A.T Kearney Bogota Two Year Anniversary

Internet of Things: Changing the World November 4, 2015 [email protected] @AlexBlanter

Interest in the Internet of Things is off the charts

In the last 12 months: • Nearly 4 million mentions • 5X increase… on top of prior 6X increase

4-week moving average score: • April 2013 – 15 • April 2014 – 50 • April 2015 – 90

9X increase in publications over 2 years

Connected devices will be everywhere… both globally and here in Colombia By 2020 in the World… 30 25 20 15

2014 to 2020: 7x growth in IoT devices vs. 2x for traditional

By 2020 in Colombia…

Internet of Things


Traditional connected devices

5 0

• Country: 50M+ people; presently 400M devices connected to the Internet • Bogotá: 8M+ people; a host city of the Campus Party, the largest technology festival in the world

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

• 65% internet penetration (higher than Mexico or Brazil) • 6M Twitter accounts – ranks 12th in the world Nearly 30 billion devices

Over 7.7 billion people

Over 3.5 connected devices per every human on the planet

• Significant government IT and communications infrastructure investments (Vive Digital) Likely the highest number of connected devices per person in Latin America!

What is the Internet of Things (IoT)?

We define the Internet of Things as a seamless combination of embedded intelligence, ubiquitous connectivity, and deep analytical insights that creates unique and disruptive value for companies, individuals, and societies

Conceptually, IoT is simple – practically…not so much Things




Enterprise Consumer Public Sector Analyze



Value and Impact

Policies & Standards


There is no single Internet of Things – there is a multitude of specific solutions, each generating value in unique ways

Each solution will present multiple opportunities for new business • • • • • • •

Monitoring & control Content Optimization Mobility Sharing Interactive Marketplace

• • • • • •

• • • • •

Communication Control & automation Storage & retrieval Data analysis & decision Transactional

• Internet access and connectivity infrastructure • Data aggregation and storage • Computing • App & service development enablers & APIs • Deployment & management solutions

Sensors & actuators Radios Embedded processors Smart modules Wearables ( VR Goggles) 3D Printers

Our current 2015 forecast is that by 2020 IoT will impact close to 6% of the global economy $3.4T Revenues directly attributable to sale of IoT hardware, software, and services

Additional IoT Revenues


Revenue Redistributed

Global Economy in 2020


Up 7.5% since last year Direct increase in output per unit of cost, enabled by IoT and reinvested in productive assets and activities

Productivity Improvement

Revenues realized within the world economy that will potentially move from one player to another with no net increase in total economy

Value to End

$164B Customer

Direct reduction in costs driven by IoT and realized by end customers


IoT will be materially disruptive – there will be winners and losers

Additional IoT revenues will be split in a multitude of ways Since last year

Enterprise Consumer Public Sector

6% 39%

Survey Results: Time to Value Rank

55% $205B 37% $135B 8% $30B

1 2

Additional IoT Revenues

40% closer in 2015 vs. 2014


3 #of sensors +33% yoy # sensors





Bandwidth cost -25% yoy €/Mbs




Computing cost -33% yoy



Storage cost -38% yoy €/GB

Surveys consistently show IoT value delivery will hit the rapid growth phase by 2020 Value buzz 1

Survey Results


















IoT value delivery is accelerating

Last year has seen a global explosion of IoT activities GE forges Internet of Things alliances with Verizon, Cisco, Intel… will also open up its Predix software platform to developers and users in 2015 as it aims to add intelligence to industrial gear

Qualcomm announced that its subsidiaries are achieving significant adoption of their broad connectivity, computing and solutions for the Internet of Everything

Microsoft announced a new version of Azure, an IoT-focused version of the Windows 10 operating system.

Intel Corp is using sensors to predict tool failure

Colombian mobile operator TIGO ( Millicom) has chosen Gemalto to deliver a suite of M2M solutions geared to improve remote preventive maintenance

Telefonica Brazil is launching the Vivo M2M Control Center which allows businesses in any market to easily deploy, manage and monetize IoT services

Colombian engineering solutions firm Sienco has developed a new solution against Energy Theft in a wireless tool named dTech, which is able to capture through Smart Meters any theft attempts

Telefónica is extending to LatAm its M2M Global Partner Program, a program intended to work in collaboration with key players in the M2M value chain

Bosch disclosed it would acquire ProSyst Software GmbH, a producer of software for smart devices. The company now has 3,000 software engineers working on IoT SAP announced the launch of the SAP HANA Cloud Platform for the Internet of Things (IoT) to enable the device cloud for faster delivery of IoT business value Deutsche Telekom and China Mobile formed a joint venture that will see them provide connected car services to China's growing automotive sector

Sony and Interdigital launch a JV to combine consumer electronics with wireless M2M TSMC launches ultralow power technology platform for IoT and wearable device applications, leveraging its 8” and 12” fabs to produce microcontrollers, image sensors, WiFi and Bluetooth sensors

SK Telecom together with local furniture maker Hyundai Livart, has unveiled new Internet of Things-enabled household furniture Flanked onstage by developers of smart shoes (Boogio), farming- data sensors (Weenat) and an IoT programming (Temboo), Young Sohn, president and chief strategy officer of Samsung Electronics, unboxed Artik, new chip technology for Internet-connected devices.

M&A related to companies supporting the Internet of Things continue to climb. So far in 2015, companies have spent $14.8 billion to purchase 39 companies related to IoT, surpassing the $14.3 billion spent for 62 such companies in 2014

South America lags other regions in terms of expected benefits from IoT Survey Ranking North America

Asia Pacific


1.7 Europe

2.9 Middle East

2.9 South America


However the IoT race is on as most countries are adopting new IoT policies and initiatives • The government launched the National Digital Strategy which aims for México to be ranked first in Latin America in terms of Internet connectivity by 2018 • Under the second phase of “Vive Digital” plan, the government aims to supply both, fiber optic and 4G network infrastructure to all 1,123 municipalities in the country • “Vive Digital“ also envisages subsidies for purchase of equipment and Internet services for more than 2mn low income households (8MM by 2018) • Government initiative “Talento Digital” aims to increase the number of IT professionals by issuing forgivable bond to students who decide to enroll in in ICT related courses • The Colombian government is working on a project to allocate almost 50Gz of unlicensed mobile spectrum to help boost IoT use

• Swiss power company ABB will provide Petroamazonas, the state owned oil company, with intelligent energy management solution (Emax2)

• Agenda Digital Chile 20132020 is the principal governmental initiative in connectivity with ambitious goals such as having the digital economy reach 10% od GDP by 2020, providing internet access to 80% of households and launching free wi-fi spots in every community throughout the country

• There is a governmental initiative scheduled by January 2016 to tag electronically almost 50 million cars nationwide in an attempt to control car theft • Brazilian government has enacted a law reducing fees paid by operators for each active M2M terminal • A national plan for M2M communication and IoT is expected to be ready by the end of 2015 • There are estimates that IoT could add 70 billion to Brazil´s economy through projects in the public sector • The government plans to build an underwater fiber network to connect the Amazon region

• Buenos Aires has made significant investments in Smart City technologies and currently ranks 4th in leading Smart Cities in Latin America

Our analysis indicates the Colombia has the second fastest pace of IoT adoption in the region

IoT Influence on Economy = sum of applicable IoT use cases, weighted by the relative size of each in 2020 Pace of IoT Adoption = Internet and connectivity infrastructure, ease of doing business, overall pace of economic growth, and culture of innovation Bubble size represents 2020 GDP size

At a regional level, success in IoT depends on three key factors Key factors

Key components

The right business environment

• Advanced • Favorable economy, with regulatory easy access to environment capital and workforce

The right local ecosystem

• High concentration of diverse but leading businesses

Companies that know how to innovate

• Reach for the business model

• Rich socioeconomic system

• Instill innovation culture

• Critical mass of relevant industries

• Culture conducive to collaborative innovation • Invest in informed strategic choices

• Strong players capable of making the market • Shared history and resulting confidence • Leverage the network

IoT is only one of many technological and business changes impacting the world...

Internet of things

Artificial Intelligence

3D Printing

Digital and Big data


…And the pace of change is accelerating

The only real way to deal with this avalanche of change is Innovation Over 70,000 books written on innovation – 1,500 new books just in the past 3 months

46 Innovation conferences just in 2015

14,776 LinkedIn Groups on topic of Innovation

99,000 Facebook posts on Innovation

Innovation conversation is all around us

50 TED Talks on Innovation

5,740,000 YouTube videos on Innovation this year

We believe that we are at the start of a new innovation era TODAY

Innovation Outcomes Winning Formula Innovation Approach Innovation Actors

Tribal leadership (or death)

Industry leadership

Economic growth

Right to continue to innovate

Random Action

Bespoke Efforts

Rigorous Methodology

Rapid Experimentation

Magic (often black)





Select Companies

Select Industries




Part of that new era is a fundamentally new startup environment Rank (high to low)

Silicon Valley Tel Aviv Los Angeles Seattle New York City Boston London Toronto Vancouver Chicago

• 70% increase in startup funding


• 10x to 100x reduction in startup costs

Sao Paulo

• 60% increase in early VC rounds


• Accelerators, incubators, startup service providers





Melbourne Bangalore Santiago

At the same time, large public enterprises continue to face many challenges in being repeatable innovators • Stable – and somewhat frozen – business models • Complex regulatory environment – and resulting risk aversion • Culture of a large organization – with its premium on current performance and business stability • Complex organizational structure – with multiple operating companies, P&L owners, decisionmakers, and interfaces • Organizational clock speed measured in months and quarters – rather than in days and weeks • Legacy infrastructure and processes – and significant costs to re-platform • Accumulated complexity – in markets, channels, infrastructure, products and services

Addressing these challenges one by one is a losing proposition – A Change in DNA is a must

The old innovation methods will deliver the old innovation results – The new innovation DNA is required Run multiple business models in parallel Venture wildly – for a meaningful place in the ecosystem Incubate with gusto at scale – don’t just play… do Innovate deliberately, with clear strategy Establish real constraints… couple with real rewards

Drive for ecosystem dominance first, financial returns second Play the long game, but fast