Internet of Things 2020: A Glimpse into the Future

Silicon Valley Thought Leaders Series

Alex Blanter Partner +1 510 710 4365 Alex.Blanter@atkearney.com Follow me: LinkedIn | Twitter

Mark Holman Partner +1 650 400 0264 Mark.Holman@atkearney.com Follow me: LinkedIn | Twitter

We came here today to discuss the Internet of Things…

3% 5%

27%

48%

17%

Never Heard ofIt

Novice andLearning

CasuallyInformed

GenerallyFamiliar

Expert

#IoT2020

In the Know: 65% Up and Comers: 35%

…ahead of this meeting we asked for your forecasts on time to IoT value, speed of adoption across sectors and industries, and barriers to overcome

Source: A.T. Kearney IoT2020 Survey

Everybody seems to be talking about IoT

iot internet of things

security 2020

cloud trends cisco 2013 m

ean

blo

g

ioe

check

companies

gre

at

the

iot

ibm

need m2m data mobile

people time web

20

14

tech

google smart b

ig

join

app

world

IT b

log

s

technology connected

business bluetooth

digital

today

launches

de

vic

es

big data start gigaom

post

potential

#IoT2020

On track for nearly 22,000 publications

Source: Twitter, Google, Factiva, A.T. Kearney

Twenty unique definitions provided in the survey – key words: Devices, System, Connected, Internet, Data

Source: Sysomos, A.T. Kearney

#IoT2020

We define the Internet of Things as a…

seamless combination of embedded intelligence,

ubiquitous connectivity, and deep analytical insights

that creates unique and disruptive value for companies, individuals, and societies

#IoT2020

Source: A.T. Kearney

Ind

ustr

ies

Things

Value and Impact

Po

licie

s &

Sta

nd

ard

s

Identify

Sense

Connect

Collect

Analyze

Act

Taking that definition to the next, more detailed, level…

#IoT2020

Enterprise

Consumer

Public Sector

Source: A.T. Kearney

IoT will be pervasive… are you ready?

2013 to 2020: From half as many to twice as many – growth of IoT devices relative to traditional connected devices

Over 7.7 billion people 20X+ as many connected

devices per person Over 3.2M people Nearly 30 billion devices

By 2020 in the World…

Over 3.5

per every human on the planet

By 2020 in Silicon Valley…

#IoT2020

For a family of four: 250+

For us in this room: 7,000+

For all in Silicon Valley: 200M+

Internet of Things

Traditional connected devices

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0

5

10

15

20

25

30

Co

nn

ec

ted

d

evic

es

Source: BI Intelligence, US Census Bureau, Silicon Valley Index, A.T. Kearney

IoT will be materially disruptive – there will be winners and losers

By 2020 IoT will impact close to 6% of the global economy

$3.5T Revenue Redistributed

$1.9T Productivity Improvement

$177B Value to End Customer

$344B Additional IoT Revenues

Revenues directly attributable to sale of IoT hardware, software, and services

Direct reduction in costs driven by IoT and realized by end customers

Direct increase in output per unit of cost, enabled by IoT

and reinvested in productive assets and activities

Revenues realized within the world economy that will potentially move from one player to another with no net increase in total economy

Global Economy in

2020

$100T

#IoT2020

Source: A.T. Kearney

Additional IoT revenues will be split in a multitude of ways

Enterprise

Consumer

Public Sector

$217B

$97B

$30B

63%

28%

9%

#IoT2020

$344B Additional IoT Revenues

Survey Results: Time to Value Rank

1

2

3

$196B 57%

$41B 12% 18% $62B

13% $45B

Source: A.T. Kearney

2010 2015 2020 2025 2030

It will take years for IoT potential to be realized

1.0

Value buzz

1

• $1.1B of VC investment in IoT –

growing at 46% vs. 7% growth for all VC investment

• US government is investing

$100M per year and UK just

announced a £45m investment

• Cisco is investing $1B over 5 years; Intel has created IoT BU

• AT&T, Cisco, Intel, GE, IBM

forming Consortium

#IoT2020

Survey Results

13% 22% 59% 2% 4%

Source: A.T. Kearney

Challenges to IoT deployment and value span 6 areas

#IoT2020

Ind

us

trie

s

Things

Value and Impact

Po

licie

s &

Sta

nd

ard

s

Identify

Sense

Connect

Collect

Analyze

Act

Enterprise

Consumer

Public Sector • Lack of standards for critical layers of IoT solutions

• Multitude of alliances and partnerships

• Policies not keeping up with technological advancement

• Lack of scale needed to achieve acceptable cost points

• Limited near term business cases

• Concerns about design and implementation complexity

• Complex interoperability

• Complex interoperability

• Legacy environments

• Exponentially growing data volumes

• Lack of integrated end-to-end solutions that deliver value

Source: A.T. Kearney

Overcoming these challenges will require all and everyone – top 10 success factors

1. Standardized platforms and interfaces

2. Updated policies and regulations

3. Defined cross-industry collaboration models and alliances

4. Strategically eliminated systemic bottlenecks

5. Relentlessly lowered costs

Overall Ecosystem Individual Company

1. Clarity of business value

2. Strategic and operational flexibility

3. Focus on superior innovation

4. Collaborative and co-creative culture

5. Teams capable of ecosystem collaboration

#IoT2020

Source: A.T. Kearney

What will the future world look like?

Objects communicate with each other without humans and act independently

Distributed intelligence enables self sufficiency

Experiences are personalized

Autonomous

Analog and digital world merge, with seamless experiences across both

Everything can access everything else remotely

Sharing becomes predominant mode of use

Unified

Digital identity for every human, creature, and object… and a home page

Everybody and everything is traceable and trackable

Technology is pervasive but invisible

Transparent

Most everything is direct – intermediaries are gone

Most everything is real time – information, decisions, actions

Predictive, with an ecosystem that anticipates and responds to its environment

Dynamic

#IoT2020

Progress by 2020

Source: A.T. Kearney

Appendix: Survey Results

Question 1: How familiar are you with IoT? – 70+ responses received

3% 5%

27%

48%

17%

Never Heard ofIt

Novice andLearning

CasuallyInformed

GenerallyFamiliar

Expert

1. These responses omitted from the rest of the survey Source: A.T. Kearney

1

3%

Never

3%

Beyond 2025

2025

22%

2020

62%

2015

10%

2.6

2.0

1.4

Consumer

Public sector

Enterprise

5.9

5.7

4.4

4.3

3.5

2.3

2.1

Natural resources

Education

Financial Services

Healthcare

Transportation/ Logistics

Retail / Consumer Products

Manufacturing

4.2

4.1

3.9

3.3

3.2

2.5Standards

User concerns

Regulation

Investment

Insufficient value

Technical

Survey results

Q2: When will delivered IoT value live up to expectations?

Q3: Which sectors of the economy will develop the fastest?

Q4: Which industries will be furthest along the adoption curve by 2020?

Q5: Which factors need to be overcome for IoT to reach its potential?

Source: A.T. Kearney

Disclaimer

This document is exclusively intended for select clients of A.T. Kearney. Distribution, quotations, duplication, and excerpts are not permitted without A.T. Kearney’s prior written consent. The content compiled in this report is for presentation only and does not represent the complete findings or total documentation on the topic represented.