The competitive landscape of the Internet of Things

1. The competitive landscape of IoT Competitive forces and companies shaping the Internet of Things Vienna Global IoT Day, 9 April 2015 Knud Lasse Lueth, Founder of IoT Analytics @KnudLueth @AnalyticsIoT

3. 2 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Starting point: The internet changed our lives In 1994, the Internet was the next big thing… Time Magazine Cover 1994 Source: Time Magazine, Wikipedia

4. 3 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Starting point: The internet changed our lives In 1994, the Internet was the next big thing… … and created a whole new industry Time Magazine Cover 1994 List of biggest Internet companies 2014 Source: Time Magazine, Wikipedia # Company Headquarters Industry Revenue ($B) 1 Amazon Seattle, WA E-commerce $74.45 2 Google Mountain View, CA Search $59.82 3 eBay San Jose, CA E-commerce $16.05 4 Tencent Shenzhen Social $9.91 5 Alibaba Hangzhou E-commerce $8.57 6 Facebook Menlo Park, CA Social $7.87 7 Rakuten Tokyo E-commerce $5.56 8 Priceline.com Norwalk, CT Travel $5.26 9 Baidu Beijing Search $5.21 10 Yahoo Sunnyvale, CA Web portal $4.68 11 Salesforce.com San Francisco, CA Cloud comp. $4.07 12 Yandex Moscow Search $1.21 13 Flipkart Bangalore E-commerce $1+

6. 5 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. How will IoT change our lives? In 2014, the Internet of Things has arrived… Who will dominate the industry in 20 years? HBR Cover 2014 Source: HBR, IoT Analytics IoT Analytics tries to understand: What determines IoT success and who is it?

7. 6 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. IoT Analytics focuses on market intelligence for the IoT Competitive Intelligence (CI) Market environment Market insights General trends Business climate Risk& Attractiveness Market drivers Economy dynamics Market size Regulation Market forecast Segmen- tation Company strategies Company profiles M&A activity Case studies Market shares Product intelligence We intend to become a leading source of market insights&competitive intelligence for the Internet of Things

8. 7 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. A few of our recent publications and current work Intro to IoT IoT market analysis Smart Home primer IoT strategy primer White papers Case studies The Nest story (not yet published) Structured company lists Market share analysis 2000+ IoT companies 350+ Smart Home companies 250+ Wearables companies 300+ publicly listed IoT companies Company popularity ranking Bottom-up Smart Home market share model (not yet published) www.iot-analytics.com

10. 9 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Most value of IoT lies beyond the connectivity Value (to the end customer) high high low low 1 “Dumb” Physical device/ product 3 Monitored Remote condition monitoring 4 Controlled Remote control of device/product 5 Optimized Algorithms, Decision-support, additional services, etc. 6 Autonomous Self-coordination Automated decision-making 7 Ecosystem -enabled Smart interaction with other smart objects In same ecosystem 2 Digital Digitally-enabled device/product 8 Cross- Ecosystem Optimized Smart interaction With devices in other ecosystems Maturity (of the offering) The IoT value-maturity curve Connected deviceNon-connected device

14. 13 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Most of the value for Nest has not yet been unlocked Value (to the end customer) high high low low 1 “Dumb” 3 Monitored 4 Controlled 5 Optimized . 6 Autonomous 7 Ecosystem -enabled 2 Digital 8 Cross- Ecosystem optimized Maturity (of the offering) Manual Thermostat 1883 Digital Thermostat 1980s Autonomous Thermostat 2011-14 Ecosystem thermostat 2016? Nest today Connected deviceNon-connected device

15. 14 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. The thermostat industry before Nest: Rather unattractive G Y RGreen = Favorable conditions for companies in the industry Barriers to entry • Product development requires little sophistication • Some upfront investment necessary • Relatively easy access to main sales channels (online, DIY store) Internal rivalry • Many competitors • Limited industry growth Substitutes and complements • Systems without thermostats (e.g., central heating systems) Supplier power • Most thermostat parts are commodities • Some switching costs Buyer power • Large DIY stores/electronics distributors with purchasing power • Little switching costs for buyers • Limited price sensitivity since often sourced in larger packages together with other heating/cooling components Yellow = Conditions for companies in the industry neither favorable nor unfavorable Red = Unfavorable conditions for companies in the industry Y G Y Y R Y R Average profitability: ~10% EBIT margin1 1. Based on a set of German thermostat manufacturers 2005-2012 Source: IoT Analytics

16. 15 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. After the arrival of smart thermostats: IoT changes the industry forces Average profitability: Likely higher in the future! Source: IoT Analytics G Y RGreen = Favorable conditions for companies in the industry Barriers to entry • Complex product development • Significant upfront investment in product and talent • Relatively easy access to main sales channels (online, DIY store) • Learning from own captured data Internal rivalry • Many competitors • High industry growth Substitutes and complements • Systems without thermostats (e.g., central heating systems) Supplier power • Most thermostat parts are commodities • Some switching costs Buyer power • Large DIY stores/electronics distributors with purchasing power • High switching costs for buyers due to existing smart home ecosystem • Limited price sensitivity since often sourced in larger packages together with other heating/cooling components Yellow = Conditions for companies in the industry neither favorable nor unfavorable Red = Unfavorable conditions for companies in the industry Y G Y Y G Y G

22. 21 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. The top 10 IoT companies creating the biggest buzz 3 2 1 4 5 6 7 8 9 10 Company Overall popularity1 Specific products 1. Popularity ranking based on popularity in Google searches, Twitter tweets, LinkedIn posts, and news headlines in Q1/2015. 2. Com. Hardw = Communication hardware 3. M2M platform in partnership with other companies Source: Google, Twitter, LinkedIn, Company websites, IoT Analytics 22% 24% 26% 31% 34% 55% 59% 66% 69% 72% Oracle Gartner SAP Apple Samsung IBM Google Cisco Microsoft Intel • IoT-enabled ERP • Hana database • M2M platform3 Technology offering2 Sen- sors Proce ssors Com. hardw De- vices Plat- form Ana- lytics Data- base Other ✓ ✓ ✓ ✓✓ ✓ ✓ ✓ ✓ ✓✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ • IoT cloud platform • Market research • Wearables • Smart Home platform • Processors • Gilileo developer kit • IoT platform • Azure platform • Streaming analytics • Wearable camera • Smart watch • Smart home platform • Smart health platf. • Routers/Gateways/etc • Security solutions • Analytics • Databases (eg Cloudant) • Application infrastr. • Nest/Revolv smart home • Physical web platform • Google Glass • Self-driving car ✓ ( ) ✓ ✓ ✓ ✓

23. 22 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Biggest US startups much larger than Austrian counterparts Top IoT startups by country Name Segment Location Funding Jawbone Wearables San Francisco $520m Prodea Syst. Smart home Richardson, TX $160m iRhythm Connected health San Francisco $120m Nest Labs Smart home Palo Alto $80m Name Segment Location Funding AlertMe Smart home Cambridge $36m Electric- imp Smart home Cambridge $23m Roli Conn. music London $13m Evrythng IoT platform London $7m Name Segment Location Funding Tado Smart home Munich $16m Yetu Smart home Berlin $8m Relayr Dev. board Berlin $3m Gestigon Gesture contr. Lübeck $1m Name Segment Location Funding Flatout Smart home Vienna $1m Tractive Wearables Pasching $0.5m Linemetrics Industrial Haidershofen $0.4m Indoo.rs Indoor localization Brunn am Gebirge n/a

24. 23 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Conclusion 1. The value of the Internet of Things lies beyond the connectivity – It comes with smart analytics and ecosystem-enablement 2. Entire industry forces are changing due to IoT. Some industries may experience higher profits. Companies need to be aware of potential lock-out. 3. The “new” IoT infrastructure is being created now – Hardware including sensors and processors, communication, software, and application. 4. The top IoT companies in terms of “share-of-voice” currently are: Intel, Microsoft, Cisco, Google, IBM 5. US startup funding in the IoT area is much larger than German or Austrian IoT investment activity

25. 24 Copyright©2015byIwww.iot-analytics.comAllrightsreserved. Questions? Knud Lasse Lueth IoT Analytics knud.lueth@iot-analytics.com www.iot-analytics.com Hamburg/Berlin Germany @KnudLueth @AnalyticsIoT

The competitive landscape of the Internet of Things

The competitive landscape of the Internet of Things

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The competitive landscape of the Internet of Things