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1Excellence in Market Intelligence 1

Market Sizing North AmericaIntelligent & Integrated Technologies


Overview for CABA IIBC at AHR2010

Jan. 25, 2010



Level 1 sponsors

Level 2 sponsors


Experienced Project Team

Andrew Giles, MAGeneral ManagerBSRIA - World Market Intelligence (WMI)

Jeremy Towler, BBA, HTEC, dipl. Oek. Senior ManagerIntelligent Building Technology

Sukant Rout, BEng(Telecom), MBASenior Market Research Consultant: Intelligent Building Controls / IT Cabling & Associated Technologies

Ianire Cobeaga, MBAMarket Research Consultant Intelligent Building Technology

Lone HansenSenior ManagerI.T. Cabling and Associated Technologies

Gambi Chiang, MSc, BEng, MCIM, Charter MarketerSenior Manager Special Projects

Allan McHale, CEng, MIMechE, MIst Energy, MBIM. Independent Consultant


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

Scope1. IT Convergence2. Environmental Controls3. Lighting Controls4. Security Systems5. Fire Detection Systems

Timetable June – Dec 2009


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 knowledgeLighting 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 efficiencySecurity Systems CCTV / Video surveillance setting the pace, followed by access control Strong movement towards IP systems and integration of security systemsFire 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


$20 Billion Systems* Market 2009

BMS$5,733

29%

CCTV/Video$5,475

28%

Fire Detection & Alarm$2,751

14%

Access Control$2,535

13%

Intruder Alarm$2,053

11%

Lighting Control$9065%

* Systems = Product + Value Add (Engineering, Commissioning, Installation) excluding maintenance

* Products = Hardware, Software, Cable and Cabinetsat first point of distribution prices

$8.5 Billion Market for Products* (incl. cable & cabinets) 2009


End-user Sectors Top vertical markets:

Education

Offices

Central / Local Government

Health

13%

12%

11%

9%


IBC Markets will Rebound

-7%

10%

13%

9%

6% 6% 5% 4% 5%

-10%

-5%

0%

5%

10%

15%

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Construction Output Growth Rate (%)

6.5%

1.5%

2.3%

4.2% 4.2%

3.1%

2.3% 2.6%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2009f 2010f 2011f 2012f 2013f 2014f 2015f 2016f 2017f

Construction Output Growth Rate

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


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


Definition integration

IT-Networks

Technical Infrastructures (HVAC/Lighting/Security/Fire etc.).

IT-C

onve

rgen

ce

Integration

IT-Networks

Technical Infrastructures (HVAC/Lighting/Security/Fire etc.).

IT-C

onve

rgen

ceIT

-Con

verg

ence

IntegrationIntegration

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)


Total system market $20 billion• 56% = stand-alone• 44% = integrated and/or

converged34% integrated

and converged

8% converged (IT) only

2% integrated

only

BMS IT

21% on a separate BMS infrastructure

13% on the IT network/backbone


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%)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

BMS Lighting(controls)

CCTV Accesscontrol

Intrusion Fire andsafety

Stand alone Integration Convergence (IT) Convergence (BMS)


Forecast 2009 – 2013, % split by stand-alone vs. integrated and converged

- Converged BMS

- Convergence IT

Integrated only

Stand alone

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013


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


Smart Grid - Definition

An intelligent electricity system that connects all supply grid (utilities) and demand elements (end-users) through an intelligent communication system


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


2 Main Drivers of ConvergenceEnergy 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

1 2


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


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


The Main Systems Integrators

IBC(e) IBC(l) IBC(s) IBC(f)Honeywell Honeywell Diebold Honeywell

Johnson Controls Johnson Controls Convergint Siemens

Schneider Electric Schneider Electric Honeywell Tyco

Siemens Siemens Johnson Controls UTC? (GE Security)

UTC UTC Niscayah

Siemens

Schneider Electric

Tyco

UTC

CISCO

IBM

OracleHP

Others, Accenture, Plexus, Wipro etc.


Building Controls Product Trends

Sensor Better automatic control require more sensors Demand for smart sensor Demand in CO2 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


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


Development of Integrated Building Management Systems (IBMS)

Integrate with sub-systems Integrate with other BAS

Integrate with other systems Integrate with other enterprises systems

Open Standards Enabling Convergence


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


How Quickly will Integration Grow?N

umbe

r of P

roje

cts

Time

Hurdles:• Too much

customization

• Lack of standard applications

• Ability to demonstrate and convince the clients on ROI


Key Market Drivers and TrendsCurrent drivers1. 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 Label3. Energy Legislation and codes4. Government stimulusLong term driver5. Smart grid development

– Monitor consumption and track min. and peaks– Automatic demand response– Demand modeling


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


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


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


Fire Detection/Alarm Market Penetration

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

GDP

/ Ca

pita

(US$

)

Total IBC(f) System Sales / Capita (USD) Sources: CIA World Factbook, BSRIA Proplan

Western Europe 7 (EU(7))* Average

* Belgium, France, Germany, Italy, Netherlands, Spain, United Kingdom 2008 estimates based on 2007 actual data

United Kingdom

Spain

Italy

Belgium

GermanyFrance

Netherlands

North America


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


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

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2007 2008 2009 2010 2011 2012 2013

USD

mill

ion

CCTV / Video surveillance sales

Product sales

Access Control

Intruder Alarm

GAGR 2008-2013

5.0%

6.7%

3.7%

2.0%

Growth 2008-2009

-1.9%

0%

-3%

-5%


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

LowLowLow


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

End

Thank you

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