1. Glen Allmendinger Founder and President Harbor Research, Inc. CABA Intelligent Buildings and Digital Home Forum April 2014 The Internet of Things Is Upon Us

2. 2 Hundreds of millions, then billions, of individuals and businesses, with billions of smart, communicating devices…… …….will change the way we work, learn and innovate The Internet of Things and People Is Upon Us….

3. 3 Managed Services System Applications & Services Networks & Network Services Engineered “Smart” Products & Components People/Vehicles Personal Devices Equip In Facility “movable” “mobile” “fixed” Nets Energy “mobile” Facilities IT Fixed Networks Mobile Networks Building Controls HVAC Systems Fire, Security & Access Industrial Controls Industrial Machinery Transport & Vehicles Healthcare Equip IT & Network Equip Home Appliances Media Equip Managed Services Customers & Users Embedded Sensing & Intelligence Softwar e Arch & Tools Products Channels Connectivity of Things & People Pervasive Network Integration Value Added Services New Application Values The Age Of Infinite Interactions…. … The “Physical” World Meets The “Virtual” World..

4. 4 Real-Time Systems Sensor / Actuator / ID Systems Control Systems 4-Bit 8-Bit 32-Bit 16-Bit n-Bit Content Driven Systems GUI-Based Systems Non GUI-Based Systems Processor / Platforms Chip / Logic Systems Industrial I/O Basic Appliance Controls Toys & Games 64-Bit Smart Tags, RF-ID Simple Appliance & Machine Controls Wireless inteligent Sensors, Industrial Monitors Hydraulics / Pneumatics Devices Smart Cards, Safety Systems Elevators, Auto Subsystems Industrial process Equip Auto Power-train / Braking / Safety Smart / Network Appliances Motion Control Meters & Advanced Sensors Set-Top Box / Audio / Video / Systems AMR / AMI Meters, Machine Controls, HVAC Office Equipment, Security Systems Residential Gateways, Routers & Hubs Test / Diagnostics Equipment, Network Switches / Routers Office Equipment, Medical Systems, Small Servers Telematics / Navigation Systems, Digital Cameras High Level Multiprocessor Servers / Mainframes Application Servers & Workstations Desktop / Laptop / Tablet PCs, ATM’s & POS Systems Smart Phones / PDA / Hand-Held POS Power Consumption Becomes Driver Less Deterministic More Deterministic The Ratio Of Devices That Operate Autonomously, Versus Those That Have Human Interfaces Has Eclipsed Ratios Of 10:1 And Will Move Toward 100’s And Even 1000’s…

5. 5 Software Tools, Middleware Network Infrastructure & Connectivity Mobile Equipment Aerospace On-Road Off-Road Complex Systemic Equipment Fixed Equipment Tools & Infrastructure Electronic Interconnect Systems and Equipment Types Systems Applications Carrier & Network Services Services & Applications Standard Machines & Equipment Facility Systems & Equipment Facility Infrastructure Components & Sub-Systems Marine Rail Facility Systems & Equipment Mechanical Sub-Systems & Components Fluid & Pneumatic Sub-Systems & Components Electrical Sub-Systems & Components Machine/Device Sub-Systems, Assemblies, Modules & Components Power & Control Systems Semiconductors & Micro-Electronics Embedded Electronics Terminals Diagnostic Tools Mobile Telephony, IT Terminals & Tools SmartPhones Tablets Vehicles As The Physical & Virtual Worlds Converge……. ……Connectivity & Integration Will Become Universal

6. 6 ~60% of the value in future revenue opportunities will be captured by software and managed service providers as IT moves toward a more IoT based architecture Internet of Things Value Elements Traditional Value Stack Product Services Software Components and Sub- Systems Electronics Value Chain Time Smart Components And Connectivity Smart Components And Connectivity Network Services Systems Applications Data & Analytics Services Data & Analytics Services Cloud and Mobility Services Cloud and Mobility Services Application Services Application Services System Integration Today 2020 Total Managed Services 2020: $750B Managed Services Becomes The Center of Gravity…

7. 7 To date, the machine connectivity and the Internet of Things opportunity has largely been comprised of “simple” remote services applications We Are Just At The Beginning of This Technology Wave..

8. 8 8 Facility / Building Systems & Equipment Wireless Network Operator Partner Vertical Segments & Users Fixed & Mobile Devices & Equip Smart System Platforms & Services Electrical, Mechanical, Fluid & Pneumatic Sensors, Devices & Sub-Systems IT Infrastructure Security / Access Fire & Safety Transport Lighting HVAC Device Connectivity Network Provisioning Network Services Institutional Industrial Retail / Commercia l Additional Verticals Simple Fixed Devices / Equipment Complex Fixed Equipment & Systems Mobile Devices, Equipment & Systems Device Enablement Network Services Provider Infrastructure Devices & Sub-Systems Device and Data Management Data Aggregation and Integration Device Data Management Device Development Data Management, Analytics and Application Development Platform Full integration of devices, people, existing systems and business processes will require new architectures and platforms Integrating Things, People & Systems Requires Innovations

9. 9 Mobile/Dispersed Asset-Centric Device/Equipment- Centric Facility- Centric Designing and developing systems focused on building, facility and energy management… Designing and developing systems focused on highly machines and equipment systems Designing and developing systems focused on mobile, fleet and dispersed applications Business Processes Legacy “Cultural” Technology Barriers Are Falling…....Installed Inertia Still A Big Hurdle To Reaching Value

10. 10 Convergence Of Cloud And IT/Telecom Services ‘Always-Available’ Integrated Services Environment Sensor And Instrumenting Impacts Infrastructure & Application Services Integration Managed Shared Services (No Silos) Managed Shared Services (No Silos) ICT & Cloud Infrastructure Sensor & State- Based Platform Sensor & State- Based Platform Network Services Infrastructure Converged ICT Services Future-Proof Infrastructure Hybrid Connectivity Low-Cost Sensor/Devices Automated Services (Bots) Integration Platform Secure Payment Models Standardized Access Models Shared Data Brokerage Quality Of Service Multi-Sided Access Security Active Consent Mechanism OT and IT Technologies Are Evolving…..Finally…. …To Support Complex Service Delivery

11. 11 As People, Processes and DATA…… …. Become The Next Big Thing…..

12. 12 IM Display Outbound communication Smartphone Integration Video Online advertising Email marketing SMS/MMS marketing Blogs RSS CRM application App Development Interactive Advertisements Streaming Podcasting Branded entertainment Facebook Social Sharing Twitter Google+ Applications Mobile Sites Increased People and Thing Interactions Drive New Services content delivery, interactions and identity enable new business models

13. 13 Data and Analytics Becomes The Real Driver of Value … …..The New Currency… The New “Land Grab”

14. 14 Platform Architecture And Standards Fosters The Exchange of Meaningful, Actionable Information Between Two Or More Sub-Systems, Including: Energy management Asset management Maintenance and repair staff Supply chain support Enterprise integration Design Install Operate MaintainUpgrade Point Application Platform Energy Management Controlling Energy Usage Networked System For Point Application Platform Integrated Managed Services and Application Delivery Platform Monitoring Energy Usage Enterprise Integration Maintenance Management Supply Chain Energy Management Asset Management Simple versus Compound Applications Building and Facility Asset and Energy Management Integrating Buildings, Mobile and People Assets Smart Systems Are Driving Towards Fully Integrating Devices, Equipment, Systems And People

15. 15 Given the incredibly rapid growth of networked devices, are we on a collision course because of evolving security challenges… solutions… But Will We Hit An Iceberg Effect? …Due To Physical & Virtual Security Issues?

16. 16 Growing Security And Privacy Challenges Are Driving Forces Of Usage And Related Behaviors Integrated Residential System Voice/Data/Video Generator Transfer Switches Meter Sockets Load Centers Breakers Surge Power Devices Spa Panels Disconnect Switches Generators Lighting Control Smoke (CO Gas)` Water Shut-Off UPSSmart Wiring Devices Door (Open/Clos e) Security (Open/Clos e)

17. 17 CUSTOMER EXPERIENCE CUSTOMER OFFERING CUSTOMER NEEDS VALUE CAPTURE CONTROL POINTS Customer Needs For New Services Platforms To Cover Many More Things Build Software Platform With Capabilities To Reach Greater Customer Scope and Value Design With Strong Bias Towards Partner Collaboration & Value Extensions Shift To New Software Platform and Managed Services Values Enabling, Aggregating & Analyzing Critical Customer Data How Will You Organize Your Evolving Offerings, Create Value and Capture Value? CREATING VALUE (CUSTOMER FACING) CAPTURING VALUE (INTERNAL – GETTING PAID) Business Strategy In The Age Of The Internet of Things