©Kii Corporation 2016

Platform Microservices Vertical Frameworks

Designing Business Models for theIndustrial Internet of Things

IoT Solutions World Congress 2016 | Barcelona, Spain

Martin Tantow | General Manager, EMEA

• Founded in 2007 after MBO from Nokia

• Global HQ in Tokyo. US HQ in Silicon Valley. Growing presence in the US, Asia and Europe• 90+ employees• Investors include Cisco

and Fidelity

We Enable The Delivery Of Complex IoT Solutions

50+ Customers and 30,000 Developers

Full-featured, Carrier-Grade Solution Enablement Platform

IoTPlatform

Smart BuildingsSmart Health Carrier SolutionsSmart Cities Smart LogisticsIndustry 4.0 (IIoT)

• Selected by the Hamburg Port Authority to identify pollution sources, reduce pollution and meet environmental standards • Extensible Smart Port solution

built atop Kii’s platform using AQMesh devices

• Working with the HPA to add additional solutions, integrate/interop with other devices/assets

Smart Environmental Monitoring For Hamburg Port Authority

NO2, SO2, PM2.5/PM10 etc. (low detection thresholds, <10ppb for NO2,SO2)

Major Technical Innovation Has Led to an Explosion of Connected Opportunities

Components ofIndustry 4.0Intelligent Machines / Tools / ElementsIoT / Connectivity

Big Data Smart DataSelf-learning Systems

AR

In 2020 (vs. today)

Sensor cost € 0.30Wireless connectivity

Penetration rate of 4G x5

Processor power x6

Miniaturisation“Computers” the size ofa grain of sand

Cloud, storage, data x16 data volumes

Market Size for Connected Devices will grow from $6.5B in 2015 to $48B in 2020 at 49.5% CAGR.

Sources: Intel, GSA, GSMA, Iaw Moore, IDC, ExtremeTech, Oliver Wyman

An Explosion of Connected Possibility

19921,000,000

20030.5 billion

2009Iot Inception

201311.2 billion

20128.7 billion

201414.4 billion

201518.2 billion

201622.9 billion

201728.4 billion

201834.8 billion

201941.1 billion

202050.1billion

0

10

20

30

40

50

90 969492 0200 140698 18161004 1208 20

Mill

ions

of d

evic

es

YearSource: Cisco

Four Predictions that are Prompting a Revolution in Business Models

It’s not enough to improve existing business models, new ones need to be invented

Boundaries between industries are being challenged

1

?

New opportunities if companies quickly adapt

to changing markets

Data is becoming the most valuable asset

2

Future IoT business models will be data-

centric

Services are becoming more prominent

3

Product companies become solution providers

More direct customer relationships allow mass personalization

4

Existing customer segments need to be revised and new ones

added

Development of Data-Centric Business Models

Industry Edge ComputingEmbedded Systems

Gateway

Sensors & Devices

Supply Chain Process

IoT Platform

Algorithm & Data Analysis

Cloud InfrastructureIaaS

PaaS

SaaS

Cloud

Connectivity

Pred

icti

ve

Mai

nten

ance

Surv

eilla

nce

Benc

hmar

king

On-

dem

and

- ava

ilabi

lity

- bill

ing

Pers

onal

izat

ion

& C

usto

mer

da

ta

Self

lear

ning

Solution

AR

Quality Availability

Smart Services & Business Models

Input

Network

Processing

Content

Benefit

Strategy Tactics

IoT Platform

Open Information Marketplace

Interoperability

Standards

Business Model Development by Stakeholder

Stakeholder Input Network Processing Content

Benefit(monetary/non-monetary)

Generalpublic

Internet / Mobile Network Pollution levels Immediate warnings

Ship positioning (AIS), traffic data, weather (e.g. wind)

Internet APIsAlgorithm for data harmonization & visualization

“Polluter” detection (ships, traffic, industry)

Possibility to fine polluter source or avoid pollution

Environmental data (e.g. NOx, SO2, NO2)

GPRS Post processing, outlier detection Pollution levels Service charges

Data marketplace Internet APIs / MQTT

Data interoperability, Solution Accelerator, Thing Interaction Framework

Pollution source identification and levels on map, push notifications

Service charges

Example:

Business Model = Logic of the firm, the way it operates and how it creates valuefor its stakeholders.

Business Model Strategy & TacticsStrategy

Industrial driving force

Ex: Gira (BMS, building technology)

Ex: Existing/legacy homes and buildings

Ex: Sigfox (connectivity)

Strategicintent

Market driven Technology push

Get-ahead

Catch-up

Ex: 3rd tier mobile carriers (e.g. upgrading to 5G)

DSLPhysical Freemium

Digital Add-on

Digital Lock-in

Product as POS

Object Self-Service

Remote Usage & Conditioning Monitoring

Sensor as a Service

Tactics (Physical Asset + Service)

Sources: Li et al, Fleisch et al

Physical asset with service (initially free): e.g. Canary

Inexpensive physical asset with add-on high margin services, e.g. AWS

Digital handshake to limit compatibility, e.g. Gigaset elements

Physical device or smart phone as POS, e.g. Shopkick

Ability to place orders on the Internet, e.g. Amazon Dash ButtonReal-time data transmission and ‘Pay per Use’ billing, e.g. remote 3D printerData provisioning for multiple applications, e.g. data marketplace

Developing a Marketing Proposition

Components(by stakeholder)

Strategy

Tactics

Target Market

Value Proposition Value creation to the customer

New & existing customer segments

Competitive Strategy Branding & differentiation / USP

Solution delivery process

Value Chain Ecosystem Revenue Model

Partners that can add value to the proposition

Revenue mechanism & pricing

Leveraging New Value Assets: Data Marketplaces

Source: McKinsey & Company

Setup phaseTechnical data marketplace

Target stateData and service ecosystem

Raw-data trader• Works only as an

inter-mediary to exchange data on a technical platform

• Data will be forwardedas raw data

Data normalizer• Defines standard

data model, format, and attributes for all data

• Incoming data will be syntactically verified

• Inventory of data will be continuously managed and extended

Data aggregator• Data marketplace

aggregates data into logical bundles

• For example, data for a certain region is combined and offered to service providers

Quality assurer• Verifies the content of

data and carries out consistency andquality checks

• Invalid data are rejected

• Fees for data marketplace are higher, though it is accountable for correctness of data

Depth of value added of the marketplace

Selected Major Opportunities – Smart City & Building, Healthcare

Application Description and Examples Current Status Outlook

EnvironmentalMonitoring

Sensors for environmental protection and monitoring:Air and water quality, atmospheric or soil conditions, movement of wildlife, earthquakes and tsunami-warning

Increasing deployment due to frequency of concerns.

Investment primarily government-driven. Budget limits govern growth.

InfrastructureManagement

Monitoring and controlling operations of urban and rural infrastructures:From traffic, parking management to maintenance of bridges, railway tracks and wind farms.

Increased attention as infrastructure programs gain traction.

National government renewal programs driving market.

BuildingManagement

Enhancement of building management systems (BMS):Access & energy management, light control, safety & conference room management.

Already large market which sees quick ROI.

Strong demand for mainly new properties.

Medical remotemonitoring

Health monitoring and emergency notification systems:From blood pressure and heart rate monitors to advanced devices like pacemakers or hearing aids.

Numerous small deployments to prove use cases.

Ramp up dependent on insurance and regulatory approvals.

Selected Major Opportunities – Industrial IoT & Security

Application Description and Examples Current Status Outlook

Industrial control, automation & measurement

Enabling smart factory through real-time optimization of manufacturing production and supply chain networks, asset management via predictive maintenance and maximizing reliability.

Strong growth. Clear ROI. Limited by sunk costs of old processes.

Expect fast ramp of high-value contracts by global manufacturers.

AI & Machine Learning

Algorithm for pattern recognition and computational learning theory. Making sense of all the data collected from millions and billions of sensors.

Growing AI technology adoption in various industries, several acquisitions by Google and Apple.

Deep learning breakthroughs will be driving a boom on AI.

SecurityMajor concern in the private and public sector, increasing exponentially to the amount of connected devices.

Huge concern and threat to all IoT solutions, major security issues are not solved.

Large market, expected to reach $37B by 2021.

Keep In Touch

Martin TantowGM, EMEA

martin.tantow@kii .com

Thank You!