evolution of internet of things (iot) ecosystem - potential in india

Evolution of Internet of Things Ecosystem – Potential in India

Executive Summary

November 2014

Confidential Evolution of Internet of Things Ecosystem – Potential in India Current State, Growth Potential and Future Outlook

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Executive Summary Key Global Developments in the Internet of Things Space Internet of Things (IoT) is defined as ‘A worldwide network of “things” having identities and virtual personalities operating in smart spaces using intelligent interfaces to connect and communicate within social, environmental, and user contexts’. The goal of the IoT is to enable things to be connected anytime, anyplace, with anything and anyone ideally using any path/network and any service. While IoT is “Internet first” and potentially brings “true openness” and “rapid scale” of internet to billions of connected devices (estimated 28 Bn by 2020), it also inherits the major challenge of managing that scale.

Potential Growth of IoT Connected Devices In Comparison with Other Internet Connectivity Devices

IoT enables rapid product application development and operation as well as the collection, analysis, and sharing of the potentially large amounts of longitudinal


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data generated inside and outside the products that has never been available before. Building and supporting the technology stack for smart, connected devices require substantial investment and a range of new skills including software development, systems engineering, data analytics, and online security expertise. The IoT application space is very diverse and IoT applications serve different users under three key categories - Consumers, Communities and Enterprises. There exist numerous opportunities for IoT applications to leverage the changing dynamics of societal trends (health and wellness, transport and mobility, security and safety, energy and environment, communication and e-society) and market trends (consumer electronics, automotive electronics, medical applications, communication, etc). Increased innovation and affordability of sensors, increasing adoption of smartphones (2.2 Bn and counting), affordable bandwidth, cheap processing, ubiquitous wireless coverage, big data analytics and cloud computing are some of the key dynamics that are driving the readiness for IoT. However, the applications space is far from large scale adoption as fundamental challenges including interoperability, standardization and security are yet to be overcome. The demand and success of IoT will not be from a single compelling “Killer App”; it will be from thousands of unexpected killer apps. Currently, in its nascency, IoT is witnessing different solutions in the consumer space such as Wearables and Smart Home solutions. The key learning and the primary success factor to emerge from the Smartphone era (post-PC era) is the scale and success of “Innovation Crowdsourcing” – companies developing platforms and scores of developers building applications, thus driving the ecosystem growth. This is the fundamental approach that many global companies are adopting during the initial stages of IoT ecosystem development to ensure long-term competitiveness. Another strategy that we are witnessing companies adopt globally is that of proliferation of tools for “Data Collection”. The success of an IoT platform is primarily dependent on its ‘Data Synthesis’ functionality, and for accurate data analytics and synthesis, the platform requires significant amount of data set from varied touch points. And, it is imperative for the companies to access and control data flow in an IoT ecosystem.


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Key Announcement in the IoT Platforms Space

Many large technology companies are involved in governing the IoT ecosystem through various initiatives and efforts around standardization. There are over 14 industry bodies working on developing IoT standards, some of the leading ones include Thread (led by Google), AllSeen Alliance (led by Qualcomm) and Industrial Internet Consortium (IIC, led by GE).


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Forecasts of Yearly Growth of IoT-Only Developers (‘000)

Geographic Split of IoT Developers Around the World

Source: Vision Mobile’s “Insights on IoT Developers” Report, Oct 2014; Convergence Catalyst Research


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IoT platforms thrive by a steady stream of innovation by developers, experimenting day and night in their quest to find new use cases. There are already over 3.2 million developers working on IoT specific applications and services. Of these, over 415,000 are dedicated IoT-only developers. Their number is expected to grow to 4.5 million by 2020. Currently, Asia (primarily India & China) has the highest number (over 40%) of IoT developers in the world. Globally, the investments in the IoT domain increased significantly in 2013. 2013 saw the Internet of Things capture the imagination and financing dollars of investors to the tune of USD 1.1 billion across 153 deals. There is significant scope (and chance) for yet-to-be-named companies to emerge as leaders in IoT. The only definitive mandate for players to remain relevant and emerge as leaders in this domain is the need for “Agility” and “Staying Power”. The maturity of IoT is long way ahead, which will be characterized by rapid innovation, disruption and continuous evolution. Potential of IoT Ecosystem Growth in India India could potentially play a significant role in the evolution of IoT ecosystem – Both as a market and as an innovation hub. With rapid urbanization, focus on infrastructure development, significant dependence on agriculture, evolving education and healthcare needs and large manufacturing sector, there are multiple domains in which IoT based solutions can add value in India. In a move to play a larger role in the global evolution of IoT domain, while catering to the domestic requirements and inefficiencies that can be potentially bridged by numerous IoT solutions, the Indian government is taking various initiatives including policies and regulatory framework development (India’s first IoT policy framework was released in October, 2014), driving solutions development (and deployment) in partnership with private industry players (Smart City & Smart Grid projects) and market creation. A key part of smart city development is the Smart Power Grid. There are currently 14 ongoing smart grid pilot projects in India, in cities such as Pondicherry, Mysore, Kolkata, Mumbai, etc. All these projects are in public-private partnership mode. Key features being implemented as a part of these pilot projects include Advanced Metering Infrastructure, Peak Load Management, Outage Management System, Renewable Energy Integration, etc.


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Ongoing Smart Grid Projects in India

Source: Industry Interviews, Convergence Catalyst Research There are many niche technology companies working on various IoT products and solutions in India - over 60 startups working on dedicated IoT solutions. While a significant number of Indian IoT companies are focusing on services & system integration, there are also many companies focusing on product and cloud platform development in the IoT space. And, the primary focus areas of these IoT product focused companies in India include Wearables, Healthcare, Consumer Goods and Home Automation.


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Industry-Wise Split of Indian Companies Working on IoT Solutions

Source: Convergence Catalyst Research There are many supply and demand side enablers and drivers evolving that could potentially drive the IoT ecosystem in India – Both as a market and as an innovation hub, such as Rapid Urbanization, Increasing consumer awareness, Favorable government initiatives, Evolution of IoT specific industry forums, Large companies’ focus on IoT in India and Growing startup ecosystem and investor interest. Having said that, over and above the common global IoT ecosystem development challenges such as interoperability & standardization issues and security concerns, India has its own cultural, market and structural challenges that could potentially hinder the growth of IoT ecosystem in India such as Indian historically being a follower market in technology adoption, poor connectivity, fragmented value chain, services mindset and lack of multi-domain expertise, which will be key for evolution of a robust and sustainable IoT ecosystem. Various IoT based services and solutions will proliferate into Indian market at different times and with different evolution trajectories, basis individual industry vertical growth rate, value add of the solution and most importantly, the customer understanding of the value proposition. However, in the medium term (by 2018-2020), Consumerization of Healthcare through a number of Wellness


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based solutions, Smart Home solutions and Smart Grids are expected to take off in India. India could potentially play a pivotal role in the development of global IoT ecosystem both as a market and as an innovation hub. To be successful in Indian market, companies need to adopt unique and innovative business models that could then be taken global. India could also potentially leverage its large base of IT software workforce with the upcoming electronics and semiconductor manufacturing ecosystem (being driven by Indian government’s “Make in India” program) and deliver innovative IoT products and solutions. India currently has over 2 million mobile app developers and this number is expected to increase to 3 million by 2017, making it the largest base of mobile app developers in the world. An increasing portion of these developers could potentially focus on IoT apps and innovations. While US is driving the Standards and China is driving the Hardware, India will drive Apps & Business Models for Internet of Things.


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Contents Page

1. Overview of Internet of Things (IoT) Ecosystem 8

1.1. Internet of Things (IoT) Vision 8 1.2. Key Elements of IoT 8 1.3. Key IoT User Segments and Their Needs 10 1.4. Key IoT Application Areas 10

1.4.1. Health 11 1.4.2. Home Automation 12 1.4.3. Cities 12 1.4.4. Environment 12 1.4.5. Water 12 1.4.6. Energy Smart Grid, Smart Metering 13 1.4.7. Security & Emergencies 13 1.4.8. Retail 13 1.4.9. Logistics 14 1.4.10. Industrial Control 14 1.4.11. Agriculture 14 1.4.12. Animal Farming 15

1.5. Key Players in the IoT Value Chain 15 1.6. Current State of IoT Evolution 15 1.7. Key Enablers Driving the Current IoT Growth 16 1.8. Key Challenges for the Growth of IoT Ecosystem 18

2. State of Global Developments in the IoT Space 21

2.1. Focus on Platforms Development and Data Collection 21 2.2. Formation of Consortiums and Standard Bodies 23 2.3. Developers and Innovators – Key for the Ecosystem 24 2.4. Vulnerability of Large Companies 26 2.5. Investments, Mergers and Acquisition Trends 27 2.6. Key Global Markets’ Role in IoT Evolution 28

2.6.1. USA 28 2.6.2. China 29

2.7. Right Direction, But No Winning Strategy As Yet 30


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3. Current State of IoT Ecosystem in India 31

3.1. Development of IoT Policies 31 3.2. Public-Private Partnerships 33 3.3. Smart Grid Projects in India 34

3.3.1. Case Study – Pondicherry Smart Grid Project 34 3.4. IoT Focused Startups and Young Companies in India 36

4. Key Enablers & Driving Factors for IoT Ecosystem Growth in India 38

4.1. Rapid Urbanization 38 4.2. Increasing Consumer Awareness 38 4.3. Favorable Government Initiatives 39 4.4. Evolution of IoT Specific Industry Forums 39 4.5. Large Companies’ Focus on IoT in India 40 4.6. Growing Indian Startup Ecosystem & Investor Interest 40

5. Key Challenges for Growth of IoT Ecosystem in India 42

5.1. India is a Follower, Not a Leader Market 42 5.2. Disconnected and Fragmented Value Chain 43 5.3. Lack of Ubiquitous Connectivity 43 5.4. Need for Evolution from Services to Product Mindset 45 5.5. Need for Multi-Domain Expertise 45

6. Future Potential of IoT Ecosystem in India 46

6.1. Potential Opportunity for Various IoT Based Solutions 46 6.1.1. Consumerization of Healthcare 47 6.1.2. Connected Home Solutions 48 6.1.3. Smart Grids 49

6.2. Role of India in Global IoT Ecosystem Development 49

7. Appendix 51


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List of Tables and Charts 1. Key Elements of IoT Solution Technology Stack 2. Application Matrix: Societal Needs Vs Market Segments 3. Key Players in the IoT Value Chain 4. Potential Growth of IoT Connected Devices In Comparison with Other

Internet Connectivity Devices (1996-2020E, Bn) 5. Global Average Bandwidth Cost (1999-2013, USD) 6. Global Average Processing Cost (1990-2013, USD) 7. Key Announcement in the IoT Platforms Space 8. Forecasts of Yearly Growth of IoT-Only Developers (2014-2020E, Mn) 9. Geographic Split of IoT Developers Around the World 10. Split of Early-Stage IoT Investments by Sub-Industry (2011-13) 11. List of Smart Grid Projects in India with Target Consumer Base 12. Automated Metering Infrastructure Process Flow of Pondicherry Smart Grid

Project 13. Industry-Wise Split of Indian Companies Working on IoT Solutions 14. Number of Technology Startups in India and Their Yearly Growth (2013-

2020E) 15. Timeline Comparison of Various Cellular Services Launched Globally and in

India, and Their Adoption (Users, Mn) 16. Comparison of Average Number of Smartphone Apps by Country 17. Typical Service Call Flow of a Telematics Application 18. Potential Opportunity for Various IoT Solutions In Indian Market in the

Medium Term (2018-2020E)


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Convergence Catalyst Credentials About The Authors

Jayanth Kolla, Partner – Lead Author Jayanth brings over Twelve years of experience in Technology, Product Marketing, Research and Strategy Consulting in the Telecom, Media and Technology domains. He has held various roles in Telecom Carriers, Handset Manufacturers and Management Consulting firms. He was involved in the roll-out of India’s first rural wireless telephone network for a private telecom operator, implementing SHLR, testing of CDMA devices & FWTs, successful rollout of multiple GSM and CDMA handsets, developing multiple Mobile Value Added Services (MVAS) product offering & business growth plans and offering telecom research & advisory services for various players across the industry value chain. His areas of expertise are Business Advisory, Product Offerings Strategy, Go-to-Market Planning, Tracking and Publishing on current Technology and Industry Trends, specifically in the domains of Mobile, Internet and Telecom Infrastructure. Having worked for key players in the Telecom industry, Jayanth brings invaluable domain knowledge that spans across Business Strategy, Technology, Product and Operations. Currently, as a Partner with Convergence Catalyst, Jayanth advises various global and Indian companies on Market Entry, Business Growth, Product & Service Offering strategies and Investment Advisory for India and Emerging Markets. Prior to co-founding Convergence Catalyst, Jayanth has experience working with Analysys Mason, Nokia, Motorola, Kyocera Wireless and Tata Teleservices.


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Monika Sharma, Senior Consultant Monika has over ten years of experience in the Wireless Telecom industry in RF & VAS domains. Working with leading organizations such as ITI Ltd, Tata Teleservices Ltd, Qualcomm and Aricent, she has experience in multiple roles including RF Planning & Optimization Manager, Mobile Chipsets Test Lead and SDP Platform Implementation Lead. Implementing the GSM network of BSNL (in the West zone), setting up the RF test lab (for Tata Teleservices) and Mobile Handset testing lab (for Qualcomm), implementing India’s first VAS Service Delivery Platform (SDP) for Airtel, (where she was responsible for Message Broker and Parley), she has managed to garner crucial experience in vast and critical projects, thus covering the entire wireless telecom area.


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About Convergence Catalyst Convergence Catalyst is a Bangalore-based Telecom Research & Advisory. Convergence Catalyst (CC) has been formed by experienced Indian Telecom Industry professionals and leverages it's hands-on experience to offer Research & Advisory Services to various Indian and global companies. We offer Market Entry, Business Growth and Products & Services Offering Strategic Advisory (Business Advisory & Go-To-Market Planning) and Custom Research to the clients. The company has been formed with the idea of aiding various organizations in the Telecom, Media and Technology space to fine-tune their business and product offering strategies in order to emerge as leaders in the rapidly converging world. We primarily focus on Telecom & Internet Technologies Evolution, Smart Devices, Chipsets, Apps Ecosystem, VAS (Value Added Services), Customer Experience Management (CEM, Big Data Analytics in Telecom), Mobile Broadband and Digital Convergence domains. CC's key service offerings include Market Analysis, Product Marketing Advisory, Investment Advisory and Custom Research.

evolution of internet of things (iot) ecosystem - potential in india

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