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The Internet of Things:
Understanding the evolving value chain
Jamie Moss, Senior Analyst, Consumer Technology & IoT
Gary Barnett, Chief Analyst, Software, Ovum
© Copyright Ovum 2015. All rights reserved.
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
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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
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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?
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2) The IoT value chain ”role-map”
Source: Ovum
 A value chain defined by role/s performed, not by company „type‟
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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
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3) How to dimension the IoT?
Source: Ovum
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3) IoT market opportunity: the M2M „core‟
 50 billion connections by 2020?
 Perhaps, but NOT using cellular alone…
Source: Ovum
 Cellular ~530 million by 2019, based on current trends
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3) The 2020 device gap: the missing 44 billion…
Source: Ovum
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4) Vertical drill-down: Wearables
 Tethered devices, plus sensors with app-based UI and intelligence in the cloud
Wearable device
purchase
Intention:
Source: Ovum
Source: Ovum
© Copyright Ovum 2015. All rights reserved.
“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
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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
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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
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Three things you need to know about
the IoT
Gary Barnett, Chief Analyst, Software, Ovum
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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
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There is a lot of nonsense being touted
There will be
One Trillion
IoT Devices
by 2020
IoT is easy
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The IoT will
result in an
EXPLOSION
of data
IoT will
change your
sector
overnight
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Think it through
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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
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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
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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
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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
2895
1786
12
111
99
246
136
554
308
1047
493
Per Year
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739
1109
1478
1848
2217
Stored Data
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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
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The IoT is very, very, hard…
http://www.changelondon.org/
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http://www.airsensa.org/
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The “thing”….
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The “thing”….
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… all the other things….
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By far and away the hardest thing….
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Three things to consider….
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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
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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?
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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
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Jamie Moss, Senior Analyst, Consumer Technology & IoT
[email protected] Tel: +44 20 7017 5553
Gary Barnett, Chief Analyst, Software, Ovum
[email protected] @thinkovation
Thank you for listening!
…and enjoy the day
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