The document discusses the growing interest and impact of the Internet of Things (IoT). By 2020, it is estimated there will be over 30 billion connected devices globally. Countries like South Korea are well positioned to benefit due to its advanced economy, supportive regulatory environment, and major industries involved in technology. Success with IoT depends on having the right business environment, a strong local innovation ecosystem, and companies capable of innovative strategies. The IoT will significantly change both individual and business operations around the world over the coming years.

1. Internet of Things: Changing the World
Seoul Forum 2015
May 28, 2015
alex.blanter@atkearney.com
@AlexBlanter

2. Interest in the Internet of Things is off the charts
In the last 12 months:
• Nearly 4 million
mentions
• 5X increase… on top
of prior 6X increase
4-week moving average score:
• April 2013 – 15
• April 2014 – 50
• April 2015 – 90
9X increase
in
publications
over 2 years
Source: A.T. Kearney

3. Connected devices will be everywhere… both globally and here
in South Korea
By 2020 in the World… By 2020 in Korea…
Internet of
Things
Traditional
connected
devices
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
0
5
10
15
20
25
30
2014 to 2020: 7x growth
in IoT devices vs. 2x for
traditional
• Country: 50M+ people, with
population density 10x
global average
• Seoul: 10M+ people, second
most densely populated city
in the world (2x New York,
and 8x Rome)
10x to 20 x connected devices per person vs. world
average: 350M to 700M in Seoul alone
• World’s highest Internet
penetration
• Internet speed 4x world
average
• 85% mobile penetration
• Significant government IT
and comms infrastructure
investments
Over 3.5 connected devices
per every human on the planet
Over 7.7 billion peopleNearly 30 billion devices
Source: A.T. Kearney

4. What is the Internet of Things (IoT)?
Source: A.T. Kearney
We define the Internet of Things as a seamless combination of embedded
intelligence ubiquitous connectivity, and deep analytical insights that
create unique and disruptive value for companies, individuals, and societies.
Source: A.T. Kearney

5. Conceptually, IoT is simple – practically…not so much
Industries
Things
Value and Impact
Policies&Standards
Identify
Sense
Connect
Collect
Analyze
Act
Enterprise
Consumer
Public Sector
There is no single
Internet of Things –
there is a multitude of
specific solutions,
each generating value
in unique ways
Source: A.T. Kearney

6. Each solution will present multiple opportunities for new
business
Source: A.T. Kearney
• Communication
• Control & automation
• Storage & retrieval
• Data analysis & decision
• Transactional
• Internet access and connectivity
infrastructure
• Data aggregation and storage
• Computing
• App & service development
enablers & APIs
• Deployment & management
solutions
• Sensors & actuators
• Radios
• Embedded processors
• Smart modules
• Wearables
• Monitoring & control
• Content
• Optimization
• Mobility
• Sharing
• Interactive
• Marketplace

7. Our current 2015 forecast is that by 2020 IoT will impact close
to 6% of the global economy
IoT will be materially disruptive – there will be
winners and losers
$3.4T
Revenue
Redistributed
$1.7T
Productivity
Improvement
$370B
Additional IoT
Revenues
Revenues directly
attributable to sale of
IoT hardware, software,
and services
$164B
Value to End
Customer
Direct reduction in
costs driven by IoT and
realized by end
customers
Direct increase in output per unit of
cost, enabled by IoT and reinvested
in productive assets and activities
Revenues realized within the world
economy that will potentially move from
one player to another with no net increase
in total economy
Global
Economy in
2020
$100TUp 7.5%
since
last
year
Source: A.T. Kearney

8. Additional IoT revenues will be split in a multitude of ways
Enterprise
Consumer
Public Sector
$370B
Additional IoT
Revenues$205B
$135B
$30B
55%
37%
8%
Survey Results:
Time to Value Rank
1
2
3
$201B55%
$45B12% 18%$68B
15%$56B
#of sensors
+33% yoy
# sensors
Bandwidth cost
-25% yoy
€/Mbs
Storage cost
Computing cost
-33% yoy
€/transistor
6%
39%
Since last year
40% closer in
2015 vs. 2014
Source: A.T. Kearney
-38% yoy
€/GB

9. Surveys consistently show IoT value delivery will hit the rapid
growth phase by 2020
Value
buzz
Survey Results
4% 2014
2015
2010 2015 2020 2025 2030
1
13% 22%59% 2%
12% 16%72% 0% 0%
IoT value delivery is accelerating
Source: A.T. Kearney

10. ICT will have a crucial role in most IoT solutions and scenarios
Direct
connection
Wide
Area
Network
(WAN)
Close
area
network
Personal
Area
Network
(PAN)
Connectivity solutions
Examples: Wifi,
Bluetooth, Zigbee
Examples: Cellular
network, Satellite
Connected
TV
Smart meter
Connected
car
Smart
container
Connected
watch
Devices
Antennas
Satellite
Connectivity solutions for IoT
Range
(m)
Network infrastructures
Internet
network
Source: A.T. Kearney

11. z
Last year has seen a global explosion of IoT activities
Source: A.T. Kearney
GE forges Internet of Things alliances
with Verizon, Cisco, Intel… will also
open up its Predix software platform to
developers and users in 2015 as it
aims to add intelligence to industrial
gear
AT&T certifies tiny 3G module for IoT
applications …world's smallest 3G chip
module for use on the carrier's cell
networks. The 16-by-26-millimeter
module is intended for applications in
the Internet of Things, transmitting
data between devices
Qualcomm announced that its
subsidiaries are achieving significant
adoption of their broad connectivity,
computing and solutions for the
Internet of Everything
Microsoft announced a new version of
Azure, an IoT-focused version of the
Windows 10 operating system, and
Azure Stream Analytics, designed to
serve up real-time data from the world
of connected objects
Intel Corp is using sensors to predict
tool failure
SAP announced the
launch of the SAP
HANA Cloud Platform
for the Internet of
Things (IoT) to enable
the device cloud for
faster delivery of IoT
business value
Bosch disclosed it would
acquire ProSyst Software
GmbH, a producer of
software for smart devices.
The company now has
3,000 software engineers
working on IoT
To reward innovative
Internet of Things (IoT)
solutions for business
customers, Deutsche
Telekom Group is now
accepting entries for the
Business Wall of Fame
contest in 8 countries
Chancellor of the
Exchequer George
Osborne today unveiled a
£40 million plan to
improve the Internet of
Things (IoT) in the UK, as
part of his 2015 Budget
Deutsche Telekom
and China Mobile
formed a joint venture
that will see them
provide connected car
services to China's
growing automotive
sector
SK Telecom together with
local furniture maker
Hyundai Livart, has
unveiled new Internet of
Things-enabled household
furniture
Fujitsu and Microsoft
announced their
collaboration to bring
innovative operational
excellence to
manufacturing
Flanked onstage by
developers of smart
shoes (Boogio), farming-
data sensors (Weenat)
and an IoT programming
(Temboo), Young Sohn,
president and chief
strategy officer of
Samsung Electronics,
unboxed Artik, new chip
technology for Internet-
connected devices.
Sony and Interdigital launch
a JV to combine consumer
electronics with wireless
M2M
TSMC launches ultralow
power technology platform for
IoT and wearable device
applications, leveraging its 8”
and 12” fabs to produce
microcontrollers, image
sensors, WiFi and Bluetooth
sensors
M&A related to companies supporting the Internet of Things continue to climb. So far in 2015, companies have spent $14.8
billion to purchase 39 companies related to IoT, surpassing the $14.3 billion spent for 62 such companies in 2014

12. North America and Asia Pacific are expected to be the main
beneficiaries of IoT, at least in the near term
North America
1.4
Asia Pacific
1.7Europe
2.9
Middle East
2.9South America
3.1
Survey Ranking
Source: A.T. Kearney

13. In Asia, the IoT race is on as most countries are adopting new
IoT policies
• Gov’t unveiled an action plan
called “Internet Plus” aiming
to support the integrated
development of cloud
computing with IoT, big data
and mobile to foster the
artificial intelligence
industry
• Made in China 2025 initiative
unveiled by China’s State
Council outlining a 10 year
plan including a focus on
developing smart
manufacturing capabilities
• The government of Shanghai,
China and China-based
Internet service player
Tencent have signed a
collaboration agreement to
jointly push Shanghai's
Internet of things (IoT)
infrastructure
• China's Ministry of Finance
and the Ministry of Industry
and Information Technology
(MIIT) have jointly released
administrative measures to
standardize the subsidies
for Internet of Things
• Indian government released a Draft
Policy on IoT: create IoT industry in
India of USD 15 billion by 2020 and
intends on developing 100 smart cities
• Singapore unveils plan in push to become smart nation: launches the Smart
Nation Programme which seeks to harness ICT, networks and data to support
better living, create more opportunities, and to support stronger communities
• Government included IoT as one of 5
smart-city projects in order to improve
city management and plans to use an
area of Kowloon East to explore the
feasibility of developing a ``Smart City.
• Gov’t announced a plan to invest 5.6
trillion won ($5.1 billion) by 2020 to
foster new growth engine industries
including 77.2 billion won ($70 million)
for IoT
• South Korea has announced plans to
foster the growth of IoT and its smart
car industry, with 1 trillion won
allocated for this year
• IoT to be applied to the entire area of
Seoul city by 2020
• Japan's Ministry of Internal Affairs and
Communications (MIC) sponsors R&D
Initiative, "Research and Development
Project for the Ultra-high Speed and
Green Photonic Networks"
Source: A.T. Kearney

14. Our analysis indicates that South Korea will be among the top 5
countries globally to benefit from the Internet of Things
Bubble size represents 2020 GDP size
IoT Influence on Economy = sum of applicable IoT use cases, weighted by the relative size of each in 2020
Pace of IoT Adoption = Internet and connectivity infrastructure, ease of doing business, overall pace of economic growth, and culture of innovation
Source: A.T. Kearney

15. At a regional level, success in IoT depends on three key factors
Key factors
The right business
environment
The right local
ecosystem
Companies that
know how to
innovate
Key components South Korea
• Advanced economy,
with easy access to
capital and workforce
• Favorable regulatory
environment
• Critical mass of
relevant industries
• Strong players
capable of making the
market
13th largest economy in
the world
Ranked by the World
Bank as #5 in ease of
doing business
Telecom, consumer
electronics, heavy
industries, white goods…
Source: A.T. Kearney
2
5
11
1314
18
20
22
25
35
GermanySwedenUnited
Kingdom
Korea,
Rep.
ChinaUnited
States
BrazilIndiaJapanAustralia
Top 5 Companies as a percentage of GDPTop 5 companies as a percentage of GDP

16. At a regional level, success in IoT depends on three key factors
Key factors Key components Silicon Valley example
The right business
environment
The right local
ecosystem
Companies that
know how to
innovate
• High concentration
of diverse but
leading businesses
• Rich socio-
economic system
• Culture conducive
to collaborative
innovation
• Shared history and
resulting
confidence
Source: A.T. Kearney

17. At a regional level, success in IoT depends on three key factors
Key factors Key components Best Innovator attributes
The right business
environment
The right local
ecosystem
Companies that
know how to
innovate
1. Reach for the
business model
2. Instill innovation
culture
3. Invest in informed
strategic choices
4. Leverage the
network
5. Measure
relentlessly
Source: A.T. Kearney

18. In closing…
Internet of Things will materially change what we do as individuals
and enterprises – and that will happen whether you do anything
or not
Most of us in the room – and our companies and countries –
will be key beneficiaries of the Internet of Things
Truly taking advantage of the Internet of Things will require
different strategic thinking and new execution capabilities –
for all involved
1
2
3
Source: A.T. Kearney

19. This document is exclusively intended for select clients of A.T. Kearney.
Distribution, quotations, duplication, and excerpts are not permitted without
A.T. Kearney’s prior written consent. The content compiled in this report is for
presentation only and does not represent the complete findings or total
documentation on the topic represented.