Thank you, Mark, for the introduction. Good evening everyone, and thank you for being here tonight. [click]
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1 Thank you, Mark, for the introduction. Good evening everyone, and thank you for being here tonight. [click] 1
2 Audience Knowledge Our topic today is the Internet of Things. To set up the right conversation for this evening, we first wanted to understand how knowledgeable folks are about IoT. So we asked. [click] You could see that the level of knowledge in the group is fairly high. We also asked you for a few forecasts [click] about the time to the Internet of Things value, expected rate of implementation across various industries, the barriers that IoT needs to overcome What s quite curious is that we couldn t find material differences in the responses of those on the right of this chart and those on the left. I guess it means that either one group knows less than what it thinks it does or the other group knows more Whichever is the case, we hope that today s discussion will be interesting and useful for all. [click] 2
3 Industry Buzz You can see from how crowded this room is that the level of interest in IoT is quite high. We actually had to close registration for this event two weeks ago, way ahead of our plan. We see such level of interest not only here, but also in the broader world, in business and social media. [click] Here are a few examples from across the spectrum: starting on a more casual side [click] the current tweeting rate on all things IoT is over 1 tweet per minute, with an overall 5-fold increase in tweeting volume over the last year; [click] moving on to Google there has been a 3-fold increase in IoT-related searches since last March; and, finally, looking in the business press [click] we see a similar rate of growth in IoTrelated publications. [click] 3
4 External Definitions Well, everyone is talking about the Internet of Things but what is it? Our research shows that while much of the IoT vocabulary is quite common [click], with key words being Physical Objects, Networks, Connectivity, and Data, how that vocabulary is put into sentences and concepts can actually vary a lot. In fact, we found dozens of definitions of what IoT is, with many authors and publications not even attempting to define it. In your survey responses [click] you provided us with close to 20 unique IoT definitions as well, with a slightly more engineering bend. In these 20 responses there were not even two that were alike. No doubt these will all converge, but it just shows how early we are in the Internet of Things jounrey and how much in flux things really are. [click] 5
5 A.T. Kearney Definition Being a consulting company that operates in this space we couldn t resist offering our own definition. In developing it we focused on the key foundational attributes of IoT and on its impacts. [click] From our perspective the essence of IoT is in three integrated things: Embedded Intelligence, Ubiquitous Connectivity and Deep Insight, put together in a very disruptive and value generating way. [click] 6
6 A.T. Kearney IoT Framework At a more practical and operational level, we see IoT coming to [click] all three economic spheres: b-to-b, b-to-c, and the public sector. Regardless of the sphere the key feature of the Internet of Things, from our perspective, [click] is the full cycle from the physical world of Things through the digital one and back to the physical, the first time ever that such a closed loop can be implemented on such a vast scale, across so many areas and with such an enormous potential. This cycle is enabled by four distinct categories in the value chain [click] from Sensors to Services that make up each and every one of true IoT solutions that operate [click] within and across industries and in the context of regulatory and policy landscape. As a result, starting with Things and intelligently connecting and manipulating them we arrive [click] to the real world value and impact. [click] 7
7 Devices Growth Forecast In real, physical, terms, [click] by 2020 we are looking at the number of IoT devices growing by a factor of 10, 4 times faster than traditional connected devices. Now envision that future [click] on average across the world Africa, China, Mexico, maybe even Russia - there will be 3.5 connected devices per person. Doesn t sound overwhelming, does it? Well, how about here in Silicon Valley? [click] 250 per family, 7,000 for all of us here, and more than 200M in the area of less than 30 miles in diameter. Is it impressive or scary? [click] 8
8 Economic/Financial Forecast In dollar terms the impact will be just as significant, [click] with 6% of the $100T world economy affected in one way or another. [click] We separated those effects in four different categories. Some are truly incremental, with increased Productivity driving economic growth, and additional Revenues for IoT products and services adding to the overall economy. Others will benefit end Customers or redistribute Revenues across different players or industries. Think about such a movement in the last 10 years, with the Internet revolution. Advertising, information, education, commerce have all been massively affected and the IoT will be even more impactful. We did a number of bottom-up analyses as well as reviewed what others have published, and we estimate the impacts [click] to be between $177B for the value to End Customer to $3.5T in Revenue Redistribution. [click] Whatever your estimates are, the impact will be significant and disruptive, and there will be winners and losers. [click] 9
9 Incremental IoT Revenues Distribution If we look specifically at what we estimate for the Additional IoT Revenues, we can further break them down along a couple of IoT dimensions that might be of interest to you. [click] Across three sectors of the economy, based on a variety of use cases and scenarios, we believe that close to 2/3 s of all incremental revenues will accrue in the b-t-b sector, with the remainder split between b-t-c and public sector at a 3:1 ratio. It is interesting that when we asked you in our survey about the time to value, [click] these three sectors lined up in exactly the same way. I guess, like always, where there is value there is also the race to get to it. Let me show you one additional cut, [click] and this one is across the IoT value chain. Based on our analysis about 70% of all incremental revenues will accrue to the providers of applications and services, with the remainder being split between the other two. [click] 10
10 Adoption Timing (S-curve) This is all very exciting stuff, but how long will it take for the IoT to actually live up to its expectations? We believe, and most experts in the industry agree, that we are [click] in the early stages of the IoT lifecycle. At the moment, there is more buzz than there is real value yet. That said, [click] significant money and attention are being put into this space and, inevitably, they will start producing results. We expect IoT uptake to accelerate in a couple of years [click] and take 6 to 8 years [click] more to truly deliver the value that we all expect from it. This timeline is also visible in our survey results: [click] while we do have a few real optimists in this crowd who believe that the IoT world is just a couple of years away, the majority s thinking is aligned in the window from 2020 to And, my sincere condolences to those few poor souls who don t believe that IoT is ever going to live up to its hype. I guess they are here only for the drinks [click] 11
11 IoT Adoption Challenges Why would it take so long for IoT to deliver? Well, if you think about the challenges that need to be overcome they are significant and cut across most of the areas. [click] Cost, complexity, lack of standardization, and even difficulties in articulating true business value in many cases are all the things that need to be dealt with by individual companies and the entire ecosystems. [click] 12
12 IoT Adoption Success Factors Overcoming these challenges will take time and effort, but there are clear paths forward. We identified 10 specific factors that we believe are critical for the overall IoT success 5 for the overall ecosystem and 5 for individual players. [click] On the left, the ecosystem, side, the keys will be collaboration, standardization, and simplification. On the right, company, side it is all about clarity of purpose, innovation, flexibility, and, yet again, collaboration. [click] 13
13 Future World Vision So, if we all in this room, in the Valley, and in the world are successful in ushering in the world of IoT, will we like what it will be? Well, you decide We believe that world will be defined by increased levels of [click] transparency, [click] dynamism, [click] autonomy, and [click] unity. In other words, nowhere to hide, no time to rest, nothing to do, and everyone is in one big group hug I don t know about you, but for me, coming from Berkeley, this sounds like a perfect world. In all seriousness, though, it will be a different world. [click] Not all of these world attributes will move in lock step and mature together, but they will all move. [click] The opportunity this presents is enormous. And our two guests are right at the forefront of that opportunity trying to figure out how to make it work for their companies and for the world at large. [click] With that, let me turn it over to Mark and to the panel. Thank you. 14
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