www.ovum.com The Internet of Things: Understanding the evolving value chain Jamie Moss, Senior Analyst, Consumer Technology & IoT Gary Barnett, Chief Analyst, Software, Ovum
Ovum s Internet of Things (IoT) Research Channel Jamie Moss, Senior Analyst, Consumer Technology & IoT Agenda 1. What is the Internet of Things? 2. IoT participants and the value chain 3. Dimensioning the IoT 4. Vertical drill-down: Wearables 5. Vertical drill-down: Smart home 6. Vertical drill-down: Industrial Internet 2
1) What is the Internet of Things? The Internet of Things (IoT) is the Interconnectivity of the world around us The IoT is defined by the transformative convergence of technologies The IoT enables organisation to do what they already do but better than before Efficiency and effectiveness are the operative words for the IoT The IoT touches every aspect of digital services and products, from: Regulation to service provision, Components to networks, Hardware to software, And from consumer to enterprise markets Responsibility (and ability) to cover the IoT sits across all of Ovum s topic teams The IoT is not something to be considered in isolation as a standalone topic 3
2) IoT market participant types Infrastructure Manufacturers Am I hidden behind the scenes? Component Manufacturers How many end points can I be in? Platform Vendors Can I sell to enterprises or do I enable others? Middleware/Analytics Vendors What is the opportunity for me? Connectivity Providers Can I go beyond connectivity? Service Providers What is an IoT service provider?! Device Manufacturers can I develop a service-based model? 4
Source: Ovum 2) The IoT value chain role-map A value chain defined by role/s performed, not by company type 5
2) The big IoT question Where do YOU sit in the IoT value chain? This is one of the most pressing questions affecting every company involved in the establishment of today s telecommunications and ICT service infrastructure. All believe that they have a pivotal role to play in the Internet of Things, but most do not accurately know what that role will be, nor do they have any realistic estimation of the size of the opportunity for them. Companies are actively seeking information to confirm their: 1. Relevance, 2. Strategy and 3. Opportunity 6
3) How to dimension the IoT? Source: Ovum 7
Source: Ovum 3) IoT market opportunity: the M2M core 50 billion connections by 2020? Perhaps, but NOT using cellular alone Cellular ~530 million by 2019, based on current trends 8
3) The 2020 device gap: the missing 44 billion Source: Ovum 9
Source: Ovum 4) Vertical drill-down: Wearables Tethered devices, plus sensors with app-based UI and intelligence in the cloud Wearable device purchase Intention: Source: Ovum If you re in the internet of things arena, you probably have some sort of gizmo to sell. Good for you. But the real revenue model lies, not surprisingly, in associated ongoing services, not the thing itself fitness trackers, home sensors [etc.] are trojan horses to get customers interested... - Jahangir Mohammed, CEO of Jasper 10
5) Vertical drill-down: Smart home The IoT is defined by core competencies and partnerships Value chain participants can benefit from their different attributes The main smart home opportunities in the short to medium term: Source: Ovum 11
6) Vertical drill-down: the Industrial Internet The hidden world of the Industrial Internet is where most value will lay Efficiency and effectiveness improves enterprise margins and profits Wireless carrier M2M & IoT contracts by application vertical: Source: Ovum The Industrial Internet is also where the majority of the IoT s end-points will be 12
Three things you need to know about the IoT Gary Barnett, Chief Analyst, Software, Ovum Copyright Ovum 2014. All rights reserved. 13
In a nutshell Three things you need to know about the Internet of Things There is a lot of nonsense being touted Yes it s going to be big IoT is really, really, hard Three things to consider Privacy and regulation Putting the data that comes from IoT to work The complexities associated with building IoT networks 14
There is a lot of nonsense being touted There will be One Trillion IoT Devices by 2020 The IoT will result in an EXPLOSION of data IoT is easy IoT will change your sector overnight 15
Think it through 16
Yes, it is going to be big 30-50 billion things by 2020? Feels about right It very much depends on how you count things But the vast majority of these things will be very simple sensors Very few IoT networks will contain more than a few hundred devices Most IoT networks will be very localised Big network scenarios.. Smart Metering Healthcare Automotive Smart Cities 17
Not every IoT device needs to be a supercomputer. 8 bytes of memory 20p 512 bytes of ram 1MHz 2.00 32 Kbytes of ram 96MHz 40 2 Gbytes of ram 2.32 GHz 100 18
Yes, it is going to be big Yes, the IoT will produce a lot of data But it will won t be an avalanche Expect a steady growth IoT networks take time to bring on line And a lot of the data will be worthless Either because it is gibberish Or because it only has a very narrow context Some IoT networks will require very innovative data management But most will have relatively modest requirements Security is a serious, but solvable, issue Data privacy and integrity are hugely important But the required technologies and patterns exist today 19
Yes, it is going to be big Yes, the IoT will produce a lot of data Data Volumes for AirSensa Network in London 8438 6221 4373 1047 12 111 99 136 246 308 554 493 1786 739 2895 1109 1478 1848 2217 Per Year Stored Data 20
IoT is really, really hard! IoT Hardware is complex to design Power requirements Certification IoT Software is complex to write For the device For the server 21
The IoT is very, very, hard http://www.changelondon.org/ http://www.airsensa.org/ 22
The thing. 23
The thing. 24
all the other things. 25
By far and away the hardest thing. 26
Three things to consider. Copyright Ovum 2014. All rights reserved. 27
Privacy and regulation How much should electricity companies know about my habits? What a third party infer about your lifestyle from your electricity consumption? What can an electricity company meaningfully do with my data? Who owns my biometric data? Can my fitness app vendor sell data to pharma/healthcare co s? Public access to government-collected data? OpenData? Planning regulations The visual pollution caused by IoT device proliferation 28
Putting IoT Data to work Steady growth in new sources of IoT Data Data in one context has a certain value But the value is multiplied when correlated with other sources New approaches to data analysis and aggregation will need to be developed Where in the network should the data be analysed? How will we integrate IoT data with other sources (other IoT networks, Systems of Record) How will we know what data to throw away? 29
The complexities associated with building IoT networks Integration with existing infrastructure In domains like manufacturing, healthcare, retail and logistics this is will be a major undertaking Complex technology ecosystem Who is going to make all the money? Some significant gaps in the stack 30
Please use chat box to ask questions and offer comments 31
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Jamie Moss, Senior Analyst, Consumer Technology & IoT Jamie.moss@ovum.com Tel: +44 20 7017 5553 Gary Barnett, Chief Analyst, Software, Ovum gary.barnett@ovum.com @thinkovation Thank you for listening! and enjoy the day Copyright Ovum 2014. All rights reserved. 33
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