Plume’s Revamped Go to Market Strategy Improves Affordability While Leaving Industry’s Main Concerns Unaddressed

By Andrew Spivey | 3Q 2024 | IN-7447

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The OpenSync Summit in Taipei in June saw the announcement of one of the biggest shakeups to Plume's business model in its 8-year history. The new go-to-market strategy, named "Plume PxO," comes in the form of a subscription service for Wi-Fi Customer Premises Equipment (CPE) Original Design Manufacturers (ODMs) and distributors, which permits the direct bundling of Plume's value-added services with CPE. Previously, ODMs and manufacturers could only promote compatibility with Plume's services, but now they are now able to integrate the services directly as part of their overall value proposition to their end customers, the Internet Service Providers (ISPs). The introduction of Plume PxO follows several other initiatives aimed at improving Plume's appeal to a broader array of ISPs, including the release of OpenSync Lite, but further adjustments to the company's business model are required if it is to see further adoption of its services. This ABI Insight begins by examining the significance of PxO and OpenSync Lite, assessing how they will impact both Plume's business model and the broader Wi-Fi market, and closes with an analysis of the challenges that Plume must overcome if it is to attract more ODMs to its ecosystem.

Plume is a Software-as-a-Service (SaaS) company offering a range of cloud-based value-added services that can be deployed on any Wi-Fi CPE supporting the OpenSync firmware (more on this later). Plume's main value-added service is HomePass, which includes the capabilities of adaptive Wi-Fi for improved Quality of Experience (QoE), advanced parental controls, Artificial Intelligence (AI)-driven cybersecurity, and Wi-Fi Sensing. Plume also offers a bundle for small businesses called WorkPass, and a platform for ISPs called Haystack, equipped with network analysis, monitoring, and troubleshooting functionality. Until now, ongoing monthly subscription payments by the end customer or ISP have been required to access these services. Plume's services have seen deployments by ISPs worldwide, from Comcast and Charter Communications in the United States and Vodafone and Deutsche Glasfaser in Europe, to NTT DOCOMO and J:COM in Japan. This has led to the number of deployed CPE utilizing HomePass and/or Haystack rapidly increasing from approximately 40 million in 2Q 2022 to over 60 million in 2Q 2024. Among these, the largest portion can be found in the United States, the headquarters of Plume.

OpenSync, the firmware Plume operates on, was originally developed by Plume and subsequently released open source in 2018. Since then, any ODM, ISP, or software developer has been able to contribute to the firmware, or simply adopt it directly for its CPE. CPE vendors that support OpenSync can be found globally, although those most invested tend to be based in Taiwan and maintain a large footprint in the U.S. market. Vendors fitting this description include Askey, CastleNet Technology, Hitron, Sercomm, Wistron Newb Corporation, and Zyxel Communications. Other Asia-Pacific-based vendors with significant market shares in the United States have also introduced OpenSync into select models, such as CIG (Mainland China) and TP-Link (Singapore/Mainland China), alongside KAON Broadband and Humax (both based in South Korea). Vantiva and Sagemcom from France have also adopted OpenSync supporting CPE, as have Adtran, Comtrend, and DZS from the United States. Although many ODMs have opted to adopt OpenSync, a larger number have not for reasons spanning fear of vendor lock-in and an aversion to high membership fees, to a belief that it does little to enhance their value proposition to ISPs. Likewise, many ISPs have not explored adopting OpenSync or Plume due to a lack of compatibility with their hardware or limitations in Plume's services themselves. In 2Q 2024 Plume took concrete steps to address some of these concerns.

First, targeted at ISPs, in May, Plume introduced OpenSync Lite, a pared back version of OpenSync targeted at entry-level and legacy CPE with basic capabilities. In contrast to the standard OpenSync, which is intended for more advanced (and typically newer) CPE, the idea is that ISPs can deploy OpenSync Lite onto currently deployed CPE with limited functionality to enable a selection of new services, including cloud-based Wi-Fi optimization for improved Wi-Fi QoE. This helps to extend the CPE's life span, increasing the Return on Investment (ROI) it can deliver, while at the same time delaying additional Capital Expenditure (CAPEX) requirements. Importantly, OpenSync Lite still supports Haystack, Plume's platform that enables advanced support visibility for ISPs with network analysis, monitoring, and troubleshooting, which all help to lower operational support costs. The upcoming OpenSync Release 6, with new features including Hotspot 2.0 (Passpoint) support, 5G Fixed Wireless Access (FWA) neighbor reports, and Orthogonal Frequency-Division Multiple Access (OFDMA) and Multi-Link Operation (MLO) controls from the cloud, will also be attractive to ODMs.

The second major strategic shift was the launch of Plume PxO at the 2024 OpenSync Summit in Taipei. This initiative was targeted at ODMs, with PxO intended to be an abbreviation of "Powered by ODM." Given the centrality of Taiwanese ODMs to the OpenSync ecosystem, Taipei was the logical choice for the location of the Summit. As outlined in the opening, Plume PxO is a new annual subscription that CPE ODMs and distributors can pay to obtain the rights to bundle Plume's value-added services directly with their CPE, which they can then sell as an integrated package to ISPs for a single, one-off payment. In theory, this new process benefits all parties. For the ISPs, the process is simplified as they just have to make an individual payment to a single party (the ODM/distributor), and do not need to pay a separate ongoing monthly subscription to an additional third party (Plume). The ODM/distributor benefits from having an additional route to increase the value proposition of its equipment and create further differentiation from the competition. Finally, Plume benefits because the company will have a guaranteed cash-flow from the ODMs and distributors, which are now essentially locked into their subscriptions as they will have already pre-sold future access to Plume's services to their end customers.

Plume PxO is not the first time ODMs and distributors have had the ability to directly bundle Plume's services with their CPE. Less than a year ago in October 2023, Plume introduced a one-time purchase option, in which accredited ODMs or distributors were given the ability to purchase a lifetime Plume subscription for a CPE. Yet high upfront CAPEX requirements meant that the initiative struggled to gain widespread appeal, with only a handful of adopters ever publicly announced (such as Evolution Digital, which offers a range of Plume-equipped equipment supplied by KAON Broadband). Therefore, Plume's likely rationale for Plume PxO was that by converting the subscription to an Operational Expenditure (OPEX), it can make it accessible to an expanded pool of ODMs and distributors. This calculation is a wise one, although, unfortunately for Plume, the impact of the initiative will most likely be held back by the inherent limitations of its business model.

The new go-to-market strategy introduced with Plume PxO, while creative, has some major weaknesses. The first of these is the subscription model itself. ODMs and distributors will understandably be extremely wary of committing up front to paying for future subscriptions for equipment they have already sold. This is especially true for ODMs unaccustomed to subscription models-it should be kept in mind that the subscription model itself, while popular in the United States, is less well received in non-Western markets where the majority of CPE ODMs are located. There also remains the unanswered question as to what would happen should an ODM or distributor go bust after having sold the equipment to their end customer. If this were to occur, who would be responsible for picking up the tab for the Plume subscription? Would an ISP see its access to Plume suddenly severed if an ODM or distributor failed to pay the annual subscription due to insolvency? Plume will need to address these concerns if it hopes to achieve the adoption levels it aspires for Plume PxO.

A second stumbling block for Plume PxO is the significant increase to the CPE selling price that this subscription will entail. The result is that, just like Plume's one-off payment option, uptake will, for the most part, only be seen in markets with strong consumer purchasing power, with the CPE likely to be leased for an additional monthly fee. Furthermore, although Plume PxO helps spread the subscription cost to an OPEX one for ODMs, ISPs are still expected to pay a one-off upfront CAPEX payment, creating a high barrier to entry for them. There are two steps the ecosystem can take to help alleviate these issues. First, ODMs and distributors could consider breaking ISP payments into installments, increasing affordability for them. And second, Plume can look into releasing additional tiered versions of its services platform, making different packages available for different budgets.

A third pitfall that Plume PxO faces is that it doesn't overcome the core reservations that ODMs have traditionally held toward OpenSync and Plume. Most prominent among these are fears of becoming locked into the OpenSync ecosystem, a lack of interoperability between OpenSync-equipped and non-OpenSync hardware, and aversions toward paying what are perceived as high participation fees (OpenSync participants must pay an annual member fee). While OpenSync Lite does help overcome hardware limitations by enabling OpenSync to operate on low-performance legacy CPE, this is unlikely to convince anyone with skepticism toward OpenSync to overlook the above concerns. These issues, although readily apparent, cannot be effectively addressed by Plume unless it wishes to completely upend its business strategy. For this reason, Plume PxO will only see limited success, restricted to those who have no qualms about the above-mentioned shortcomings and previously were only held back by challenges of affordability. For those who were unconvinced about Plume before, Plume PxO will do little to change the equation.