1 Smart SystemsDesign Research

Smart Buildings Brief:Multi-Unit Dwellings

Technology Research Business Strategy Services Design+ +

Trends & Forces

Segmentation

Profit Map

Forecast

Business Models

Ecosystem

2 Smart Buildings BriefJanuary 2017

Buildings Market Trends and Forces

Integrated technologies and low-cost wireless technologies continue to gain significant traction as the connected Building market seeks to optimize energy costs and equipment performance. The confluence of forces point towards a large and growing opportunity

Technology

Socioeconomic

• Building occupants and managers are adopting building automation technologies to hedge against volatile energy prices and meet energy efficiency requirements. Global estimates put building usage at roughly 30-40% of total energy use.

• Governments are responding to climate change, energy prices, pollution, and other concerns by increasing their involvement in the market. Regulatory activity is intensifying, driven by political and social concerns about energy dependence and environmental impacts.

• Even as standards have narrowed to protocols such as BACnet and IP-based building systems, integration problems persist as new protocols, players and technologies push back on traditional proprietary systems.

• The convergence between low-cost wireless communications, web-enabled IT systems and all other building automation systems is fueling system development

• Increased communication between IT and buildings networks as well as third party service providers has opened the door to cyber attacks.

• Smart grid and smart building integration is in its early stages, but future developments will tightly tie the building and energy markets together.

Customers

Competitive

• Companies are struggling to adjust their business models and portfolios as services become more central. Open protocols and lower barriers to entry have encouraged the successful emergence of smaller and more innovative startups.

• As smart buildings become more complex, offering a truly “end-to-end” solution is nearly impossible to achieve alone. Near-constant technological advances and the breadth of the buildings market require that companies expand through acquisitions or partnerships.

• End users are moving beyond historical HVAC automation into more complex applications. Lighting has emerged as the next “baseline” application, with more extensive energy management, security, and other applications on the horizon.

• Traditional point solutions (heating, air-conditioning, and lighting) are now converging onto a common IT infrastructure, driving integrated Building Energy Management (BEM) solutions.

• Cost savings and high performance are key end user considerations. Mission critical buildings are more likely to adopt the latest wireless and integrated technologies.

Large & Growing Smart Buildings Opportunity

3 Smart Buildings BriefJanuary 2017

Smart Buildings Market Segmentation

While the device segments across each customer sub-segment are similar, the customer sub-segments themselves are defined by the function of the building, or what the building is being used for. This user context is critical to the technologies and suppliers in each

•Appliances•Utility Metering• Lighting Components• Intrusion, Detection & Alarms

•Appliances•Utility Metering•HVAC Systems• Lighting Components• Fire Detection Equipment

•HVAC Systems• Lighting Components•Metering Electrical Power

Distribution• People Moving

•HVAC Systems• Lighting Components• Electrical Power

Distribution• People Moving

Smart Infrastructure

Homes

Single Tenant Multi Tenant (MDUs)

Buildings

Commercial & Institutional Industrial

Buildings and Facilities

Sector

Venue

Customer Segment

CustomerSub-Segment

DeviceSegment

4 Smart Buildings BriefJanuary 2017

Many Suppliers Coming At Smart Buildings Market From Many Angles

Box Stores• Lowes• Home Depot

Equipment & Product OEMs• Schneider Electric• Johnson Controls• General Electric• Honeywell International;• Emerson• UTC• Samsung• Whirlpool • Nest

Demand Response Platforms• Opower• C3 Energy• Comverge• EnergyHub• Energate

IT Behemoths• Apple• Google• Cisco• Amazon

Carriers and Network/Data Services Providers• AT&T• Verizon• Rogers• ADT• Swisscom• Orange• Comcast

Silicon Players• Freescale• Texas Instruments• Intel• Gainspan

Utilities• British Gas• Enel• NV Energy• OG&E• PG&E• SMUD• SDG&E• SSE

IoT Software Platforms• Smart Things• Ayla Networks• ThingWorx• Alarm.com• Tendril• Analytica

Solar/Inverter• SolarCity• Vivint.Solar• Sunpower• Enphase

Energy

The Supplier Ecosystem is Fragmented…

• Traditional building management and automation offerings are not well suited for smaller commercial or residential buildings

• Occupant comfort and convenience focused offerings have struggled to find relevance in larger commercial, retail and multifamily residential buildings

• Suppliers have struggled to develop successful horizontal offerings due to the diverse needs of stakeholders across commercial and residential buildings

• Platforms enabling both building automation and control systems and occupant comfort and convenience solutions are well position for rapid growth across building sub-segments

SmartBuildings

5 Smart Buildings BriefJanuary 2017

Smart Buildings Market Opportunity Scale

While Commercial buildings represent the largest current opportunity, Residential is almost as large and is not well served today. This is especially true for Multi-Dwelling Units where commercial technologies and consumer technologies have not naturally coalesced

2016 Buildings Smart Systems Revenue by Building Type and Device Segment ($32,398M)

IndustrialCommercial & Institutional

Lighting

Residential

Life Safety, Surveillance & Security

HVAC & Large Appliances

Other

Electrical Power Distribution & Quality

$3,835$958

$14,921M $2,708M

$289$2,006

$14,768M

$1,696

$1,743

$221

$2,682

$2,108

$412

$5,769

$2,879

$828

$1,256

$5,717

Multi Tenant

Security Management

Supply Chain Management

Single Tenant

Customer Support

Energy Management

Database & Analytics

Asset Management

Mobile & Cloud Services

$1,087M

$97

$247

$256

$199

$191

$1,401M

$333

$259

$143$185

$104

$115

$75

$134

$149

Residential Smart Systems Market 2016by Value Added Application

6 Smart Buildings BriefJanuary 2017

Smart Buildings Player and Profit Map

If the opportunity scale across the range of building devices equals approximately 6X the value of base products in networked smart services potential, then the market opportunity in the smart buildings arena equates to almost a trillion dollars in value added services

7 Smart Buildings BriefJanuary 2017

Multi-Dwelling Units As A Testbed For User-Focused Innovation

Multi-dwelling units (MDUs) sit at the intersection of residential homes and commercial buildings, having characteristics of both. The size of MDUs and the multiple stakeholder groups results in more potential suppliers of equipment, devices, technologies and systems to these buildings, and thus serve as testbeds for technology innovation that meets needs of both occupants and owners/operators

TraditionalCommercial

TraditionalResidential

Multi-Dwelling

Units

ResidentialTechnology in residential settings has always focused on two applications: comfort & convenience and safety & security. As such, traditional suppliers have tended to target a specific application. While the line between the two groups of suppliers is blurring, these consumer-oriented companies are rarely geared towards commercial applications.

Due to the fragmented user-base and fickle nature of consumers, new entrants are coming from all angles and some are experiencing mild success as the race for consumer acceptance (and data) continues.

Multi-Dwelling UnitsMDUs are characterized by two groups of stakeholders: occupants and owner/operators. The structures themselves are closer to commercial buildings in terms of size and more centralized systems, however, the needs of individual unit occupants must be considered.

With characteristics of both commercial and residential buildings, MDUs serve as a testbed for innovative technology solutions that serve the needs of all parties involved.

Safety &Security

Energy Management /

Comfort

Comfort & Convenience

Operations Visibility &

Optimization

Safety &Security

CommercialTechnology in commercial buildings has traditionally focused on operations visibility and optimization and safety and security. These buildings are characterized by more centralized systems, and due to the size of these buildings, they incur high operations costs (e.g. energy, maintenance, etc.).

Larger IT companies and equipment manufacturers have controlled much of this market in the past. These traditional suppliers have acquired new software and application platforms to provide better services to their customers, and are entrenched in their market-leading positions.

8 Smart Buildings BriefJanuary 2017

Business Models Addressing This Market Are Varied

Supplier business models are largely dependent on their legacy, however, traditional approaches will not result in a winning position in this market. To effectively serve all MDU stakeholders, collaboration between and amongst multiple suppliers will be critical

SmartMulti-Dwelling

Units

Application Enablement Platforms

Provide OEMs with a platform to connect consumer end products

Gateway/Aggregators

Offer hardware, software and/or services to coordinate across devices and systems

Building System Automation

Provide automation, monitoring and services for large, centralized building systems such as HVAC and electrical power distribution

Home Automation Solutions

Provide more complete coverage of multiple applications, including security, energy, lighting, etc.

Bundled Services

Offer home network services, often leveraging “bundles” home automation software/platforms from other providers

Utility-Energy Management

Provide energy-related hardware, software and services for improved customer usage & efficiency

B2B - UtilityB2C

Consumer Devices

Offer personal assistant and other consumer electronic devices to be the home-based center of a consumer’s “smart life”

9 Smart Buildings BriefJanuary 2017

Have Your Say: Participate In Harbor’s 2017 Smart Buildings Market Survey

Harbor Research is currently conducting a market study of both adopters (building owners, managers, developers, engineers and architects) and suppliers (equipment, technology and service providers) of smart, connected devices and services.

After investigating the challenges and opportunities for IoT technologies identified by business and thought leaders, we’ll be sharing the findings with every survey participant. Everyone that completes the survey will also be entered into the drawingfor a $250 Amazon gift card.

Owners, Operators & Developers

Take the Survey Here

• Building Owners• Building Managers/

Operators• Developers• Builders• Engineers & Architects

TechnologySuppliers

Take the Survey Here

• Technology hardware (e.g. gateways, hubs, smartphones) providers

• IT software and services providers

• Network enablement hardware manufacturers

• Network service providers• Telecommunication equipment

and service providers• Cloud storage and computing

infrastructure providers• Internet of Things software

platform providers• Value-added application (e.g.

analytics, orchestration) developers or providers

Original Equipment Manufacturers

Take the Survey Here

• Climate control equipment

• In-home display equipment

• Security and access equipment

• Energy and power distribution equipment

• Personal healthcare devices

• Fire/life safety equipment• Appliances• Lighting & Lighting

Fixtures• Smart outlets and plugs

ServiceProviders

Take the Survey Here

• Electric and water utilities

• Maintenance professionals

• Network and IT systems integrators

• Device installers• Insurance providers• Security service

providers• Government

organizations

IndustryExperts

Take the Survey Here

• Consultants• Analysts • Researchers

10 Smart Buildings BriefJanuary 2017

Our clients want to make sure it fully benefits from its capabilities by pursuing large, validated opportunities. In the past, commonly available market research might have sufficed to supply needed market, competitor and customer information. However, given the rapidly changing IoT environment and the need to look beyond the surface drives a need for much greater specificity. Hence, our Smart Systems Research Service is specially configured across three basic dimensions:

Market Intelligence Tracking, Insights and Reviews

Research Briefs &Configured Research

Marketing Visibility &Community Forums

o On-Going Queries

o Market Intelligence Updates

o Topic Briefings

o Custom Forecast Modeling

o Strategic Business Reviews

o Player Analysis and Database

o 2017 Smart Systems Forecast and Report

o Market and Technology Briefs

o Configured Research Modules

o Workshops and Innovation Forums

o Co-created Research and Surveys

The goal of this service is to act as an extension of your team. To that end, Harbor Research will dedicate an analyst to facilitating and supporting your team with market intelligence, configured research and on-going strategy feedback.

o Webinar/Panel Moderation

o Content and White Papers

o Speaking Engagements

o Market and Ecosystem

Development

o Access to community webinars

o Access to Smart Systems forum

Our research service is organized into three main areas

11 Smart Buildings BriefJanuary 2017

Industrial Energy & Infrastructure Consumer Healthcare Buildings Transportation

Harbor’s client mix affords a unique perspective on market development – we have actively worked to foster a community of interest for smart systems and the Internet of Things

Harbor Research Clients and Community

12 Smart SystemsDesign Research

Alex GlaserDirectoraglaser@harborresearch.comP: 303-786-9000 x25M: 314-374- 8656@Aglaser_IoT

Harry PascarellaConsultant

hpascarella@harborresearch.comP: 303-786-9000 x36M: 207-632-1780@HSPascarella