The Internet of Everything 2016

Providing in-depth insight, data, and analysis of everything digital.
BI Intelligence
The Internet of Everything

THE INTERNET FIRST CAME TO US ON PCS
Estimated Global PC Installed Base
Source: BI Intelligence Estimates, 2015
-
15
30
2015E 2016E 2017E 2018E 2019E 2020E
Installed Devices (Billions)

IT THEN MOVED TO SMARTPHONES
Estimated Global PC And Smartphone Installed Base
-
15
30
2015E 2016E 2017E 2018E 2019E 2020E
Smartphones Personal Computers

EXPANDED TO TABLETS, SMARTWATCHES,
AND TVS
Estimated Global PC, Smartphone, Tablet, Connected TV,
And Smartwatch Installed Base
-
15
30
2015E 2016E 2017E 2018E 2019E 2020E
Smartphones
Personal Computers
Tablets
Smartwatches
Connected TVs

AND IS NOW COMING TO ALL OF OUR EVERYDAY
DEVICES UNDER THE INTERNET OF THINGS
Estimated Global PC, Smartphone, Tablet, Connected TV, Smartwatch,
And IoT Device Installed Base
-
15
30
2015E 2016E 2017E 2018E 2019E 2020E
Tablets
Personal Computers
Smartwatches
Connected TVs
IoT Devices
Smartphones

BY 2020, 34 BILLION DEVICES
WILL BE CONNECTED TO THE INTERNET
Estimated Global Internet-Connected Device Installed Base
-
20
40
2015E 2016E 2017E 2018E 2019E 2020E

THAT’S MORE THAN 4 DEVICES FOR EVERY
HUMAN ON EARTH
2020 Estimated World Population Vs. Internet-Connected Devices
Source: UN, BI Intelligence Estimates
8
34
Global Population Internet-Connected Devices
Billions

THE INTERNET OF THINGS HAS THE POWER
TO REVOLUTIONIZE EVERYTHING
Source: Shutterstock- Mikko Lemola

IT’S REVOLUTIONIZED OUR HOMES…
Source: Shutterstock

OUR BUSINESSES…
Source: Getty

AND OUR CITIES…

WHAT’S DRIVING THE IOT’S GROWTH?

BY 2018, HALF OF THE WORLD
WILL BE CONNECTED TO THE INTERNET
Estimated Penetration Of Global Population Using The Internet
Source: ITU
0%
50%
100%
2005 2007 2009 2011 2013 2015E 2017E 2019E

AND THE PRICE OF HARDWARE THAT MAKES
THE IOT POSSIBLE IS DROPPING
Average Sensor Cost Forecast
Source: Goldman Sachs, BI Intelligence Estimates, 2014
$0.00
$0.75
$1.50
2004 2006 2008 2010 2012 2014 2016E 2018E 2020E

BY 2020, 24 BILLION IOT DEVICES
WILL BE INSTALLED
Estimated Global Internet-Connected Device Installed Base
-
15
30
2015E 2016E 2017E 2018E 2019E 2020E

THE MAJORITY OF IOT DEVICES WILL BE USED
BY BUSINESSES AND GOVERNMENTS
Estimated Global IoT Device Installed Base
0
15
30
2015E 2016E 2017E 2018E 2019E 2020E
Enterprise IoT Devices
Government IoT Devices

AND BUSINESSES WILL BE THE TOP INVESTOR
IN IOT SOLUTIONS
Estimated Global IoT Investments Compounded 2015-2020
$-
$5
$9
Enterprise Government Consumer
USD (Trillions)

HOW ARE BUSINESSES
USING IOT DEVICES?

AS OIL PRICES FALL…
Historic Oil Prices
Source: Federal Reserve, Bank Of St. Louis, 2015
$-
$20
$40
$60
$80
$100
$120

OIL AND GAS EXECUTIVES ARE INVESTING
IN THE IOT TO BECOME MORE EFFICIENT
Global Oil & Gas Company Executives’ Future Plans To Invest
In Digital Technologies Over The Next 3-5 Years
Source: Accenture, Microsoft, 2015
18%
0% 25% 50%
Don't Plan To Invest
Invest The Same Amount
More
Significantly More

MANUFACTURERS ARE CURRENTLY SEEING
THE MOST RETURNS FROM IOT INVESTMENTS…
Source: TATA Consultancy Services, 2015
0% 25% 50%
Media and Entertainment
Consumer Packaged Goods
Insurance
Automotive
Utilities
Healthcare and Life Sciences
High Tech
Travel, Transportation, and Hospitality
Retail
Energy
Telecom
Banking and Financial Services
Industrial Manufacturing
Industries Seeing Largest Returns From IoT Investments
% of respondents in their industry with 2014 revenue gains from IoT of > 30%

AUTOMATING THEIR PRODUCTION THROUGH
INTERNET-CONNECTED ROBOTS
Estimated Global Industrial Robot Shipments
Source: IFR Estimates, BI Intelligence, 2014
-
250
500
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Installations (Thousands)

AGRICULTURAL COMPANIES ARE USING SENSORS
TO COLLECT DATA FOR PRECISION FARMING
Estimated Amount Of Data Generated By The Average Connected Farm Per Data
Source: Onfarm, BI Intelligence Estimates
-
2,500,000
5,000,000
Data Points Generated Per Day

DOCTORS CAN REMOTELY MONITOR
THEIR PATIENTS
Percent Of Americans With A Wearable Fitness Tracker
By Age
Source: Icontrol State of The Smart Home, 2015
0%
10%
20%
Total 25-34 35-44 45-54 55-64 65+

INSURANCE COMPANIES ARE TRACKING CUSTOMERS’
DRIVING HABITS FOR USAGE-BASED INSURANCE…
Estimated Number Of US Drivers Who Have Or Have Had Usage-Based Insurance
Source: Insurance Research Council, Tower Watson, NHTSA, BI Intelligence
Estimates, 2015
-
30
60
2014E 2015E 2016E 2017E 2018E 2019E 2020E
Number Of Consumers
(Millions)

AND ADOPTING IOT DEVICES RAPIDLY
Q: How far, if at all, has your company progressed with these IoT-related
connected insurance initiatives?
Source: Accenture, 2014-2015
0%
50%
100%
2014 2015 2014 2015 2014 2015
Connected
Home/Buildings
Health and Fitness
Monitors
Other Wearables
It's not currently of any interest
It's a topic of focus/discussions but we
have no concrete plans yet
Strategy defined in this area
We have launched pilots or are in test
phase
We have already launched, or are about
to launch products and services using
these technologies

RETAIL STORES ARE USING BEACONS TO TRACK THEIR IN-
STORE CUSTOMERS AND PUSH DISCOUNT OFFERS
$-
$25
$50
2015E 2016E
USD (Billions)
*Top 100 Retail Locations Only
Estimated US In-Store Retail Sales Influenced By Beacon-Triggered Messages

UTILITIES COMPANIES CAN REMOTELY MONITOR
THEIR CUSTOMERS’ POWER USAGE
Source: Pike Research, IBIS World, USITC, European Commission, Northeast
Group, Ernst & Young, News Releases 2010-2015, BI Intelligence Estimates 2015
-
500
1,000
2014 2015E 2016E 2017E 2018E 2019E 2020E
Installed Base (Billions)
Estimated Global Number Of Smart Meters Installed

HOW ARE GOVERNMENTS
USING IOT DEVICES?

AS THE URBAN POPULATION RISES…
Estimated Percentage of World Population Living In Cities
Source: UN Estimates, 2015
0%
35%
70%
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
2020
2023
2026
2029
2032
2035
2038
2041
2044
2047
2050
We Are Here

URBAN PLANNING FOR CONNECTED CITIES
WILL BECOME MORE IMPORTANT

AND CITIES’ INVESTMENT IN THE IOT IS SOARING
Estimated Connected Cities’ Investment In IoT Systems Per Year
$0
$70
$140
2014E 2015E 2016E 2017E 2018E 2019E
USD (Billions)

BY 2020, 6 BILLION IOT DEVICES
WILL BE USED BY CITIES
Estimated IoT Device Installed Base for Connected Cities
-
4
7
2014E 2015E 2016E 2017E 2018E 2019E
IoT Device Installed Base
(Billions)

WHICH CAN IMPROVE CITIES IN MULTIPLE WAYS
Source: Libelium

GOVERNMENTS ARE ALSO AUTOMATING
THEIR DEFENSE
Global Spending on Smart Weapons
Source: Transparency Market Research, BI Intelligence, 2015
$-
$40
$80
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
USD (Billions)

THROUGH DRONES AND ROBOTS
Global Shipments of Military Robots
Source: Frost & Sullivan, BI Intelligence, 2015
0
70
140
2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E
Thousands

HOW ARE CONSUMERS
USING IOT DEVICES?

THE SMART HOME MARKET HAS BEEN
STRUGGLING TO TAKE OFF
North American Smart Home Device Penetration
Source: McKinsey, 2015
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Connected Smoke/CO Detector
Remote Video
Connected Lock
Connected Leak Detector
Connected Thermostat
Connected Lighting
Connected Energy Tracking
Connected Lawn Sprinklers
Vitals Data Uploading
Connected Scale
Elderly/Child Activity Uploading
Connected Pill Case
Connected Washer/Dryer/Dishwasher
Connected Stove/Oven
Connected Refrigerator/Pantry
Connected Cleaning/Vacuum
Multi-Room Music
Seamless Audio/Video Playback
Room Controlling Home Theater
Security And
Safety
Utilities
Management
Wellness
Monitoring
Smart
Appliances
Smart
Entertain
ment

BECAUSE THE DEVICES ARE TOO EXPENSIVE
2015 Advertised Prices Of Connected Vs. Nonconnected Home Products
Source: Amazon, Sears, Nest, Walmart, Best Buy, Build.com, Sears, Home Depot
$250
$16
$250
$18
$200
$31 $25 $8
August Door Lock
Master Lock
Nest Thermostat
Honeywell Basic
Thermostat
Nest Connected Home
Monitoring Camera
Astak Wired Security
Camera
Belkin Wemo 60W Light
Bulb
Cree LEDi 60W
Connected Nonconnected

HOWEVER, THE CONNECTED CAR MARKET
EXPLODED IN 2015

PRIMARILY BECAUSE
AUTOMAKERS SEE
MULTIPLE INTERNAL
BENEFITS FROM
CONNECTING THE
CARS THEY SELL
1
• Collecting Data Generated By
The Car
2
• Pushing Over-The-Air Updates
To Prevent Recalls
3
• Improving Car Safety
4
• Sell Connected Car Products &
Services (e.g. apps, media, etc.)
How Automakers Benefit From Connecting Cars

AT&T CONNECTED NEARLY 3 MILLION CARS
IN THE FIRST 9 MONTHS OF 2015
AT&T Connected Car Net Adds
Source: AT&T Company Filings
-
600,000
1,200,000
3Q 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015
Net Adds

THAT’S 43% OF THE CARS THEIR 8 AUTOMAKER
PARTNERS SOLD
AT&T Net Adds Vs. Total Car Sales Of 8 Partners
Source: AT&T Company Filings, Motor Intelligence, WSJ, Company Filings, 2015
-
1
2
3
4
5
6
7
AT&T Partners AT&T
Millions
Subaru of America
Volvo
Nissan North America
Tesla
BMW of North America
Audi of America
Ford
GM

THESE TECHNOLOGICAL ADVANCEMENTS
WILL LEAD TO A SELF-DRIVING CAR
Global Self-Driving Car Shipment Forecast
-
3
6
2015E 2016E 2017E 2018E 2019E 2020E
Cars Shipped (Thousands)
Remote Valet
Assistant
Highway
Autopilot With
Lane-Changing
User Operated
Year Feature
Is Released

WHAT’S SLOWING THE IOT DOWN?

THE CURRENT INFRASTRUCTURE CAN’T HANDLE
THE INTERNET TRAFFIC
North America Mobile Data Traffic Forecast In Petabytes Per Month
Note: Data traffic prediction based on average of Cisco and Ericsson Mobile Data Traffic forecasts
Source: CTIA
0
1,750
3,500
2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E

THEREFORE, NEW NETWORKS
ARE BEING INTRODUCED
Source: BI Intelligence THE IoT NETWORKS REPORT, 2015
ISP/Server
Base
Hardwire
Telco Wireless
Network
Internet
Modem
Gateway
Wireless Router
Internet Network
Devices
Ethernet
Ethernet
Wi-Fi
Wi-Fi
Internet Origination
Points
IoT Devices
Mesh
Networking
Network Signal Range
Low
High
Long Range
Hardwire

ALL OF THESE NEW NETWORKS ARE CONFUSING TO
BUSINESSES, GOVERNMENTS, AND CONSUMERS

THERE ARE ALSO 3 PRIVACY
AND SECURITY CONCERNS

IOT DEVICES OFTEN LACK BASIC
CYBERSECURITY PROTECTIONS
(I.E., STRONG PASSWORDS, ENCRYPTION)
1.

IOT DEVICES GIVE CYBER CRIMINALS NEW
AVENUES TO STEAL SENSITIVE DATA FROM
ENTERPRISES, CONSUMERS, AND GOVERNMENTS
2.

STATE-BACKED HACKERS AND HACKTIVISTS
CAN USE IOT DEVICES
TO DO PHYSICAL DAMAGE
3.

THESE VULNERABILITIES HAVE BEEN BROUGHT
TO LIGHT BY RECENT HACKS
Source: WSJ, 2014; WIRED, Engadget, 2015

AS A RESULT, IN 2016, WE EXPECT CYBER
SECURITY INVESTMENTS TO RISE
Estimated Global Cybersecurity Market
$0
$80
$160
2015E 2016E 2017E 2018E 2019E 2020E
USD (Billions)
Connected Car
Wearables
Connected TV
Mobile/Network
PCs
IoT Devices

AND DEMAND FOR CYBER INSURANCE
IS SET TO EXPLODE
Estimated Global Annual Cyber Insurance Premiums Written
Source: PwC, Lloyds, BI Intelligence Estimates, 2015
$0
$4
$8
2014E 2015E 2016E 2017E 2018E 2019E 2020E
USD (Billions)

EVEN WITH THESE BARRIERS
THE INTERNET OF THINGS MARKET
WILL BE HUGE…

IN TOTAL, $6 TRILLION WILL BE INVESTED
ON IOT SOLUTIONS BETWEEN 2015-2020
Estimated Global IoT Investment Per Year
$-
$4
$7
2015E 2016E 2017E 2018E 2019E 2020E
USD (Billions)
Enterprise Government Consumer

THAT’S 1.25% OF THE GLOBAL GDP
DURING THAT SAME TIME
Compounded Global IoT Investment vs. Compounded Global GDP (2015-2020)
Source: : World Bank World Development Indicators, International Financial Statistics
of the IMF, IHS Global Insight, Oxford Economic Forecasting, BI Intelligence Estimates
$-
$100
$200
$300
$400
$500
$600
Compounded IoT Investment Compounded GDP
USD (Trillions)

THAT $6T INVESTMENT WILL GENERATE
A $12.6T ROI OVER THE NEXT DECADE
Estimated Global IoT Return On Investment
$0
$8
$15
Compound Investment 2015-2020 ROI 2015-2025

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