already mentioned it. We always think oh, it’s always really interesting IoT use cases. But sometimes they’re really common objects that are being used. Common devices that are being used every day. And I think it was the, if I’m right, it was the floor cleaning machine was the first product that you tried it on. Is that right?

Francesco Melegoni: Yeah. Exactly. Exactly. This was our first project. Our first IoT project, and our first use of Eseye SIM cards. It was great, because we grow a lot through this project. And we get a lot of knowledge.

It was challenging at the time, because we didn’t have the perfect knowledge of all the components involved in the IoT ecosystem. But it was a challenge that paid year after year. And after this project, we developed together other many…

Nick Earle: Yeah. I think it’s fair, to say we learn together when you’re pioneers. You were a pioneer in being the, I think, the first company… Well, you must have been. Because we’d only just introduced the capability, and it was first in the market. But you’re the first company that went from electronic boards, to electronic boards plus the IoT connectivity. And that floor cleaning project then as you say, developed into several others.

I think you mentioned it at the beginning. And I have to say that your ice cream machine is a very Italian example. Probably coffee as well. But you also, ovens you said. And cranes. And I want to pick up on cranes. Because we’ve recently published a case study on our website of a company that I know you’ve been heavily involved in, that offers cranes as a service. So Fassi Cranes, offering cranes as a service. Which is not a phrase I don’t think, any of us thought we would hear. So maybe for the listeners… Because, this is one of the bigger, in fact, I think it’s the biggest project. But certainly, the biggest physical devices. We’re talking cranes. Maybe you could just describe… I know you’ve been involved in it, the Fassi project.

Francesco Melegoni: We are not the producer of the electronic boards that control the cranes. Because it’s a completely different sector, and we don’t have the skills for the crane control. But thanks to IoT, we enter in a customer that was not possible before. And we developed for them, the data gateway that interact with the crane through the canvas. And send the data to the cloud with an LT module. Well actually in 2015, it was a 2G/3G module. And then we developed for them the cloud storage and the web portal to manage the cranes, and to interact with the cranes. To do remote assistance. And to deliver new smart services to the clients.

So thanks to IoT, Fassi is evolving their business. And they are moving from a product-based business, to a service-based business. As you mentioned, the crane as a service is not just an optional of the crane. The crane itself, became a new product. So the crane itself became a service, rather than a product. Because you can have the crane, and you can use the crane. And they can give you the crane, because the crane is connected.

Nick Earle: These case studies are always really fascinating. Because we’ve talked in the series that we’ve done, which is well over 30 of these podcasts. And I would say three quarters of them, there always comes the point where a physical product gets redefined. And people have used the phrase, information about how the product is being used is more valuable than the product itself. And it’s almost like the original purpose of the product, in this case, the crane picking very heavy things up and moving them almost becomes just a feature. But it’s not the primary purpose of the product.

And the model of course changes financially from CapEx to OpEx. But actually yes, it’s still a crane. And it looks like a crane. But it’s interesting the way you phrased it, they don’t sell it as a crane. They sell it as a managed service to provide information to the customer about what’s going on in their environment. Oh and by the way, it picks up heavy things and it moves it. I don’t know whether you can give a couple of examples of what sort of features and capabilities do Fassi provide to their customers, with it being now a smart device?

Francesco Melegoni: They provide the tracking of the crane. So the client is always aware where the crane is. And where the crane have been today, on the previous day. Or in their life. And predictive maintenance is another service delivered through the IoT. So the clients know before a possible failure, before alarms, when it’s better to change some part of the crane. And take care of some part of the crane that will probably fail in the near future.

Another service is the crane is a service. So when the clients buy the cranes, doesn’t want the crane by itself, it wants the service provided by the crane. So as renting a car rather than buying a car, you need to move from A to B.

Nick Earle: Yeah. You don’t need a car. Yeah.

Francesco Melegoni: You don’t need the car. The car, it’s a bit different. Because sometimes, you want the car because you like the car.

Nick Earle: Well I know you’re very near the Ferrari factory, so that’s the second Italian thing you’ve just said. Yeah. Still… In that case, you definitely want the car in the image. But in that one example of, you said the predictive maintenance. Because the three models of maintenance is the reactive, proactive, predictive. So predictive is you fix things before they go wrong. And what that will allow them then to do, it would diagnose it’s likely to go wrong. And take preemptive action to stop it going wrong. Which basically means, more productivity for the same outlay.

It isn’t a break, fix model. It’s a continuous availability model, enabled by analysis of this information. Which if you compare that to what you said at the beginning of the podcast is, the boards that you design, Micro Systems for the controller boards for the machines, we talked about for the maintenance engineer to plug in. Well, that’s a reactive process.

My machine is broken, I call out the maintenance engineer. The maintenance engineer arrives, plugs in into the board. And the board downloads information into a handheld device. And says oh, the fan is broken. Or the component is broken. Or whatever. But this is now taking it to a completely different level.

In an ideal world, there is no need for the engineer. Because, everything’s done with proactive preemptive software updates. And that certainly, is how we see all products moving. And it’s a whole industry industry piece. So this is what you are doing now. You’re a medium size company, Northern Italy. Dealing primarily with I guess, it’s Italian customers. Because they come to you, and they’re all designing… There’s a lot of manufacturing in that area, I know. In Northern Italy. Do you see this world of the board, the controller board and the IoT board, which are separate… I mean, I know we talked about cost of coffee. One of our customers… When you open the cost of coffee machine, there’s a controller unit. And there’s a IoT unit, which we provide. But they’re separate units. Do you see those two, them always being separate units? Or do you believe that ultimately, they will start to merge into one?

Francesco Melegoni: Yeah. The architecture of IoT births as a separate. Because, it was something really new. And the data gateway that take care of sending the data was separate from the electronic boards that control the machine. But we don’t think it’s the most future-proof architecture. Because, it’s not cost-efficient. If you have two different boards with two different microprocessor within serial communication in between, you have more components than what you need.

If you can integrate the IoT into the same board that control the machines, you have just one microprocessor. You have just one PCB, the green base for the components. And so, you’re more cost-efficient. And we think it will be the future active architecture for the IoT.

Because the cost of the data gateway, the cost of the electronic boards that you have to put on the machine is a factor that could slow down, that could hold back the adoption of IoT on every machine. Because, a crane can afford to have 300 euros data gateway. But if you take a coffee machine, actually coffee machine, 500 euros, you can’t put 10 euros, 100 euros data gateway.

Nick Earle: Absolutely. And the cost of the components, and the physical size as well of the components is a real key factor. I would add a third one, from our experience. It’s also the time to deployment if you’re designing a new device. Because the problem is that… And we see this a lot. Because these worlds have been… I mean, this is nothing to do with Eseye or Micro Systems. The whole industry has been designing controller boards for the sensors in the machine. The electronics in the machine. And IoT connectivity modules separately. They’re completely separate industries. They’re completely separate companies. And you were one of the very first companies to say, let’s push those two worlds together. One of the consequences of there being separate companies is that, you have this serial supply chain effect. In this case, it’s a design chain.

So people design the board without any considerations on connectivity. Because, that’s the brief. And then someone goes out and designs the connectivity. And then they try and connect the connectivity to the board. And guess what? They find that it doesn’t work, and they have to make changes on one or both sides. So then they typically go back again. And they go to both companies and they say, can you work together? And the board company doesn’t know anything about connectivity, and the connectivity company doesn’t know anything about board.

And the point is… And they don’t have the firmware expertise inside, to solve it. Because, a lot of it is solved through software. So the point is that often what seemed to be a three to six month project can be a 15 to 18 month project, to get an initial design out. And that’s because different companies with different skills having to work together. So clearly it makes a lot of sense if this functionality can be put together. And I think… And that’s what you’ve described is that, it’s cost. It’s footprint, but it’s also speed of innovation. Getting a product out to market. And I guess, that’s one of the reasons why this is now becoming a really important part of your business.

Francesco Melegoni: Yeah. Absolutely. And time to market is another great factor. And when you are just one supplier that can supply the electronic board for the machine with the connectivity integrated, you have the control on the whole system. It’s more efficient, and it’s more reliable also. And when the companies are two, maybe also when there is a problem, the company of the data gateway, you could say, it’s a problem on the control board. And the company of the control board will say it’s a problem on the data gateway. Maybe because they don’t know, so they try to guess where the problem is.

Nick Earle: Or blame somebody else.

Francesco Melegoni: If they don’t see the problem on their part, they could say it’s on the other board. But when you develop all the architecture, it’s much more efficient. And this is our strength. And it’s not so common to find companies that can take care of the IoT, but also have a great background in the electronic parts of the machine.

Nick Earle: I think there are a handful, and I would venture to suggest certainly less than 10. And maybe… Well, let’s just leave it. We think within, for Europe footprint, we’re aware of significantly less than 10 companies that can do this right now. Although, there are hundreds of companies doing the individual components.

Let’s move on. So it’s very clear what you’re doing, and why you’re successful. And the projects that you’re working on. But I want to look forward now, because I know that having been a visionary in Multi-IMSI, having now being a visionary and pushing the two boards together, you are also now looking at the next challenge. And the whole issue of device management, and making the devices even smarter.

Now, that’s something which we’re very passionate about. And I’ll come back to that. But maybe you could explain over and above just enabling connectivity, what’s your vision or your thoughts around how the devices themselves could be made even smarter?

Francesco Melegoni: It’s really important that the device will be smart enough to manage a different situation. Because our clients, OEMs are selling their machine. So our IoT board worldwide, but really worldwide… Even in some remote areas. We were speaking before, our Fassi is selling also crane to Greenland from… And Australia, and Myanmar. And many different countries. So the IoT board and the SIM cards will find a scenario, and will find a country. Will find a situation that is not really common. It’s not-

Nick Earle: Not expected.

Francesco Melegoni: It’s not expected. And so it’s really important that the device is smart enough to choose the network with the best reliability. Or to choose the network with a better latency. Or to switch from a network that is not answering, and try to move to another network.

Even because in a single country, there are multiple networks and multiple operators. And it’s really important that the device will be able to do it by itself. Because when you have thousands of machines, you can’t take care of each of them individually.

Nick Earle: Yeah. And of course, as they say on TV, regular listeners will know… Yeah. Regular listeners of the podcast, or if you know Eseye will know that we absolutely share this vision. And in fact, we did a podcast, the last one I recorded, with a company in North America. AmericanPharma, who do completely different business to you. They provide monitoring devices for vaccines, human tissue. Blood and embryos. But they almost word for word, described the future as you just described it. The device has to choose it’s own connectivity. The device has to make choices based on more granular circumstances like network latency, signal strength.

And also in the case of an outage, the device has to do it on itself. The device has to be self-sufficient and intelligent to be able to take action, without having to wait for the cloud. Because if you don’t have connectivity, you can’t communicate to the cloud. The device just sits there and waits. And our SMARTconnect product, which they talked about on the podcast, you talked about the fact that it had increased the device resiliency by 85%. Which if you’re monitoring human embryos, is literally a life or death benefit. Because of the temperature fluctuations can harm the embryos.

And I think that your vision, to me, this is the third area where you are looking to be first mover. You have the Multi-IMSI, you have the blending of the boards. And I know you’re in evaluations on SMARTconnect. We can’t talk about it publicly on the podcast as to how it’s going, but you are evaluating SMARTconnect now. And the ability to actually have the device choose the connectivity. Have the device be intelligent on it’s own. And even multi RAT. Because, cellular’s only 13% of all the connectivity worldwide. There’s a lot of other technologies out there, like LoRa.

You mentioned wifi being not reliable, which a lot of people say. But sometimes if it’s available, it’s very reliable. And it’s free. And so this idea of saying well, what is available around me? What can I use? But if it’s not available, then use this. And it could be a technical parameter, like latency or signal strength. It could be a RAT type. Which is, here’s my priority order. Bluetooth first, LoRa second. In the future, release 17 satellite so that I could get Greenland… What did you say? Myanmar. Australia. And whatever… The answer to those countries and large sways of the planet will be satellite.

Which requires new firmware to be loaded in the device, so we can use the cellular modem. Or it could be price. Use free networks first, and only paid networks if the free networks aren’t there. So our vision, which we know you share is ultimately we’ve gone through a phase where, as you said in 2013, the controlled move from the operator to the MVNO. In this case with you, it was us. And now we’re into EUICC and eSIMs.

But we are clearly getting to a phase where the… Well, the eSIM becomes the iSIM. So it goes down to the silicon, which makes the device cheaper and smaller. But after the… It doesn’t stop at the iSIM. Because then what happens is the device, the rules engine. The logic. The software, the control. The device management starts becoming device resident. And that then really turbocharges things. Because then, you can offer very differentiated consumer experiences to your OEMs.

Francesco Melegoni: Yeah. Absolutely. And this where Eseye come to us not just a supplier of SIM cards, but a company that can lead us into the real innovation. Because through SMARTconnect, we will be able to have a much better, more resilience, and much robust connectivity. And we will be able to transfer this reliability to our OEMs. And this is thanks Eseye, that lead us into this new technology.

Nick Earle: Well, thank you for saying that. I think it’s just a very exciting industry. I mean, I think we both do. You decided to spearhead… As I said, I know it’s a family-owned company. And you said look, we’ve got to get into this. And they said, okay. Give it a go. And now you’ve built this business, so congratulations. I now you have this vision for where it’s going to go next. And I think that reason people listen to this podcast is that they share… They’re curious, but they also share the enthusiasm I think we all do in the industry, about where it can go. Because the promise for society, and what we can do by turning products into services is so huge. It is so… I’ve said before, it was one thing… The first wave of the internet changed everything. But really, it changed everything through people’s interface with machines. With computers.

Now what we’re talking about is people’s interface with things. Or actually, with… And things talking to things. But that has so much potential. And we’ve really only scratching the surface so far. So I think as a company, you’re positioned in a very nice space. And there’s a lot of things happening right now in the industry, that are enabling new capabilities.

And it’s great to be able to talk to a company that has had the ambition and the courage actually to say, no. We’re going to be at the forefront of this. And so I applaud you for what you’ve done, and some of your case studies. And I would encourage people… I mean this is about Micro Systems, not Eseye. But if you want to read more about that Fassi case study, it’s on our website. You can search for Fassi, search for cranes case studies or whatever. Because, it really is a great example. I think it definitely holds the record for the biggest thing that we’ve ever smart enabled. Although, I’m sure the record will be beaten. But certainly, the biggest. Sometimes we deal with little tiny products, and we look at battery life management. But it’s-

Francesco Melegoni: The cranes are huge. Yeah.

Nick Earle: Yeah. The cranes are pretty big, and pretty heavy. Listen Francesco, I think it’s a great story. And it’s not like a big company with tens of millions of dollars of research budget, and a thousand people in the IT department. You’ve done this as a family company in northern Italy.

Francesco Melegoni: Yeah. It’s a family business. We are 42 people, and 13 software engineer. So we… And with 6 million of revenues per year. So we are a small size company, also in Italy. But when you have a good attitude and the good skills, and the good people and the good team, you can do something. You can take the innovation, and take it to the market.

And at the end, it’s all about improving the quality of people. And the quality and of how they work, and how they use the machine. And the final target is to have more intelligent machines, and making the technology almost disappearing. Because, you just see the result. You see something that works really well. Yeah.

Nick Earle: The ultimate measure of perfect technology is when it becomes invisible, and you don’t know it’s there. And you said that so well. I think that we should leave it there.

Thanks very much for being on the podcast. And I’m sure you’ve inspired a lot of people listening to this, to come down the IoT road. Which is all we’re really trying to do with this series. So Francesco, thanks for being an Eseye customer. Congratulations on your innovation. And thanks for being on the IoT Leaders podcast today.

Francesco Melegoni: Thank you, Nick. It’s been a pleasure. And thanks for having me.

Nick Earle: Thanks. And Ciao.

Francesco Melegoni: Ciao.

Outro: Thanks for tuning in to IoT Leaders. A podcast brought to you by Eseye. Our team delivers innovative global IoT cellular connectivity solutions that just work. Helping our customers deploy differentiated experiences and disrupt their markets. Learn more at Eseye.com.

You’ve been listening to IoT Leaders, featuring digitization leadership on the front lines of IoT. Our vision for this podcast is to be your guide to IoT and digital disruption. Helping you to plot the right route to success.

We hope today’s lessons, stories, strategies, and insights have changed your vision of IoT. Let us know how we’re doing by subscribing, rating, reviewing, and recommending us. Thanks for listening. Until next time.

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