The document discusses how high-tech companies can take advantage of opportunities presented by the growing Internet of Things (IoT). It defines the IoT and describes how by 2020 there will be nearly 50 billion internet-connected devices. It then discusses how the IoT will impact and provide opportunities for various parts of the high-tech industry, including semiconductor companies, contract manufacturers, distributors, and OEMs. It provides examples of how the IoT can help companies increase sales through new business models and contextual offerings. It also discusses how the IoT can help improve operations through applications like predictive maintenance, yield management, and counterfeit detection.

1. The Internet of Things: Impact and
Applications in the High-Tech Industry
To make good on the abundance of opportunities that accompany the IoT,
high-technology companies must retool how they spec, design and deliver
their products and services, and find new partners that can turn IP
addressability and awareness into business advantage.
Overview: IP Addressability Everywhere
Defining IoT
The IoT is a global system of IP-connected sensors,
actuators, networks, machines and devices.
It is made possible by the development and
proliferation of Internet Protocol (IP) addressable
devices connected to the Web. It represents a
dramatic leap in the Internet’s development, as
connections move beyond computing devices to
power billions of everyday devices, from parking
meters to home thermostats.2
IoT architecture can be represented by four
systems (see Figure 1, next page):3
1. Things: Thesearedefinedasuniquelyidentifiable
nodes,primarilysensorsthatcommunicatewithout
human interaction using IP connectivity.4
There
are millions of IP addressable “things” around us
already – from RFID tags to fitness bands – and
their numbers are expected to rise exponentially
as sensors become cheaper, smaller and more
power-efficient. Morgan Stanley estimates that
this number could be as high as 50 billion by 2020,
which translates to approximately 6.4 devices for
Executive Summary
The Internet of Things (IoT) is quickly
going mainstream. In fact, by 2020 there will be
nearly 50 billion Internet addressable and aware
devices — which translates into a $14.4 trillion
business opportunity, according to networking
vendor Cisco Systems, Inc. 1
However, along with
vast opportunity comes massive hype about how
the IoT is going to impact various industries and
change the way business is done.
Given its core IP, it comes as no surprise that high
technology is on the cusp of this mega-trend.
Acrosstheindustry,theIoTiscreatingopportunity
for newer models, channels and ways of delivering
adjacent services to end customers, meeting their
evolving needs for more personalized products.
To take advantage of the proliferating IoT,
high-technology vendors must first define
pertinent business cases that not only anticipate
customer requirements but enable them to
outmaneuver the competition. This white
paper helps to do this by cutting through the
technological maze to identify potential use
cases and key capabilities that will ensure IoT
implementation is smooth and seamless.
cognizant 20-20 insights | march 2015
• Cognizant 20-20 Insights

2. cognizant 20-20 insights 2
every one of the 8 billion human beings who are
expected to be on the Earth at that time.5
2. Gateways:Theseactasintermediariesbetween
things and the cloud to provide the needed
Internet connectivity, security and manageability.
3. Network infrastructure: This is comprised
of routers, aggregators, gateways, repeaters
and other devices that control data flow. They
also connect to the telecom and cable networks
(3G, 4G/LTE) operated by service providers.
4. Cloud infrastructure: Cloud infrastructure
contains large pools of virtualized servers and
storage that are networked together. Supporting
the IoT, this infrastructure runs applications that
analyze data from devices and sensors in order to
generate actionable information used for services
and decision-making.
Defining the Opportunity for High-Tech Companies
IoT adoption is fueled by a combination of forces,
including the exponential growth of connected
devices, a confluence of low-cost technologies
(things, gateways, big data and computing
power), pervasive connectivity and massive
volumes of data. Estimates of the future market
size of the IoT vary, but most experts agree
that it will dwarf any other market. A recent
GE and World Bank study predicts that the IoT
opportunity could be as big as $32 trillion, or
46% of the size of global economy today.6
This,
in turn, will drive the next wave of growth for all
segments of the high-tech industry, beyond
mobile devices, such as the semiconductor space
where new IoT chip opportunities could power the
industry across the $400 billion mark by 2020
(see Figure 2).7
The IoT’s Impact on the High-Tech Industry
High-tech companies will be both producers
and consumers of IoT products and services.
Market leaders will harness IoT value to either
increase sales by delivering more personalized
and curated offerings, or decrease input costs by
optimizing operations, or both. The IoT represents
an opportunity to reshape competition within
the industry and expand industry boundaries. It
can shift the base of competition from discrete
products to highly-customized product systems
containing closely related products to software-
enabled services based on machine-to-machine
communications (see Figure 3, next page).
It is important to note that high-tech companies
will find it hard to realize the full potential of the
IoT on their own. To deliver compelling consumer
experiences across a heterogeneous ecosystem
of things, high-tech companies will need to
collaborate to establish industry standards.
IoT Topology
Figure 1
Services-creation and solutions layer
Things Gateway Network and cloud
Network
Infrastructure
Cloud
Infrastructure72˚
Framing the IoT Opportunity for High Tech
Figure 2
Driver Computer Smartphone M2M
0
50
150
250
350
450
1985
Mainframes
Personal
computer Cellphone
Smartphone
and tablet
IoT
1990 1995 2000 2005 2010 2015 2020
PC, laptop, Smartphones
Machine-2-machine (M2M)
Semiconductor industry revenue, bn USD Connected devices in use, bn Units
Bringing the industry to over $400Bn... ...and doubling IP device volumes
Mainframe
50
9-12
1
2003 2011 2020

3. cognizant 20-20 insights 3
For example,Fordisworkingtocreatecompatibility
standards for in-case entertainment systems
through its 2013 acquisition of Livio and through
the sharing of its Smart Device API.8
The Dynamic High-Tech Industry
The IoT is expected to drive significant changes
in the high-tech value chain (see Figure 4). To
take advantage of the proliferating IoT, high-
technology vendors must first define pertinent
business cases that not only cut costs but also
create new revenue streams by anticipating
customer requirements in order to outmaneuver
the competition.
How the IoT Can Increase Sales
The IoT can help high-tech companies boost
sales by creating opportunity for newer models
and channels and ways of delivering adjacent
services to end customers, meeting their evolving
IoT Use Cases in the High-Tech Industry
Figure 4
Distributors End Users
Yield Management
Semiconductors Distributors OEMsSegment
Solution Sales
Integrated Chip
Manufacturers
Fabless Chip
Manufacturers
Foundries
EMS/
ODM
IT Original
Equipment
Manufacturers
Non-IT Original
Equipment
Manufacturers
Distributors
Resellers
& System
Builders
Software
& Services
Vendors
1 2 3 4
Contract
Manufacturers
Increase
Sales
Product
Monetization
Near-shoring Contextual
Offerings
Creating new recurring
revenue streams by
adopting the services
model.
Shifting production
closer to demand to
enable personalization.
Moving beyond
traditional physical
sales to consultative
selling.
Leveraging consumer
code halos to enable
personalized
experiences.
Improve
Operations
Proactive
Maintenance
Counterfeit
Detection
Manufacturer
Partnering
Improving yield by
dynamically altering
process parameters
at fabs.
Monitoring equipment
performance levels to
identify maintenance
requirements.
Tagging and tracking
electronic components
through supply chain
to identify fakes.
Sharing real-time
usage data with
suppliers to unlock
innovation.

4. cognizant 20-20 insights 4
needs for more personalized products. In this
section, we will explore potential use cases
that can help players across the different high-
tech subsegments increase revenue and create
differentiated value propositions.
Semiconductors: New Approaches to Monetization
Similar to traditional software vendors,
semiconductorvendorscanmonetizeIoTproducts
by adopting new licensing and entitlement
management systems that control access to the
Internet-connected device, its functions and its
features. Licensing and entitlement management
also offers more flexible pricing and packaging,
enabling the manufacturer to bundle product
features and capabilities, ensure payment, provide
upgrade paths and create new revenue streams.
To accommodate the business opportunities
opened by the connected devices, semiconductor
companies will need to develop a road map (see
Figure 5) for high-level business transformation
strategies that include:
• Adapting CRM/ERP/IT systems to accommodate
and manage the new licenses and entitlements.
• Cloud delivery.
• Customer support (with the new model).
• Sales process (move from selling boxes to
solutions).
• Revenue allocation, recognition, deferrals, etc.
Contract Manufacturers: Overhauling the
Operating Model
Traditionally, original design manufacturers
(ODMs) and electronic manufacturing services
(EMS) vendors have manufactured high-tech
products in low-cost geographies and shipped
finished goods to customers across the globe.
This operating model, though efficient for long-
established product categories such as desktop
computers and servers, has led to increased price
competition with low-cost, second-tier Asian
manufacturers and reduced industry profitability.
However with the advent of the IoT, contract
manufacturers must adjust their client/product
base as IoT devices have a much shorter life span,
require personalization and respond to demand
that is often unknown.

5. cognizant 20-20 insights 5
To address this supply-chain challenge, ODM
and EMS companies can move production closer
to demand. This trend, known as near-shoring,
involves splitting the production process and
moving the last step of product integration
and packaging to locations such as Mexico
(for the U.S.) and Eastern Europe (for Western
Europe). Near-shoring also optimizes last-
mile customization; for instance, enabling IoT
devices such as wearables to be customized to
users’ tastes and preferences. This would enable
contract manufacturers to create a differentiated
offering (from second-tier vendors), tailored to
IoT demand, and improve long-term profitability.
Distributors: An Evolving Value Chain
The IoT can help electronic component distribu-
tors reinvent their existing business models and
break through into adjacent markets. Customers
of these companies are looking for guidance
in areas such as connectivity, cloud operations
and potential business models. Oftentimes,
this can translate into service and consulting
opportunities for traditional hardware distribu-
tors. For example, Arrow Electronics, a leading
component distributor, has been able to increase
its component sales through solution selling –
offering the nuts and bolts of the IoT system,
from the device to the control, storage and
analysis modules.
OEMs: Altering Commercial Practices
Device manufacturers such as Apple
(e.g., iBeacon) are implementing Bluetooth
low-energy (BLE) wireless technology to
create a streamlined platform for sharing
location-based information and services.
When used in a retail environment (such as a
supermarket), this particular application of the
IoT has the potential to dramatically personalize
users’ shopping experiences. Whenever a user
carrying a smartphone walks into a store,
apps installed on the consumer’s smartphone
“listen” for nearby sensors. When an app “hears”
a sensor, it communicates the relevant data
(UUID, major, minor) to its server, which then
triggers an action. This could be something as
simple as a push message (“Welcome to Target!
Check out Doritos on aisle 3!”), or it could include
targeted advertisements and special offers (see
Figure 6).
Other potential applications for wireless
transmitters include mobile payments – where
digital wallets can be enabled, based on the
shopper’s location, and complete the transaction
Enabling Contextual Offerings Using IoT
Figure 6
Transmitter
connects with
buyer’s social
network
Customer
shopping at
favorite store
Internet of
Things
Device does the following:
Provides in-store guidance
Product locator facility
Gathers customer buying details
Shopping behavior
• Maps users on this social network
to the store.
• Identify their buying behavior, habits,
history.
• Previous purchases at store.
• Identify non-visitors of store.
• Finds stores from where they currently
purchase.
• Monitor their social profiles and map
interests.
Analytics
• Identify which stores are being visited
most by friends.
• Ratings, likes, dislikes, comments,
feedback of social friends for stores.
• Map best store to shop at based on
shopping habits.
• Relevant discounts, offers, loyalty
programs available.
• New products, alternatives,
complementary products available
at these stores.
ContextualOfferings

6. cognizant 20-20 insights 6
Yield Management Using IoT
Figure 7
Semiconductor Fab
Sensor Sensor Sensor Sensor
Assembly
Services
Testing
Services
Facility
Parameters
Manufacturing
ExecutionSystem
Weather &
temperature feeds
Facility lighting &
cooling data
Cleanroom air
contamination data
Wafer manufacturing process parameters
Manufacturing equipment data –
performance, uptime, etc.
Electrical/metrology performance of the
wafer
Wafer Sort &
Testing
IC
Manufacturing
Assembly Final Test
Packaging &
performance
Functional
testing
Performance
testing
Service to manage
yield drops
Closed
feedback loop
without the need for the shopper to take out
cash or credit cards. Merchants can leverage this
technology as well to drive shopper analytics
inside and outside their stores. Smart solutions
can also be implemented beyond retail, including
airports, concert venues and theme parks.
Improve Operations
The high-tech industry’s operational model
is particularly well-suited for IoT applications
due to its globalized supply chain, distributed
manufacturing, connectivity-enabled products
and intense competition. In this section, we will
look at some potential IoT use cases that can
improve operations and cut costs across the
different high-tech subsegments.
Semiconductors: Yield Management
It is critical for semiconductor fabs to maintain
high yields as the production process is highly
capital-intensive (with setup costs ranging
from $2-4 billion), involves a large number of
processing steps (>150), has long production cycle
times (>6 weeks) and uses expensive raw materials
(with individual wafers costing up to thousands
of dollars). However, they have struggled with
low yields as long process and testing times in
semiconductor manufacturing make it difficult to
implement real-time statistical process control.
The IoT makes it possible to deploy sensors to
record yields and settings at different production
steps, which then, combined with analytics,
can help the yield application to keep up with
the incoming data and lower the reaction time
between detecting an actionable event and
making decisions to adjust the manufacturing or
test process (see Figure 7). In the long term, IoT-
driven yield models, linked with statistical process
control methods, ensure process improvements
as process engineers can quantify their own
process sector’s influence on test yields instead
of waiting for months to get the final test results.
Contract Manufacturers: Proactive Maintenance
Surface mount technology (SMT) production lines
and wave solder machines are a major capital
expenditure for high-tech manufacturers such
as EMS, ODM and OEM companies. Even a single
fault in one machine in an SMT production line
can cause significant production delays and repair
expenditures. Traditional preventive maintenance
approaches are inefficient in predicting and
averting breakdowns as they do not properly
account for the progressive degradation of the
production asset.
IoT-driven predictive maintenance uses sensors
placed in the different parts of the machine to
provide continuous visibility into the machine and

7. cognizant 20-20 insights 7
its operating conditions (see Figure 8). This data
can be analyzed in real time and alarms can be
triggered whenever the data falls outside standard
operating limits, indicating that the machine
needs maintenance. Moreover, the sensor data
can be distilled with predictive analytics tools to
suggest a more appropriate maintenance schedule
that maps with the anticipated deterioration of
the machine. Over the long term, companies can
align their repair resources – human, cash and
spares – to a place where they’d be in sync with the
manufacturing footprint and increase throughput
by reducing downtime.
Distributors: Counterfeit Detection
Fake components are a major headache
for electronic component manufacturers,
distributors, OEMs and consumers. Such
components, when sold as genuine products,
can cause product performance issues and raise
warranty costs. In some cases, such as medical
and automotive applications, they can pose a very
real threat to the health and safety of the user.
Efforts to counter the counterfeit menace have
met with only limited success as the globalized
supply chain of high-tech companies provides
ample avenues for injecting fake components in
the distribution chain.
The anti-counterfeiting approach for the
pharmaceuticals industry, suggested by A. Ilic,
M. Lehtonen, F. Michahelles and E. Fleisch, can
be used for electronic components using IoT (see
Figure 9, next page).10
A component manufacturer
can insert sensors in individual parts/packages
at the manufacturing site. These products are
then shipped, through multiple points, to an
EMS, ODM or OEM manufacturing facility and are
authenticated at every step. An alert is triggered
to the component manufacturer/distributor
whenever a counterfeit product is detected.
Thus, by linking physical products with digital
identities through IoT sensors, component
distributors can prevent counterfeit products
from entering the distribution channel. In the
long term, the awareness of counterfeits and the
knowledge about items’ most recent locations
can be used to effectively deter counterfeiting.
OEMs: Manufacturer Partnering
Leading high-tech OEMs are increasingly
leveraging their suppliers’ expertise in product
design to improve quality and reduce costs. These
collaborations – formalized through manufac-
turer partnership programs – are fast becoming
hotbeds of innovation. However, these programs
suffer from a flaw: suppliers have no access to
real-time product usage information and, by
extension, insights into customer preferences and
needs. There are also other challenges such as:
• Most product usage data, if recorded, lies
unused with the OEM.
• There are security concerns and classification
issues with sharing raw, unstructured data
with the suppliers.
• The amount of data is voluminous and
post-processing is extremely complex and
time-consuming.
Proactive Maintenance Using IoT
Figure 89
Traditional SMT*/Wave Solder Maintenance Scheduling
Proactive SMT/Wave Solder Maintenance Using IoT
Legend
Asset put in life
Maintenance
Asset failure
Error detection
Time/asset usage
Asset sensor data
EMS/ODM/OEM Manufacturing Plant
* SMT: Surface Mount Technology

8. cognizant 20-20 insights 8
• If post-processing takes too long the date
is often rendered meaningless as product
lifecycles contract.
Researchers from the Eindhoven University of
Technology have suggested one possible IoT
solution, in their paper “Improving Product
Usage Monitoring and Analysis with Semantic
Concepts,” to automate the process of usage data
collection and standardize relevant data available
to both OEMs and suppliers.11
This can be done
by incorporating an IoT sensor in the product
itself. The sensor needs to be complemented
with a predefined observation specification to
ensure that recorded data is relevant, accurate
and formatted appropriately. Once implemented,
the preprocessed data can be shared with
corresponding suppliers that, in turn, can use it
to understand user preferences and incorporate
them into the design.
Manufacturer Partnering Using IoT
Figure 10
Source: “Improving Product Usage Monitoring and Analysis with Semantic Concepts,” Eindhoven University of
Technology
Observation
Specification
Observation Data Analysis
Observation
Authoring
Enviroment
Specify Observe Analyze
Product
Sensor
Observation
Analysis
Enviroment
Observation
Analysis
Enviroment
supplier 1
supplier 2
Service to
collect &
classify usage
data by supplier
Supplier
specific
data
streams
Usage
Insights
Counterfeit Tracking Using IoT
UsageStocking ReceivingProduction
Component Manufacturer
Service to detect counterfeit products
Distributor EMS/OEM
Tagging
Counterfeit
Products
Shippingtion Tagging
Counterfeit
Products
Ship Stocking UsageReceiving
RFIDSensor
RFIDSensor
RFIDSensor
RFIDSensor
Figure 9

9. cognizant 20-20 insights 9
A Consultative Approach
Our IoT approach is to help high-tech companies
understand the impact that IP-connected devices
can have in their business, choose the right tools
and operate these tools efficiently to extract
maximum value. Our service offerings cover the
end-to-end IoT future state development cycle
including:
• Building a roadmap for an IoT-enabled future.
• Developing the IoT-enabled future solution.
• Supporting the operating model of an
IoT-enabled future state.
Building a Road Map for an IoT-Enabled Future
As the first step, it’s critical to create an IoT
road map for the short- and long-term horizons.
We work with clients to explore IoT use cases
so they can determine where sensors will have
maximum impact in their businesses and value
streams. For example, an EMS manufacturer that
operates in a low-margin, highly-commoditized
market can potentially leverage IoT to improve
asset utilization in the short term and create
differentiation in the medium term (see Figure 11).
Developing the IoT-Enabled Future Solution
After determining usage models and exploring
IoT architectures, it’s time to invest in
the technology and partners that can build out
specific use cases and then build and deliver
value. We help clients evaluate IoT platforms
as an extension of the work performed by their
IT departments. As a part of our consulting
methodology, we bring multiple perspectives
to the research table like analyzing industry
research and drawing from our past experiences.
Supporting the Operating Model of the
IoT-Enabled Future State
The final piece of the puzzle is to define and
execute the operating models of the IoT solution.
Our breadth of expertise can help clients quicken
their go-to-market cycle, execute at scale and
incorporate client feedback. For example, our
subscription enablement teams have been
helping high-tech companies rapidly experiment
with subscription offerings, identify plans that
work and quickly deploy them across different
geographies.
Figure 11
List of Potential IoT Use Cases
for an EMS Vendor
Prioritized List of IoT Use Cases
for an EMS Vendor
Core Collaborate Core Collaborate
ImproveOperations
IncreaseSales
IncreaseSales
ImproveOperations
• Product to Service
• Licensing & Pay-as
You-Go
• Near-shoring
• Contextual Offerings
• Personalization
• Solution Selling
• Digital Content
Delivery
• Umbrella Services
• Product to Service
• Near-shoring
• Solution Selling
• Yield Management
• Predictive Mainte-
nance
• Counterfeit Detection• Yield Management
• Predictive
Maintenance
• Manufacturer
Partnering
• Counterfeit Detection
• Remote Operations
2 4
1 3
Priority
Prioritizing IoT Use Cases

10. cognizant 20-20 insights 10
Footnotes
1
“Embracing the Internet of Everything to Capture Your Share of $14.4 Trillion,” Cisco, February 2013,
www.cisco.com/web/about/ac79/docs/innov/IoE_Economy.pdf.
2
Postscapes infographic, http://postscapes.com/what-exactly-is-the-internet-of-things-infographic.
3
www.intel.com/content/dam/www/public/us/en/documents/white-papers/
developing-solutions-for-iot.pdf.
4
“Internet of Things in Manufacturing: Driving Revenue and Improving Operations,” Robert Parker,
September 2014.
5
www.morganstanley.com/articles/internet-of-things-opportunities-for-investors/.
6
“Industrial Internet: Pushing the Boundaries of Minds and Machines,” Peter C. Evans and Marco
Annunziata, General Electric, November 2012.
7
“NXP and the Internet of Things (‘IoT’)”, Andrew C. Russell, NXP Corporation.
8
http://techcrunch.com/2013/09/26/ford-buys-automotive-app-maker-livio-radio-for-less-than-10m/,
Matt Burns, September 2013.
9
http://blog.bosch-si.com/categories/manufacturing/2013/02/iot-and-predictive-maintenance,
Steve Hilton, February 2013.
10
“Synchronized Secrets Approach for RFID-enabled Anti-Counterfeiting,” by A. Ilic, M. Lehtonen,
F. Michahelles, E. Fleisch, May 2013.
11
“Improving Product Usage Monitoring and Analysis with Semantic Concepts,” Mathias Funk, Anne
Rozinat, Ana Karla Alves de Medeiros, Piet van der Putten, Henk Corporaal and Wil van der Aalst,
Eindhoven University of Technology, 2013.

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About the Authors
Dipesh Biswas is a Senior Director within Cognizant Business Consulting’s High-Technology Consulting
Practice. He has 29-plus years of business and IT consulting experience, the last 20 years of which
have been spent in Silicon Valley. Dipesh has served the high-tech sector for the last eight years,
focusing exclusively on helping these companies transform their business models and leverage SMAC
technologies. He can be reached at Dipesh.Biswas@cognizant.com.
Raghu Ramamurthy is a Director within Cognizant Business Consulting’s High-Technology Consulting
Practice. He has 14-plus years of experience in various areas of supply chain management and has
worked on business transformation initiatives for clients across the U.S., Europe and APAC. Raghu’s
key areas of expertise include supply chain planning optimization, business process harmonization
and IT road map development. He holds a master’s degree in management from the Indian Institute of
Management, Lucknow. Raghu can be reached at Raghu.Ramamurthy@cognizant.com.
Stephen Pradeep Edward is a Senior Manager within Cognizant Business Consulting’s High-Technology
Consulting Practice. He has 15-plus years of experience and has worked extensively in executing
various supply chain consulting projects and programs for numerous high technology companies,
ranging from OEMs to equipment manufacturers. Stephen’s experience spans package implementation
and developing custom service offerings for the high-tech segment. He can be reached at
Stephenpradeep.Edward@cognizant.com.
Aditya Dixit is a Senior Consultant within Cognizant Business Consulting’s High-Technology Consulting
Practice.Hehasworkedacrossdiverseconsultingengagementswithleadinghigh-techandsemiconductor
companies. Aditya’s key areas of expertise include supply chain management, trade compliance, business
strategy and program management. He can be reached at Aditya.Dixit@cognizant.com.