IoT Megatrends 2016

IoT Megatrends 2016 | © 2015 VisionMobile
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August 2015 August 2015
Developer Megatrends H1 2015 © 2015 VisionMobile1
DEVELOPER MEGATRENDS H1 2015
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Stijn
Schuermans
Senior Business
Analyst
Michael
Vakulenko
Strategy
Director
Andreas
Constantinou
Director and
Founder
Stijn focuses on understanding how
technology becomes value-creating
innovation, how business models affect
market dynamics, and the consequences of
this for corporate strategy. He is the lead
Internet of Things researcher in the
VisionMobile team since 2012. Stijn holds
an engineering master degree and an MBA.
He has over 10 years experience as an
engineer, product manager, strategist and
business analyst.
You can reach Stijn at:
stijn@visionmobile.com
@stijnschuermans
Michael has over 18 years experience in
mobile and telecom starting from working
on first experimental 3G systems in
Qualcomm. Later on Michael was part of
several startups developing products in the
areas of wireless, enterprise networking
and mobile apps. At VisionMobile Michael
works at the cross section of business
models, economics and technology where
he leads strategy practice for software-
centric business models in mobile, Internet
of Things and Connected Car.
You can reach Michael at:
michael@visionmobile.com
@mvakulenko
As Director and Founder, Andreas oversees
the growth and strategy at VisionMobile.
He has been working on the mobile
industry since 2000, helping take the very
first smartphones to market. Since then
he’s worked with the top technology
brands, from Amazon to Samsung to help
them understand developer trends and the
future of software. In his academic life,
Andreas is an Adjunct Professor at Lund
University, Sweden, where he teaches
Internet Business Models.
You can reach Andreas at:
andreas@visionmobile.com
@andreascon
About theauthors

Inthisreport
5
Developersare
the new baseline
Battle of the
Smart Home Hubs
The 4 frontiers
of wearable platforms
From Connected Car to
software-definedtransportation
Consumer and Enterprise
technology converge
The hottest business
models in IoT

© 2015 Vision Mobile
Developers are the new baseline
If you’re not into developers, you’re not doing it right

Developers flood into theInternet of Things fast
7
5M
10M
Already 4.5 million individuals
active as IoT developers in 2015

Keyplayers ineverymarket build their strategy around developers
8
Smart Home Smartwatches Industrial IoT
Connected Car Drones Augmented & Virtual Reality

Developers extend yourbusiness model
9
Innovators Customers Extenders Distributors
Developers are …
Developers build new
value with software as
employees in your
company
Developers are customers
of tools, libraries,and
platforms
3rd
party developers
extend your business into
new use cases, and are
partners in new alliances
3rd
party developers are
distributors of your
products, taking it to new
users and markets
Replenishment Service
Amazon Alexa
Voice Service
value
creation
value
capture
value
delivery
value
creation
Developers extend your business model:

But developer interest shouldn’t betaken for granted!
Hype alone could not sustain developer involvement in Wearables
10
28%
21%

Every company should master developer ecosystem skills
11
platform
technology
people
rules for
interaction+ +
“Managing developer ecosystems is a human art.”
Todd Luwak*
individuals & companies
users & developers
API
cloud, APIs, apps,
devices, OS, …
app curation,
governance, …
(*) http://allthingsd.com/20131021/managing-platforms-is-a-human-art/

Understand developers bylooking attheir goals andmotivations
12

The developer segment mix isanindicator ofmarket maturity
Industrial IoT is almost as mature as mobile; Smart Home trails
Increasing
maturity
13
mobile
IoT

IoT markets arenotindependent: developers cross boundaries
Smart Home
Retail
Industrial IoT
Wearables
Smart City
Medical
Connected Car
The link is stronger when developers are
more likely to target both verticals.
Smart Home, Connected Car and Smart
City form a cluster. Developers active in
one area are likely to be active in the
others as well.
Wearables is one of the most
stand-alone IoT verticals.
Smart City is disconnected
from Retail and Medical.
There is a big overlap
between IoT
developers active in
Retail and Medical.
14

IoT Megatrends 2016 | © 2015 VisionMobile15
Developers are a driving force in every IoT industry
and a source of competitive advantage
Every IoT company should master the human art
of managing developer ecosystems
take-aways
read more
IoT Developer and Platform
Landscape 2015
IoT Developer Population
2015 - 2020

Battle of the Smart Home hubs

Smart Home Hubs: everyone wantstobeatthecenter of your
home
17

Smart Home draws themost attention from developers, too
18
number of individualIoT developers active in each vertical

How do modern Smart Home hubs compete?
(A)
New touchpoints
(B)
New interaction
models
(C)
Developers

(A) 4new touchpoints: whattheuser interacts with everyday
20
Voice control Next-gen remote controls
Apps Messaging
Microsoft Cortana
Apple Siri
Logitech Harmony
WeChat Facebook M
on your watch, phone, tablet, desktop, TV

Who owns thecustomer relationship?
Who will users be loyal too? In which interface will users invest time to learn?
21
device
makers?
hub
makers?
touchpoints?
user

(B) Interaction models: whatdoes a‘Smart Home app’look like?
22
Companion app Scenario or rule Conversation
Rules set by artificial intelligence
Microsoft
Cortana
Apple Siri
with voice or chat
Rules set by the user

Artificial intelligence willplayakeyrole inSmart Home interaction
23
Companion app Scenario or rule Conversation
Rules set by artificial intelligence
Microsoft
Cortana
Apple Siri
with voice or chat
Rules set by the user
artificial intelligence is the
key value proposition

Willdevelopers goextinct?
And what are the implications for future Smart Home platforms?
24
Smartphone
Smart
Home
app developers
create functionality
power users
set rules
everyone is a
developer
app developers
program scenarios
developers
assist users
artificial intelligence
discovers rules
developers are
nearly obsolete?

(C) Extendibility by3rd parties isstill keytosuccess
25
Platforms will beat Products every time! *
Amazon Alexa Skills Kit
extend with apps
and scenarios
extend with
scenarios
extend with
voice-addressable
services
(*) Marschall Van Alstyne, professor, MIT

Keyplayers count ondevelopers todrive value creation
26
App & rule platforms Conversation platforms
Alexa by
Apple HomeKit

Platforms, not products, will determine who wins the
customerrelationship. Conversational platforms (voice,
chat) are coming up strong.
The rise of artificial intelligence fundamentally challenges
the central role of developers as creators of use cases, but
developers remain key in platform strategies, if not for
apps, then for services.
take-aways
read more The Smart Home Landscape 2015
Developer and platform outlook for the
Smart Home
Published August 2015

The 4 frontiers of wearable platforms

4innovation frontiers inwearable platforms
29
1
2
3
4
Wearables move from consumer electronics devices
to being unobtrusively embedded in clothing
In smartwatches, Android Wear is under
pressure from new platform challengers
Augmented and virtual reality are the next
big wearable app platform opportunity
Data app platforms are emerging;
developers haven’t caught on yet

The disappearing actof wearable technology
Wearables move from high-tech devices to unobtrusive clothing
30
Rihanna's Go-To Designer Made a
Dress That Works as a Credit Card
Ralph Lauren's
Futuristic Fashion:
The PoloTechSmart Shirt
ShiftWear:sneakers
with e-ink screen and
“Walk to Charge” tech
1
when it’s invisible but valuable,
technology becomes relevant for traditional fashion companies

Enabling technologies fornext-gen smart clothing
31
Printable electronics
and batteries
Woven electronics
and batteries
Energy harvesting for
self-poweredwearables
via thermopiles(shirt) or
kinetic energy (shoes)
1

Newopportunities for fashion brands :digital identity iskey
32 Source: IoT report series: The Wearables Landscape 2015
expanded value proposition
• personalized workout recommendations
• personalized encouragement
• engaging community
from one-off sale
to lasting customer relationship
• continuous brand exposure via app
• lock-in through stored value (exercise history)
• re-engage and market directly to consumer
1
Digital identity enables a powerful
connection between brand and user

Android Wear isunder pressure insmartwatch platforms
Chinese internet companies
build their own Android
derivatives for wearables
Victims of the Android
smartphone strategy build
direct challenger platforms
based on Tizen or webOS
33
2

The nextbigwaveof wearable appplatforms: AR/VR
Valve SteamVR
Sulon Cortex
StarVR
34
Playstation VR
3

AR/VR developer tools areemerging, too
35
tools and script libraries
for VR app development,
motion tracking technology
“WorldViz virtual reality empowers
businesses with new visualization
techniques, developers with
fresh creative potential, and
researchers with tools that
accelerate scientificdiscovery.”
Structure Sensor and SDK:
real-time 3D vision on mobile
devices
“Need precise 6-DoF positional
tracking? Volumetric
reconstruction? Real world
occlusion? Our APIs have you
covered. ”
Cloud-based creation and
hosting of high-fidelity 3D
models
“Our Models. Your Apps. Leverage
the world’s first end-to-end
platform for creating immersive
media.”
3

Data-first appsandplatforms aregaining momentum
36
Apple ResearchKit
clinical research
with smartphones & wearables
early apps address autism,epilepsy,
moles, microbiome,environmental
influences, neurocognitive
disorders, liver disease,asthma,
cardiomyopathy, and more
100,000 sign-ups in
March to October 2015
Humanyze
workplace people analytics
with sensorized ID badges
capture tone of voice, when and
how quickly people speak, where
people are when they interact face-
to-face, and more
correlate with other forms of
communication (email,phone) and
key performance indicators
Oscar
health insurance
with data from wearables
hired 45 engineers and built better
tools for matching patients with
physicians, gives customers free
fitness-tracking devices and access
to a free unlimited telemedicine
service
40,000+sign-ups
in 2 US states in 2 years
4

Data-centric solutions aremore lucrative thandevices or apps
37 Source: VisionMobile Wearables Landscape 2015
Probability of earning
more than a given amount
per month in revenues
(higher is richer)
4
%ofwearabledevelopersinterestedinrevenue|n=506

…butfew developers havegone thedataroute so far
38 Source: VisionMobile Wearables Landscape 2015 | % of IoT developers | n=2,360
4

Innovation in wearables is in full swing.
Soon …
… brands will compete on digital identity
… watches and AR/VR will compete on who has most apps
… the most successful developers will build on top of data
take-aways
read more The Wearables Landscape 2015
Developer outlook and platform leaderboard
for Wearables
Published October 2015

From connected car to software-defined
transportation

DATA DONGLE
The focus incar appdevelopment isshifting
2012 2014 2016
41

Focus shifts from control over dashboard tocontrol over data
We need to control access
to [vehicle] data.
We want to keep control of the HMI,
the UI, the whole safety aspect, the
certification of the app in terms of the
regulations of the different countries.
SteffenNeumann
Mercedes-Benz, app portfolio manager
42
“
Don Butler
Ford, executive director of
connected vehicle and services
“
Jan
2014
Jul
2015

Withcardata, developers areonce again thekeytosuccess
43
Selected automotive developer programs in 2016

Software will define thefuture of transportation
Dashboard controls and engine data are just the beginning…
44
electrical cars are less complex,
allow entrance of CE companies
machine learning systems based on
big data from car sensors
where to drive to get from point A
to point B, given road conditions
deciding in real-time where every
car needs to go to meet demand
connecting car makers,operators,
app & service providers, and users
from ‘taxi services’ to thousands of
uses for autonomous transportationservices & apps
transportation
platform
fleet routing
navigation
autonomous driving
car hardware old and new car makers
Who’s playing?
software
The future transportation value stack

Car makers facegreat challenges inthis new era
45
electrical cars are less complex,
allow entrance of CE companies
machine learning systems based on
big data from car sensors
where to drive to get from point A
to point B, given road conditions
deciding in real-time where every
car needs to go to meet demand
connecting car makers,operators,
service providers, and users
from ‘taxi services’ to thousands of
uses for autonomous transportationservices & apps
transportation
platform
fleet routing
navigation
autonomous driving
car hardware old and new car makers
software
Car makers lack access to software
and data expertise, including artificial
intelligence, data science, and
developer ecosystems
Car makers and their suppliers lack
access to sufficient autopilot training data
Google: 48 cars | 1.2M miles driven
Tesla: 100,000 cars | 1.5M miles per day
Car makers & suppliers:
limited data frominternal testing
Consumer electronics companies
have advantages in supply chain
and key technologies
(e.g. batteries)

Will carmakersmiss automotive computing just like Microsoft missed mobile?
46
Right now we're selling millions and millions and
millions of phones a year, Apple is selling zero
phones a year. In six months, they'llhave the most
expensive phone by far everin the marketplace. ...
Let's see how the competition goes.
Steve Ballmer
CEO Microsoft, 2007
“
There is absolutely no reason to assume
that Apple is going to be financially
successful in the electric car business.
Electric cars are generally money losers.
Bob Lutz
former vice chairman GM, 2015
“ We’re in the car business
today, and they [Google]
are not.
Mark Reuss,
Product Development Chief GM, 2015
“
then
now

The innovation focus in Connected Cars is shifting from the
dashboard to vehicle data, and in the future to data-driven
transportation platforms.
Car makers struggle to keep control over and to gain access
to the necessary supply chain, expertise, and data to be
leaders in this evolution.
take-aways
read more
Apps for Connected Cars?
Your Mileage May Vary
http://www.visionmobile.com/blog/2015/11/
self-driving-cars-are-about-platforms-not-
about-cars/
BLOG

Consumer and enterprise technology
converge

Today Smart Home, tomorrow Smart Office
49
Smart Home, not building automation, will be the future
technology foundation for office environments
Why? consumer markets offer much faster product evolution and validation with customers
Smart
Home
today
Smart
Office
tomorrow
Smart Lock Smart Lighting Smart TV Smart Thermostat
Access
control
Lighting
control
Meeting room
equipment
Climate
control

The power of consumer-grade convenience
50
IBM and Yanzi sensorized an entire office building in under 4 hours
temperature sensors, smart plugs,motion sensors in rooms, on chairs, and on other objects
Consumer-grade ease of installation coupled with enterprise-grade security
http://www.ibmbigdatahub.com/video/creating-connected-building-under-4-hours

Wearables intheworkplace: same technology, different use cases
Source: IoT report series: The Wearables Landscape 201551
Phase 1
new tech, old solution
Phase 2
wearable-first
Phase 3
data-first
activitytrackers
for corp. healthplans
“shrunkensmartphone”
displaycompanydata,
BYOW
hands-free data logging,
assisted reality, safety
people analytics

Industrial IoT: clash of technologies andengineering cultures
52
Jeff Immelt
CEO General Electric
If you went to bed last night as an
industrial company, you’re going to
wake up this morning as a software
and analytics company.
“
industrial
technology
data technology
from social media,
e-commerce, search
Source: GE Minds+Machines conference, 2014

Clash of cultures: consumer andindustrial techconverge
The industrial Internet is the second wave of the internet
revolution. A revolution which has already
transformed the consumer environment is now
beginning to spread to the industrial environment,
thanks to a rapid decline in the cost of sensors and in the
cost of data storage and computing.
Marco Annunziata
GE Chief Economist
Source: https://www.youtube.com/PxvKbt8pByA | Davos World Economic Forum, Jan 2015
“
Angela Merkel
German Chancellor
We must deal quickly with the fusion of the online
world and the world of industrial production. In
Germany, we call it Industrie 4.0. Because otherwise, those
who are the leaders in the digital domain will take the lead
in industrial production. We enter this race with great
confidence. But it's a race we have not yet won.
“
53

Consumerand enterprise technology are
increasingly converging in most industries.
Consumernot enterprise technology will be the
foundation for the converged future.
Developers will be increasingly mobile between
consumerand enterprise markets.
take-aways
read more
Smart Home
Landscape 2015
Wearables
Landscape 2015
IndustrialIoT
Landscape 2015

The hottest business models in IoT

Value quadrants: mapping business model evolution
56
services
tangible products
revenue at time of sale post-sales revenue
traditional product sales
when money
is earned
with what
money is earned

Value quadrants: some examples
57
services
tangible products
consumables
(razer and blade model)
sell services
on a monthly contract
traditional product sales
work on commission

Business models shiftinIndustrial IoT
58
services
tangible products
sales of industrial asset,
typically with yearly
service contract
vendor retains
ownership of the asset,
sells utility as a service

Industrial machines: from product toservice
59
“Sell locomotion,
not locomotives”
-- GE
“Power by the Hour”
-- Rolls Royce
IoT data
zero unplanned downtime
vendors take on the
risk of ownership
sales of additional software
and data services
(e.g. capacity optimization)
enables
enables
enables

Business models shiftinSmart Home
60
services
tangible products
sale of connected product
(Smart Home device)
connected product is point of
sale for consumables
Smart Home: e-commerce

Every Smart Home device becomes ane-commerce point of sale
61
E-Commerce revenue enables subsidized hardware, i.e. the Kindle model.
IoT extends e-Commerce affiliate and user acquisition schemes beyond
websites, mobile and apps, into every physical object.

Business models shift: consumer getspaid
62
services
tangible products
sale of connected product
(smoke detector, car data
dongle, wearable)
subsidized IoT device
bundled with service
(e.g. insurance,
energy rebates)

From ‘consumer pays’ to‘consumer gets paid’
Subsidizing devices from other revenue streams enables more growth
63
Nest Safety Rewards
smoke detector
bundled with
home insurance
Nest Rush Hour Rewards
allowing energy providers to
control the thermostat in
exchange for rebates

From ‘consumer pays’ to‘consumer gets paid’
Subsidizing devices from other revenue streams enables more growth
64
Oscar Health Insurance
health insurance
bundled with
Misfit activity tracker
Automatic
ConnectedCar app & services
connected to
usage-based car insurance

The prevalent business models in the Internet of Things are
moving from product sales to recurring revenue, and from
products to services.
Product-as-a-Service, devices as a distribution channel for
e-commerce, and for insurance, are some of the key
business models to watch.
take-aways
read more
The Commerce of ThingsIoT Report Series

IoT Megatrends 2016 | © 2015 VisionMobileCopyright VisionMobile 2011
Knowledge. Passion. Innovation.
Updated: 12 November
2010
Getintouch withUs
Matos Kapetanakis
matos@visionmobile.com
Senior Manager,
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