Navigant Research Leaderboard Report: Smart City Suppliers

Transcription

1 RESEARCH REPORT Navigant Research Leaderboard Report: Assessment of Strategy and Execution for 16 Published 4Q 2014 Eric Woods Research Director Noah Goldstein Research Director

2 Section 1 EXECUTIVE SUMMARY 1.1 Introduction The supplier ecosystem for smart cities continues to expand. Established suppliers are moving into the market from the energy, transport, buildings, and government sectors, while startups are addressing a range of emerging opportunities. This has created a complex and dynamic market. According to Navigant Research estimates, the global smart city technology market is expected to be worth more than $27.5 billion annually by 2023, compared to $8.8 billion in This represents a compound annual growth rate (CAGR) during that period of 13.5%. Cumulative global investment in smart city technologies over the decade is expected to reach $174.4 billion. As per Navigant Research s definition, a smart city is characterized by the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development. The concept of the smart city covers a wide range of communities and governance models spanning from megacity regions to small towns and from historic urban centers to greenfield developments. Similarly, an incredible diversity of customers, suppliers, technologies, and requirements fall under the smart city label. This Navigant Research Leaderboard Report identifies and assesses the technology companies that are playing a leading role in the evolution of this important but complex market. 1.2 Evaluation Overview This Leaderboard Report offers an evaluation of leading players in the market that have the capacity to provide leadership on large-scale projects spanning multiple city requirements. It complements Navigant Research s Smart Cities report, which provides a deep dive into the market issues and demand drivers affecting the global smart city technology market. Technology companies included in this Leaderboard meet the following guidelines:» They are delivering smart infrastructure, IT, and communications solutions to cities.» They are able to support cities across multiple operational and infrastructure issues (notably energy, water, buildings, transportation, and government).» They have a global presence with the potential to work with cities in multiple regions. In order to establish a reasonable model for comparison across diverse suppliers, Navigant Research has excluded some sectors that also address smart city issues, including telecommunications service providers, systems integrators, municipal service providers, building service companies, and real estate developers. Navigant Research has limited the selection to companies that already have a footprint in this market. Smaller suppliers and those targeting a narrow sector of the market have also been excluded. 1

3 The criteria by which smart city suppliers are compared in this report include the following:» Strategy Criteria Vision Go-to-Market Strategy Partners Product Strategy Geographic Reach» Execution Criteria Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power Detailed descriptions of each criterion are provided in the Criteria Definitions section of this report. 1.3 The Navigant Research Leaderboard Grid The smart city technology market is characterized by a diverse range of suppliers spanning many sectors, which makes a comparison of their strengths and capabilities a challenging exercise. However, such comparisons are becoming more important as city and other service providers look to select partners and technology providers to help them deliver on their smart city strategies and ambitions. IBM and Cisco have retained the Leader positions they had in the previous iteration of this Leaderboard Report. This reflects a continued commitment to city engagement, thought leadership, and product development by both companies. However, the competition in the market is becoming much more serious as cities look to deepen their supplier relationships and plan for larger-scale programs and deployments. Schneider Electric, which leads the Contenders to IBM and Cisco, is an example of a company that has significantly upped the tempo of its smart city strategy and is leveraging broader company initiatives to strengthen its smart city proposition. Microsoft is another company that stands out among a strong group of Contenders. The introduction and rapid acceptance of its CityNext program has led to a dramatic jump in its ranking, from eleventh place in Navigant Research s previous report to fifth. The company is now positioned between heavyweight infrastructure players like Siemens, Hitachi, and Toshiba as a key player in the smart city market. The appearance of Ericsson and Huawei among the Contenders reflects both the core 2

4 role of communications and IT infrastructure in smart cities and the growing ambitions of suppliers in this market. The continued attractiveness of the smart city market is shown by the addition of new suppliers to the Navigant Research Leaderboard Grid. Notable among the emerging challengers in the market are players that have built their reputation in the smart grid market; Itron and Silver Spring Networks are leading the way for other energy and smart grid players. AGT s appearance as another new entrant on the Leaderboard Grid reflects the growing focus on the role of advanced analytics in smart city applications. Chart 1.1 The Navigant Research Leaderboard Grid FOLLOWERS CHALLENGERS CONTENDERS LEADERS IBM Cisco Execution Silver Spring Networks GE Itron AGT Schneider Electric Hitachi Siemens Microsoft Oracle Toshiba Huawei SAP Ericsson ABB Strategy (Source: Navigant Research) 3

5 Section 2 MARKET ISSUES 2.1 Market Definition In Navigant Research s definition: A smart city is characterized by the integration of technology into a strategic approach to sustainability, citizen well-being, and economic development. The smart city concept is a framing device for many of society s most important conversations about globalization, technology, and the environment. These issues are driving investment across a range of city services and infrastructure. Navigant Research identifies five industries that are the focus for smart city investment: smart energy, smart water, smart buildings, smart transportation, and smart government. The smart city market is as an amalgam of several existing markets, as well as a driver for emerging technologies and solutions that span existing sectors. The market for smart city solutions has continued to expand since the 2013 iteration of the Navigant Research Leaderboard Report:. Cities around the world are committing to programs for sustainability, innovation in public services, and economic development that depend on technology investments. New suppliers continue to enter the market and established players have been evolving their solutions. This is a market that requires suppliers to be innovative in their product offerings and in the way they engage with cities and their partner networks. 2.2 Market Drivers Urbanization The interest in smart cities is being driven by a range of social, economic, and technological developments that are having an impact on cities around the world. However, a number of overarching issues and themes are common across many smart city initiatives. Between 2010 and 2050, the number of people living in cities is expected to increase from 3.6 billion to 6.3 billion. According to the United Nations, by 2025, there will be 37 global megacities with populations of over 10 million; 22 of those cities will be in Asia. While the leading developed economies already have urban population rates of over 80%, China only passed the 50% mark in India will not reach 50% urban population until 2050, and Africa s process of urbanization will stretch well into the second half of this century. This expansion in the urban population is already having a profound impact on the global economy, on demand for infrastructure and resources, and on new thinking about how cities are designed and managed. 4

6 2.2.2 Sustainability Cities represent only 2% of global land use but are responsible for around 80% of global gross domestic product. They are also responsible for around 70% of the world s energy use and roughly the same percentage of greenhouse gas emissions. City leaders have recognized this and have taken a lead in developing ambitious energy efficiency and carbon reduction programs. As centers of population, transportation, and industry, cities dictate the use of resources and have a huge impact on the environment. The new and expanding cities of the world have to find ways to decouple the aspiration of people for basic services and improved quality of life from the growth in emissions, resource demand, and energy consumption. Cities in the developed world have a responsibility to show the way and to reduce their own environmental footprint while continuing to meet the expectations of their citizens for a high quality of life. Sustainability programs are seen as providing multiple benefits. For instance, reducing energy costs has a direct financial benefit to citizens. Other enhancements, such as a reduction in vehicle traffic and better insulated homes, also improve the quality of life in cities Economic Development A defining characteristic of the smart city movement is the focus on economic development within cities. Cities have long been recognized as engines for economic development, but globalization and the financial crisis of 2008 have put a new focus on their role in the modern economy. Smart city programs are often a key element within a city s economic development plans. For example, a number of cities have linked their smart city ambitions to the development of local industry clusters and incubator programs for clean and sustainable technologies. Other cities are focusing on the development of local software and other information and communications technology (ICT) industries. Smart city initiatives are also closely associated with many regeneration programs, particularly for older industrial areas (as in the 22@ district in Barcelona or the HafenCity project in Hamburg). National governments are also recognizing the importance of urban innovation as a driver for the technology market. Japan, South Korea, Taiwan, and the United Kingdom are among the governments that are providing funding and other support to cities and businesses to develop solutions for the global smart city market Improving the Quality of Life in Cities Improvements in the efficiency and quality of government services are a vital part of any city program. A safe, clean city with good schools, efficient transportation, and effective health and social care remains the basic requirement. For some cities in emerging economies, the provision of online access and the basic communications networks required to provide this continue to be a priority. A more recent development has been a focus on the opening up of city data to allow innovation on services and increase the transparency of government. 5

7 This is also a growing focus on the need for cities to be better prepared for the impact of climate change, extreme weather events, and other shocks to city operations and infrastructure. For this reason, resilience is an increasingly important attribute of the smart city. Resilience can be characterized as the ability of cities and communities to quickly recover from catastrophic events and other threats to the stability and well-being of the city. Resilience requires a deeper understanding of the normal operations of a city and its vulnerabilities so that it is better able to cope with extreme events. In turn, that new understanding and the new approaches to planning and management can inform many aspects of a smart city strategy, including cross-agency collaboration, security, social inclusion, and the use of data analytics. 2.3 Market Challenges Finance There are several challenges facing cities and suppliers as they try to realize the ambitious visions embodied in smart city programs. Securing financial support and developing new business models remain the most commonly cited barrier to growing this market. However, as projects become larger and more complex, other concerns like security issues will grow in importance. The development of appropriate finance models for smart city projects continues to be one of the most important barriers to this market. Smart city projects vary widely in their investment requirements and the length of time over which benefits are accrued ranging from a short-term focus on the outcomes of social programs to the very long-term expectations for infrastructure projects. Vendors often have to sell a funding mechanism as well as the investment itself. Funding mechanisms such as public-private partnerships, build-operate-transfer agreements, savings recovery agreements, and performance contracting are all a part of smart city development Governance Challenges Much of what happens in a city is not under the control of city leaders. Elements of the transportation system or policing services may be run by regional or national governments, the private sector may run utilities and other services, and other agencies may be responsible for health or education. A smart city vision must be able to reach out to these diverse stakeholders as well as bridge gaps between city departments. The need for this broader dialogue is one of the key drivers for smart city standards, along with a need to develop shared models for understanding requirements across siloes. Cities particularly megacities are typically aggregations of diverse urban communities, often with many layers of governance. Even in cities with strong mayoral roles, the scope of the mayor s power across the whole city is limited. Developing large-scale infrastructure developments will often require collaboration between several tiers of government, as well trans-government agencies (i.e., the European Commission, The World Bank, or the Asian Development Bank) in addition to private sector sources of funding. 6

8 2.3.3 Citizen Engagement and Resistance Security Smart city pilots around the world are demonstrating the benefits of technology innovation to citizens, but there is an urgent need to see more projects that make a real difference across broader elements of the city. Smart city discussions need to become more inclusive if the momentum behind the market is to continue. City leaders must find ways of connecting smart city ideals with the day-to-day concerns of citizens. Citizens need to understand the reasons for infrastructure and service investment and the benefits that they will provide. Transparent benchmarking of services, for example, is being used by some cities as a way to demonstrate innovation-led improvements in areas such as public safety, transportation, and health. Negotiating the necessary data privacy rules that govern smart city applications will also be a critical element in gaining wider citizen approval. The relationship between citizens and government will need to evolve to address the issues raised by greater access to detailed realtime data on the activity of the city and its citizens. The increasing complexity of city systems, the instrumentation of new areas of the city infrastructure, and the growing interdependency between systems all increase the vulnerability of the city. For example, a city in which street lighting or smart parking systems are integrated into a broader communications network needs to address a new level of security concerns. Additionally, the growing use of third-party vendors providing services to the public (e.g., networked parking meters and transportation passes) creates another layer of complexity and responsibility and, therefore, a potential increase in security risks. Greater dependency on automated systems for energy, water, transportation, or public safety also increases the vulnerability of a city to critical failure (such as from a malicious attack, system failure, or extreme weather event). City leaders need to ensure that these new systems are part of a broader strategy for ensuring the resilience of the city to such threats. In addition to traditional security measures, new assessments are needed that recognize the interdependency between systems, the weak links in those systems, and the danger of cascading failure if a key component of the system fails. 7

9 2.3.5 Technology Maturity and the Skills Gap Most of the solutions being offered to cities to improve services and efficiencies are based on well-established technologies; however, the focus on new analytics capabilities, broader data integration, and near real-time response offers a challenge to traditional ways of working. The ability to harness real-time, highly granular data across a wide range of city operations and services is changing the way the urban environment is managed and experienced. However, city managers still have the major challenge of ensuring that data is fit for purpose and is used appropriately. Above all, managing and analyzing large data sets and developing insights for effective policymaking or operational improvements requires skills that are in short supply, particularly in the public sector. Meeting the skills gap for data analytics will be a significant barrier to city innovation. While the component elements of many smart city solutions may be familiar, the delivery of integrated systems is a challenge to both existing infrastructure and existing siloes of operations. Suppliers need to work with cities to develop incremental paths to greater integration that can build on the success of addressing specific priority issues into a broader platform for city improvement Finding the Right Standards Appropriate standards and models for smart cities can help accelerate the adoption of smart city solutions, reduce the risks to cities and suppliers, and make it easier for successful projects to adapt to new contexts. Smart city standards are less about regulation and more about consistency, repeatability, and enabling integration and collaboration across multiple domains such as transportation, sustainability, and public safety. Some substantial products are starting to appear such as the City Protocol, the International Organization for Standardization s work on city infrastructure metrics, and the United Kingdom s Smart City Framework. 8

10 2.4 The Market Opportunity Technological innovation is a driver for the evolution of cities and is also a vital support for those looking to find new ways to manage resources and deliver services. Many smart city technologies are being developed to deal with specific issues in energy distribution, energy management, transportation management, or public safety. These industry-specific innovations are underpinned by more general developments in areas such as wireless communications, sensor networks, data analytics, geospatial analysis, mobile computing, and cloud computing platforms. Integrated approaches to city operations are an important innovation that will drive further innovation in cross-functional technologies and solutions. Such solutions also need to support the ability of smartphones and open data platforms to extend the opportunity for citizens and others to participate in the management of their cities. The global smart city technology market is expected to be worth more than $27.5 billion annually by 2023, compared to $8.8 billion in This represents a compound annual growth rate (CAGR) of 13.5% during that period. Cumulative global investment in smart city technologies over the decade is expected to be $174.4 billion. Chart 2.1 Smart City Technology Annual Revenue by Region, World Markets: ($ Millions) $30,000 $25,000 $20,000 $15,000 $10,000 North America Europe Asia Pacific Latin America Middle East & Africa $5,000 $ (Source: Navigant Research) 9

11 Section 3 THE NAVIGANT RESEARCH LEADERBOARD 3.1 The Navigant Research Leaderboard Categories Leaders Contenders Challengers Followers Navigant Research scored the vendors in this Navigant Research Leaderboard Report according to four categories: Leaders, Contenders, Challengers, and Followers. These categories are defined below. Leaders are vendors that scored 75 or above in both Strategy and Execution. These companies have differentiated themselves from the competition through a strategic approach to smart cities, an involvement in a wide range of projects, and the development of new solutions and products to enable smart city evolution. Leaders are playing a major role in helping cities define and shape their requirements. Contenders are vendors that scored between 50 and 75 in both Strategy and Execution. While some of these companies have a solid foundation in a range of smart city projects and an extensive portfolio of solutions, they have not yet established a clearly differentiated market position. A few companies in this category have a strong portfolio of products but have a limited number of reference projects. Others need to develop a more integrated vision of how the different components of their smart city offerings hang together in terms of a conceptual model or as an integrated solution to meet cross-functional requirements. Challengers are vendors that scored higher than 25 in Strategy and Execution but are not yet competing for market leadership. These companies are not yet positioned to challenge the Leaders in the smart city market, but may be establishing their own positions and developing market and product strategies that will enable them to move up in the rankings. However, these companies need to improve their strategic visions, show an ability to execute well on an unproven vision, or extend their solution sets if they are to move up to the ranks of Contenders or Leaders. Followers are vendors that have failed to distinguish themselves and scored below 25 in Strategy and Execution. These are companies that are not currently expected to challenge the Leaders unless they can substantially alter their strategic vision and execution. There were no smart city suppliers ranked as Followers in this Navigant Research Leaderboard Report. 10

12 3.2 The Navigant Research Leaderboard Grid The smart city market has attracted a diverse range of suppliers to meet the complex and evolving requirements of cites across the globe. This presents significant challenges in comparing offerings across suppliers that focus on multiple industries and offer products and services spanning IT, communications, infrastructure, and diverse city services. However, it is a necessary endeavor in order to help customers differentiate between the approaches presented to them. As the smart city market gains momentum with city leaders around the world, these diverse approaches are being evaluated by city leaders while they try to find the visions and products that best match their specific needs. This Leaderboard Report is focused on a subset of global players that have the capacity to provide leadership on large-scale projects that span multiple smart city requirements. Suppliers targeting a narrow element of the market or providing a single niche solution have been excluded. Suppliers also have to have a presence across North America, Europe, and Asia Pacific. The focus on technology suppliers means that a number of service-focused sectors have been excluded. Telecommunications services providers, systems integrators, management consultancies, and building service companies are among those excluded. Chart 3.1 The Navigant Research Leaderboard Grid FOLLOWERS CHALLENGERS CONTENDERS LEADERS IBM Cisco Execution Silver Spring Networks GE Itron AGT Schneider Electric Hitachi Siemens Microsoft Oracle Toshiba Huawei SAP Ericsson ABB Strategy (Source: Navigant Research) 11

13 IBM and Cisco have retained their position as Leaders in the smart city market. Both companies have continued to build on their early leadership and have been adapting their products and go-to-market strategies to reflect the evolution of the market. IBM continues to combine a pragmatic approach to city engagement with its development of smart city platform solutions. Its investments in R&D, thought leadership, new products, and city engagements continue to be significant drivers in this market. Cisco has also been adapting its strategy to reflect the need to support a range of city applications across a diversity of cities. Meanwhile, Cisco s partner network continues to be an important source of innovation in the market. However, while IBM and Cisco have retained their leadership positions, the gap is closing as competitors develop new solutions and greater market visibility. The strong role that IBM and Cisco have played in the early development of the market also made them a focal point for criticism that technology vendors are having too much influence on the evolution of urban systems. Both suppliers need to show that they can support bottom-up innovation as well as the large system requirements for city development. There are several companies contending for Leader positions in the market. Schneider Electric has strengthened its position as the leading Contender as it evolves its product and market strategy. Its smart city offering is also benefitting from the acquisition of Invensys and a broader technology strategy for the integration of the company s product and solution portfolio. Siemens has also maintained its position and has continued to develop its offerings and thought leadership, most notably in terms of energy infrastructure. However, its position is now being challenged by Microsoft. Microsoft s launch and development of its CityNext program is the primary reason for the company showing the biggest jump in Navigant Research s ratings from eleventh to fifth position. It is building on its global ecosystem of partners to establish a distinct offering in the smart city space. Oracle and SAP have also been extending their capabilities in the smart city space and are positioning themselves as addressing a broad range of city challenges and not just government administration. Hitachi and Toshiba s commitment to smart city and community developments in Japan and elsewhere makes them both significant Contenders, but they are facing pressure to develop more commercial solutions, building on the lessons learned from extensive involvement in pilot projects. Two other notable Contenders are Huawei and Ericsson. Their first-time appearances on the Leaderboard reflect the importance of communication capabilities to the realization of the smart city vision and both companies efforts to provide a roadmap for the evolution of city-scale communications and the role of specific vertical offerings. 12

14 Challengers seeking to increase their footprint include Itron and Silver Spring Networks, both of which are building on their strong smart grid and utilities experience to develop a broader range of city-focused solutions. These companies show the continued attraction of this market and the room for innovation driven from each of the core city sectors. AGT s appearance on the Leaderboard Grid reflects the growing opportunity for advanced analytical solutions spanning multiple operational areas of the city. Table 3.1 The Navigant Research Leaderboard Overall Scores Rank Company Score 1 IBM Cisco Schneider Electric Siemens Microsoft Hitachi Huawei Ericsson Toshiba Oracle SAP ABB GE Itron AGT Silver Spring Networks 45.3 (Source: Navigant Research) 13

15 Section 4 COMPANY RANKINGS 4.1 Leaders IBM To qualify for the Leaders category, a company must score 75 or higher in both Strategy and Execution. This Navigant Research Leaderboard Report features two Leaders: IBM and Cisco. Overall Score: 82.3 Strategy: 83.3 Execution: 81.3 IBM s Smarter Cities program is delivering solutions to cities around the world. These solutions encompass a wide range of applications and technical solutions that span the breadth of city operations and services including infrastructure (energy, water, and transport), people services (healthcare, education, and social services), and city management (governance, public safety, and buildings). IBM continues to engage with an even wider range of cities with its Smarter Cities Challenge, a philanthropic program that works with cities to develop innovative solutions to entrenched problems. IBM is driving innovation in the use of technology to address critical issues in city management and in particular is leading the way in the use of advanced data analytics. It has been working on a series of notable analytics-focused projects that have shown improvement in public safety, transport management, and water management for example. The IBM Intelligent Operations Center (IOC) for Smarter Cities is an integrated operations platform for city management based on IBM software for data management, analytics, and event management, among other components. The IOC is offered as an in-house deployment, a shared service (for multiple authorities or for cross-agency applications), and as a cloud service. IBM has also developed a series of integrated offerings based on the IOC that meet the needs of different city departments or service providers. In May 2014, the company launched the IBM Emergency Management Center, the IBM Transportation Management Center, and the IBM Water Management Center. Each of these solutions draws on IBM s work with cities around the world. The IBM Transportation Management Center, for example, builds on key traffic management projects the company has worked on with the Land Transport Authority of Singapore, the Finnish Transport Agency, and other global transportation agencies. In the future, IBM plans to expand its management centers to other city systems, such as buildings, healthcare, and employment. 14

16 The evolution of different solutions based on the IOC shows the need for IBM to remain pragmatic in its offerings to cities. Cities are slowly evolving a more integrated view of their operations and will continue to need solutions that address specific issues and challenges. IBM s biggest challenge is to find the right models for engaging with the broadest range of cities. Its cloud and software as a service-based offerings are vital here, as is the ability offer flexible financial models to cities, including outcome-focused and benefit-sharing approaches. In the longer term, it will be interesting to see how IBM will use its next generation of intelligent computing systems namely the cognitive computing model it is pioneering with Watson to support effective city management. Chart 4.1 IBM Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) 15

17 4.1.2 Cisco Overall Score: 77.9 Strategy: 80.8 Execution: 75.0 The vision for smart cities offered by Cisco is of an integrated urban ICT infrastructure that can support the delivery of connected urban services on a global scale. Cisco s engagement in smart city issues is championed by the Smart+Connected Communities (S+CC) initiative under the Cisco Industry Solutions group. S+CC is working with the Internet of Things (IoT) group, the Services Platform Group, and other Cisco teams to develop a portfolio of city-oriented solutions. These solutions are based on Cisco networking and cloud computing capabilities and incorporate a host of specialized applications developed by or with key partners in the S+CC ecosystem. Cisco has deployed smart city solutions worldwide, involving around 120 deployments of varying sizes. The company has worked particularly closely with a number of lighthouse cities including Barcelona, Chicago, Dallas, and Dubai. Solutions deployed in these cities include city Wi-Fi, smart parking, traffic management, street lighting, city operations centers, and city safety and security. In April 2014, Cisco announced a new partnership with the city of Hamburg, Germany to deliver a number of smart city pilot projects, including traffic management, smart street lighting, remote citizen services, and support for a smart port initiative. The company is also working with cities to develop their overall IT and communications strategy. It is providing master IT planning for a number of cities, including new city projects that are part of the Delhi Mumbai Industrial Corridor (DMIC) development in India. The Indian government s plan to expand the number of smart city projects in the country is a significant opportunity for Cisco, which has its smart city development center in Bangalore. Cisco s strong partnership network enables it to adapt to a diverse range of smart city requirements and to help drive innovation across a number of sectors. As the competition among communications technology and service suppliers for the smart city market gets more intense, Cisco needs to be addressing these high focus areas, as well as offering a longer-term vision for multi-application urban communications systems. 16

18 Chart 4.2 Cisco Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) 4.2 Contenders To fall into the Contenders category, a company must score between 50 and 75 in both Strategy and Execution. Ten companies are identified as Contenders in this Navigant Research Leaderboard Report. This group reflects not only the importance of the major infrastructure providers in the smart city space, but also the growing focus of the enterprise IT and communications sectors on providing extended offerings for city management. 17

19 4.2.1 Schneider Electric Overall Score: 73.7 Strategy: 76.5 Execution: 70.8 Schneider Electric has been evolving its smart city offering across six core domains of expertise: energy, mobility, water, buildings, public services, and integration solutions and services spanning all these areas. The company has a rich heritage of products, solutions, and experience in each of these domains and has also been developing its architecture for cross-domain integration. The Schneider Electric vision is of a smart city platform that evolves bottom-up from the existing operational areas of the city, rather than a single top-down model for integration. The smart city platform suite is the latest incarnation of Schneider Electric s enabling platform for this integration. A key component in this offering is the company s City Operating System (OS). The City OS is a middleware layer that integrates different operational areas to meet the needs of city leaders, citizens, and third parties to access cross-functional data. Schneider Electric is also developing packaged solutions for specific use cases based on this integration platform, starting with energy management and mobility solutions. It is also investing in its consultants and business development teams to support cities in the early stages of understanding their requirements, priorities, and options for development. The Integrated Corridor Management solution that Schneider Electric has developed for Dallas is a showcase example of its approach to integrated smart city solutions. The solution combines data coming from automobiles, buses and light rail, weather forecasts, and pedestrians (via smartphones) to provide real-time information for transport management and improved travel planning. The company s extensive footprint in cities worldwide has been extended through its acquisition of Invensys, which was completed in January The acquisition gives Schneider Electric a greater presence in the automation and control aspects of city operations in areas like water and wastewater management, traffic management, and buildings control. The acquisition has also strengthened the company s software and integration capabilities. Schneider Electric s smart city offering combines bottom-up evolution and top-down vision that fits well with the practicalities of municipal operations. If the company can get that balance right and deliver a robust and adaptable integration platform, then it will establish a leadership position in an increasingly competitive smart city market. 18

20 Chart 4.3 Schneider Electric Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) Siemens Overall Score: 68.9 Strategy: 70.5 Execution: 67.3 Siemens initiatives for smart cities are led by its Infrastructure & Cities sector. The sector, which accounts for almost a quarter of the company s revenue, reflects the breadth of its offerings with five main divisions: Rail Systems (rolling stock), Mobility and Logistics (traffic, transport, and logistics management), Low and Medium Voltage, Smart Grid (intelligent power grids), and Building Technologies. Siemens has also invested in cross-industry innovation for cities, notably through the creation of a new R&D facility to support its smart city business. It established its first Center of Competence Cities in London in The center is a focus for research on new urban solutions as well as the delivery of custom products, including integrated traffic systems and innovations in energy efficiency. Siemens has also been active in thought leadership on green cities, urban mobility, building energy management, and energy infrastructure. 19

21 A significant development for the company is its collaboration with the Austrian utility Wiener Stadtwerke and other stakeholders on a smart city/smart grid project outside Vienna, which was launched in October The 40 million ($55 million) Aspern Smart City Research program is planned to support a community of up to 20,000 people by 2030, including living and working environments. It will involve a host of smart grid, smart city, and smart building technologies alongside an integrated approach to spatial design, energy strategy, and mobility planning. The project team is particularly focused on testing these technologies against the real living experience of people at work and at home. Siemens capability to provide an intelligent infrastructure for cities is undoubted. Its vision for how the elements of that infrastructure can be better integrated is less clear. It could, for example, do more to show how these different sectors can be brought together through data integration and analytics. The Aspern project may present the company with the opportunity to better define and communicate interactions across its areas of expertise. The work on smart buildings, energy management, and energy infrastructure could define a market-leading position. Chart 4.4 Siemens Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) 20

22 4.2.3 Microsoft Overall Score: 67.4 Strategy: 69.3 Execution: 65.5 Microsoft has made a dramatic improvement in its smart city capability since the previous iteration of this Leaderboard Report. In July 2013, the company launched its CityNext program, which extends its smart city offering into a broader range of urban operations than covered by its traditional public sector business. CityNext is a portfolio of technologies and products that can be used by Microsoft s global partner network to develop solutions for smart city challenges. Along with products such as its Azure cloud platform, mobile application support, and data management capabilities, Microsoft is also contributing training and educational services to the program. The initiative focuses on eight critical city functions: government administration, public safety, healthcare, buildings, tourism, education, transportation, and energy and water. Microsoft announced nine initial partner cities for CityNext projects: Auckland, Barcelona, Buenos Aires, Hainan Province (China), Hamburg, Manchester, Moscow, Philadelphia, and Zhengzhou (China). This list has now expanded considerably along with the number of partner suppliers (now over 200) signed up to work with the CityNext program. The company s position as a software provider to municipal governments and related agencies makes it a significant player in any move towards smarter cities. It is now using that position to enable a broad range of partner solutions far beyond traditional government IT applications. Microsoft s CityNext program has already proven to be an important intervention in the market, boosting both the company s own presence and enabling innovation across its partner network. Encouraging partners in its network to collaborate further and to support emerging standards for collaboration and data exchange would further boost Microsoft s growing influence on the smart city market. 21

23 Chart 4.5 Microsoft Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) Hitachi Overall Score: 66.6 Strategy: 66.8 Execution: 66.5 Hitachi sees smart cities as part of its goal to help build more sustainable and safer communities. Its vision for such communities is based on a set of coordinated multi-layer infrastructures, linked together by IT, that support consumers and service providers. Key sectors for the company s smart city offering include energy, water, urban mobility, IT, and communications. Hitachi has been active in smart city prototypes, with several large-scale pilot and model projects underway. In Japan, these include the Yokohama Smart City (for which it is supplying electric power storage solutions) and Kashiwanoha Smart City projects. Internationally, Hitachi is a partner in the Smartcity Málaga project in Spain, the leader of a Japanese consortium that won the right to develop a smart community demonstration project in Manchester, United Kingdom, and a partner with local companies in a comprehensive smart grid project in Hawaii. 22

24 In Asia Pacific, Hitachi is trying to use its long-term experience in Japan s post-war reconstruction as a guide for high-growth developing nations. It is involved in several new large-scale regional smart city efforts, including the Sino-Singapore Tianjin Eco-city and Guangzhou Knowledge City projects in China and the DMIC in India. If Hitachi can commercialize its combination of infrastructure technologies and intelligent ITbased control systems for smart cities, it will be a strong Contender in the smart city market. Its experience outside Japan will help in this process. The company s ability to adapt its vision for community energy management to the realities of the municipal requirements will also be a significant factor. Chart 4.6 Hitachi Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) 23

25 4.2.5 Huawei Overall Score: 62.6 Strategy: 64.0 Execution: 61.3 Huawei is stepping up its focus on the smart city market. In addition to broad support for communications and IT infrastructure across cities, the company has developed a series of vertical solutions for specific city sectors and departments. Its solutions for municipalities and connected buildings now include government services, safe cities, intelligent transportation, smart grid, healthcare, education, and tourism. Huawei has been engaged in over 60 smart city sector programs in 20 countries. It was a key partner in the Smart Liaoyuan program in northeast China. The city s program includes city management, emergency command, public security, and healthcare, for which Huawei provided the communications and data center infrastructure. In October 2014, the company announced a new smart city Center of Excellence based in the Middle East to support the growing interest in smart city solutions across the region. Huawei s acquisition of Neul in September 2014 is another indication of its desire to be at the leading edge of innovative communications solutions for cities. Based in the United Kingdom, Neul is a specialist IoT communications provider that has been focusing on smart city applications. Huawei is beginning to articulate its vision of how the diverse requirements for city management and development can be supported through advanced communications networks and IT systems. Above all, it emphasizes the necessity for ubiquitous broadband connectivity supported through fourth- and fifth-generation mobile communications and integrated fixed and wireless services. The breadth of Huawei s smart city sector offerings and its innovation in communications infrastructure make it a strong Contender in this market. 24

26 Chart 4.7 Huawei Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) Ericsson Overall Score: 62.4 Strategy: 65.3 Execution: 59.5 Ericsson has a stated goal of enabling what it refers to as a Networked Society, where increased connectivity allows for new ways of innovating, collaborating, and socializing. The company views a Networked Society as a transformative force that can help solve major global challenges, such as improving education and healthcare and tackling climate change and the use of natural resources. Rapid urbanization and smart cities are key areas of focus for the company s Networked Society vision. 25

27 Within the smart city space, Ericsson has a particular focus on smart energy, smart transportation, and smart security. For smart transportation, the company offers a framework for intelligent transportation solutions. The framework uses ICT infrastructure and provides services such as device and connectivity management to enable applications such as traffic efficiency, road tolls, vehicle interaction, transportation safety, vehicle infotainment, and goods management. In May 2014, Ericsson announced that it had been chosen by Telefônica Vivo to support its digital city project in Águas de São Pedro, Brazil. Ericsson, along with its technology partners, is responsible for providing the project with smart lighting and smart parking solutions and for systems integration. Ericsson has also been active in providing thought leadership and has published two Networked Society City Index reports. The City Index 2013 ranks 31 major world cities according to their ICT maturity and their triple bottom line, which measures sustainable development through social, environmental, and economic factors. The company sees a key role for the fifth generation of mobile networks (5G) in smart cities. Ericsson views 5G as eventually offering multiple integrated wireless/access solutions that will enable a Networked Society. 5G will enable the seamless integration of licensed and unlicensed wireless technologies to form a heterogeneous network that can connect vehicles, sensors, people, and objects. Chart 4.8 Ericsson Strategy & Execution Scores Vision Go-to-Market Strategy Execution Strategy Partners Product Strategy Geographic Reach Market Share Sales & Marketing Product Performance & Features Product Integration Staying Power (Source: Navigant Research) 26

28 4.2.7 Toshiba Overall Score: 62.1 Strategy: 63.1 Execution: 61.0 Smart cities are part of Toshiba s focus on smart community projects, which highlight what the company calls its social infrastructure capability. The company wants to be a global leader in smart community development, linking across its energy, transportation, and building services. Toshiba s Smart Community initiative, started in 2010, is based on the company s ICT strength combined with expertise in controls and automation. The Smart Community includes solutions for water management, traffic control, healthcare, security, and disaster prevention, but the company s primary strength is its comprehensive collection of technologies relating to energy management. At the core are its grid and power management solutions, including the Micro Energy Management System for grid management, and rechargeable lithium ion batteries for grid-scale storage. Toshiba has already participated in over 30 smart city projects around the world. It is a major participant in the Yokohama Smart City project, providing most of the community with energy management systems as well as infrastructure for electric vehicle (EV) charging. Toshiba has provided solutions to several cooperative smart city projects in Southeast Asia, including the Amata Science City in Thailand and the Green Township project in Malaysia. Central to Toshiba s involvement in these projects is its technology network for smart community energy, which is based on the company s innovations in the areas of smart grid, energy storage, and ICT. Toshiba brands its work across these multiple technologies as Total Energy Innovation. In addition to integrating a range of renewable energy resources through smart transmission and distribution grids, the company is also providing building and home energy management systems and demand side management programs. However, Toshiba could still do much more to leverage the capabilities it acquired with the purchase of Landis+Gyr in 2011, in particular as an entry point for its smart community solutions into North American and European markets. Other smart meter and smart grid vendors are now actively targeting these markets, and Toshiba should be among their ranks. 27