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Pervasive Internet & M2M Business Opportunities

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Convergence Drives Big Opportunities

Relay / E-MFixed Control

Centralized ControlProgrammable Control

Highly Distributed Control Networked Home,

Business & Industry

Distributed ControlNetworked

Manufacturing Systems

VoiceWireline Voice

DataLAN / Internetworking

WirelessSimple Voice

DigitalComplex Voice & Data

Uni

t Vol

ume

Time

PrintText & Graphics

RadioVoice Broadcast

Motion PictureVoice & Video Broadcast

TelevisionVoice & Video Broadcast

Client / ServerCooperative Computing

MicrosNetworked PCsMinis

Distributed ComputingMainframesBatch & Timesharing

Info AppliancesInformation Utility

Pervasive Internet

Ubiquitous Information, Communications, Control

& Computing

Interactive MediaComplex Multimedia

BroadbandHigh Bandwidth Transmission

Inform (Content)

Communicate

Control

Compute

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• Remotely manage devices in real time over the Internet/WAN• Direct interaction with devices at customer sites• Understand device operating performance; detect problems early or

prevent them• True partnering with your customers• Create service synergies

Technical Services

Field Service Eng.

R & D Team

Real time device information

Sales and Marketing

What Is Pervasive Computing & M2M

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Data Ware-housing

Server Farms

• Emergency Response & Repair• Safety and Security

• Remote Asset Mgmt/Services• Info & Entertainment

• Intelligent Transportation• Supply-Chain Logistics

Major Opportunity Areas

Office / Factory Home

Internet WANs/LANs

Multi-media Broadband

Banking /Financial

Healthcare

Government

Retail EducationTransportation

Communications NetworkSatellite & RF

Cellular & MobileFiber & Cable

Smart Community

Smart Workplace Smart Home

The Connected World

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Mobile info

appliances

Static info appliances

Mobile devices

Static devices

Controllers

Smart sensors

Microprocessors & Microcontrollers

Mobile phones, PDAs, scanners, Web Tablets, GPS, etc.

PC’s, servers, etc.

Vehicle cargo containers, tankers, supply chain assets (SKU)s…

Medical Device, HVAC, industrial machinery, distributed generation…

Industrial controllers, appliance controllers…

Accelerometers, pressure gauges, flow, position, speed, temp biosensors, etc.

8-, 16-, 32-, 64-bit chips, etc.

Human-centric

Device-centric

1.5 billion

500 million

350 million (SKUs: trillions)

375 million

500 million

750 million

35 billion

Intelligent Device Hierarchy 2005 Potential

Device Segmentation – Wired & Wireless

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Use the Internet for real-time monitoring, diagnostics and management of devices

• Proactive• New services• Secure• Enterprise wide

Remote control for maintenance, training, and troubleshooting.

• Reactive• Internet-based• Reduces visits• One-to-one

Direct dial-up

• Reactive• Low-speed• Specific functions• One-to-one

Manually download logs files and e-mail them to service organization.

• Reactive• Inaccurate• Manual• One-to-one

Remote Desktop Control

M2M

Reactive Proactive

Software Agents

Device Middleware

Applications

Dial-Up Email Log Files

M2M Is A Natural Evolution

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Traditional Service Timeline

ServiceProvider Aware

ProblemResolved

Hours to weeks

Customer Aware of Failure

Hours to days

FailureOccurs

Seconds to hours

FaultOccurs

Hours to weeks

Pervasive/M2M-enabled Service Timeline

Hours to days

Service ProviderAlerts/Dispatches

ProblemResolved

Hours to days

ServiceProvider Aware

Seconds to hours

(as fast as required)Fault

Occurs

Compressing The Service Time Line

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• Remote services customers experiencing 10%+ overall savings levels (in service cost $$).

• 65% of alarms/notifications from devices resulted in service call avoidance

• Significant reductions in downtime (30% reduction in unplanned downtime)

Reduction in total service costs

-10%

Reduction in equip. downtime

65%-30%

% of alerts which eliminated a call

M2M Deployments Drive Results

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Overall Demand For Sensor Networking

Factors Contributing To Demand

What Are The Key Adoption Forces

Interactions and optimization between humans and devices

Remote monitoring, location/presence

Safety and security concerns encourage optimization

Devices enable inexpensive lifestyleenhancements

…..Competition for customer attention becomes digitized

Deployment of Technology /

Infrastructure

Business Modeluncertainty

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Networked ProductsProfits come from consumables, services, and content

Non-networked ProductsProfits come from the product / device

Level of device-performance required by users

Time

NetworkedMarketplace

Non-Networkedmarketplace

Transition point

Unfilled needs

The device becomes secondary to the value it brings to the customer. Services become the means to cultivate an ongoing customer relationship.

Vast Profits from Value-Add, Not From Devices

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Networked Product Business Model

Value in services will grow significantly

Competitive advantage from proprietary, limited-use products will diminish

Nearly ubiquitous networked embedded intelligence will capture more value

Product-Driven Business Model

Sys Integration

Product Services

System ProductsSoftware

Products

Electronics

Valu

e S t

ack

Time

What Is The Value-Add Impact

Embedded Platforms

Systemic Products

Device Middleware

DeviceApplications

Value-AddedServices

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Deg

ree

of O

utso

urci

ng

/ Val

ue-A

dded

High

Low

Type of Recurring Service

Infrastructure to Enable Service(Pay per transaction)

Information Collection and Exception Reporting

Data Analysis and Tooling

Decision Support

Totally Outsourced SolutionEn

ergy

Se

rvic

es

Reg

ulat

ory

Serv

ices

Ass

et M

gmt

Serv

ices

Info

/ IT

Serv

ices

Faci

litie

sM

anag

emen

t

S/W

Sup

port

& D

evel

opm

ent

Syst

em/N

etw

ork

Inte

grat

ion

Cha

nge

Man

agem

ent

Hel

p D

esk

Serv

ices

Trai

ning

/C

onsu

lting

Adm

inis

trat

ive

Task

s

Dis

patc

h /

Mai

nten

ance

M2M Technologies Drive Horizontal Applications

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What Are The Adopter Models

Product

Service

Embedded Innovator

Embedded Innovators allow traditional stand-alone services to be embedded directly into the product.

Solutionist

Product

Service 1

Service 2 Service 4

Solutionists provide many or all of the services around the total lifecycle of a product

Service 3

Aggregator

Dealer Dealer Dealer

OEM

Customer Customer Customer

Aggregators integrate the sales and service of the product, as well as the interaction with the customer

SynergistAggregator Function

Synergists are contributors and participants in an alliance web where no single company “owns” the aggregator function

Synergist

Synergist

Synergist

Synergist

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General Motors OnStar system embeds global positioning and cellular-based data communications within passenger and light-duty vehicles. The system offers a variety of safety, security and convenience services.

Airplane Information Management System (AIMS) provides airlines with embedded monitoring and diagnostic services that improved airplane turn-around time between flights.

GreenStar system provides farmers and agricultural traders (such as Archer Daniels Midland) with accurate, real-time information on crop yield, while the crop is being harvested.

Product

Service

New digital technologies such as pervasive computing and device relationship management allow traditional down-stream services to be built into the product. By freeing the customer of the need to perform those services, the newly configured “smart” product can save considerable labor costs, which the customer is typically willing to share with the manufacturer.

Business Case –Embedded Innovators

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New digital technologies such as pervasive computing and intelligent device management allow manufacturers and their channel partners to operate more efficient supply chains.

Dealer Dealer Dealer

OEM

Customer Customer Customer

Business Case -- Aggregators

Eaton is organizing networked building systems and power qualitysolutions via alliances and acquisitions and channel coordination – utilizing M2M technologies to build a smart building solutions “eco-system”

In addition to selling paints and finishes to automotive companies, DuPont now provides software and services that control the painting equipment to optimize the paint mix formulas and control finish quality – Dupont has organized relationships with paint equipment manufacturers.

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Synergists are contributors and participants in an alliance web where no single company “owns” the aggregator function

Business Case Examples -- Synergists

Aggregator Function

Synergist

Synergist

Synergist

Synergist

Citgo pioneered the concept of linking, via satellite, all of its retail operations, as well as independent operators, with a real-time inventory tracking and replenishment system.

Walmart pioneered low cost, big box retail efficiencies – combining supply chain automation with consumer modeling and behavioral analysis will drive even lower costs and greater adaptability and personalization

Coca-Cola provides its bottling companies, independent bottlers, retailers and vending machine distributors with an inventory tracking and control system.

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Product

Service 1

Service 2 Service 4

Service 3Solutionists tap into the total-cost-of-ownership spending around a piece of equipment, such as financing, installation, repair, maintenance, facilities, storage, operator training, de-installation, and disposal.

Business Case -- Solutionist

Pitney-Bowes expanded from its base of postage and mail handing equipment into comprehensive services including corporate mailroom outsourcing and equipment rentals. 75% of revenue now comes from services and equipment leasing & renting.

Similar to GE, IBM now derives 48.2% of its revenues from its Global Services and capital services business units. IBM provides comprehensive services that address the TCO of IT systems for its customers.

General Electric is the leading industrial example of comprehensive services supporting an equipment based-business, with 46% of its revenues coming from services; finance, insurance, outsourcing, maintenance, repair, etc.

Physical product is the value

Automated cradle-to-grave “customer value environment” is the value. Product is minimally profitable or even given away.

Far from customer Partnered with customer

PURE PRODUCT COMPANYActivities: Designs, manufactures, and sells non-networked objects. Any inherent product “intelligence” is trapped in the box and unleveraged. Offers reactive or proactive services to make sales and retain customers, often leaving money on the table with services “bundling.”

EMBEDDED INNOVATOR

Shift: Product becomes smart and networked. Customer experience of owning and using the product is greatly improved

Activities: Offers truly pre-emptive maintenance & replenishment via remote monitoring & diagnostics of its smart, networked products

VA

LUE

OFF

ER

ED

CUSTOMER PROXIMITY

AGGREGATOR

Shift: Device data is integrated across the entire customer fulfillment network, creating service synergies and much better responsiveness

Activities: Provides device-data access to third-parties for a fee or a share of services profits. Invests more aggressively in warehousing and mining of networked device data

SOLUTIONIST

Shift: Considerably expanded number of activities throughout product life-cycle. Contiguous values provided in related services become smart and integrated

Activities: Owns product life-cycle and full spectrum of the customer relationship. Co-designs, finances, installs, maintains, replenishes, and disposes of product. Enters the customer’s business as a problem-solving, value-creating partner

Business Models Are Progressive

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Aeris.net

Opto-22

Wavecom

TI

SmartSignal Motive

Cisco

CompXsBluetreeWireless

AtmelIntel

BEA

Accenture

PacketPoint

Cimetrics

Espial

HP

Xsilogy

Engage

Lantronix

emWare

AxedaDevice

Connectivity

Services/Complex

Applications

Point Solutions Enterprise Solutions

SAP

Oracle

Ember

M2M Datacorp

Siebel

IBM

Digi

eDeviceMillennial Net

CrossBow

AcuniaProSyst

Echelon

QuestraTridium

SAIC

Microsoft

NPhase

FT/Orange

HelicommDust

Figure 8Sensicast

Free ScaleChipcom

MitsubishiPhilips

Samsung

NumerexComtech

Sensoria

Comverge/6D

Trakm8

SensorLogic

CardioNet

Velocita

M2M & Pervasive Market Landscape

Sony Ericsson

Eka Systems

AirdeskNumerex

EI3 Wireless Matrix

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Honeywell

Philipscustomers

Chipcon

Buildings

Home/Consumer

Power

venues

products

Gov/Security

Polaris VenturePartners

DFJ ePlanetVentures

DFJ New England

Grandbanks Capital

RRE Ventures

vendors

Eka Systems

Helicomm

Millennial Net

Sensoria

Wireless InnovationEmberNet Developer Kit

EmberNet Gateway

peers

investors

SIGNALSmart™

Philips

Honeywell

Sensitech

Chipcon

Chipcon

alliances

sourcing

Supplier

channel

EmberNet Node

strategic

Smart Devices

LANs

Gateways

Sensors

Wireless

marketing

Eco-Systems Are Key To Growth

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How Can We use Pervasive & M2M Technology To

Our Best Advantage?

How Can We use Pervasive & M2M Technology To

Our Best Advantage?

• What unrealized leadership opportunities are available given the advent of intelligent device networking?

What Creative Combinations Will Drive Our New Business

Model?

What Creative Combinations Will Drive Our New Business

Model?

• How can we best make, partner or acquire those value elements that will win our chosen customer and give us sustainable advantage?

What Business Architecture Will Build Long-Term

Success?

What Business Architecture Will Build Long-Term

Success?

• What business structure and management priorities will allow us to realize our strategy?

Strategy and Business Planning

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Adopter Track – M2M