The Internet of Things - Industry Trends and Key Players

The Internet of Things - Industry Trends and Key Players
SYNC. Global investment themes: Telecoms, media and technology The Internet of Things as an investment theme 10 March 2015 Cyrus Mewawalla Director of Research cyrus@researchcm.com +44 (0) 20 3393 3866 CM Research 56 Broadwick Street, London W1F 7AJ www.researchcm.com Authorised and regulated by the Financial Conduct Authority Elgen Strait Director of Sales elgen@researchcm.com +44 (0) 20 3744 0105
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 2 Contents DEFINITION .................................................................................................................................................... 3 MARKET SIZE ................................................................................................................................................. 4 TIMELINE ......................................................................................................................................................... 5 STANDARDS .................................................................................................................................................... 6 VALUE CHAIN ................................................................................................................................................. 7 DEVICE LAYER ............................................................................................................................................... 8 CONNECTIVITY LAYER ................................................................................................................................ 9 DATA LAYER ................................................................................................................................................. 10 CONTROL LAYER ......................................................................................................................................... 11 KEY PLAYERS ............................................................................................................................................... 12 2015 INVESTMENT THEMES ................................................................................................................... 13
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 3 Definition Automated home Industrial Internet Driverless car Definition Ambient Commerce Wearable technology The Internet of Things (IOT) refers to the concept of connecting physical objects – like clothes, watches, cars, fridges, heaters and factory machines – to the internet. By collecting and analysing the data they transmit, consumers and businesses will be able to monitor, maintain and upgrade these “things” much more efficiently. Source: freshome.com, Google, Zdnet, pedalo.co.uk, just perfect
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 4 Market Size  Ericsson: There will be 50bn connected devices by 2020, up from 12.5bn in 2013 (Cisco agrees)  Gartner: There will be 26bn IoT installed devices by 2020, up from just 0.9bn in 2010  Intel: There will be 200bn connected devices by 2020  IDC: The IoT market will be worth $8.9 trillion by 2020, up from $1.9 trillion in 2013 Even the most pessimistic industry commentators expect the market for the internet of things to quadruple from today’s levels over the next five years. IDC expects the IOT market to almost quadruple from $1.9tn in 2013 to $8.9tn by 2020. Cisco is more optimistic. Accenture expects smart thermostats to be one of the first IoT products to go mass market, followed by smart fridges. Source: Cisco, McKinsey, IDC, Accenture (2014 State of the Internet of Things Study), CM Research 0 5,000 10,000 15,000 20,000 2013 2020 $bn Growth forecasts for IoT revenues Cisco McKinsey IDC 0% 10% 20% 30% 40% 50% Smart thermostat Smart fridge Smartwatch Wearable heads up display Projected adoption of connected technology by US consumers By 2015 By 2020 After 2020
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 5 Timeline  The Internet of Things was born in 2009...  ...when the number of connected devices exceeded the world’s population for the first time.  Today, PCs and mobile phones account for three quarters of all connected devices ...  ...but, in future, they will be physical “things”. 1995 2000 2005 20152010 2012 2013 20142011 1995: Siemens launches "M1", a GSM data module for machine‐ to‐machine applications 1999: Procter & Gamble's Kevin Ashton coins the phrase "internet of things", referring to RFID technology in P&G's supply chain connected to internet 2003: BigBelly Solar creates smart solar‐ powered trash cans which tell rubbish collectors when they are full 2005: The UN publishes a report on the Internet of Things via the ITU, for the first time 2010: The ZigBee Alliance and IPv6 Forum create partnership with IPSO to help smart objects talk to each other 2014: Intel and others set up Open Interconnect Consortium in direct competition with the AllSeen Alliance 2012: Google begins testing prototype for Google Glass, an optical, connected head‐mounted display 2012: Proteus Digital Health gets FDA clearance for an ingestible medical device wireless connected to a mobile phone 2012: IPv6 is launched worldwide, providing virtually unlimited IP addresses enabling billions more devices to be connected to the internet 2000: LG announces research on world's first connected fridge 2013: Qualcomm and others form the AllSeen Alliance to develop an open framework for IOT 2011: Nest Labs launches its Learning Thermostat with sensor algorithms, machine learning and cloud computing technologies 2014: Google Glass goes on sale to general public at $1,500 2008: The IPSO alliance is founded to promote the use of networked devices 2014: Apple launches HomeKit, an app to control the smart home, working with AppleWatch 2008/9: The number of connected devices exceeds world population for the first time 2014: Samsung acquires SmartThings, a smart home hub for connected devices
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 6 Standards  The market for the Internet of Things can only take off once all connected devices speak the same language.  This has kicked off an intense battle for domination of the communications protocol that will govern the IoT. Standards body Description Members AllSeen Alliance (a.k.a. AllJoyn Alliance) Founded 2013 A Qualcomm-led open source project aimed at enabling compatible smart devices to "recognize each other and share resources and information across brands, networks, and operating systems." Qualcomm Cisco Microsoft Electrolux LG Sony HTC Haier Panasonic Open Interconnect Consortium Founded 2014 An Intel-led project aimed at creating a new standard by which household gadgets communicate with each other. Intel Samsung Atmel Broadcom (left after disagreement over IP) Dell The Physical Web Founded 2014 A Google-led project aimed at allowing users to communicate “with any smart devices without having to download an app first.” Google Industrial Internet Consortium Founded 2014 An Intel-led project with whose aim "is to accelerate the development and availability of intelligent industrial automation for the public good." Intel Cisco AT&T IBM Microsoft GE Samsung VMware Thread Founded 2014 A Google-led project aimed at creating a new IP-based wireless networking protocol. Nest (Google) Samsung Freescale Semiconductor ARM Silicon Labs Yale Locks IPSO Alliance Founded 2008 Formed in 2008, the Internet Protocol for Smart Objects (IPSO) Alliance was one of the first IoT alliances. Its aim is to establish Internet Protocol as the basis for the connection of smart objects. ARM Atmel Bosch Cisco Freescale Semiconductor Fujitsu EDF Ericsson Google Nokia Oracle Texas Instruments Weightless Founded 2011 A consortium promoting the Weightless-N long range (5km) wireless communication standard. ARM Accenture Cable & Wireless CSR (Qualcomm) Neul Source: CM Research
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 7 Value Chain  We split the value chain for the Internet of Things into four layers: devices, connectivity, data and control. Connectivity Layer Data LayerDevice Layer Control Layer Applications Operating System Controller devices ‐ smartphone ‐ smartwatch ‐ tablet ‐ homehub Connected "things" Sensors, cameras & antennae Embedded chips Internet infrastructure Edge devices Database Security Storage Analytics Integration Telecom networks Network
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 8 Device Layer  Today, most connected devices – such as smartphones, tablets and laptops – are controlled by humans.  In the Internet of Things, most connected “things” will be run by other connected “things”. Source: CM Research Apple Google LG Microsoft Fitbit Samsung HTC Xiaomi Apple Microsoft Sony Electrolux Nest (Google) Sonos Samsung Dropcam (Google) Autoliv Elektrobit Audi Ford Delphi Takata BMW General Motors Denso Valeo Fiat Mercedes Google GE Fanuc ABB IBM Rockwell Kawasaki Kuka InvenSense Renesas Asia Optical NXP Mobileye ST Microelectronics Largan Precision TomTom ARM Intel Atmel Microchip Broadcom Qualcomm Freescale Micronas Device Layer Connected Things Electronic Components Wearable Technology Industrial internet Connected car Automated home Market leaders Challengers Embedded chips Sensors, cameras & antennae
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 9 Connectivity Layer  Makers of edge devices like Cisco provide routers and gateways that act as the first point of entry into a data network.  Internet infrastructure providers like Amazon Web Services provide the back-end systems which power the IoT.  Telecom operators provide the pipes through which all this data travels. Source: CM Research Alcatel Lucent Juniper Networks Alibaba Facebook Cisco Nokia Amazon Google Ericsson Sonus Networks Apple Huawei Akamai Google Equinix IBM Amazon Microsoft HP Rackspace Hosting F5 Networks Tibco Software Infoblox Telecity BT Softbank Bharti Airtel KDDI AT&T Telefonica China Mobile MTN Group Level 3 Verizon China Telecom Orange NTT Vodafone Deutsche Telekom SingTel Connectivity Layer Telecom networks Internet infrastructure Edge devices Market leaders Challengers
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 10 Data Layer  In the age of PCs and laptops, many of the applications we used were run locally on the computer.  With the Internet of Things, most of the data is processed in the cloud – the devices are just a collection of sensors. Source: CM Research Amazon IBM Qlik Tech Tableau Google Microsoft Splunk Verint Systems IBM Oracle Cloudera MongoDB Microsoft SAP Hortonworks MarkLogic Citrix Systems Red Hat Information Builders SAS Informatica VMware MobileIron Teradata Aruba Networks Fusion IO Arris Lenovo Brocade Comms Riverbed Tech Huawei ZTE IBM Check Point Software FireEye Palo Alto Networks Fortinet Trend Micro HP Qihoo 360 EMC NetApp Amazon Microsoft HP Nimble Storage Google Qlogic Data Layer Insight Management Infrastructure Analytics Storage Security Database Market leaders Challengers Integration Network
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 11 Control Layer  The control layer is likely to become the most profitable segment of the IoT value chain.  As more machines connect to the internet, the big technology giants may seek to act as gatekeeper for after-sales services, weakening the original equipment manufacturer’s relationship with its customers. Source: CM Research Alibaba Facebook Samsung Amazon Huawei Schneider Apple Baidu IBM Siemens Google Cisco LG Sony GE Microsoft Twitter Belkin iControl Ubi Bosch Revolv Xiaomi Evrythng Supermechanical Control Layer Apps Control hubs ‐ home hub ‐ smartphone ‐ smartwatch ‐ tablet Operating systems Market leaders Challengers
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 12 Key Players Devices Connectivity Data Control Philips Electronics LG Electronics Pace Connected things Panasonic Pioneer Samsung Electronics Sony ARM Atmel Freescale Semi Sensors, Infineon microcontrollers Intel & embedded InvenSense chips MediaTek Microchip Tech Micronas Semiconductor Nvidia Qualcomm Renesas STMicroelectronics Texas Instruments Alcatel Lucent Cisco Edge devices Ericsson Juniper Networks Nokia Sonus Networks 21 Vianet Akamai Internet / Cloud Amazon Infrastructure F5 Networks Google Infoblox Rackspace Hosting AT&T BT China Mobile Telecom China Telecom operators Deutsche Telekom Level 3 NTT Softbank Telefonica Verizon Vodafone Qlik Tech Analytics Salesforce.Com Splunk Tableau IBM Database Oracle SAP Citrix Systems Informatica Integration Mobile Iron Red Hat VMware Arris Aruba Networks Network Brocade Comms Riverbed Tech ZTE Check Point Software FireEye Security Fortinet Palo Alto Networks Trend Micro CommVault EMC Storage Hewlett-Packard NetApp QLogic Alibaba Amazon Apple Apps, Baidu operating systems, Cisco & control hubs Facebook GE Google IBM Microsoft Samsung Electronics Sony
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 13 2015 investment themes Social ‐ Crowd funding ‐ Virtual currencies ‐ Sharing economy ‐ Music, video, games Cloud ‐ Enterprise software ‐ Internet of things ‐ Automated home ‐ Cyber security Mobile ‐ operating systems ‐ maps ‐ mobile payments ‐ messaging Big Data ‐ Artificial intelligence ‐ Ad‐tech ‐ Software analytics ‐ Wearable tech Ecosystems ‐ Ecommerce ‐ Enterprise software ‐ Automated home ‐ Mobile internet Internet of Things ‐ Automated home ‐ Artificial intelligence ‐ Ambient commerce ‐ Cyber security Adv. Manufacturing ‐ 3D printing ‐ Artificial intelligence ‐ Robotics ‐ Driverless cars Software Defined Networking ‐ Service enhancement ‐ Network function virtualis ‐ Cost reduction Wearable Tech ‐ Google Glass ‐ Smart watches ‐ Med‐tech ‐ Internet of Things Internet TV ‐ Video streaming platform ‐ Second/third screens ‐ 16k / flexible screens ‐ Ad‐tech China ‐ Alibaba IPO ‐ Telecom equip trade wars ‐ Variable Interest Entities ‐ Accounting risk Regulation ‐ Net neutrality ‐ Data privacy ‐ Patent litigation ‐ Anti‐competition law
The Internet of Things as an investment theme 10 March 2015 www.researchcm.com 14 About CM Research CM Research is an independent research provider with a blue chip list of institutional clients. We analyse emerging trends in the technology, media and telecom sectors and develop them into global investment themes, highlighting the winners and losers. Our focus is on disruptive technologies. Our clients include institutional investors, corporations, consultancies and governments. At a time when many of our competitors have had their reputations mired by conflicts of interest, we fiercely guard our independence. Our business model is based on independence, exclusivity and experience. Contact CM Research Research: Cyrus Mewawalla cyrus@researchcm.com Sales: Elgen Strait elgen@researchcm.com 56 Broadwick Street | Soho | London W1F 7AJ | United Kingdom +44 20 3744 0105 www.researchcm.com Important Disclosures This document is issued by CM Research (“CMR”) solely for our clients. 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