Internet of Things in High Tech –Why you should care… NOW

November 12, 2014

alex.blanter@atkearney.com

@AlexBlanter

Let me start at the end and give you the “answer”

Internet of Things will materially change what we do as individuals and enterprises – and that will happen

whether you do anything or not

High Tech companies –semiconductor, device, hardware, and systems –

will be key beneficiaries of the Internet of Things

Truly taking advantage of the Internet of Things will require different

strategic thinking and new execution capabilities

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Now you can leave to have a drink… or explore Las Vegas…or stay to see and hear facts, figures, and opinions

You are here today because you are interested in the Internet of Things – and so is everybody else

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On track for nearly 26,000 publications

2X rate increase in less than 6 months

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What is the Internet of Things (IoT)?

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

provide

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Let’s make this a bit more tangible

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Ind

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Things

Value and Impact

Po

licie

s &

Sta

nd

ard

s

Identify

Sense

Connect

Collect

Analyze

Act

Enterprise

Consumer

Public Sector

IoT will be pervasive… are you ready?

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

Over 7.7 billion people20X+ as many conne-

cted devices/personOver 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…

For a family of four: 250+

For all in Silicon Valley:200M+

Internet ofThings

Traditional connected devices

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

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10

15

20

25

30

Co

nn

ecte

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dev

ices

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IoT will be materially disruptive – there will bewinners and losers

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

$3.5TRevenue Redistributed

$1.9TProductivity Improvement

$177BValue to End Customer

$344BAdditional IoTRevenues

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

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Additional IoT revenues will be split in a multitude of ways

Enterprise

Consumer

Public Sector

$217B

$97B

$30B

63%

28%

9%

$344BAdditional IoTRevenues

Survey Results:Time to Value Rank

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$196B57%

$41B12% 18%$62B

13%$45B

Source: 2014 A.T. Kearney IoT Survey

2010 2015 2020 2025 2030

IoT journey is starting now

Valuebuzz

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

Survey Results

13% 22%59% 2% 4%

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Source: 2014 A.T. Kearney IoT Survey

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In many cases IoT will radically transform our lives –Smart Clothing example

Mobile apps that provide the user interface and tethered cloud connectivity

User

Cloud platform & software stackfor new use cases to be developed by multiple providers

Data storage and analytics platform

Oth

er

us

ers

Smart Clothing & Braceswith embedded sensors, medical monitors, and actuators

Wearableswith Bluetooth connectivity that transmit the sensed information to a Smartphone… or two other Wearables

Serviceproviders

• Healthcare

• Wellness

• Fitness

• Athletics

• Insurance

• Remote care

• Health & wellness mgmt.

• Emergency services

• Visualization

• Services mgmt.• Direct feedback

• Therapeuticintervention

Source: Pictures from company websites sensoria, djoglobal, fitbit, nod, gowtrainer

Information flow Services

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Not all industries will adopt IoT at the same time – adoption forecasts favor High Tech

2.1

2.3

3.5

4.3

4.4

5.7

5.9

Manufacturing

Retail / Consumer Products

Transportation / Logistics

Healthcare

Financial Services

Natural Resources

Education

Rank ordered responses, with 1 – fastest time to value

High Tech semi and devices opportunity (revenue sizing, $B)

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6

4

5

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Faster Slower

Opportunities to stake additional ground within and across IoT solutions will grow and multiply

• Communication

• Control & automation

• Storage & retrieval

• Data analysis & decision

• Transactional

• Monitoring & control

• Content

• Optimization

• Mobility

• Sharing

• Interactive

• Marketplace

• Internet access and connectivity infrastructure

• Data aggregation and storage

• Computing

• App & service development enablers & APIs

• Deployment & management solutions

• Sensors & actuators

• Radios

• Embedded processors

• Smart modules

• Wearables

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Across most industries IoT will transform more products into High Tech products

Traditional Products

High Tech ProductsTraditional

products incorporating

electronics and software

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IoT will change customer behaviors and will require even Higher Tech solutions

Delivery urgency

Dominant product mode

Connected devices

Appetite for new products

Personalization

Hardware

1.8B

Fledgling

7 days

1 to 3 yrs

Software

30B

Mainstream

Same day

2x / year

Experience

500B+

Prevalent

Hours

Monthly

Demanding Fickle Intolerant

2010 2020 2030

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Key players are starting to get serious about IoT – happenings in just the last two months

Qualcomm Chief Executive Steve Mollenkopf said automakers are accelerating efforts to bring mobile technology into vehicles — outpacing health care, education and the connected-home industries

Windows 10 will help Microsoft integrate more tightly with the Internet of Things… Windows 10 will run on wireless sensors and integrate with more objects and machines even as the platform is being designed to support applications across PCs, tablets and smartphones.

Europe’s largest telecommunications providers are gearing up for a battle in the lucrative race to connect cars, homes, utilities and other everyday devices to smartphones and other wireless devices.

Intel Corp is using sensors to predict tool failure, a company Internet of Things expert told attendees at a San Francisco event Tuesday.

Deutsche Telekom and China Mobile on Friday formed a joint venture that will see them provide connected car services to China's growing automotive sector.

Dell Inc. has opened a Silicon Valley laboratory where customers can develop software to improve business operations. The facility, dubbed the Dell Internet of Things Lab, opened in the Dell Silicon Valley Solution Center in Santa Clara

With the rise of the Internet and its data-rich applications, America's railroad system has entered a new age -- one that is focused on improving the commuter experience, enhancing safety and minimizing costs… Cisco's Connected Rail…

Best Buy will add more than 100 new smart-home products online and at 400 stores before Thanksgiving.

Microsoft and LG Electronics agreed to cooperate on the Internet of Things (IoT) yesterday when Microsoft’s Chief Executive Officer Satya Nadella was in Korea to attend the TechDays 2014 forum

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GE forges Internet of Things alliances with Verizon, Cisco, Intel… will also open up its Predix software platform to developers and users in 2015 as it aims to add intelligence to industrial gear

AT&T certifies tiny 3G module for IoTapplications …world's smallest 3G chip module for use on the carrier's cell networks. The 16-by-26-millimeter module is intended for applications in the Internet of Things, transmitting data between devices

Competition is also heating up in specific industry segments –semiconductor industry example

• Bought SmartThings, developing own wearable devices & software

• Investing $18bn in new manufacturing facility anticipating demand from IoT growth

• Intel and Qualcomm leading consortiums to define competing IoT standards

• Renesas collaborates with IS2T and Micrium to develop Microcontrollers for IoT applications

• ARM acquired SensinodeOy a provider of S/W technology for IoT

• Maxim teams with Logic PD to develop wearable devices

• TI launches its own IoT cloud ecosystem

• Silicon Labs offers suite of products targeting IoT applications including Zigbee SoCs

• Marvell introduces a new platform targeting the internet of things

• STM MEMS Sensor products target Wearables and applications beyond the smartphone

• Bosch partners with Institute for Technology Management (ITEM) at the University of St. Gallen

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LogicRadio, Analog and Power Management

Sensors & ActuatorsMemory

Success in IoT requires… high level of business value clarity

Are you moving fast enough?

What industrieswill be the main focus?

Where your company fits into IoT ecosystem?

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Success in IoT requires… explicit strategic choices

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Semiconductor example

Continue in the core

Expand to adjacent upstream

Evolve into a platform player

Transition from products to solutions and services

E.g., manufacture Individual components that go into sensors &

devices

Integrate devices, memory, computing

into SoC edge modules

Provide components, modules, software to

enable edge modules and customer applications

Go into specific industry verticals with customer

ready offerings

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Success in IoT requires… alignment of innovation focus with selected strategic choices

Continue in the Core• Tune product characteristics to IoT-specific needs – e.g., low power,

low cost, increased variability

Expand to adjacent upstream

• Focus on system and sub-system design and strengthen integration capabilities, including software

Evolve into platform player

• Drive standardization and interoperability

Transition from products to solutions/services

• Deepen vertical industry expertise and corresponding ecosystem relationships

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Strategic Choice Innovation Focus

Success in IoT requires… operational capabilities built for flexibility and experimentation

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Focus on superior innovation

Proactively manage complexity

Implement agile product development

Enable distributed collaboration

Social Ideation & Creative DesignSharable 3D virtual prototyping to infuse innovation from customers, designers and engineers alike…3D virtual prototypes can be displayed on any browser, any time, anywhere in the worldhttp://www.3ds.com/industries/high-tech/ht-body/social-ideation-creative-design

Ideation & Concept DesignCombines automated social market listening, streamlined 3D-drawing to 3D-design integration, project-oriented social media, and one-source-of-truth product lifecycle management for extensive development capability. Available on-cloud and on premise. http://www.3ds.com/industries/high-tech/ideation-concept-design/

Requirement, Traceability & TestAutomate capture of customer needs and associated product specifications... “voice of the customer” translation it into user requirements for new product definition. Single repository…http://www.3ds.com/industries/high-tech/smarter-faster-lighter/requirements-traceability-test/

Concurrent Hardware & Software DesignImproves coordination between ME, EE and SW eng teams. Provides a single repository for all PD data including spec, 3D models, code, analysis results, and mfg requirements.http://www.3ds.com/industries/high-tech/smarter-faster-lighter/concurrent-hardware-software-design/

Semiconductor Collaborative DesignFaster design integration through advanced element modularization. Efficiently manages design data for an entire design organization. Design data contributed by individual teams seamlessly integrated into higher level designs. http://www.3ds.com/industries/high-tech/silicon-thinking/semiconductor-collaborative-design/

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