more than smart home: the role of utilities in...

Ian GreenblattManaging Director & TMT Practice Lead J.D. Power

More than Smart Home: The Role of Utilities in IoT

Mark ThirmanSr. Consultant, IoTJ.D. Power

© 2019 J.D. Power. All Rights Reserved. CONFIDENTIAL & PROPRIETARY—For Internal Use.

• 50 Billion devices by 2020/vs. 7 Billion people (8x), and most things are still not connected:• The key IoT operators (including satellite providers)

have approximately 600M devices connected and growth continues .

• New IoT service provider entrants include Comcast, additional Mobile Virtual Network Operators (MVNOs) , and developer-powered networks (e.g. Twilio, SAP Connect)

90M connected cars now/110M in 2020/ 2025 to 130M. Over 200M of those autos are 15 years old or younger -95% not connected• Connectivity expanding exponentially

• 3G/4G ubiquitous and expanding – 5G coming soon• Other new radio types emerging could enable

further market expansion – NBIoT, CATM, LoRaWan

Introduction: IoT is Fertile Ground and Growing


5000+ IoT Companies as of 1/19• No shortage of investment • No shortage of addressable clients• No shortage of interest in the space• No Uniform Best Practices• No Regulation• No Unifying Protocols or Registration

IoT is the Wild West of the 1800s if the West was approximately several

hundred trillion square miles nothing but blue sky

McKinsey forecast $4-11 Trillion in economic value by 2025

Introduction: IoT is Fertile Ground and Growing


0

20

40

60

80

2018 2019 2020 2021 2022 2023 2024 2025

Connected devices in billions

World wide

IoT market

457 billion

by 2020

38.8 35.9 38.8

11.84.5

0204060

Revenue in…

2018 Worldwide IoT revenues by

subsystem

Discrete manufacturing

Transportation & Logistics

Utilities

B2C

Healthcare

Energy and Natural Resources

Worldwide IoT spending by vertical in 2020

$ billions

40

40

40

1215

25

Global agricultural

IoT market

20billion

by 2020

https://www.statista.com/https://aws.amazon.com/blogs/aws/aws-iot-cloud-services-for-connected-devices/

Near-Term IoT Outlook


IoT breaks into two broad categories:1. Consumer2. Enterprise/Industrial

Consumer starting to take off, as we will see later in this presentation

Enterprise/Industrial segment has connected and monitored machines for over a decade• First via fixed/hardwired connections within the four walls of a factors• As cellular connectivity became cheaper and faster, the platforms to manage devices became

available: large, distributed engagements became pervasive• WiFi not preferred (security, manageability, etc)

“Nothing happens until somebody puts a sensor on something and connects it to a network”- David Geltner – original CTO and architect of Verizon’s M2M/IoT platform (nPhase)

A Quiet Revolution Occurred…


IoT enables key information to be exchanged without human intervention, making it possible to reduce costs and improve both efficiency and service to customers.

“Firms use IoT technologies to extend digital business into their daily operations and business processes by capturing detailed visibility into the physical world” - Forrester

• Terminals• Connectivity• Modules (3G/4G, other networks)• Platforms

• Connectivity Management• Application Enablement• Analytics• Real-time control

• Item being monitored/managed

Hardware / Device / Sensor

Managed connectivity

service

Applications

A Quiet Revolution Occurred…

What are the Bits and Pieces?

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjb6JqE1PbPAhXDWD4KHZ4kA-MQjRwIBw&url=http://www.keyword-suggestions.com/bmV0d29yayBjbG91ZCBpY29u/&psig=AFQjCNFiCQS0-qSn32X10vhp5fToyKKMxQ&ust=1477508978985011


Harel Kodesh/GE – MIT Connected Things 2017

Consumer ≠ Industrial


mHealth

MobilePayment

Security &Surveillance

Natural Resources

Energy & Automation

DigitalSignage

Fleet Management

Industrial Equipment

Automotive Agriculture

IoT: Solving Problems Across Verticals

IoT: Solving Problems Across Verticals?


Cellular (IoT) connections will reach 3.5 billion by 2023, from ~600 million today

“With the new standards in cellular connectivity, almost every asset in a factory can be connected and managed in order to solve operational challenges.” http://www.ericsson.com/mobility-report

28%

26%14%

13%

11%

5%3%

IoT Verticals %

Industrial

Automotive

Utilities

Finance

ConsumerHealthcare

It’s all about Verticals

http://www.ericsson.com/mobility-report


Operational efficiencyProcess optimization & automation

New business modelsInnovation and new product development

Customer satisfactionImprovements tailored to customer needs

ComplianceRegulation and legislation support

SustainabilityEfficient business practices

Save time and money

Stay ahead of the game

Increase customer loyalty

Avoid penalties and improve business practices

Reduce CO2 and energy costs

Benefits of M2M across Utilities


A sensor detects that the vending machine is

out of product

Message is sent to the warehouse

Inventory is checked on the server

Driver is informed & given best route to all

vending machines

Driver refills the machine

1 2 3 4 5

Vending machine notifies warehouse

when full6

How Does M2M/IoT work?


Why?

• Connected Trash bin• Green• Saves money• Eliminates unnecessary truck rolls• Like the vending machine example…

World Leader of Smart Water & Recycling

Management

Currently Available in 47 Countriesaround the world

Proudly Made in the USA with customers

In all 50 states

53 Distributors contributing to a global footprint

Named Top Smart City Application in the

2014/2015 IoT Awards

5th Generation Solar-Powered Smart Stationtransforming public waste

management

How Does M2M/IoT work?


• Platform or onboarding fee (negotiable, but budget $10K+)• SIM $1.00 – Cost to buy SIM for device• MRC $0.28 – Monthly recurring charge• $0.11 MB / $0.33 per 3MB / Pooled Plan• Average IoT data use: 1MB/month (fleet/telematics example)

Put another way:• $1.38 per month per device plus onboarding fee- (1x)• Assumes 5 year term, tens of thousands of devices• Implementation or additional platforms extra• Excludes any relevant hardware

Not like your iPhone bill - No device subsidies

What does a large IoT Engagement cost?


Sensors/ Monitors are inexpensive


Horizontal:Connectivity ManagementDevice ManagementApplication EnablementData Management

Vertical/Solutions:Predictive/Prescriptive MaintenanceAnalyticsMonitor/AlarmControl (e.g. remotely operate something)

API/Web services can link several platforms togetherConnectivity + Analytics (two or more vendors’ platforms communicating)

Some of the biggest names in enterprise technology have entered the platform space:

AWS IoT

SAP Leonardo

Accenture CPAAS

Siemens Mindsphere

Bosch IoT Suite

Hitachi Lumada

Vodafone IoT Platform

Cisco Jasper

Microsoft Azure IoT

Aspirants include: Salesforce.com, C3IoT(Siebel’s startup), Schneider, including many consumer IoT platforms (Ayla, others).

What is a Platform


Venture investors are in:

• U.S.-based IoT startups alone reached its highest annual mark as investors poured $1.46B into startups

• Smart thermostat maker Ecobee now has over $155 million to compete with Google's Nest

https://i3connect.com/tags/smart-home/831/activity

IoT Investment trends: Smart Home gaining traction


https://i3connect.com/tags/smart-home/831/activity

Key Drivers: comfort and convenience, energy savings plus demand response or time-of-use pricing for utilities

IoT Investment trends: Smart Home gaining traction

100 Million US Homes Lack Smart Devices, but 40 Million Will Have Smart Thermostats by 2020

• By 2020, more than 12 million U.S. households will have a smart water leak detector, more than 40 million will have a smart thermostat, nearly 50 million will have a smart light bulb, and nearly 14 million will have a smart home controller (Parks Associates )

• Smart thermostats have been the main gateway for utilities and third-party energy services companies seeking to study and control residential load.


(c) (dot)IoT®

GSMA Intelligence forecasts that the total number of IoT connections globally will reach 25.2 billion in 2025, up from 6.3 billion in 2016.

The industrial segment, which refers to IoT deployed within enterprises or vertical-specific applications, will account for more than half of the connections total by that point (13.8 billion), while the number of IoT connections in the consumer segment will reach 11.4 billion, driven by developments in the smart home market

- June 2018

Smart Home will drive consumer IoT segment


Key Findings:

• Global IoT smart building market will approach $51.44B USD globally by 2023• 33% of IoT smart building market will be powered by AI technologies by 2023• North America will lead the IoT smart building market with 36% share by

2023• Smart Building automation systems will grow at 48.3% CAGR from 2018 –

2023• Edge, 5G, real-time IoT data analytics, and asset tracking are key solution

areas

Source: Compass Intelligence: IoT in Smart Buildings Market Outlook and Forecasts 2018-2023

Smart Building – Industrial heads Home


Smart Home leadership from the ground up—literally.

How do you think an intelligent home should work?What we’re seeing today is a collection of devices that are all controlled by their own apps. The promise of enhanced utility is actually being reduced by the complexity we’re introducing. A successful smart home should be built on the idea that nobody programs anything; the basic services in your home would just work. So you would walk up to your front door, which would unlock if you were authorized to enter. You would go in and the light would turn on, the temperature would adjust, and if you started watching TV and moved to another room, the TV show would follow you. When you’re no longer using various services, they could shut down automatically to save energy, or be set to respond to the weather or the time of day.

Smart thermostats, lights, blinds, door locks, humidity sensors, TVs, radios, and speakers that sit in this ecosystem. Those would be the building blocks of the smart home. The unifying intelligence [that ties everything together] and is what enables the home to be smart could come from iRobot or a different company.

MIT Technology Review“Roomba to Rule the Smart Home”

December 2017– CEO Colin Angle

iRobot is vying to be the Google Maps or ‘single source of truth’

of the home

iRobot –– the Vacuum cleaner that maps your home


Is the Roomba or Alexa a smart home Trojan Horse?


The Verticals have multi-trillion dollar sub verticals


• IoT is worth over USD1 billion a year for Verizon, ”Verizon’s IoT revenues grew 3.7% sequentially to $389 million in Q4, which includes $230 million from their telematics division. Full year IoT revenues were nearly $1.5 billion (+500M YOY)

• Vodafone closed out the current quarter with €187 million in IoT Revenue. IoT SIMs increased 34% year-over-year to approximately 65.8 million with € 720 million ($890M) for Vodafone. If IoT were a standalone business, it would be considered large; it is only small in comparison to the core business.

• AT&T, having closed Q2’18 with 44.7 million connected devices-strong, displayed healthy growth this Q2 with 3 million new connections added

• Sprint has 13.39 million connections (Q2 2018)

• Comcast closed Q2 with 1.23 million security and automation customers,

• Tmobile– US – est 15M active IoT connections

IoT is already a $1 billion business for telcos


• GPS moving from 4m (13 feet) accuracy to centimeter (.4”)• Millimeter (.04”) precision indoors

• IoT Impact: Pinpoint assets, Autonomous car improvements (safety, traffic)• “Autonomy” – things make decisions• “Situational Autonomy” – things make informed decisions

• Intersection of IoT with robotics/AI/ML• IoT Impact: new business models emerge when people and machines work

together.

Trends/Observations from MIT EmTech


Subject of recent debate at MIT Connected Things @ Media Lab:

• Blockchain/bitcoin doesn’t scale

• High power consumption: Blockchain/bitcoin is extremely power-hungry. The bitcoin network can handle about 4 transactions/second. 1BTC transaction takes 749 kWh. 100,000 VISA transactions takes just 169 kWh

• Governance issues. Let’s not pretend blockchains are trustless, don’t have “owners” and rules, but no accountability

• It’s immutable – which is rarely desired in IoT

On The Radar: Blockchain and IoT


IoT: What it is and what it is not

Is Not Comments

“Dumb” connected Things Laptops, iPads, iPhones PC/phones/iPads are self contained.

Vertical solutions Horizontal Solves a problem

Cardiac or sleep apnea monitors

Fitbit, Tag on Jeans at store Can’t address it, passive, not connected

Mostly enterprise Kid’s toy with Internet Access

Not a managed solution

Fleets of things One of something Managed by platform(s)

I prefer “Connected Things” to IoT as I do not want my “things” on the internet


The Hype Cycle for IOT as presented

by Gartner for 2018

IoT Hype Cycle


• Many different, unrelated devices in the home, powered by electricity• Speakers, vacuum cleaners, medical devices, doorbell/lock, smoke/CO2/security alarms, thermostats,

white goods• All WiFi dependent/no WiFi = “dumb” home• Look at partnering with telcos on NBIoT devices

• Join the design-win discussions with operators and device/appliance makers• Build trusted systems from the design stage

• Stick with licensed/standards-based protocols• Create Managed Service offering

• MAKE IT EASY FOR CONSUMERS• IT JUST WORKS

• Curate/Subsidize IoT products that work well• Help manage• Participate in the data flow

Cognitive Home


Highly engaging residential home IoT solution that provides:

• Improved energy efficiency and savings on bill

• Increased awareness of home activity and safety issues

• Identification of key faults and issues in the home

Consumer solution for utilities that helps with:

• Grid-edge analytics

• Energy efficiency targets

• Peak demand management

• Customer engagement

Case Study: Sense

© 2019 J.D. Power. All Rights Reserved. CONFIDENTIAL & PROPRIETARY—For Internal Use. Confide

ntial |

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10/4/

HIGH-RESOLUTION METERING

Sub-second sampling of I &VEdge computing connected to cloud and other smart home techInstalled as a retrofit in panels, leveraging home Wi-Fi

MACHINE LEARNING

Sense conducts machine learning to identify the unique signature of each electronic device, determine its state and energy usage.

Sense is building up a library of signatures. As Sense collects more data, is in more homes, and samples a diversity of appliances, the library is continually growing.

NETWORK EFFECT

How does Sense work today?


• New Revenue Opportunities – Curating and educating consumers and businesses about IoT devices and managed services creates variable revenue in a rate-regulated environment

• Electrification – EVs are only the tip of the sensor-driven device iceberg. Prepare now for the network effect of myriad devices smartly charging under ToU programs easing demand curves and spikes

• Safety: Mass instrumentation brings more, faster data about your infrastructure

• Consider Gas Leak detectors in Andover, MA; cameras covering PG&E lines

• Satisfaction: J.D. Power finds that awareness of and utilization of utility products and services increases overall satisfaction by 70 index points (on a 1,000-point scale).

Why IoT Matters to You


• SmartHome gaining traction• Smart Lock, Smart Speakers, Smart Thermostat, Vacuum, Fire/CO2 alarm, security,

Medical Devices – all connected• WSJ (1/28/19) – Spending on home-energy devices exceeded $40B in 2018

and will double in next five years, per Wood Mackenzie.• Tech giants teaming up with utilities sector (Google and Reliant/NRG, etc.)

• New competition as tech giants disrupt – that’s what they do…( solar, battery, EV management)

• WSJ: “In 10 or 20 years, the dominant retail electric provider in the US is going to be Amazon or Google,” David Crane (ex-CEO NRG), “they can provide lower cost and better service.”

• Consider: new service offerings• Managed service for alarming, assured service for home medical devices• Data Access• BE the platform for connected home, before somebody else does

In Summary – New Considerations for Utilities


These are big, growing markets:According to data presented at the World Economic Forum, IoT devices are expected to generate $3.7 trillion in revenue by 2028. Last year, Americans bought over 40M smart home devices, contributing to the nearly 20M smart homes.

Delight your customers by helping curate and connect relevant devices

Assure customers of data privacy (GDPR and CCPA in California)

Be part of the ‘design-win’ discussion alongside operators and IoT ecosystem

Make it easy: “it just works”

J.D. Power can partner with you to create and implement an IoT strategy

Recommendations

TRUTH THAT TRANSFORMS

4

Mark ThirmanSr. Consultant, IoTM (508) 341-4432

[email protected]

Ian GreenblattManaging Director, TMT

M [email protected]

mailto:[email protected]

mailto:[email protected]

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