This document provides an overview of the Internet of Things (IoT) as an investment theme. It defines the IoT as connecting physical objects to the internet to collect and analyze data. It estimates the IoT market will grow significantly by 2020 and outlines the value chain and key players in device, connectivity, data and control layers. The document also reviews standards bodies competing to dominate IoT communications and provides investment themes for 2015 related to social, cloud, mobile, big data, ecosystems and more.

1. SYNC.
Global investment themes: Telecoms, media and technology
The Internet of Things
as an investment theme
10 March 2015
Cyrus Mewawalla
Director of Research
cyrus@researchcm.com
+44 (0) 20 3393 3866
CM Research
56 Broadwick Street, London W1F 7AJ
www.researchcm.com
Authorised and regulated by the Financial Conduct Authority
Elgen Strait
Director of Sales
elgen@researchcm.com
+44 (0) 20 3744 0105

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Contents
DEFINITION .................................................................................................................................................... 3
MARKET SIZE ................................................................................................................................................. 4
TIMELINE ......................................................................................................................................................... 5
STANDARDS .................................................................................................................................................... 6
VALUE CHAIN ................................................................................................................................................. 7
DEVICE LAYER ............................................................................................................................................... 8
CONNECTIVITY LAYER ................................................................................................................................ 9
DATA LAYER ................................................................................................................................................. 10
CONTROL LAYER ......................................................................................................................................... 11
KEY PLAYERS ............................................................................................................................................... 12
2015 INVESTMENT THEMES ................................................................................................................... 13

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Definition
Automated home Industrial Internet Driverless car
Definition Ambient Commerce Wearable technology
The Internet of Things (IOT) refers to
the concept of connecting physical
objects – like clothes, watches, cars,
fridges, heaters and factory machines –
to the internet. By collecting and
analysing the data they transmit,
consumers and businesses will be able
to monitor, maintain and upgrade these
“things” much more efficiently.
Source: freshome.com, Google, Zdnet, pedalo.co.uk, just perfect

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Market Size
 Ericsson: There will be 50bn connected devices by 2020, up from 12.5bn in 2013 (Cisco agrees)
 Gartner: There will be 26bn IoT installed devices by 2020, up from just 0.9bn in 2010
 Intel: There will be 200bn connected devices by 2020
 IDC: The IoT market will be worth $8.9 trillion by 2020, up from $1.9 trillion in 2013
Even the most pessimistic industry commentators expect the market for the internet of things to quadruple
from today’s levels over the next five years.
IDC expects the IOT market to almost quadruple from $1.9tn in
2013 to $8.9tn by 2020. Cisco is more optimistic.
Accenture expects smart thermostats to be one of the first IoT
products to go mass market, followed by smart fridges.
Source: Cisco, McKinsey, IDC, Accenture (2014 State of the Internet of Things Study), CM Research
0
5,000
10,000
15,000
20,000
2013 2020
$bn
Growth forecasts for IoT revenues
Cisco McKinsey IDC
0%
10%
20%
30%
40%
50%
Smart thermostat Smart fridge Smartwatch Wearable heads
up display
Projected adoption of connected technology
by US consumers
By 2015 By 2020 After 2020

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Timeline
 The Internet of Things was born in 2009...
 ...when the number of connected devices exceeded the world’s population for the first time.
 Today, PCs and mobile phones account for three quarters of all connected devices ...
 ...but, in future, they will be physical “things”.
1995 2000 2005 20152010 2012 2013 20142011
1995:
Siemens
launches
"M1", a GSM
data module
for machine‐
to‐machine
applications
1999: Procter &
Gamble's Kevin
Ashton coins the
phrase "internet of
things", referring to
RFID technology in
P&G's supply chain
connected to internet
2003: BigBelly
Solar creates
smart solar‐
powered trash
cans which tell
rubbish
collectors when
they are full
2005: The UN
publishes a
report on the
Internet of
Things via the
ITU, for the
first time
2010: The ZigBee
Alliance and IPv6
Forum create
partnership with
IPSO to help
smart objects talk
to each other
2014: Intel and
others set up Open
Interconnect
Consortium in
direct competition
with the AllSeen
Alliance
2012: Google
begins testing
prototype for
Google Glass,
an optical,
connected
head‐mounted
display
2012: Proteus
Digital Health gets
FDA clearance for
an ingestible
medical device
wireless
connected to a
mobile phone
2012: IPv6 is
launched worldwide,
providing virtually
unlimited IP
addresses enabling
billions more devices
to be connected to
the internet
2000: LG
announces
research
on world's
first
connected
fridge
2013:
Qualcomm and
others form the
AllSeen Alliance
to develop an
open framework
for IOT
2011: Nest Labs
launches its Learning
Thermostat with
sensor algorithms,
machine learning
and cloud computing
technologies
2014:
Google
Glass goes
on sale to
general
public at
$1,500
2008: The
IPSO alliance
is founded to
promote the
use of
networked
devices
2014: Apple
launches
HomeKit, an
app to
control the
smart home,
working with
AppleWatch
2008/9: The
number of
connected
devices exceeds
world population
for the first time
2014: Samsung
acquires
SmartThings, a
smart home
hub for
connected
devices

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Standards
 The market for the Internet of Things can only take off once all connected devices speak the same language.
 This has kicked off an intense battle for domination of the communications protocol that will govern the IoT.
Standards body Description Members
AllSeen Alliance
(a.k.a. AllJoyn Alliance)
Founded 2013
A Qualcomm-led open source project aimed at enabling compatible smart
devices to "recognize each other and share resources and information across
brands, networks, and operating systems."
Qualcomm
Cisco
Microsoft
Electrolux
LG
Sony
HTC
Haier
Panasonic
Open Interconnect
Consortium
Founded 2014
An Intel-led project aimed at creating a new standard by which household
gadgets communicate with each other.
Intel
Samsung
Atmel
Broadcom (left after
disagreement over IP)
Dell
The Physical Web
Founded 2014
A Google-led project aimed at allowing users to communicate “with any smart
devices without having to download an app first.”
Google
Industrial Internet
Consortium
Founded 2014
An Intel-led project with whose aim "is to accelerate the development and
availability of intelligent industrial automation for the public good."
Intel
Cisco
AT&T
IBM
Microsoft
GE
Samsung
VMware
Thread
Founded 2014
A Google-led project aimed at creating a new IP-based wireless networking
protocol.
Nest (Google)
Samsung
Freescale Semiconductor
ARM
Silicon Labs
Yale Locks
IPSO Alliance
Founded 2008
Formed in 2008, the Internet Protocol for Smart Objects (IPSO) Alliance was
one of the first IoT alliances. Its aim is to establish Internet Protocol as the
basis for the connection of smart objects.
ARM
Atmel
Bosch
Cisco
Freescale Semiconductor
Fujitsu
EDF
Ericsson
Google
Nokia
Oracle
Texas Instruments
Weightless
Founded 2011
A consortium promoting the Weightless-N long range (5km) wireless
communication standard.
ARM
Accenture
Cable & Wireless
CSR (Qualcomm)
Neul
Source: CM Research

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Value Chain
 We split the value chain for the Internet of Things into four layers: devices, connectivity, data and control.
Connectivity Layer Data LayerDevice Layer Control Layer
Applications
Operating System
Controller devices
‐ smartphone
‐ smartwatch
‐ tablet
‐ homehub
Connected "things"
Sensors, cameras
& antennae
Embedded chips
Internet
infrastructure
Edge devices
Database
Security
Storage
Analytics
Integration
Telecom networks
Network

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Device Layer
 Today, most connected devices – such as smartphones, tablets and laptops – are controlled by humans.
 In the Internet of Things, most connected “things” will be run by other connected “things”.
Source: CM Research
Apple Google LG Microsoft
Fitbit Samsung HTC Xiaomi
Apple Microsoft Sony Electrolux
Nest (Google) Sonos Samsung Dropcam (Google)
Autoliv Elektrobit Audi Ford
Delphi Takata BMW General Motors
Denso Valeo Fiat Mercedes
Google GE Fanuc ABB
IBM Rockwell Kawasaki Kuka
InvenSense Renesas Asia Optical NXP
Mobileye ST Microelectronics Largan Precision TomTom
ARM Intel Atmel Microchip
Broadcom Qualcomm Freescale Micronas
Device Layer
Connected
Things
Electronic
Components
Wearable
Technology
Industrial internet
Connected car
Automated home
Market leaders Challengers
Embedded chips
Sensors, cameras
& antennae

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Connectivity Layer
 Makers of edge devices like Cisco provide routers and gateways that act as the first point of entry into a data network.
 Internet infrastructure providers like Amazon Web Services provide the back-end systems which power the IoT.
 Telecom operators provide the pipes through which all this data travels.
Source: CM Research
Alcatel Lucent Juniper Networks Alibaba Facebook
Cisco Nokia Amazon Google
Ericsson Sonus Networks Apple Huawei
Akamai Google Equinix IBM
Amazon Microsoft HP Rackspace Hosting
F5 Networks Tibco Software Infoblox Telecity
BT Softbank Bharti Airtel KDDI
AT&T Telefonica China Mobile MTN Group
Level 3 Verizon China Telecom Orange
NTT Vodafone Deutsche Telekom SingTel
Connectivity Layer
Telecom networks
Internet infrastructure
Edge devices
Market leaders Challengers

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Data Layer
 In the age of PCs and laptops, many of the applications we used were run locally on the computer.
 With the Internet of Things, most of the data is processed in the cloud – the devices are just a collection of sensors.
Source: CM Research
Amazon IBM Qlik Tech Tableau
Google Microsoft Splunk Verint Systems
IBM Oracle Cloudera MongoDB
Microsoft SAP Hortonworks MarkLogic
Citrix Systems Red Hat Information Builders SAS
Informatica VMware MobileIron Teradata
Aruba Networks Fusion IO Arris Lenovo
Brocade Comms Riverbed Tech Huawei ZTE
IBM Check Point Software FireEye Palo Alto Networks
Fortinet Trend Micro HP Qihoo 360
EMC NetApp Amazon Microsoft
HP Nimble Storage Google Qlogic
Data Layer
Insight
Management
Infrastructure
Analytics
Storage
Security
Database
Market leaders Challengers
Integration
Network

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Control Layer
 The control layer is likely to become the most profitable segment of the IoT value chain.
 As more machines connect to the internet, the big technology giants may seek to act as gatekeeper for after-sales
services, weakening the original equipment manufacturer’s relationship with its customers.
Source: CM Research
Alibaba Facebook Samsung
Amazon Huawei Schneider
Apple Baidu IBM Siemens
Google Cisco LG Sony
GE Microsoft Twitter
Belkin iControl Ubi
Bosch Revolv Xiaomi
Evrythng Supermechanical
Control Layer
Apps
Control hubs
‐ home hub
‐ smartphone
‐ smartwatch
‐ tablet
Operating systems
Market leaders Challengers

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Key Players
Devices Connectivity Data Control
Philips Electronics
LG Electronics
Pace
Connected things Panasonic
Pioneer
Samsung Electronics
Sony
ARM
Atmel
Freescale Semi
Sensors, Infineon
microcontrollers Intel
& embedded InvenSense
chips MediaTek
Microchip Tech
Micronas Semiconductor
Nvidia
Qualcomm
Renesas
STMicroelectronics
Texas Instruments
Alcatel Lucent
Cisco
Edge devices Ericsson
Juniper Networks
Nokia
Sonus Networks
21 Vianet
Akamai
Internet / Cloud Amazon
Infrastructure F5 Networks
Google
Infoblox
Rackspace Hosting
AT&T
BT
China Mobile
Telecom China Telecom
operators Deutsche Telekom
Level 3
NTT
Softbank
Telefonica
Verizon
Vodafone
Qlik Tech
Analytics Salesforce.Com
Splunk
Tableau
IBM
Database Oracle
SAP
Citrix Systems
Informatica
Integration Mobile Iron
Red Hat
VMware
Arris
Aruba Networks
Network Brocade Comms
Riverbed Tech
ZTE
Check Point Software
FireEye
Security Fortinet
Palo Alto Networks
Trend Micro
CommVault
EMC
Storage Hewlett-Packard
NetApp
QLogic
Alibaba
Amazon
Apple
Apps, Baidu
operating systems, Cisco
& control hubs Facebook
GE
Google
IBM
Microsoft
Samsung Electronics
Sony

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2015 investment themes
Social
‐ Crowd funding
‐ Virtual currencies
‐ Sharing economy
‐ Music, video, games
Cloud
‐ Enterprise software
‐ Internet of things
‐ Automated home
‐ Cyber security
Mobile
‐ operating systems
‐ maps
‐ mobile payments
‐ messaging
Big Data
‐ Artificial intelligence
‐ Ad‐tech
‐ Software analytics
‐ Wearable tech
Ecosystems
‐ Ecommerce
‐ Enterprise software
‐ Automated home
‐ Mobile internet
Internet of Things
‐ Automated home
‐ Artificial intelligence
‐ Ambient commerce
‐ Cyber security
Adv. Manufacturing
‐ 3D printing
‐ Artificial intelligence
‐ Robotics
‐ Driverless cars
Software Defined
Networking
‐ Service enhancement
‐ Network function virtualis
‐ Cost reduction
Wearable Tech
‐ Google Glass
‐ Smart watches
‐ Med‐tech
‐ Internet of Things
Internet TV
‐ Video streaming platform
‐ Second/third screens
‐ 16k / flexible screens
‐ Ad‐tech
China
‐ Alibaba IPO
‐ Telecom equip trade wars
‐ Variable Interest Entities
‐ Accounting risk
Regulation
‐ Net neutrality
‐ Data privacy
‐ Patent litigation
‐ Anti‐competition law

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Contact CM Research
Research:
Cyrus Mewawalla
cyrus@researchcm.com
Sales:
Elgen Strait
elgen@researchcm.com
56 Broadwick Street | Soho | London W1F 7AJ | United Kingdom
+44 20 3744 0105
www.researchcm.com
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