Part I:  TiE-SV Panel and IoT Track at TiECon 2014

Introduction:

In the past two weeks, we’ve attended Internet of Things (IoT) presentations at TiE-Silicon Valley (SV), IDC Directions 2014 and (via webinar) from Yankee Group.  This three-part article summarizes the key take-aways from each of those events.

Backgrounder:

The confluence of efficient wireless protocols, improved sensors, cheaper processors, and a bevy of startups and established companies developing the necessary management and application software has finally made the concept of the Internet of Things (IoT) mainstream.

by 2020, Internet-connected devices are expected to number between 26 billion and 50 billion (depending on which forecast you believe). For every Internet-connected PC or handset there will be 5-10 other types of devices sold with native Internet connectivity. These will include all manner of consumer electronics, machine tools, industrial equipment, cars, appliances, and a number of devices likely not yet invented. In our view, the concept of the IoT will disrupt consumer and industrial product markets generating hundreds of billions of dollars in annual revenues, serve as a meaningful growth driver for semiconductor, networking equipment, and service provider end markets globally, and will create new application and product end markets that could generate billions of dollars annually

The IoT will result in profound changes in the way enterprises operate and the products they produce and consume. Although machine-to-machine (M2M) applications have existed for quite a while, these applications were closed, highly specialized and expensive. IoT opens up inexpensive connectivity to any device and couples this with the power of the cloud and big data analytics to enable enterprises to reduce costs, optimize resources, create new products, and explore new business models. 

McKinsey Global Institute’s Disruptive Technologies report calls out the Internet of Things (IoT) as a top disruptive technology trend that will have an impact of as much as $6 Trillion on the world economy by 2025 with 50 billion connected devices! The economic impact of IoT has been variously estimated as between $14.4 and $19 trillion, and inevitably this will create unprecedented opportunity for entrepreneurs, be they in software, hardware or services. Valuations for IoT startups have also increased dramatically and caught Wall Street and the venture capital community by storm, including Google’s acquisition of Nest for $3.2 billion dollars and Jawbone’s pre-IPO valuation at $1.5 billion.

TiE Silicon Valley IoT March 12, 2014 – Overview presentation and panel session discussion:

The IoT overview was presented by Bill Bien, a partner at Waterstone Management Group LLC.  “If software will eat the world, then the IoT will be the teeth that will do the eating,” according to Mr. Bien.  

Opinion: That’s a heck of a statement, considering how much software goes into cloud c& mobile computing/ mobile apps, e-commerce, gaming, virtual reality and big data/analytics.

“Embedded intelligence is now growing at 11% per annum, but will grow to In this session, we 40% by 2017,” said Bien (see Note below).  “There will be 50B connected devices by 2020,” he added.  Vertical market segments such as transportation, retail, agriculture, health care, government and others will all embrace IoT.  Investor interest is building up as evidenced by Google’s recent acquisition of smart thermostat maker NEST, according to Bill.

The drivers for IoT include:  increased processing power in devices (courtesy of Moore’s Law) and sensors, wireless ubiquity (95% cell phone penetration rate in the U.S.), cloud computing and big data deployments.  

IoT will change industries, according to Bill.  A few examples: wearable electronics and connected self, connected home and car, industrial Internet, connected health.A Credit Suisse (investment bank) study said there was “significant upside” for the connected home, but which direction it takes isn’t clear.  Will everything in the home be connected or will there be separate connected appliance solution depending on use or application, e.g. security, lighting and energy control, etc.

“The connected  car will be a $54B opportunity,” according to Bill.  That includes both mobile connectivity and services as well as telematics for remote management of the car.Industrial IoT was said to be a $3T to $6T market (by when?). That huge market includes: e-health, manufacturing, smart cities, power grid/smart grid, building controls, process automation.

An astonishing “$45B of the enterprise IoT market will be addressable by start-ups,” Bien predicted.  That includes: data analytics, enterprise software and analysis, applications and services.  

The Economist magazine stated that enterprise IoT is still in the planning phase with manufacturing in the lead.  It has to cross a “chasm” before it can be a commercial success.  While there’s great excitement and a lot of interest in enterprise IoT, the industry needs to change how software and services are sold to the customer.  Mr. Bien concluded: “Drivers are in place for rapid growth of IoT.  A diverse set of apps will soon be developed, but we’re still in the early days of IoT.” 

Note: Mr. Bien stated many forecasts for market size, growth rate and number of connected devices, but generally did NOT provide the source for any of those.  Part II of this series includes even more market size forecasts, which are all from IDC.

Panel Session Discussion:

Moderator:  Brett Galloway, Founder and CEO, Xova Labs

Panelists:

-Thomas A. Joseph, PhD, Senior Vice President, SAP’s Office of the CTO

-Bill Bien, Partner, Waterstone Management Group LLC

-Jasper zu Putlitz, Founder and Managing Director, ansacloud LLC (formerly with Bosch)

-Sanjay Manney, Director of Product Management, Echelon Corporation

-Pradip Madan, Advisor, Board Member, and Investor

-Patrick Eggen, Investment Director, Qualcomm Ventures

The panel first addressed the question of whether or not IoT is a real market, rather than just another way of talking about industrial networking technology.  The management and control of high value assets is one way IoT is different and distinct.  It’s a platform where discrete data can be used to manage high valued assets, suc  h as in health care.  It’s a system where many devices talk to each other, e.g. Internet connected health care appliances/monitors.

Sanjay Manney of Echelon thinks the IoT foundation starts with Internet protocols.  Then others are added to provide a “reliable form factor for the appropriate applications.  There’s a real value in putting sensor data in a software context,” he said.

Patrick Eggen of Qualcomm ventures said that WiFi was probably the most likely wireless network to be used for the IoT.  He said that cellular (3G, 4G) might be used in the future, but the economics of 3G don’t work today for many low cost applications.  (Note that Sprint is using 2G for many of it’s IoT/M2M configurations).  He identified smart cities, sensor based parking as applications while noting that many municipalities have their own proprietary wireless networks with cellular being too expensive to replace them.

Jasper zu Putlitz of ansacloud said the wireless carriers would be big beneficiaries of the IoT.  Of course, that assumes that their cellular services (2G, 3G, and 4G) are used.  Seven or eight wireless carriers control most global wireless access.  6% growth in service provider CAPEX is primarilly driven by wireless spending. 

How IoT will change transportation (cars, trains, buses, etc) was the next panel discussion point.  Connected transportation systems will include sensors with built in radios.  Telematics will be used to ensure smoother traffic flows. This will be part of many smart city initiatives.The challenge will be integrating many diverse technologies, especially different sensor types.  Much of the systems integration will need to be done in software.

One version of the connected home will be for optimized energy management, which will minimize wasted energy usage.  Such a system will control heating, lighting and react to the ambient environment, e.g. smoke alarms.  But standards for this are missing but needed to o beyond “hobbyist” endeavors.  A connected home/IoT system has to work flawlessly and be intuitive to sense (and possibly act) on ambient conditions.The panel continued to debate many interesting aspects of the IoT.  

While time and space don’t permit me to cover that, readers are invited to watch this TiE-SV event video at: 

http://player.vimeo.com/video/89187936?title=0&byline=0

IoT Track at TiECon 2014:

Many, including this author, believe that the Internet of Things is the next huge wave of growth of the Internet, and TiEcon 2014 will explore this fast expanding field of entrepreneurial opportunities. Big growth numbers and expectations are dramatically expanding for the IoT in Silicon Valley and globally. 

TiEcon 2014 (May 16, 2014) will explore all the major IoT trends and the disruptive opportunities they will create for startup innovation, consumer value and enjoyment, societal benefit, and wealth creation. If you are an entrepreneur and interested in surfing the next wave of the Internet, come join us at TiEcon 2014. We will be wrapping up the day with a panel of leading VCs talking about where they plan to invest!More info at:  http://tiecon.org/internet-of-things

From TiECON:  Why the ‘Internet of Things’ is relevant:

‣ $6 Trillion impact on world economy by 2025‣ 50 Billion connected devices by 2025

‣ Evolution of smart cars, buildings, factories & cities

‣ Proliferation of intelligent wearable technologies & smart devices

‣ Quantum leaps in innovations around healthcare, manufacturing & infotainment

What you will learn at TiECon 2014 IoT Track:

‣ Top market trends and projections in IoT

‣ Technology visions of the whose-who in IoT

‣ Shifts and transformations in value chains

‣ Demonstration of healthcare management through remote applications and sensors

‣ Innovative Ideas and breakthrough opportunities for entrepreneurs

TiECON 2014 Overview:

http://tiecon.org/content/conference-overview