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IoT-Where is the Money? - Chandrashekar Raman, Engagement Manager, IoT Strategy, Cisco,11th Oct. 2014


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“Internet of Things (IoT) – Where is the Money?” - This talk highlighted the need for innovative business and technical models. Top 5 key takeaways from the session: 1) Analyze business models from the perspective of targeting “control points” (allows disproportionate share of value e.g. platform), “network externalities” (users generate more users e.g. facebook) and “virtuous cycle” (self-propogating value system e.g. Twitter: tweets generating more, value, tweeters and users) 2) Fog computing (solutions at the edge of the network) should be considered for "time sensitive" or "mission critical" solutions 3) IoT Stats 2013: $1.7B funding, 186 deals, 30% up YOY, 75% up on exits, largely in platforms; Cisco estimates 50B connected devices by 2020, economic value of 19 trillion added in next decade 4) Manufacturing and Smart Cities most immediate opportunities in Enterprise space 5) Key Challenges are security and time-sensitive networking. In summary, IoT Startups focused in a hot space need to pick clever business models relative to the competition.

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IoT-Where is the Money? - Chandrashekar Raman, Engagement Manager, IoT Strategy, Cisco,11th Oct. 2014

  2. 2. Quick Intro ¨ ¨ IoT Strategy at Cisco ¨ Current Focus: Innovation Ecosystem development, IoT Innovation Centers, Hackathons ¨ Before this: Product Management, Application Development, Consulting, Smart Cities ¨ Interests : ¤ Making IoT work – Raspberry pi, simple home automation ¤ Open Data and Analytics, in the context of Indian democracy n
  3. 3. Topics for Today ¨ Drivers for the Internet of Things ¨ Size of the opportunity ¨ Key Verticals and Markets ¨ Technology stack and control points ¨ Platforms and Network Externalities ¨ Who is investing and where ¨ IoT opportunities for startups
  4. 4. The internet of things is already here Inflection point 6.8 7.2 7.6 50 Billion “Smart Objects” Rapid Adoption rate of digital infrastructure: 5X faster than electricity and telephony World Population 50 2010 2015 2020 40 30 20 10 0 Billions of devices 25 12.5 Timeline Source: Cisco IBSG, 2011
  5. 5. Internet of Things – Why Now? The perfect Storm! Internet of Things Metcalf’s law (power of networks increases with the number Moore’s Law (Hardware is getting cheaper) of nodes) Big Data Analytics and Cloud (Affordable tools to make sense of Data deluge) API Economy (service models and loosely coupled software) IP V6 Data Anemic à Data Bulimic Insight à Foresight Reactive à Proactive
  6. 6. How did we get here and whereto from here?
  7. 7. How Big is it? “Trying to determine the market size for the Internet of Things is like trying to calculate the market for plastics, circa 1940. At that time, it was difficult to imagine that plastics could be in everything.” Prof. Michael Nelson, Georgetown University
  8. 8. Big Numbers: whichever way you look at it. Source Number of Objects (2020) Market Size Cisco 50 Billion Economic Value of $19 Trillion added in the next decade McKinsey - As high as $6.2 T Economic value in 2025, upto $2.5T in healthcare alone, followed by manufacturing Goldman Sachs 28 Billion ~ $2 Trillion opportunity just in Industrials Gartner 26 Billion Addressable market of $300B, $1.9B economic value added by 2020 Manufacturing, Healthcare and Insurance top verticals
  9. 9. Internet of Things market predictions ¨ Nearly 2 Billion connected devices will be shipped in 2014 – increasing to ~8 Billion in 2020 ¨ ~ 1-3 Billion utility meters in 2020, ~0.5-1.5 Billion autonomous vehicles ¨ Driverless cars can generate ~$1.3T of savings just in the US ¨ 500M parking lots in US ¨ $14B in potable water is lost every year to leakage, theft and unbilled useage ¨ 280 Million streetlights globally ¨ Wearables market to reach $20B by 2017 at a CAGR of ~60%
  10. 10. IoT Verticals Utilities Consumer Transportation Retail Quantified Self, Wearable tech , Smart Home, connected appliances Disc. Manufacturing Automation, Preventive Maintenance, Asset Management, energy efficiency Proc. Manufacturing Automation, Preventive Maintenance, Scheduling, energy efficiency Smartgrid. Automatic Metering Infrastructure, Asset Management Healthcare Remote monitoring, Early intervention, preventive care, post operative Smart City Safety and Security, Parking, Waste Management, Lighting, services kiosks Telematics, Autonomous cars, Positive train control, preventive maintenance Inventory Control, Smart checkout, vending machines, multi channel
  11. 11. Verticals and growth Manufacturing and Smart Cities and utilities look like most immediate opportunities in the Enterprise space Source: Intel
  12. 12. IoT in Manufacturing ¨ Converged Plant networks ¨ Plant Wifi ¨ Factory Visibility ¨ Automation – Industry 4.0 ¨ Energy Management ¨ Preventive maintenance ¨ Remote monitoring ¨ Connected Supply chain Key Challenges 1. Security 2. Determinism, time sensitive networking)
  13. 13. Applications IoT Platform Devices Application Platform Connectivity Platform Connectivity Application 1 Application 2 Application 3 Application 4 Application 5 Connectivity Protocols Analytics
  14. 14. Architectural Control Point ¨ Architectural Control Point is a system component, the control over which confers control over other components (i.e. enable or constrain design of other components) ¨ Component is an architectural control point if • Causes Technological Dependence – interfaces, standards • Adds Value to dependents • Absence of close substitutes/ high switching costs/ Intellectual Proporty Control points capture a disproportionate share of value generated by the system and are key to sustaining relevance
  15. 15. Platforms as Control Points Network Externalities and the Virtuous Cycle 1 Sided NE – ex Social Networks 2 Sided NE More Users More Value/Incentives for new users $$$ Ex. Telephone, Whatsapp, Facebook More Developers on Platform More Users/Customers/ Installed base More monetization opportunities for developers More Applications – more value for users Development Platforms, Ad Networks, Ecommerce Aggregators
  16. 16. API for Developers Data Management and Analytics Time Series Archival Device Provisioning, Fulfillment and Management Message Bus Applications Devices Platform + Hardware Ecosystem Platform + Single Source Hardware Connectivity Module Connectivity Module
  17. 17. Who is investing in IoT Corporates Venture Capital Accelerators Crowd Funding Source: postscapes, CB insights
  18. 18. Whats at play Investments Acquisitions/IPO’s Source: CB insights
  19. 19. Where is the money going? Home Automation Wearable/Health Platforms Analytics Security 2014 2013 $ 15M $ 2M $ 7M $ 14.5M $ 4M $ 4.9M $ 5M $ 1.65M $ 14M $ 2M $ 3.75M $ 100M $ $ 8.5M $ 112M $ 3.2B $ 555 B ~ $ 100M $ 170M $ 0.45M $ 1M $ 11.9M $ 30M $ 1.3M Source:
  20. 20. Application 1 Application 2 Application 3 Application 4 Application Platform Connectivity Platform Network App 1 Agent 1 App 2 Card 1 Agent 1 Card 2 OS1 OS2 Card 3 Hypervisor Card 4 Network App 3 Agent App 4 Card 1 Agent Card 2 OS1 OS1 Card 3 Hypervisor Card 4 Applications Network Edge Devices
  21. 21. Summary ¨ Next Big Opportunity that will change the way we work live and play ¨ Smart home and wearables are more visible but significant opportunity in Manufacturing and Smart Cities ¨ Understand the customer and his universe – technology comes next ¨ Holy grail – ‘uber’ platform that will connect everything and become the ‘facebook’ of things ¨ Opportunities in new ‘edgeware’ marketplaces ¨ Opportunities in designing customer use cases using off the shelf hardware and software platforms ¨ Design thinking for the internet of things