Preparing for the New Wave: The IoT Era

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1 WHITE PAPER Preparing for the New Wave: The IoT Era February 2015 Sponsored by: Executive Summary The Internet of Things (IoT) is an increasingly integral part of our everyday life. As IoT expands, we are faced with the challenge of managing explosive data traffic growth and diverse types of information. In order to adapt to new data traffic, data center and network performance parameters such as flexibility, robustness, and security are key factors in further development of IoT. NTT group, the largest provider of data center collocation space, is rapidly adapting to the IoT era by providing data center and network integration services for multinational companies. ICR, NTT,

2 1. IoT s Predicted Penetration In October 2014, Gartner, a US research firm, identified IoT as one of the top 10 technology trends for the years Various other research firms also believe that IoT will be a top trend. IoT will have significant impact on our everyday life and business. This report covers the basic definition of IoT as well as the latest IoT technology and services. 1-1 Definition of IoT The term IoT is used in various contexts. Major research firms define IoT as a network of networks of uniquely identifiable endpoints or things that communicate without human interaction using IP connectivity, be it locally or globally. (IDC) the network of physical objects accessed through the Internet that contain embedded technology to sense or interact with their internal states or the external environment. (Gartner) the network of physical objects accessed through the Internet. (Cisco) Within all these definitions, network is the key element in IoT. In this context, network means not only connectivity but also smart network. By connecting to a smart network, things become intelligent and able to create new values. 1-2 Latest IoT Devices Wearable Devices Wearable devices were originally perceived as a conceptual technology. With the introduction of Google Glass, wearable devices became real technology that could be integrated into our everyday life. After the release of Google Glass, various other device manufacturers entered the wearable devices market. Most wearable devices introduced today are smart watches. LG, Samsung, and Sony introduced the first generation of smart watches. In September 2014, Apple also announced its Apple Watch, scheduled to be available for sale in early Other types of wearable devices have also been announced. For example, Hitoe is a functional fabric material capable of measuring biomedical signals to obtain, for example, a person s electrocardiogram or electromyogram. Hitoe was jointly developed by NTT and textile TORAY Industries Inc., Japan. Other such wearable devices are being rapidly developed, and these new ideas and products are all being introduced into the market as IoT devices. NTT, ICR

3 1-2.2 Connected Cars IoT is also changing the automobile industry. Many analysts believe that connected cars (which are equipped with communication modules enabling Internet connection) will be one of the early results of IoT s impact on our everyday life. At the Consumer Electronics Show (CES) 2014, Steve Coening, CEA director of research, predicted that Smartphones and tablets will fall into single-digit growth in In the developed countries, we cannot rely on sales for those products. As the smartphone and tablet markets in developed countries quickly become saturated, the IT industry has begun targeting the automobile industry as a new frontier for growth and revenue. In-vehicle infotainment (IVI) is the key force driving the development of connected cars. Through IVI systems, connected cars are now able to access multimedia (audio and video) content and information such as navigation systems. IVI also brings voice control, i.e., recognition technology to connected cars, giving drivers safer access to content and information. Although IVI s history is not recent (car manufacturer Ford Motor Company has been aggressively deploying IVI since 2007), the hype around IVI gained new momentum when Google and Apple entered the connected car market. In June 2013, Apple announced CarPlay, which provides a seamless connection between connected cars and ios devices such as iphones and ipads and introduces Apple s voice assistance technology Siri to cars. After Apple s announcement, Google also entered the market by forming a new consortium, the Open Automotive Alliance (OAA). Through OAA, Google aims to promote the use of its Android platform in connected cars, just as it did with the smartphone market. In fact, connected cars are becoming increasingly similar to smartphones. Some even refer to connected cars as smartphones with wheels. After all, similar to a smartphone, a connected car is a device through which the IT industry can deliver content and services. However, as the word wheels indicates, driving is still the main function of a connected car, and the IoT wave is changing the way we drive. One such way in which our driving is changing is through the use of vehicle-to-vehicle (V2V) communication. With V2V technology, connected cars are able to transmit information to one another, thereby automatically sending alerts and acting to prevent accidents. Because V2V technology increases the safety of drivers, some governments are moving toward mandates requiring its installation. For example, the U.S. Department of Transportation is considering a mandate that would require the installation of V2V crash prevention systems. With this kind of regulatory push, V2V technology will soon become a standard function in connected cars. Development of V2V will ultimately lead to self-driving cars. Through development of its driverless car, Google hopes to have self-driving car technology available by 2017, and car manufacturers such as Audi, Ford, and GM are also aggressively investing in this technology. However, in addition to needing communication modules, self-driving cars will also need sensors that link with traffic control systems, car positioning systems, and vehicle control systems; sensors will need to frequently interact with these systems securely and most importantly, without any error or delay Smart Homes Homes are also becoming smarter with IoT. Since late 2013, a number of IoT-related organizations have been established. One of the first was AllSeen Alliance, which the Linux Foundation formed in December 2013; its members include Qualcomm, LG Electronics, and Haier. The goal of AllSeen Alliance is to create a universal framework that allows devices and applications to discover and interact with one another regardless of their manufacturer. The universal framework is based on an open-source system called AllJoyn, which was developed by Qualcomm. NTT, ICR

4 Silicon Valley's biggest names have also entered the smart home market. On June 2014, Apple announced its new framework called HomeKit, which will allow developers to create software for ios8 that can communicate with and control devices for home automation. Furthermore, although details have not been disclosed, IBM announced it would cooperate with Apple in the field of big data analysis for smart homes. Just one month later, in July 2014, Google formed a working group called the Thread Group. Thread is a new, IP-based wireless networking protocol for smart homes that was developed by a consortium of manufacturers such as Google, Nest Labs, and Samsung Electronics. The goal of this working group is to create an open standard that will lead to a simple, secure, and low-power network to accelerate the development of smart homes. Companies such as Silicon Labs, ARM, and Freescale have joined the group. 1-3 IoT s Impact IoT is increasingly becoming an integral part of our everyday life. As IoT expands, there will be a rapid growth of data traffic and diversification of the types of information running through the network. We can expect IoT to have three main areas of impact. The first is Volume. Currently, IoT wearable devices do not create a vast amount of data traffic. They only transmit text-level data. However, as new applications and services are introduced, data such as live video feeds could be flowing through the network. As of now, it is possible to categorize wearable devices as low-volume in terms of data traffic. On the other hand, today s connected cars already produce high-volume data traffic. Such cars already have access to multimedia content as well as vehicle-related data flowing back and forth through the network. Smart homes consist of both low-volume data devices such as digital thermostats and high-volume data devices such as security cameras; thus, smart homes can be categorized as mix of low and high volumes. The second area of IoT impact is Frequency. IoT devices communicate with a cloud to update the status of the device s user. Wearable devices are categorized as low in terms of their frequency. However, if in future, wearable devices send out constant perimeter data, this categorization will change. Devices such as connected cars frequently access the cloud to both cope with their changing environment and maintain the safety of their drivers. On the other hand, smart homes can be categorized as mix of medium and high frequencies. The third area of IoT impact is Value. In the IoT era, various sensitive data will be sent through the network. The value of the data will differ in terms of sensitivity. The more sensitive the data, the more valuable the it becomes. In terms of value, the data that is sent out by today s wearable devices can be categorized as medium. Today, wearable devices gather and send mainly health and fitness data instead of medical data that could affect one s life. Connected cars can be categorized as a mix of medium and high. Data such as that sent out by a self-driving car is critical to the driver s safety; on the other hand, user data used for optimizing user experience can be considered of medium value. Smart homes, having the same characteristics as connected cars, may be categorized as having a mix of medium- and high- value data. NTT, ICR

5 IoT s impact on the network Volume Frequency Value Wearable Small Low Medium Connected Cars Large High Medium High Smart Home Small Large Low High Medium High IoT may change not only our private life but also our work life. In particular, factories are rapidly adapting to IoT and transforming into smart factories. Within such smart factories, various home appliances are installed with sensors that gather operational statuses in real time. For example, the Kurimoto, a steel factory in Japan, has equipment that containing 500 sensors. These sensors transmit data that show the condition of the equipment every 10 to 100 ms. With more sensors installed in the devices, communication between devices could become the new norm for smart homes and factories. With D2D communication, data could stay within the local network, thus decreasing the need for network access to the cloud. In other words, as new technology is introduced, IoT s impact on the network will continue to change. NTT, ICR

6 2. Data Traffic in the IoT Era Various things will be able to access the Internet and transmit data to the network, and various forecasts have been made by research firms and venders. This chapter will focus on the forecasts that have been made and will quantify the impact of IoT. 2-1 Number of IoT Devices Not all things will suddenly have communication capabilities. However, the pace of IoT adaptation will most likely be rapid. For example, Cisco s Internet Business Solution Group has forecasted that the number of Internet-connected devices will be approximately 25 billion by 2015 and up to 50 billion by ABI Research announced that in 2014, the number of wireless-connected devices will be more than 16 billion, a 20% increase over the previous year, and that it will be 40.9 billion in A Gartner study shows that 25 billion things and devices will be connected to the network by 2020, and Gartner estimates that total IoT-related service spending will be $263 billion by Note that definitions of IoT differ from study to study, which makes a clear estimate of the number of IoT devices difficult. However, all studies believe that the connected things will number in billions. 2-2 IoT Data Traffic Most studies show that billions of IoT devices will be introduced into the market. Considering this amount, it is important to understand the volume of data traffic those devices will cause. EMC, a storage vendor, conducted the Digital Universe Study with IDC and announced the latest results in April Those results claim that the total volume of data transacted in the digital universe in 2014 was 4.4 ZB and will be 44 ZB in 2020; IoT data makes up 10% of that total volume in other words, by 2020, IoT will be responsible for 4.4 ZB of data. Figure 1: M2M Data Traffic 1,000,000 M2M data traffic 500, M2M data traffic 20,736 49, , , , ,472 Cisco conducted a study on machine-to-machine (M2M) data traffic that was published in February They estimate that M2M data traffic was 20,736 TB/month in 2013 and will be 907,472 TB/month in 2018, an approximately 44-fold growth. Estimated growth rates exponentially increase until These forecasts show that IoT will bring a data traffic explosion in the near future. NTT, ICR

7 Some argue that the data traffic generated from IoT will be gradual. Considering the slow introduction of IoT devices today, this argument holds some logic. However, history shows data traffic explosion comes not with the device but with the introduction of new applications and services to the device. Figure 2: Smartphone data traffic growth (worldwide voice and data traffic) Figure 2 illustrates the data traffic growth caused by smartphones. The iphone was announced in June 2007 and the Android OS was announced in November Data traffic did not rapidly increase until the introduction of the AppStore and the Android Market. Considering that there will be new applications and services for IoT, there is a high probability that data traffic will rapidly increase at that time, just as it did for smartphone data traffic. The 50 billion connected things that Cisco forecasts will be introduced into the market, and these things will send control signals to the network. Estimating how frequently the control signals will be sent to the network is almost impossible; however, the nature of data traffic is anticipated to profoundly change. NTT, ICR

8 3. Vital Role of Communication Infrastructure for IoT Development 3-1 Coping with IoT Data Traffic From the forecast, the data traffic from IoT devices is expected to rapidly increase. The diversification of data sent to the network increases with an increase in the volume of the IoT-related data traffic. In the IoT era, the network will face various challenges. First, the network must be flexible. As discussed in the previous chapter, data traffic in the IoT era will not be the same as that in today s communications environment. The network needs to be flexible to cope with the changing data traffic. Along with a flexible network, there needs to be effective data centers as well. IoT is perceived as the next frontier of big data. It is predicted that there will be a high demand for IoT-related data to be stored and processed. Second, zero-downtime architecture will be required in both the network and data centers. IoT-related data includes crucial data that affects society and even life. Network infrastructure needs to be stable under any given circumstance. Third, maintaining secure data transactions will be imperative. With IoT, critical data such as personal information and biometric data will be flowing through the network. These data must be protected from malicious acts. Data centers and the network must have high-level security measures in place. 3-2 New Opportunity for the Telecommunications Industry To anticipate IoT data traffic, the telecommunications industry must overcome various issues. The first issue to overcome is the flexibility of the network. In the IoT era, data traffic will increase both in volume and frequency. Predicting the changes in data traffic that will take place is almost impossible. Hence, there is a need for a flexible network that can seamlessly adapt to changes. Furthermore, data gathered through IoT devices will create value. Data centers that store and process these data will be virtually indispensable in the IoT era. The second issue to overcome is the robustness of the network. The network needs to integrate a zero-downtime architecture. This is applicable to both the network and the data centers. As IoT devices become an intricate part of our daily lives, the data must be sent flawlessly through a robust network and data center. The third issue is the network s security. As IoT devices develop, various data will be sent to data centers through the network. Such data could contain critical personal data. These data must be protected from attacks at any cost. The network and data centers of the IoT era must have a higher level of security than ever before. NTT, ICR

9 These issues and challenges are difficult to solve. However, such difficulty can be perceived as an opportunity for the telecommunications industry. Those who adapt to the changing environment could be well on their way to becoming leaders of the IoT era. NTT, ICR

10 4. NTT Group Network and Data Center Strategy in the IoT Era 4-1 NTT Group Data Centers NTT Group has the world s largest gross floor space and is the largest provider of colocation space worldwide. According to Telegeography, NTT Group has up to 975,000 square meters of floor space. In addition to vast floor space, NTT Group s data center also has a global footprint. As of September 2014, NTT Group had a total of 239 sites established in 19 countries. NTT Group is expanding its global footprint by opening new sites. By the end of the fiscal year 2014, new sites will be open in Sacramento in the US and Shanghai Pudong in China. In the fiscal year 2015, sites in Hemel Hempstead in the UK, Hong Kong, Mumbai in India, and Bangkok in Thailand are also planned to be opened. Furthermore, NTT Group has a long history and experience in system integration. Through its deep understanding of system integration, NTT Group can provide not only strong support but also cost-effective solutions. NTT Group can provide a seamless and wide variety of services to multinational corporations, including worldwide uniform operations, multi-linguistic support for MNC, colocation, hosting, and high-level security services. NTT Group s global data centers are committed to fulfilling global enterprise needs for high quality data storage. 4-2 NTT Group Network Services Data centers are not the single important communication infrastructure in the IoT era. Network services play an important role for the stable development of IoT as well. Among the various network technologies available, network function virtualization (NFV) is one that has recently caught a lot of attention and offers practical use. NFV is the process by which hardware that has been dedicated to network functions for telecommunications carriers is replaced with software that runs on virtualized standard servers. NTT Group is one of the fastest groups in the world accelerating this effort. For example, in May 2014, NTT Communications, an NTT Group company, announced that it had globally developed the latest NFV-enabled network service. With NFV, enterprises can change the configuration of their network and appliances by using customer portals. NTT Communications NFV solution provides enterprises with reduced initial costs, shorter delivery times, and efficient operations. NTT DOCOMO, a mobile NTT Group company, announced in October 2014 that it had succeeded in an NFV pilot project in a multi-vendor environment. The six vendors in the pilot project included Alcatel-Lucent of France, Cisco Systems of the US, Ericsson of Sweden, Huawei of China, NEC of Japan, and Nokia Networks of Finland. NTT DOCOMO is planning to launch commercial NFV services by the end of NTT Group s Strategy and Value Proposition in the IoT Era In the IoT era, globalization is accelerating in various fields such as distribution, financing, and manufacturing. Thus, any solution in the IoT era is not local but global. IoT solutions today must be inherently global through the cloud. NTT Group is the world s largest global security integrator. Their services are available in more than 50 countries with the world-class Computer Security Incident Response Team (CSIRT). This team has 1,300 NTT, ICR

11 security experts worldwide and provides security services 24 hours a day, 7 days a week. In November 2014, to respond to new security risks in the IoT era, NTT Group announced their additional investment in security by increasing the number of their security professionals. In 2012, NTT Group announced a mid-term corporate strategy. In this strategy, NTT Group plans to invest in service and infrastructure to become a valued partner. At the core of this strategy, NTT Group is targeting not only domestic but also worldwide enterprises. NTT Group has set a goal of achieving 15 billion USD in global sales by the end of the fiscal year This goal is in the process of being fulfilled, along with the continuing goal of achieving 20 billion USD by March NTT Group will invest in global cloud services and offer full stack/full life-cycle services to enterprises around the world. NTT Group is rapidly adapting to the IoT era and becoming the world s leading ICT company. NTT, ICR