The competitive landscape of IoT - Global IoT Day Conference Vienna 9 April 2015

The competitive landscape of IoT
Competitive forces and companies shaping the Internet of Things
Vienna Global IoT Day, 9 April 2015
Knud Lasse Lueth, Founder of IoT Analytics @KnudLueth
@AnalyticsIoT

1
Copyright©2015byIwww.iot-analytics.comAllrightsreserved.
Agenda
Introduction
Part 1: How IoT changes competitive forces
Part 2: The companies and technologies making IoT happen

2
Starting point: The internet changed our lives
In 1994, the Internet was the next
big thing…
Time Magazine Cover 1994
Source: Time Magazine, Wikipedia

3
Starting point: The internet changed our lives
In 1994, the Internet was the next
big thing…
… and created a whole new
industry
Time Magazine Cover 1994 List of biggest Internet companies 2014
Source: Time Magazine, Wikipedia
# Company Headquarters Industry
Revenue
($B)
1 Amazon Seattle, WA E-commerce $74.45
2 Google Mountain View, CA Search $59.82
3 eBay San Jose, CA E-commerce $16.05
4 Tencent Shenzhen Social $9.91
5 Alibaba Hangzhou E-commerce $8.57
6 Facebook Menlo Park, CA Social $7.87
7 Rakuten Tokyo E-commerce $5.56
8 Priceline.com Norwalk, CT Travel $5.26
9 Baidu Beijing Search $5.21
10 Yahoo Sunnyvale, CA Web portal $4.68
11 Salesforce.com San Francisco, CA Cloud comp. $4.07
12 Yandex Moscow Search $1.21
13 Flipkart Bangalore E-commerce $1+

4
How will IoT change our lives?
In 2014, the Internet of Things
has arrived…
HBR Cover 2014
Source: HBR, IoT Analytics

5
How will IoT change our lives?
In 2014, the Internet of Things
has arrived…
Who will dominate the industry
in 20 years?
HBR Cover 2014
Source: HBR, IoT Analytics
IoT Analytics tries to understand: What
determines IoT success and who is it?

6
IoT Analytics focuses on market intelligence for the IoT
Competitive
Intelligence (CI)
Market environment
Market insights General
trends
Business
climate
Risk&
Attractiveness
Market
drivers
Economy
dynamics
Market
size
Regulation
Market
forecast
Segmen-
tation
Company
strategies
Company
profiles
M&A
activity
Case
studies
Market
shares
Product
intelligence
We intend to become a leading source of market insights&competitive
intelligence for the Internet of Things

7
A few of our recent publications and current work
Intro to IoT IoT market analysis Smart Home primer IoT strategy primer
White papers Case studies
The Nest story
(not yet published)
Structured company lists Market share analysis
2000+ IoT
companies
350+ Smart Home
companies
250+ Wearables
companies
300+ publicly listed
IoT companies
Company popularity
ranking
Bottom-up
Smart Home
market share model
(not yet published)
www.iot-analytics.com

8
Agenda
Introduction

9
Most value of IoT lies beyond the connectivity
Value (to the end customer)
high
high
low
low
1 “Dumb”
Physical device/
product
3 Monitored
Remote condition
monitoring
4 Controlled
Remote control
of device/product
5 Optimized
Algorithms,
Decision-support,
additional services,
etc.
6 Autonomous
Self-coordination
Automated
decision-making
7 Ecosystem
-enabled
Smart interaction
with other smart objects
In same ecosystem
2 Digital
Digitally-enabled
device/product
8 Cross-
Ecosystem
Optimized
Smart interaction
With devices in
other ecosystems
Maturity (of the offering)
The IoT value-maturity curve
Connected deviceNon-connected device

10
Do you know Nest?
One of the most mature early examples of a “dumb” product becoming “smart”

11
Would you buy it today?
Nest vs. conventional thermostats 2014
Reasons NOT to
buy Nest
Reasons to buy
Nest

12
Would you buy it in 2 years?
Nest vs. conventional thermostats 2016 (forecast)
Reasons NOT to
buy Nest
Reasons to buy
Nest

13
Most of the value for Nest has not yet been unlocked
Value (to the end customer)
high
high
low
low
1 “Dumb”
3 Monitored
4 Controlled
5 Optimized
.
6 Autonomous
7 Ecosystem
-enabled
2 Digital
8 Cross-
Ecosystem
optimized
Maturity (of the offering)
Manual
Thermostat
1883
Digital
Thermostat
1980s
Autonomous
Thermostat
2011-14
Ecosystem thermostat
2016?
Nest today
Connected deviceNon-connected device

14
The thermostat industry before Nest: Rather unattractive
G Y RGreen = Favorable conditions for
companies in the industry
Barriers to entry
• Product development requires little sophistication
• Some upfront investment necessary
• Relatively easy access to main sales channels
(online, DIY store)
Internal rivalry
• Many competitors
• Limited industry growth
Substitutes and complements
• Systems without thermostats (e.g., central heating
systems)
Supplier power
• Most thermostat parts
are commodities
• Some switching costs
Buyer power
• Large DIY
stores/electronics
distributors with
purchasing power
• Little switching costs for
buyers
• Limited price sensitivity
since often sourced in
larger packages together
with other heating/cooling
components
Yellow = Conditions for companies in the
industry neither favorable nor unfavorable
Red = Unfavorable conditions for
Y
G
Y Y
R
Y
R
Average profitability: ~10% EBIT margin1
1. Based on a set of German thermostat manufacturers 2005-2012 Source: IoT Analytics

15
After the arrival of smart thermostats:
IoT changes the industry forces
Average profitability: Likely higher in the future!
Source: IoT Analytics
G Y RGreen = Favorable conditions for
Barriers to entry
• Complex product development
• Significant upfront investment in product and
talent
• Relatively easy access to main sales channels
(online, DIY store)
• Learning from own captured data
Internal rivalry
• Many competitors
• High industry growth
Substitutes and complements
• Systems without thermostats (e.g., central heating
systems)
Supplier power
• Most thermostat parts
are commodities
• Some switching costs
Buyer power
• Large DIY
stores/electronics
distributors with
purchasing power
• High switching costs for
buyers due to existing
smart home ecosystem
• Limited price sensitivity
since often sourced in
larger packages together
with other heating/cooling
components
Yellow = Conditions for companies in the
industry neither favorable nor unfavorable
Red = Unfavorable conditions for
Y
G
Y
Y
G
Y
G

16
Agenda
Introduction

17
The new technology landscape of the Internet of Things (1/4)

18

19

20

21
The top 10 IoT companies creating the biggest buzz
3
2
1
4
5
6
7
8
9
10
Company Overall popularity1 Specific products
1. Popularity ranking based on popularity in Google searches, Twitter tweets, LinkedIn posts, and news headlines in Q1/2015. 2. Com. Hardw = Communication hardware 3. M2M platform in
partnership with other companies
Source: Google, Twitter, LinkedIn, Company websites, IoT Analytics
22%
24%
26%
31%
34%
55%
59%
66%
69%
72%
Oracle
Gartner
SAP
Apple
Samsung
IBM
Google
Cisco
Microsoft
Intel
• IoT-enabled ERP
• Hana database
• M2M platform3
Technology offering2
Sen-
sors
Proce
ssors
Com.
hardw
De-
vices
Plat-
form
Ana-
lytics
Data-
base Other
✓ ✓
✓ ✓✓
✓ ✓
✓ ✓
✓✓ ✓
✓ ✓
✓
✓ ✓ ✓ ✓
• IoT cloud platform
• Market research
• Wearables
• Smart Home platform
• Processors
• Gilileo developer kit
• IoT platform
• Azure platform
• Streaming analytics
• Wearable camera
• Smart watch
• Smart home platform
• Smart health platf.
• Routers/Gateways/etc
• Security solutions
• Analytics
• Databases (eg Cloudant)
• Application infrastr.
• Nest/Revolv smart home
• Physical web platform
• Google Glass
• Self-driving car
✓
( )
✓ ✓
✓ ✓

22
Biggest US startups much larger than Austrian counterparts
Top IoT startups by country
Name Segment Location Funding
Jawbone Wearables San Francisco $520m
Prodea
Syst.
Smart home Richardson, TX $160m
iRhythm Connected
health
San Francisco $120m
Nest Labs Smart home Palo Alto $80m
AlertMe Smart home Cambridge $36m
Electric-
imp
Smart home Cambridge $23m
Roli Conn. music London $13m
Evrythng IoT platform London $7m
Tado Smart home Munich $16m
Yetu Smart home Berlin $8m
Relayr Dev. board Berlin $3m
Gestigon Gesture contr. Lübeck $1m
Flatout Smart home Vienna $1m
Tractive Wearables Pasching $0.5m
Linemetrics Industrial Haidershofen $0.4m
Indoo.rs Indoor
localization
Brunn am
Gebirge
n/a

23
Conclusion
1. The value of the Internet of Things lies beyond the connectivity – It comes with smart
analytics and ecosystem-enablement
2. Entire industry forces are changing due to IoT. Some industries may experience higher
profits. Companies need to be aware of potential lock-out.
3. The “new” IoT infrastructure is being created now – Hardware including sensors and
processors, communication, software, and application.
4. The top IoT companies in terms of “share-of-voice” currently are: Intel, Microsoft, Cisco,
Google, IBM
5. US startup funding in the IoT area is much larger than German or Austrian IoT investment
activity

24
Questions?
Knud Lasse Lueth
IoT Analytics
knud.lueth@iot-analytics.com
www.iot-analytics.com
Hamburg/Berlin
Germany
@KnudLueth
@AnalyticsIoT

The competitive landscape of IoT - Global IoT Day Conference Vienna 9 April 2015

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