Evolution of Internet of Things (IoT) Ecosystem - Potential in India

Evolution of Internet of Things Ecosystem –
Potential in India
Executive Summary
November 2014

Confidential Evolution of Internet of Things Ecosystem – Potential in India
Current State, Growth Potential and Future Outlook
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Executive Summary
Key Global Developments in the Internet of Things Space
Internet of Things (IoT) is defined as ‘A worldwide network of “things” having
identities and virtual personalities operating in smart spaces using intelligent
interfaces to connect and communicate within social, environmental, and user
contexts’. The goal of the IoT is to enable things to be connected anytime,
anyplace, with anything and anyone ideally using any path/network and any
service. While IoT is “Internet first” and potentially brings “true openness” and
“rapid scale” of internet to billions of connected devices (estimated 28 Bn by
2020), it also inherits the major challenge of managing that scale.
Potential Growth of IoT Connected Devices
In Comparison with Other Internet Connectivity Devices
IoT enables rapid product application development and operation as well as the
collection, analysis, and sharing of the potentially large amounts of longitudinal

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data generated inside and outside the products that has never been available
before. Building and supporting the technology stack for smart, connected
devices require substantial investment and a range of new skills including
software development, systems engineering, data analytics, and online security
expertise.
The IoT application space is very diverse and IoT applications serve different
users under three key categories - Consumers, Communities and Enterprises.
There exist numerous opportunities for IoT applications to leverage the
changing dynamics of societal trends (health and wellness, transport and
mobility, security and safety, energy and environment, communication and e-
society) and market trends (consumer electronics, automotive electronics,
medical applications, communication, etc).
Increased innovation and affordability of sensors, increasing adoption of
smartphones (2.2 Bn and counting), affordable bandwidth, cheap processing,
ubiquitous wireless coverage, big data analytics and cloud computing are some
of the key dynamics that are driving the readiness for IoT. However, the
applications space is far from large scale adoption as fundamental challenges
including interoperability, standardization and security are yet to be overcome.
The demand and success of IoT will not be from a single compelling “Killer
App”; it will be from thousands of unexpected killer apps. Currently, in its
nascency, IoT is witnessing different solutions in the consumer space such as
Wearables and Smart Home solutions. The key learning and the primary success
factor to emerge from the Smartphone era (post-PC era) is the scale and success
of “Innovation Crowdsourcing” – companies developing platforms and scores of
developers building applications, thus driving the ecosystem growth. This is the
fundamental approach that many global companies are adopting during the
initial stages of IoT ecosystem development to ensure long-term
competitiveness.
Another strategy that we are witnessing companies adopt globally is that of
proliferation of tools for “Data Collection”. The success of an IoT platform is
primarily dependent on its ‘Data Synthesis’ functionality, and for accurate data
analytics and synthesis, the platform requires significant amount of data set
from varied touch points. And, it is imperative for the companies to access and
control data flow in an IoT ecosystem.

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Key Announcement in the IoT Platforms Space
Many large technology companies are involved in governing the IoT ecosystem
through various initiatives and efforts around standardization. There are over 14
industry bodies working on developing IoT standards, some of the leading ones
include Thread (led by Google), AllSeen Alliance (led by Qualcomm) and
Industrial Internet Consortium (IIC, led by GE).

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Forecasts of Yearly Growth of IoT-Only Developers (‘000)
Geographic Split of IoT Developers Around the World
Source: Vision Mobile’s “Insights on IoT Developers” Report, Oct 2014; Convergence Catalyst Research

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IoT platforms thrive by a steady stream of innovation by developers,
experimenting day and night in their quest to find new use cases. There are
already over 3.2 million developers working on IoT specific applications and
services. Of these, over 415,000 are dedicated IoT-only developers. Their
number is expected to grow to 4.5 million by 2020. Currently, Asia (primarily
India & China) has the highest number (over 40%) of IoT developers in the world.
Globally, the investments in the IoT domain increased significantly in 2013.
2013 saw the Internet of Things capture the imagination and financing dollars
of investors to the tune of USD 1.1 billion across 153 deals.
There is significant scope (and chance) for yet-to-be-named companies to
emerge as leaders in IoT. The only definitive mandate for players to remain
relevant and emerge as leaders in this domain is the need for “Agility” and
“Staying Power”. The maturity of IoT is long way ahead, which will be
characterized by rapid innovation, disruption and continuous evolution.
Potential of IoT Ecosystem Growth in India
India could potentially play a significant role in the evolution of IoT ecosystem –
Both as a market and as an innovation hub. With rapid urbanization, focus on
infrastructure development, significant dependence on agriculture, evolving
education and healthcare needs and large manufacturing sector, there are
multiple domains in which IoT based solutions can add value in India.
In a move to play a larger role in the global evolution of IoT domain, while
catering to the domestic requirements and inefficiencies that can be potentially
bridged by numerous IoT solutions, the Indian government is taking various
initiatives including policies and regulatory framework development (India’s first
IoT policy framework was released in October, 2014), driving solutions
development (and deployment) in partnership with private industry players
(Smart City & Smart Grid projects) and market creation.
A key part of smart city development is the Smart Power Grid. There are
currently 14 ongoing smart grid pilot projects in India, in cities such as
Pondicherry, Mysore, Kolkata, Mumbai, etc. All these projects are in public-
private partnership mode. Key features being implemented as a part of these
pilot projects include Advanced Metering Infrastructure, Peak Load Management,
Outage Management System, Renewable Energy Integration, etc.

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Ongoing Smart Grid Projects in India
Source: Industry Interviews, Convergence Catalyst Research
There are many niche technology companies working on various IoT products
and solutions in India - over 60 startups working on dedicated IoT solutions.
While a significant number of Indian IoT companies are focusing on services &
system integration, there are also many companies focusing on product and
cloud platform development in the IoT space. And, the primary focus areas of
these IoT product focused companies in India include Wearables, Healthcare,
Consumer Goods and Home Automation.

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Industry-Wise Split of Indian Companies Working on IoT Solutions
Source: Convergence Catalyst Research
There are many supply and demand side enablers and drivers evolving that
could potentially drive the IoT ecosystem in India – Both as a market and as an
innovation hub, such as Rapid Urbanization, Increasing consumer awareness,
Favorable government initiatives, Evolution of IoT specific industry forums,
Large companies’ focus on IoT in India and Growing startup ecosystem and
investor interest.
Having said that, over and above the common global IoT ecosystem
development challenges such as interoperability & standardization issues and
security concerns, India has its own cultural, market and structural challenges
that could potentially hinder the growth of IoT ecosystem in India such as Indian
historically being a follower market in technology adoption, poor connectivity,
fragmented value chain, services mindset and lack of multi-domain expertise,
which will be key for evolution of a robust and sustainable IoT ecosystem.
Various IoT based services and solutions will proliferate into Indian market at
different times and with different evolution trajectories, basis individual industry
vertical growth rate, value add of the solution and most importantly, the
customer understanding of the value proposition. However, in the medium term
(by 2018-2020), Consumerization of Healthcare through a number of Wellness

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based solutions, Smart Home solutions and Smart Grids are expected to take off
in India.
India could potentially play a pivotal role in the development of global IoT
ecosystem both as a market and as an innovation hub. To be successful in
Indian market, companies need to adopt unique and innovative business models
that could then be taken global. India could also potentially leverage its large
base of IT software workforce with the upcoming electronics and semiconductor
manufacturing ecosystem (being driven by Indian government’s “Make in India”
program) and deliver innovative IoT products and solutions. India currently has
over 2 million mobile app developers and this number is expected to increase to
3 million by 2017, making it the largest base of mobile app developers in the
world. An increasing portion of these developers could potentially focus on IoT
apps and innovations.
While US is driving the Standards and China is driving the Hardware, India will
drive Apps & Business Models for Internet of Things.

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Contents Page
1. Overview of Internet of Things (IoT) Ecosystem 8
1.1. Internet of Things (IoT) Vision 8
1.2. Key Elements of IoT 8
1.3. Key IoT User Segments and Their Needs 10
1.4. Key IoT Application Areas 10
1.4.1. Health 11
1.4.2. Home Automation 12
1.4.3. Cities 12
1.4.4. Environment 12
1.4.5. Water 12
1.4.6. Energy Smart Grid, Smart Metering 13
1.4.7. Security & Emergencies 13
1.4.8. Retail 13
1.4.9. Logistics 14
1.4.10.Industrial Control 14
1.4.11.Agriculture 14
1.4.12.Animal Farming 15
1.5. Key Players in the IoT Value Chain 15
1.6. Current State of IoT Evolution 15
1.7. Key Enablers Driving the Current IoT Growth 16
1.8. Key Challenges for the Growth of IoT Ecosystem 18
2. State of Global Developments in the IoT Space 21
2.1. Focus on Platforms Development and Data Collection 21
2.2. Formation of Consortiums and Standard Bodies 23
2.3. Developers and Innovators – Key for the Ecosystem 24
2.4. Vulnerability of Large Companies 26
2.5. Investments, Mergers and Acquisition Trends 27
2.6. Key Global Markets’ Role in IoT Evolution 28
2.6.1. USA 28
2.6.2. China 29
2.7. Right Direction, But No Winning Strategy As Yet 30

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3. Current State of IoT Ecosystem in India 31
3.1. Development of IoT Policies 31
3.2. Public-Private Partnerships 33
3.3. Smart Grid Projects in India 34
3.3.1. Case Study – Pondicherry Smart Grid Project 34
3.4. IoT Focused Startups and Young Companies in India 36
4. Key Enablers & Driving Factors for IoT Ecosystem Growth in India 38
4.1. Rapid Urbanization 38
4.2. Increasing Consumer Awareness 38
4.3. Favorable Government Initiatives 39
4.4. Evolution of IoT Specific Industry Forums 39
4.5. Large Companies’ Focus on IoT in India 40
4.6. Growing Indian Startup Ecosystem & Investor Interest 40
5. Key Challenges for Growth of IoT Ecosystem in India 42
5.1. India is a Follower, Not a Leader Market 42
5.2. Disconnected and Fragmented Value Chain 43
5.3. Lack of Ubiquitous Connectivity 43
5.4. Need for Evolution from Services to Product Mindset 45
5.5. Need for Multi-Domain Expertise 45
6. Future Potential of IoT Ecosystem in India 46
6.1. Potential Opportunity for Various IoT Based Solutions 46
6.1.1. Consumerization of Healthcare 47
6.1.2. Connected Home Solutions 48
6.1.3. Smart Grids 49
6.2. Role of India in Global IoT Ecosystem Development 49
7. Appendix 51

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List of Tables and Charts
1. Key Elements of IoT Solution Technology Stack
2. Application Matrix: Societal Needs Vs Market Segments
3. Key Players in the IoT Value Chain
4. Potential Growth of IoT Connected Devices In Comparison with Other
Internet Connectivity Devices (1996-2020E, Bn)
5. Global Average Bandwidth Cost (1999-2013, USD)
6. Global Average Processing Cost (1990-2013, USD)
7. Key Announcement in the IoT Platforms Space
8. Forecasts of Yearly Growth of IoT-Only Developers (2014-2020E, Mn)
9. Geographic Split of IoT Developers Around the World
10.Split of Early-Stage IoT Investments by Sub-Industry (2011-13)
11.List of Smart Grid Projects in India with Target Consumer Base
12.Automated Metering Infrastructure Process Flow of Pondicherry Smart Grid
Project
13.Industry-Wise Split of Indian Companies Working on IoT Solutions
14.Number of Technology Startups in India and Their Yearly Growth (2013-
2020E)
15.Timeline Comparison of Various Cellular Services Launched Globally and in
India, and Their Adoption (Users, Mn)
16.Comparison of Average Number of Smartphone Apps by Country
17.Typical Service Call Flow of a Telematics Application
18.Potential Opportunity for Various IoT Solutions In Indian Market in the
Medium Term (2018-2020E)

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Convergence Catalyst Credentials
About The Authors
Jayanth Kolla, Partner – Lead Author
Jayanth brings over Twelve years of experience in Technology, Product
Marketing, Research and Strategy Consulting in the Telecom, Media and
Technology domains. He has held various roles in Telecom Carriers, Handset
Manufacturers and Management Consulting firms.
He was involved in the roll-out of India’s first rural wireless telephone network
for a private telecom operator, implementing SHLR, testing of CDMA devices &
FWTs, successful rollout of multiple GSM and CDMA handsets, developing
multiple Mobile Value Added Services (MVAS) product offering & business
growth plans and offering telecom research & advisory services for various
players across the industry value chain.
His areas of expertise are Business Advisory, Product Offerings Strategy, Go-to-
Market Planning, Tracking and Publishing on current Technology and Industry
Trends, specifically in the domains of Mobile, Internet and Telecom
Infrastructure. Having worked for key players in the Telecom industry, Jayanth
brings invaluable domain knowledge that spans across Business Strategy,
Technology, Product and Operations.
Currently, as a Partner with Convergence Catalyst, Jayanth advises various global
and Indian companies on Market Entry, Business Growth, Product & Service
Offering strategies and Investment Advisory for India and Emerging Markets.
Prior to co-founding Convergence Catalyst, Jayanth has experience working with
Analysys Mason, Nokia, Motorola, Kyocera Wireless and Tata Teleservices.

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Monika Sharma, Senior Consultant
Monika has over ten years of experience in the Wireless Telecom industry in RF
& VAS domains. Working with leading organizations such as ITI Ltd, Tata
Teleservices Ltd, Qualcomm and Aricent, she has experience in multiple roles
including RF Planning & Optimization Manager, Mobile Chipsets Test Lead and
SDP Platform Implementation Lead.
Implementing the GSM network of BSNL (in the West zone), setting up the RF
test lab (for Tata Teleservices) and Mobile Handset testing lab (for Qualcomm),
implementing India’s first VAS Service Delivery Platform (SDP) for Airtel, (where
she was responsible for Message Broker and Parley), she has managed to garner
crucial experience in vast and critical projects, thus covering the entire wireless
telecom area.

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About Convergence Catalyst
Convergence Catalyst is a Bangalore-based Telecom Research & Advisory.
Convergence Catalyst (CC) has been formed by experienced Indian Telecom
Industry professionals and leverages it's hands-on experience to offer Research
& Advisory Services to various Indian and global companies. We offer Market
Entry, Business Growth and Products & Services Offering Strategic Advisory
(Business Advisory & Go-To-Market Planning) and Custom Research to the
clients.
The company has been formed with the idea of aiding various organizations in
the Telecom, Media and Technology space to fine-tune their business and
product offering strategies in order to emerge as leaders in the rapidly
converging world. We primarily focus on Telecom & Internet Technologies
Evolution, Smart Devices, Chipsets, Apps Ecosystem, VAS (Value Added
Services), Customer Experience Management (CEM, Big Data Analytics in
Telecom), Mobile Broadband and Digital Convergence domains. CC's key
service offerings include Market Analysis, Product Marketing Advisory,
Investment Advisory and Custom Research.

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