IoT – Info Review*

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IoT – Info Review*

Sector: Real Estate

Aug-2016*IBR’s Info Reviews are not research reports, but a handy compilation of relevant information

What is Internet of Things or IoT?

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IoT refers to to the networking of physical objects through the use of embedded sensors, actuators, and other devices that can collect or transmit information about the objects. The data amassed from these devices can then be analyzed to optimize products, services, and operations. - McKinsey

A network of networks of uniquely identifiable endpoints (or "things") that communicate without human interaction using IP connectivity. IDC has identified the IoT ecosystem as containing a complex mix of technologies including, but not limited to, modules/devices, connectivity, IoT purpose-built platforms, storage, servers, security, analytics software, IT services, and security. It is important to note that autonomous connectivity is a key attribute within IDC's definition and, IDC does not count smartphones, tablets, or PCs within its IoT forecast.. - IDC

WHY IoT?IoT is about increasing efficiency, through better knowledge of machines, systems and processes. It allows us to measure things which were not measurable earlier, or atleast not in real time; at a cost much cheaper than other available alternatives.

IoT is now mainstream2015 was the year IoT gained legitimacy. Businesses moved beyond a “start small think big” mindset. Today, they’re building IoTinto future strategies and business models (Source: Verizon)

Market Segments

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Source: https://iot-analytics.com/iot-market-forecasts-overview/

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IoT market is not a single, monolithic market but is instead composed of tens of thousands of small markets

Size Estimates – a wide range of numbers going around


Source: India Business Reports

Some estimates suggest that connected devices will grow from 10 billion units in 2013 to as many as 30 billion devices by 2020—an uptick of about 3 billion new devices per year - McKinsey

Worldwide Internet of Things market will grow from $655.8 billion in 2014 to $1.7 trillion in 2020 with a compound annual growth rate (CAGR) of 16.9%%- IDC

Worldwide spending on Internet of Things (IoT) security will reach $348 million in 2016, a 23.7 percent increase from 2015 spending of $281.5 million, according to Gartner, Inc. Spending on IoT security is expected to reach $547 million in 2018. Gartner forecasts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from 2015, and will reach 11.4 billion by 2018 - Gartner

Between 2015 and 2021, IoT is expected to increase at a compounded annual growth rate (CAGR) of 23 percent, making up close to 16 billion of the total forecast 28 billion connected devices by 2021. – Ericsson Mobility Report

Over the next five years, global IP networks will support up to 10 billion new devices and connections, increasing from 16.3 billion in 2015 to 26.3 billion by 2020. There are projected to be 3.4 devices and connections per capita by 2020—up from 2.2 per capitain 2015 - Cisco

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A summary chart - devices



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A summary chart – Revenue estimates


Five companies have estimated how much revenue will be generated from companies that are active in the IoT industry: IDC, Visiongain, HarborResearch, Markets&Markets, and Gartner.

Again numbers vary widely, with Gartner at the lower end and IDC at the higher end. It could be due to differing methodology and/or definition of what is IoT


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Consensus insights


• We will see a massive increase in connected devices in the next few years. The expected growth rates are well beyond those of most other industries that are being forecasted (Annual growth rates ranging from 14% to 29%). For every person living on earth, there will be at least 2, maybe even 6 connected “things” by 2020.

• “Things” will clearly be the majority of all connected devices by 2020. Today the number of connected devices that are not “Things” (i.e. smartphones, computers, tablets, etc.) is almost equal to the number of connected things. (e.g., ABI says there are 7 billion smartphones, PCs and similar today). “Things” are expected to outgrow smartphones, computers, and the like by a landslide.

https://iot-analytics.com/iot-market-forecasts-overview/

Where forecasters diverge:The number of connected devices by 2020. The low estimate is 18 billion connected devices, the most bullish forecast states 50 billion devices. That is a massive difference of 275% from the point of view of the lowest forecast. One should note that both Cisco and Ericsson, who provide the highest estimate, have a direct interest to attain this number. Both are selling solutions in the IoT field and are betting on this industry. Therefore it is questionable how “objective” their forecasts are.

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Segmental Growth Data (Verizon estimates)


IoT Technologies


Low-Power, Short-Range IoT Networks

• Selecting a wireless network for an IoT device involves balancing many conflicting requirements, such as range, battery life, bandwidth, density, endpoint cost and operational cost. Low-power, short-range networks will dominate wireless IoTconnectivity through 2025, far outnumbering connections using wide-area IoTnetworks. However, commercial and technical trade-offs mean that many solutions will coexist

Low-Power, Wide-Area Networks

• Traditional cellular networks don't deliver a good combination of technical features and operational cost for those IoT applications that need wide-area coverage combined with relatively low bandwidth, good battery life, low hardware and operating cost, and high connection density. The long-term goal of a wide-area IoT network is to deliver data rates from hundreds of bits per second (bps) to tens of kilobits per second (kbps) with nationwide coverage, a battery life of up to 10 years, an endpoint hardware cost of around $5, and support for hundreds of thousands of devices connected to a base station or its equivalent.

Sensors and actuators

• The goal of an IoT system is to measure and control remotely. Measuring input comes from sensors and control is done through actuators. There are several varieties of both in terms use cases, technology used for measuring and for communicating. Every IoTuse case does not need actuators (where you simply want to measure and report) but a sensor is vital. Also necessary is technology to evacuate data: there the decision factors are narrow band or broad band, short range or wide area.

IoT Security

• The IoT introduces a wide range of new security risks and challenges to the IoT devices themselves, their platforms and operating systems, their communications, and even the systems to which they're connected.

IoT Analytics

• IoT business models will exploit the information collected by "things" in many ways — for example, to understand customer behavior, to deliver services, to improve products, and to identify and intercept business moments. However, IoT demands new analytic approaches. New analytic tools and algorithms are needed now, but as data volumes increase through 2021, the needs of the IoT may diverge further from traditional analytics.

IoT Device (Thing) Management

• Long-lived nontrivial "things" will require management and monitoring. This includes device monitoring, firmware and software updates, diagnostics, crash analysis and reporting, physical management, and security management. The IoTalso brings new problems of scale to the management task. Tools must be capable of managing and monitoring thousands and perhaps even millions of devices.

IoT Operating Systems

• Traditional operating systems (OSs) such as Windows and iOS were not designed for IoT applications. They consume too much power, need fast processors, and in some cases, lack features such as guaranteed real-time response. They also have too large a memory footprint for small devices and may not support the chips that IoTdevelopers use. Consequently, a wide range of IoT-specific operating systems has been developed to suit many different hardware footprints and feature needs.

IoT Processors

• The processors and architectures used by IoT devices define many of their capabilities, such as whether they are capable of strong security and encryption, power consumption, whether they are sophisticated enough to support an operating system, updatable firmware, and embedded device management agents.

IoT Source: Gartner, IBR

IoT devices – a useful infographic


Source: http://postscapes.com/what-exactly-is-the-internet-of-things-infographic/

http://postscapes.com/what-exactly-is-the-internet-of-things-infographic/

IoT VC investments: Enterprise IoT now leading over consumer IoT


Source: http://www.networkworld.com

IOT companies have attracted considerable venture capital investment, particularly in the US

According to Verizon Ventures:• Consumer IoT startups raised 15% more VC funding

than enterprise-focused startups in 2014. • However, in 2015, roles seemed to have reversed with

enterprise outpacing consumer by around 75%. • In 2016, Verizon believes the enterprise will continue

that trend, but by a much larger order of magnitude—roughly 2 – 3 times more than consumer. 2016 will see enterprise IoT VC funding considerably dominate that of consumer.

IoT Companies - GlobalA few lists and profiles

Large global companies in IoT



Large companies in IoT – what are they doing?


http://www.ioti.com/iot-trends-and-analysis/20-most-important-iot-firms-according-you/

Google Home automation Google paid $3.2 billion for Nest in 2014 and, later that year, added camera-based services to its Nest division with the $555 million acquisition of Internet-connected camera company Dropcam

Microsoft OS Azure IoT Suite

Cisco Cloud-based IoTsoftware platform, Smart cities

As the largest networking company in the world, the company stands to profit handsomely from the IoT boom, Did a $1.4 billion purchase of Jasper Technologies, which had developed a cloud-based IoT software platform. Has launched its Cisco IoT System. In addition, the company has emerged as a leader in the smart cities arena.

Amazon Cloud based platform, Homes

AWS IoT, a managed cloud platform that it says enables connected devices to connect securely to cloud applications and other devices. Moved into smart home market with its Amazon Echo device, a voice-controlled smart speaker that can also control a range of home automation devices and other services

IBM Industrial IoT Has announced a plan to invest $3 billion in four year’s time to establish an IoT business unit. Has announced a Watson IoT platform, and a global IoT headquarters in Munich.

Intel IoT chips Launched a dedicated IoT business unit in 2013, and has been working on expanding its portfolio of system-on-chips tailored for the industry. Recently bought two IoT automobile companies— Arynga and Yogitech

Siemens Industrial IoT Launched “Cyber Security Operation Centers,” designed to bolster its ability to offer threat intelligence services. Uses M2M monitoring in industrial use cases, for example, for wind turbines

AT&T Smart Cities AT&T has a broad vision for the IoT that involves smart cars, streetlights, and manufacturing operations

GE Industrial IoT GE is beginning to put sensors and communication systems into virtually all of its products, Has a Predix IoTplatform to link industrial technologies to the cloud to help assess and optimize performance

….Large companies in IoT – what are they doing?


Honeywell Industrial IoT, also wearables

Honeywell has made itself into a leading IoT company active in markets ranging from smart buildings to wearables, although its primary focus is on industrial applications. Niagara 4 is its IoT operating system

HP Office automation HP Inc. has recast its printers as “IoT hubs. he company’s Edgeline IoT System was created in collaboration with Intel.

Oracle Industrial IoT Has launched a dedicated IoT cloud service platform, which is suited for a range of applications including remote equipment monitoring and maintenance for industrial applications and asset tracking for logistics

Rockwell Industrial IoT Helps its customers in the oil and gas industry leverage cloud-linked sensors to glean data from traditional pump, transport, and metering equipment. Partnership with Symantec enables it to help secure industrial control systems from malware and other types of attacks

Schneider Electric

Industrial IoT, Smart Cities, Hardware

Makes IoT technology for a range of markets including oil and gas operations, utilities, water and wastewater engineering, and hotel network management. The company is also aggressively developing new technology for smart cities applications. Schneider Electric makes connected field devices like sensors, drives, meters, and programmable logic controllers. As for the platform layer, it provides cloud services, middleware, and physical infrastructure architectures. It also offers services for the on-premise central control layer including remote monitoring, predictive analysis, simulation, and cloud analytics. It also offers open software designed for the IoT—primarily for smart cities and asset management applications

TexasInstruments

Hardware One of the early entrants in IoT hardware. TI, along with Cisco and GE, is an example of a company that has been in the Internet of Things hardware business since before the term IoT was fashionable


….Large companies in IoT – what are they doing?


Johnson Controls

Smart Buildings Is a pioneer in the growing smart building niche. In 2011, the company launched an innovative cloud platform known as Panoptix for building efficiency management.

SAP Software platform & solutions

Has developed a framework for enabling developers to run IoT applications in the cloud. In 2015, SAP debuted its SAP HANA Cloud Platform for the IoT, an end-to-end platform that supports device management, IoTmessaging, and data modeling

Verizon Smart Cities,Hardware, Logistics

Has developed inexpensive LTE modems for IoT developers to link devices to its own network. Its current focus is primarily on building IoT tools. Has launched its own utility, transportation and healthcare solutions with products like Networkfleet, GridWide, VerizonShare, Hum, Intelligent Track and Trace

Dell Hardware, Cloud infra

Has an extensive IoT portfolio that encompasses fanless intelligent gateways and embedded PCs, security tools, data center and cloud infrastructure, and analytics software. Has also launched three IoT labs to help its customers with product development. Dell recently announced a strategic partnership with more than 25 other players active in the IoT market

Bosch Cloud infra, smart cars, industrial IoT, Smart cities

To drive its IoT initiative, the company launched its cloud server (Bosch IoT Cloud) in Germany to support connected industrial and smart cities applications. Already, about five million devices are linked to Bosch's IoTsoftware suite

Huawei Consumer IoT, Hardware

Huawei is starting to ramp up its commercial IoT solutions after the launch of its dedicated platform for IoTconnectivity management: Huawei IoM. The Shenzhen, China-based networking giant has two focuses when it comes to IoT: making consumer-driven IoT gadgets and building out its network services business to better support IoT


Emerging Companies in Industrial IoT solutions


Source: https://www.cbinsights.com/blog/top-startups-iiot/

Another list of Global IoT Landscape


(Source: IoT in India – The Next Big Wave, July’16, Nasscom)

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VC backed companies in Industrial / enterprise IoT space


Trilliant Smart Utilities • Trilliant helps savvy utilities and energy retailers achieve their smart grid visions through the Trilliant Smart Grid Platform, the only purpose-built communications platform that integrates these disparate system of systems into a unified whole.

• Trilliant and is backed by prominent investors such as ABB, GE, Investor Growth Capital, MissionPoint Capital Partners, UMC Capital, VantagePoint Capital Partners and zouk ventures

Blue Pillar Smart Utilities • Blue Pillar’s mission is to connect the Energy Things™ that power our world. Through its Aurora® Energy Network of Things™ platform itmakes the energy information available in real-time. This guards against power outages while helping businesses become more operationally productive and energy efficient.

• Investors are Allos Ventures, Arsenal Venture Partners, EnerTech Capital, Claremont Creek Ventures

Sensus Smart Utilities • Is into smart utility solutions, where AMR readings can be made with handheld devices, or via fixed base stations. Does EPC and provides the hardware

• Investors include The Resolute Fund and Goldman Sachs

Veniam Transportation • Veniam builds networks of connected vehicles and offer fully managed services that: expand wireless coverage in your city, bring high-definition data from your vehicle to the cloud, collect terabytes of urban data for smart city applications, delivers robust wireless networks for industrial environment, such as ports and container terminals

• Backed by investors like True Ventures, Verizon Ventures, Cane Investments, Liberty Global and Cisco

Greenroad Transportation • Tracks fleet performance and helps improve driver safety and operational efficiency• Investors are Amadeus Capital, Benchmark Capital, DAG Ventures, Israel Growth Partners, Virginia Management

AylaNetwork

IoT Networks • Ayla’s Agile IoT Platform provides a complete solution to connect nearly any device to the cloud and applications while offering all of the tools and premium services needed for a manufacturer to manage, provision, and analyze their Internet of Things deployment

• Over 10 investors including 3Nod, Ants Capital, IFC, Cisco, Crosslink Capital, Linear Ventures, SAIF Partners, Mitsui, Oriza Ventures, SJF Ventures and Voyager Cap.

Silver Spring Networks – A recent IPO, targets utilities and cities

Market Cap (USDm) 705

Revenue (USDm) 490

Net Profit (USDm) 80

Employees 708

Location USA

IPO Mar’13

Listed on NYSE


• Provides connectivity solutions for a range of applications to some of the world’s leading utilities and major international cities.

• Silver Spring manages a real-time, global network of information that allows customers to manage and analyze their data with greater productivity, efficiency, and security.

• Service areas: Smart metering, electricity distribution solutions, smart city applications like smart lights, traffic control

• Has delivered 24.3m end points as of Q2 2016; has a backlog of 10m end points• Products : Services split currently is 2:1• Within services, Managed SaaS is about 65% of revenues; rest is consulting• Highly profitable business now, with net profit margin of over 15%; gross profit margin of 45%;

and EBITDA margin of

IoT in India

Early days


IBR Observations --• Early action in Industrial IoT (incl supply chain solutions). Smart utilities to drive market going forward.

Traffic management, agri, healthcare have potential as well. Orders yet to flow in a meaningful way. • Several small companies, most doing basic solutions based on GSM based connection protocol• Very little value add; most companies come with a system integrator mindset. They buy sensors from the

market, add together a communication piece. Some may run the solution as a service, others supply and move on

Nasscom is bullish going forward: • Indian IoT market to reach USD15B by 2020; current size of market is USD 4.4B (Not clear what they

are including in this)• The big driver will be Indian government’s Smart City program, where the Central Government will

spend USD1B annually for the next 5 years. (IBR: this is very real, tenders have begun to come out, State governments and private sector will invest on top of this figure as wel)

• Nearly 120 firms offering solutions in IoT. (IBR – we think all these firms are small, cumulative revenues will range between USD100-150m)

• Cumulative investment of USD60m in this space, says Nasscom


Current market map


• 70-80% of startups since 2012 are focussing on consumer; however, none have any scale. We think consumer models will take longer to scale up compared to other segments (industrial/urban/utility)

• No one seems to be attempting to occupy the important IoT platform space; with one exception – Gaia Smart Cities; which is started by telecom sector professions

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List of IoT companies (Deloitte – Nasscom report, Jul’16)



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IoT Demand Driver: Smart Meter Market

Water

• Water meters will go the Smart way in India henceforth due to the nature of the problem. Water meters are normally installed in locations where they cant be read manually

• Global smart water meter is a growth industry

– The market is expected to grow from an estimated USD 3.88 Billion in 2016 to USD 5.51 Billion by 2021, at a CAGR of 7.23% from 2016 to 2021 (MarketsandMarkets)

– Factors such as increasing focus towards reducing non-revenue water, retrofitting of aging water infrastructure, and the need for accurate billing are driving the market globally

• Indian market expected to move towards Automatic Meter Reading (AMR). It is a metering technology that collects consumption data from the water meters and transfers it to a central database (in the utility station) for billing and other purposes (one-way communication only).

Power

• India is touted as being the largest smart grid opportunity in the world and is forecast to invest US$21.6 billion in smart gridinfrastructure in the next decade in a bid to curb rampant electricity theft


IoT Demand Driver: Smart City Program

• Plan to build 100 smart cities across the country

– Ministry of Urban Development has plans to develop 2 smart cities in each of India’s 29 states

– Delhi Mumbai Industrial Corridor Development Corporation Ltd (DMICDC) plans seven “smart cities” along the 1,500 km industrial corridor across six states with a total investment of US$100 billion

• Smart Buildings

– India expected to emerge as the world’s 3rd largest construction market by 2020, by adding 11.5 million homes every year

– The Intelligent Building Management Systems market is around US$621 million and is expected to reach US$1,891 million by 2016

– Smart Buildings will save up to 30% of water usage, 40% of energy usage and reduction of building maintenance costs by 10 to 30%

• The Indian Ministry of Water Resources plans to invest US$50 billion in the water sector in the coming years; part of this will go for smart water meters

• India to install 130 million smart power meters by 2021, and 50 million plus water meters


Demand Potential for non-consumer market: rough numbers

Smart Meters

– Lets take Rs 5000 as one time installation cost per smart meter

• This means for 180 m smart meters (electricity + water), market size becomes Rs 90,000 crore (Rs 900B, or ~USD13.5B).

• This is a large size. We are not clear over how many years will this be realised. Some experts are suggesting this will be implemented over next 4-5 years.

– Once installed, there is a further market of AMC+ data reading cost. Over a ten year period post installation, this can be a similar sized opportunity.

Smart Traffic, whether as part of smart city projects, or as part of urban (largely metro) traffic management projects.

– This appears to be USD100m annual opportunity at this time

Industrial IoT

– This is the most active segment of IoT currently, with most companies targeting this. Current revenue size (as measured by revenues of these companies appears to be small, ~USD10-15m. However, most companies expect market to grow 30-50% annually


Apart from above, there are segments like smart buildings.. Overall, we think the non-consumer market may become a USD3B annual opportunity by 2018, however, the distribution of that will be heavily skewed towards smart meters and grids

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