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ETSI IoT keynote (2016)
The document discusses the growth and potential value of the Internet of Things (IoT) based on various principles such as Moore's Law and Metcalfe’s Law, highlighting the dramatic increase in device connections and the resulting economic implications. It emphasizes the challenges of market adoption and innovation, referencing theories such as Rogers' diffusion of innovation and Christensen's innovator's dilemma. The potential for IoT to reduce marginal costs and create significant economic transformations is also explored.
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ETSI IoT keynote (2016)
- 1. 1 © Nokia2016© Nokia 2016 How big is the Internet of Things? Marc Jadoul ( @mjadoul) ETSI IoT/M2M Workshop Sophia Antipolis, 17 November 2016 1 © Nokia 2016
- 2. 2 © Nokia2016 About this presentation https://en.wikipedia.org/wiki/Nabaztag
- 3. 3 © Nokia2016 Moore’s law (1965) The number of transistors in a dense integrated circuit doubles approximately every two years time performance cost Y=Nx
- 4. 4 © Nokia2016 Micro-processor evolution has followed Moore’s law 1965 Numberoftransistors 100 1980 1990 2000 2010 20161970 1k 10k 0 1M 10M 100M 1G 10G TTL CMOS 4100 4004 8008 8080 6800 8085 8086 68000 1802 6502 Z80 6809 8088 ARM2 68020 80286 80386 80486 68040 PowerPC 601 AMD K5 AMD K6 AMD K7 Pentium I Pentium II POWER 1 Pentium III Pentium 4 Atom AMD K8 Core 2 Duo Core i7 15 Core Xeon SPARC 64X 8 Core Xeon 16 Core SPARC T3 6 Core i7 8 Core POWER 7 POWER 6 22 Core Xeon Sparc M7
- 5. 5 © Nokia2016 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 2004 2006 2008 2010 2012 2014 2016E 2018E 2020E Moore’s law has enabled IoT (r)evolution Source: Goldman Sachs & BI Intelligence, 2015 Average sensor cost
- 6. 6 © Nokia2016 Metcalfe’s law (1993) The value of a network is proportional to the square of the number of its nodes – while the cost follows a more or less linear function value cost # €
- 7. 7 © Nokia2016 Facebook growth has been following Metcalfe’s law 0 5,000 10,000 15,000 20,000 25,000 30,000 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Revenue(millionUS$) Monthly Active Users (millions) 2016E 2015 2014 2013 2012 2011 2010 20092008
- 8. 8 © Nokia2016 Source: BI Intelligence, 2015 0 5 10 15 20 25 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E IoT value will come through Metcalfe’s law Estimated number of installed IoT devices (billions)
- 9. 9 © Nokia2016 Everett Rogers’ diffusion of innovation (1962) Innovators Early adopters Early majority Late majority Laggards 0% 25% 50% 70% 100% Marketshare 13.5% 2.5% 34% 34% 16% Market penetration Market diffusion
- 10. 10 © Nokia2016 Geoffrey Moore’s chasm theory (1991) The greatest peril in developing high-tech markets is closing the gap between the early adopters of any technology and the mass market. Early market Mature market ‘techies’ ‘visionaries’ ‘pragmatists’ ‘conservatives’ ‘skeptics’
- 11. 11 © Nokia2016 Many IoT devices and apps are still stuck in the chasm 3.9 2.8 0.7 4.4 3.1 3.6 0.7 4.7 3.7 3.9 0.9 8.1 2.7 4.1 1.0 4.8 3.7 1.5 0.9 5.7 3.1 1.6 1.6 Fitbit Xiaomi Apple Garmin 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 Source: IDC Worldwide Quarterly Wearables Tracker Worldwide wearable device shipments (million units)
- 12. 12 © Nokia2016 Clayton Christensen's innovator's dilemma (1997) It is in disruptive innovations, where we know least about the market, that there are such strong first- mover advantages. This is the innovator’s dilemma. Disruptive technology should be framed as a marketing challenge, not a technological one.
- 13. 13 © Nokia2016 Crossing the chasm Technology driven Value driven Moore’s curve Metcalfe’s curve
- 14. 14 © Nokia2016 Jeremy Rifkin’s zero marginal cost society (2014) The IoT is emerging with the potential of pushing large segments of economic life to near zero marginal cost in the years ahead. Prosumers can connect to the network and use big data, analytics, and algorithms to accelerate efficiency, dramatically increase productivity, and lower the marginal cost of producing and sharing a wide range of products and services to near zero, just like they now do with information goods.
- 15. 15 © Nokia2016 The IoT is enabling a zero marginal cost value model av is the added value, mc is the marginal cost of an IoT service lim av mcmc→0 = ∞
- 16. 16 © Nokia2016© Nokia 2016 So, how big is the IoT’s (potential) value? 16 © Nokia 2016
- 17. 17 © Nokia2016 Moore’s Law applied to the IoT 1 10 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 Componentdensity (Billionsperarea) 8X increase in performance or 8X drop in price for a given performance
- 18. 18 © Nokia2016 Metcalfe’s Law applied to the IoTConnectedUsers/Devices(Billions) Connectionssquared(Billions) 2.7 3.0 3.2 3.4 7.6 3.0 3.8 4.9 6.4 20.8 1.0 1.2 1.4 1.6 7.8 1.2 1.9 3.2 5.5 58.1 1 10 100 2013 2014 2015 2016 2017 2018 2019 2020 2021 Internet users IoT connections Internet value IoT value 7.5X the value of the Internet In 2020 36X the value of the Internet in 2016
- 19. 19 © Nokia2016 A standards-based, horizontal IoT platform can boost the value of the network A1 ••• D11 D1M••• P2 A2 D21 D2M••• P1 PN AN DN1 DNM••• Network value ~ Network value ~ ••• A1 D11 D1M••• D21 D2M••• Phorizontal AN DN1 DNM•••••• ••• •••A2 N*(M+1)2 (N*(M+1))2
- 20. 20 © Nokia2016 Summary Moore’s law Metcalfe’s law Innovation & user adoption Crossing the chasm Standards- based, horizontal platform Marginal cost Network value zero 7.5X 36X IoT technology IoT value
- 21. 21 © Nokia2016 http://insight.nokia.com/how-big-internet-things-part-1 http://insight.nokia.com/how-big-internet-things-part-2