1. 1 Excellence in Market Intelligence 1 Market Sizing North America Intelligent & Integrated Technologies

2. Market Sizing North America Intelligent & Integrated Technologies Overview for CABA IIBC at AHR2010 Jan. 25, 2010

3. 3 Excellence in Market Intelligence 3 Market Sizing North America Intelligent & Integrated Technologies Level 1 sponsors Level 2 sponsors

4. 4 Excellence in Market Intelligence 4 Experienced Project Team Andrew Giles, MA General Manager BSRIA - World Market Intelligence (WMI) Jeremy Towler, BBA, HTEC, dipl. Oek. Senior Manager Intelligent Building Technology Sukant Rout, BEng(Telecom), MBA Senior Market Research Consultant: Intelligent Building Controls / IT Cabling & Associated Technologies Ianire Cobeaga, MBA Market Research Consultant Intelligent Building Technology Lone Hansen Senior Manager I.T. Cabling and Associated Technologies Gambi Chiang, MSc, BEng, MCIM, Charter Marketer Senior Manager Special Projects Allan McHale, CEng, MIMechE, MIst Energy, MBIM. Independent Consultant

5. 5 Excellence in Market Intelligence 5 Study Objectives Purpose  Detailed assessment of current and future markets around intelligence in non-domestic buildings in North America  Quantitative and qualitative market assessment, segmentation, competitor analysis, routes to market  Size markets for principle applications plus integrated and IT-converged solutions Scope 1.IT Convergence 2.Environmental Controls 3.Lighting Controls 4.Security Systems 5.Fire Detection Systems Timetable  June – Dec 2009

6. 6 Excellence in Market Intelligence 6 Key Findings Environmental (HVAC) Building Controls  The market will compete in applying BAS to tackle climate change issues  Companies need to obtain and disseminate both controls and IT knowledge Lighting Controls  Huge savings and market potential  Consolidation to provide total lighting solutions and more integration  LED lighting is a growing market but controls required for better efficiency Security Systems  CCTV / Video surveillance setting the pace, followed by access control  Strong movement towards IP systems and integration of security systems Fire Detection and Alarm  Robust, growing market, driven (and constrained) by codes & regulations  Demand for better evacuation solutions will drive integration of nascent mass notification / voice evacuation market

7. 7 Excellence in Market Intelligence 7 $20 Billion Systems* Market 2009 * Systems = Product + Value Add (Engineering, Commissioning, Installation) excluding maintenance * Products = Hardware, Software, Cable and Cabinets at first point of distribution prices $8.5 Billion Market for Products* (incl. cable & cabinets) 2009

8. 8 Excellence in Market Intelligence 8 End-user Sectors  Top vertical markets: Education Offices Central / Local Government Health 13% 12% 11% 9%

9. 9 Excellence in Market Intelligence 9 IBC Markets will Rebound Source: StatCan US$ Bn. Source: Economist/ US Census Bureau  Depressed economy, lack of credit, increasing building vacancies  Fall in new construction, delayed refurbishment and retrofit  However, IBC* markets have outperformed  Economic stimulus will help boost demand – particularly public sector  IBC* markets expected to return to growth late 2010/early 2011 USA Canada * Intelligent Building Controls

10. 10 Excellence in Market Intelligence 10 Definition Convergence Convergence is to bring together autonomous systems onto a common communication platform within the business enterprise and create a single unified solution Network = Ethernet Cat 5/5e/6 and/or fibre BMS structure IT network/ backbone

11. 11 Excellence in Market Intelligence 11 Definition integration Integration is to add value by joining or linking different building services products However nearly all integrated solutions are also converged at least at management level - many also at control level Service layer (IP provider) Management level (Mostly IP) Automation/control layer (IP/BACnet/LON/proprietary) Automation/control layer (IP/BACnet/LON/proprietary)

12. 12 Excellence in Market Intelligence 12 Total system market $20 billion 56% = stand-alone 44% = integrated and/or converged 34% integrated and converged 8% converged (IT) only 2% integrated only BMSIT 21% on a separate BMS infrastructure 13% on the IT network/backbone

13. 13 Excellence in Market Intelligence 13 Stand-alone vs. integration/convergence by product area, US$ million, 2009  Stand alone is high for lighting, intrusion and fire (~90%)  IT convergence only – 25% for CCTV, 6% access  Integration and convergence high for BMS (54%) and access (45%)

14. 14 Excellence in Market Intelligence 14 Forecast 2009 – 2013, % split by stand-alone vs. integrated and converged

15. 15 Excellence in Market Intelligence 15 Trends  Intelligent buildings not a new topic, but new attention to energy usage and building performance  Many corporations increasingly take centralised decisions and need more and better information  Government wants to reduce CO2 emissions and energy consumption  Technology advancements are key drivers e.g. IP, wireless, PoE  IT barriers (lack of bandwidth, security) solved!  Scope and expertise increasing, integration/convergence of products  A number of companies can now take on the role of Master SI (the outcome however still depending on the person in charge)  Data centres are becoming more intelligent

16. 16 Excellence in Market Intelligence 16 Smart Grid - Definition  An intelligent electricity system that connects all supply grid (utilities) and demand elements (end-users) through an intelligent communication system

17. 17 Excellence in Market Intelligence 17 Barriers  Resistance from FM and from IT to converge (stick to own areas of expertise and competence)  Lack of training and skills  Construction process uses traditional route with main contractor and sub-contractors  Long-term outsourcing contracts  Historic objections relating to the IT infrastructure e.g. security, downtime, bandwidth

18. 18 Excellence in Market Intelligence 18 2 Main Drivers of Convergence Energy and building performance  Energy savings and efficiency  Improve building performance (better decisions)  Reduce maintenance costs  Increase the value of the building/rental revenues Security  Higher level of security (physical and IT security converged)  Efficient data sharing  Remote access  Improving storage  Access cards a requirement  Link data sharing between departments 12

19. 19 Excellence in Market Intelligence 19 Who is driving convergence? BMS IT Security Large projects 90%-100% converged at management level (Ethernet) IT convergence not perceived a benefit by many BMS suppliers IT suppliers keen to drive IT convergence - Cisco: Mediator and hardware - IBM: software, consultancy and Master SI - Oracle, HP, Plexus etc. offer software/advice - Integrated in BMS offering - Driven by IT (hardw, cabling suppliers/channel) - Security SI/installers high end drive it

20. 20 Excellence in Market Intelligence 20 Who is driving convergence? Energy rating schemes Political/ economic factors End-users Most converged buildings are in US LEED silver/gold/platinum - International pressure to reduce CO2 - Government funded projects - Buildings consume 70% of electricity and 40% of primary energy - Pressure from society and clients to have a green profile - Reduce energy costs - Improve building performance and management A driver for convergence, but not necessarily IT convergence

21. 21 Excellence in Market Intelligence 21 The Main Systems Integrators IBC(e)IBC(l)IBC(s)IBC(f) Honeywell DieboldHoneywell Johnson Controls ConvergintSiemens Schneider Electric HoneywellTyco Siemens Johnson ControlsUTC? (GE Security) UTC Niscayah Siemens Schneider Electric Tyco UTC CISCO IBM Oracle HP Others, Accenture, Plexus, Wipro etc.

22. 22 Excellence in Market Intelligence 22 Building Controls Product Trends Sensor  Better automatic control require more sensors  Demand for smart sensor  Demand in CO 2 sensor  Demand for all-in-one sensor Controller  42% are web-enabled controllers, mainly automation level controllers  End-users demand for standard protocol controllers  Multi-protocol controllers Wireless  Still a very small market, mainly for sensors, < 5%  Industry sees the potential in room solution  Standards: Zigbee, 805.12.4, 6LoWPAN, EnOcean  Key issues: energy demand, data transmission capacity

23. 23 Excellence in Market Intelligence 23 Trends in the Installed Building Controls System Market  Growing demand for integration of various building controls system to a centralized one  Increased share of smaller scaled contract  Reduced contract size due to OEM packaged supply  BACnet will continue to challenge LON’s share  Proprietary system will continue to diminish  Penetration of LON in smart meters

24. 24 Excellence in Market Intelligence 24 Development of Integrated Building Management Systems (IBMS) Integrate with sub-systemsIntegrate with other BAS Integrate with other systemsIntegrate with other enterprises systems Open Standards Enabling Convergence

25. 25 Excellence in Market Intelligence 25 Development of IBMS  Integration with sub-systems is the norm  Centralized monitoring and control more common  Integrated systems are mostly IT converged  Share information to improve building and enterprise performance  Integrate for the purpose of energy saving  Driven by end users and ROI is the critical factor  Better recognition of the benefits of integration in: –Banking, transportation, education, health, high-tech manufacturing, life science, communication and data centre sectors

26. 26 Excellence in Market Intelligence 26 How Quickly will Integration Grow? Number of Projects Time Hurdles: Too much customization Lack of standard applications Ability to demonstrate and convince the clients on ROI

27. 27 Excellence in Market Intelligence 27 Key Market Drivers and Trends Current drivers 1.Energy management –More function to reduce energy consumption –Data visualization software and enterprise dashboards –Integrate smart meters –Energy monitoring, reporting and analysis service 2.LEED and Energy Star Label 3.Energy Legislation and codes 4.Government stimulus Long term driver 5.Smart grid development –Monitor consumption and track min. and peaks –Automatic demand response –Demand modeling

28. 28 Excellence in Market Intelligence 28 Key Market Drivers and Trends  Energy saving applications  Open system  Integration and IT convergence  Increase in energy retrofit  Consolidation will continue  Compete in the knowledge in buildings and BAS applications  Controls contractors migrate to system integrators

29. 29 Excellence in Market Intelligence 29 Lighting Controls Conclusions  Huge potential for lighting controls in the North American market  Integration of lighting controls with other building systems will increase - lots of push from manufacturers and end users are beginning to understand the returns  The transition to skilled and trained people with knowledge and understanding of energy management products will take time

30. 30 Excellence in Market Intelligence 30 Lighting Controls Trends  DOE will play major role in driving control (and LED) standards  Energy regulations through ASHRAE standard is big controls driver  Standard open communication protocols is growing trend - mostly driven by integration with other systems  Integration and IP-Convergence growing but apart from HVAC adoption low  Consolidation – Acuity/Philips/Cooper Controls acquiring companies to provide total lighting solutions  Wireless - ENOCEAN in commercial, Zigbee in residential  Dimming Ballasts ~10% of total ballasts market in North America  LED is growing market - still require controls for better efficiency

31. 31 Excellence in Market Intelligence 31 Fire Detection/Alarm Market Penetration

32. 32 Excellence in Market Intelligence 32 Fire Detection/Alarm Communications and Web Enabling  Majority of fire systems sold with proprietary protocol  Some BACnet equipped panels but penetration marginal – using to integrate fire panel with the HVAC system  Strict fire codes make fire system integration to non-fire systems rare  However, more end users insisting manufacturers make comms. protocol details available to enable integration by independent integrators  IP being used to connect fire panels with mass notification systems  <10% of fire systems web-enabled (remote interrogation) but growing  Web-enabled examples include small commercial chains as cost effective solution to manage buildings portfolio  Reticence towards IT-Convergence and limited installer knowledge  Consolidated supply side limits innovation

33. 33 Excellence in Market Intelligence 33 Security Systems Product Sales Forecast to 2013  Market opportunities reduced due macroeconomic situation  2009 sales fall, recovering end of 2010  Less feature rich products gain share in short term  Performance will vary by type of sub-system

34. 34 Excellence in Market Intelligence 34 Integration of Security Systems  Increasing interest in holistic security solutions  20% of security systems sold in 2008 were integrated  Open architecture platforms and development of industry standards will have a positive impact on sales  However, demonstrable benefits of integration and return on investment are essential High Low

35. 35 Excellence in Market Intelligence 35 The future  Increase in energy saving applications and retrofit  More security solutions  Open systems, IP, integration, IT convergence  Compete on knowledge of buildings and applications  Controls contractors become system integrators and master SIs  Consolidation / Partnerships between best-in-class suppliers  IT companies augment their offering to include new applications - Facility management, energy management, security…….  There will be more solution providers  Educate, disseminate, prove ROI

36. End Thank you