IoT Megatrends 2016

1. IoT Megatrends 2016 | © 2015 VisionMobile Marketlandscape reports & data Our research helps companies understand developers and create winningecosystems Understand “who”, “what”, and “how” are developers experience your product versus the competition, on the largestscale possible. VisionMobile|theanalystsofthedevelopereconomy 2 Developer Experience Tracker August 2015 August 2015 Developer Megatrends H1 2015 © 2015 VisionMobile1 DEVELOPER MEGATRENDS H1 2015 © 2015 VisionMobile.com May 2015 Availablethrough an annual report subscription Slice & dice millions of developer data points If you could talk to 20,000+ developers what would you ask them?

2. IoT Megatrends 2016 | © 2015 VisionMobile VisionMobile|theanalystsofthedevelopereconomy media presence trusted by mainstream media clients Our research is trusted by 3 We help companies understand developers and create winning ecosystems

3. IoT Megatrends 2016 | © 2015 VisionMobile Stijn Schuermans Senior Business Analyst Michael Vakulenko Strategy Director Andreas Constantinou Director and Founder Stijn focuses on understanding how technology becomes value-creating innovation, how business models affect market dynamics, and the consequences of this for corporate strategy. He is the lead Internet of Things researcher in the VisionMobile team since 2012. Stijn holds an engineering master degree and an MBA. He has over 10 years experience as an engineer, product manager, strategist and business analyst. You can reach Stijn at: stijn@visionmobile.com @stijnschuermans Michael has over 18 years experience in mobile and telecom starting from working on first experimental 3G systems in Qualcomm. Later on Michael was part of several startups developing products in the areas of wireless, enterprise networking and mobile apps. At VisionMobile Michael works at the cross section of business models, economics and technology where he leads strategy practice for software- centric business models in mobile, Internet of Things and Connected Car. You can reach Michael at: michael@visionmobile.com @mvakulenko As Director and Founder, Andreas oversees the growth and strategy at VisionMobile. He has been working on the mobile industry since 2000, helping take the very first smartphones to market. Since then he’s worked with the top technology brands, from Amazon to Samsung to help them understand developer trends and the future of software. In his academic life, Andreas is an Adjunct Professor at Lund University, Sweden, where he teaches Internet Business Models. You can reach Andreas at: andreas@visionmobile.com @andreascon About theauthors

4. IoT Megatrends 2016 | © 2015 VisionMobile Inthisreport 5 Developersare the new baseline Battle of the Smart Home Hubs The 4 frontiers of wearable platforms From Connected Car to software-definedtransportation Consumer and Enterprise technology converge The hottest business models in IoT

8. IoT Megatrends 2016 | © 2015 VisionMobile Developers extend yourbusiness model 9 Innovators Customers Extenders Distributors Developers are … Developers build new value with software as employees in your company Developers are customers of tools, libraries,and platforms 3rd party developers extend your business into new use cases, and are partners in new alliances 3rd party developers are distributors of your products, taking it to new users and markets Replenishment Service Amazon Alexa Voice Service value creation value capture value delivery value creation Developers extend your business model:

10. IoT Megatrends 2016 | © 2015 VisionMobile Every company should master developer ecosystem skills 11 platform technology people rules for interaction+ + “Managing developer ecosystems is a human art.” Todd Luwak* individuals & companies users & developers API cloud, APIs, apps, devices, OS, … app curation, governance, … (*) http://allthingsd.com/20131021/managing-platforms-is-a-human-art/

12. IoT Megatrends 2016 | © 2015 VisionMobile The developer segment mix isanindicator ofmarket maturity Industrial IoT is almost as mature as mobile; Smart Home trails Increasing maturity 13 mobile IoT

13. IoT Megatrends 2016 | © 2015 VisionMobile IoT markets arenotindependent: developers cross boundaries Smart Home Retail Industrial IoT Wearables Smart City Medical Connected Car The link is stronger when developers are more likely to target both verticals. Smart Home, Connected Car and Smart City form a cluster. Developers active in one area are likely to be active in the others as well. Wearables is one of the most stand-alone IoT verticals. Smart City is disconnected from Retail and Medical. There is a big overlap between IoT developers active in Retail and Medical. 14

14. IoT Megatrends 2016 | © 2015 VisionMobile15 Developers are a driving force in every IoT industry and a source of competitive advantage Every IoT company should master the human art of managing developer ecosystems take-aways read more IoT Developer and Platform Landscape 2015 IoT Developer Population 2015 - 2020

19. IoT Megatrends 2016 | © 2015 VisionMobile (A) 4new touchpoints: whattheuser interacts with everyday 20 Voice control Next-gen remote controls Apps Messaging Microsoft Cortana Apple Siri Logitech Harmony WeChat Facebook M on your watch, phone, tablet, desktop, TV

20. IoT Megatrends 2016 | © 2015 VisionMobile Who owns thecustomer relationship? Who will users be loyal too? In which interface will users invest time to learn? 21 device makers? hub makers? touchpoints? user

21. IoT Megatrends 2016 | © 2015 VisionMobile (B) Interaction models: whatdoes a‘Smart Home app’look like? 22 Companion app Scenario or rule Conversation Rules set by artificial intelligence Microsoft Cortana Apple Siri with voice or chat Rules set by the user

22. IoT Megatrends 2016 | © 2015 VisionMobile Artificial intelligence willplayakeyrole inSmart Home interaction 23 Companion app Scenario or rule Conversation Rules set by artificial intelligence Microsoft Cortana Apple Siri with voice or chat Rules set by the user artificial intelligence is the key value proposition

23. IoT Megatrends 2016 | © 2015 VisionMobile Willdevelopers goextinct? And what are the implications for future Smart Home platforms? 24 Smartphone Smart Home app developers create functionality power users set rules everyone is a developer app developers program scenarios developers assist users artificial intelligence discovers rules developers are nearly obsolete?

24. IoT Megatrends 2016 | © 2015 VisionMobile (C) Extendibility by3rd parties isstill keytosuccess 25 Platforms will beat Products every time! * Amazon Alexa Skills Kit extend with apps and scenarios extend with scenarios extend with voice-addressable services (*) Marschall Van Alstyne, professor, MIT

26. IoT Megatrends 2016 | © 2015 VisionMobile27 Platforms, not products, will determine who wins the customerrelationship. Conversational platforms (voice, chat) are coming up strong. The rise of artificial intelligence fundamentally challenges the central role of developers as creators of use cases, but developers remain key in platform strategies, if not for apps, then for services. take-aways read more The Smart Home Landscape 2015 Developer and platform outlook for the Smart Home Published August 2015

28. IoT Megatrends 2016 | © 2015 VisionMobile 4innovation frontiers inwearable platforms 29 1 2 3 4 Wearables move from consumer electronics devices to being unobtrusively embedded in clothing In smartwatches, Android Wear is under pressure from new platform challengers Augmented and virtual reality are the next big wearable app platform opportunity Data app platforms are emerging; developers haven’t caught on yet

29. IoT Megatrends 2016 | © 2015 VisionMobile The disappearing actof wearable technology Wearables move from high-tech devices to unobtrusive clothing 30 Rihanna's Go-To Designer Made a Dress That Works as a Credit Card Ralph Lauren's Futuristic Fashion: The PoloTechSmart Shirt ShiftWear:sneakers with e-ink screen and “Walk to Charge” tech 1 when it’s invisible but valuable, technology becomes relevant for traditional fashion companies

30. IoT Megatrends 2016 | © 2015 VisionMobile Enabling technologies fornext-gen smart clothing 31 Printable electronics and batteries Woven electronics and batteries Energy harvesting for self-poweredwearables via thermopiles(shirt) or kinetic energy (shoes) 1

31. IoT Megatrends 2016 | © 2015 VisionMobile Newopportunities for fashion brands :digital identity iskey 32 Source: IoT report series: The Wearables Landscape 2015 expanded value proposition • personalized workout recommendations • personalized encouragement • engaging community from one-off sale to lasting customer relationship • continuous brand exposure via app • lock-in through stored value (exercise history) • re-engage and market directly to consumer 1 Digital identity enables a powerful connection between brand and user

32. IoT Megatrends 2016 | © 2015 VisionMobile Android Wear isunder pressure insmartwatch platforms Chinese internet companies build their own Android derivatives for wearables Victims of the Android smartphone strategy build direct challenger platforms based on Tizen or webOS 33 2

34. IoT Megatrends 2016 | © 2015 VisionMobile AR/VR developer tools areemerging, too 35 tools and script libraries for VR app development, motion tracking technology “WorldViz virtual reality empowers businesses with new visualization techniques, developers with fresh creative potential, and researchers with tools that accelerate scientificdiscovery.” Structure Sensor and SDK: real-time 3D vision on mobile devices “Need precise 6-DoF positional tracking? Volumetric reconstruction? Real world occlusion? Our APIs have you covered. ” Cloud-based creation and hosting of high-fidelity 3D models “Our Models. Your Apps. Leverage the world’s first end-to-end platform for creating immersive media.” 3

35. IoT Megatrends 2016 | © 2015 VisionMobile Data-first appsandplatforms aregaining momentum 36 Apple ResearchKit clinical research with smartphones & wearables early apps address autism,epilepsy, moles, microbiome,environmental influences, neurocognitive disorders, liver disease,asthma, cardiomyopathy, and more 100,000 sign-ups in March to October 2015 Humanyze workplace people analytics with sensorized ID badges capture tone of voice, when and how quickly people speak, where people are when they interact face- to-face, and more correlate with other forms of communication (email,phone) and key performance indicators Oscar health insurance with data from wearables hired 45 engineers and built better tools for matching patients with physicians, gives customers free fitness-tracking devices and access to a free unlimited telemedicine service 40,000+sign-ups in 2 US states in 2 years 4

36. IoT Megatrends 2016 | © 2015 VisionMobile Data-centric solutions aremore lucrative thandevices or apps 37 Source: VisionMobile Wearables Landscape 2015 Probability of earning more than a given amount per month in revenues (higher is richer) 4 %ofwearabledevelopersinterestedinrevenue|n=506

38. IoT Megatrends 2016 | © 2015 VisionMobile39 Innovation in wearables is in full swing. Soon … … brands will compete on digital identity … watches and AR/VR will compete on who has most apps … the most successful developers will build on top of data take-aways read more The Wearables Landscape 2015 Developer outlook and platform leaderboard for Wearables Published October 2015

41. IoT Megatrends 2016 | © 2015 VisionMobile Focus shifts from control over dashboard tocontrol over data We need to control access to [vehicle] data. We want to keep control of the HMI, the UI, the whole safety aspect, the certification of the app in terms of the regulations of the different countries. SteffenNeumann Mercedes-Benz, app portfolio manager 42 “ Don Butler Ford, executive director of connected vehicle and services “ Jan 2014 Jul 2015

43. IoT Megatrends 2016 | © 2015 VisionMobile Software will define thefuture of transportation Dashboard controls and engine data are just the beginning… 44 electrical cars are less complex, allow entrance of CE companies machine learning systems based on big data from car sensors where to drive to get from point A to point B, given road conditions deciding in real-time where every car needs to go to meet demand connecting car makers,operators, app & service providers, and users from ‘taxi services’ to thousands of uses for autonomous transportationservices & apps transportation platform fleet routing navigation autonomous driving car hardware old and new car makers Who’s playing? software The future transportation value stack

44. IoT Megatrends 2016 | © 2015 VisionMobile Car makers facegreat challenges inthis new era 45 electrical cars are less complex, allow entrance of CE companies machine learning systems based on big data from car sensors where to drive to get from point A to point B, given road conditions deciding in real-time where every car needs to go to meet demand connecting car makers,operators, service providers, and users from ‘taxi services’ to thousands of uses for autonomous transportationservices & apps transportation platform fleet routing navigation autonomous driving car hardware old and new car makers software Car makers lack access to software and data expertise, including artificial intelligence, data science, and developer ecosystems Car makers and their suppliers lack access to sufficient autopilot training data Google: 48 cars | 1.2M miles driven Tesla: 100,000 cars | 1.5M miles per day Car makers & suppliers: limited data frominternal testing Consumer electronics companies have advantages in supply chain and key technologies (e.g. batteries)

45. IoT Megatrends 2016 | © 2015 VisionMobile Will carmakersmiss automotive computing just like Microsoft missed mobile? 46 Right now we're selling millions and millions and millions of phones a year, Apple is selling zero phones a year. In six months, they'llhave the most expensive phone by far everin the marketplace. ... Let's see how the competition goes. Steve Ballmer CEO Microsoft, 2007 “ There is absolutely no reason to assume that Apple is going to be financially successful in the electric car business. Electric cars are generally money losers. Bob Lutz former vice chairman GM, 2015 “ We’re in the car business today, and they [Google] are not. Mark Reuss, Product Development Chief GM, 2015 “ then now

46. IoT Megatrends 2016 | © 2015 VisionMobile47 The innovation focus in Connected Cars is shifting from the dashboard to vehicle data, and in the future to data-driven transportation platforms. Car makers struggle to keep control over and to gain access to the necessary supply chain, expertise, and data to be leaders in this evolution. take-aways read more Apps for Connected Cars? Your Mileage May Vary http://www.visionmobile.com/blog/2015/11/ self-driving-cars-are-about-platforms-not- about-cars/ BLOG

48. IoT Megatrends 2016 | © 2015 VisionMobile Today Smart Home, tomorrow Smart Office 49 Smart Home, not building automation, will be the future technology foundation for office environments Why? consumer markets offer much faster product evolution and validation with customers Smart Home today Smart Office tomorrow Smart Lock Smart Lighting Smart TV Smart Thermostat Access control Lighting control Meeting room equipment Climate control

49. IoT Megatrends 2016 | © 2015 VisionMobile The power of consumer-grade convenience 50 IBM and Yanzi sensorized an entire office building in under 4 hours temperature sensors, smart plugs,motion sensors in rooms, on chairs, and on other objects Consumer-grade ease of installation coupled with enterprise-grade security http://www.ibmbigdatahub.com/video/creating-connected-building-under-4-hours

50. IoT Megatrends 2016 | © 2015 VisionMobile Wearables intheworkplace: same technology, different use cases Source: IoT report series: The Wearables Landscape 201551 Phase 1 new tech, old solution Phase 2 wearable-first Phase 3 data-first activitytrackers for corp. healthplans “shrunkensmartphone” displaycompanydata, BYOW hands-free data logging, assisted reality, safety people analytics

51. IoT Megatrends 2016 | © 2015 VisionMobile Industrial IoT: clash of technologies andengineering cultures 52 Jeff Immelt CEO General Electric If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company. “ industrial technology data technology from social media, e-commerce, search Source: GE Minds+Machines conference, 2014

52. IoT Megatrends 2016 | © 2015 VisionMobile Clash of cultures: consumer andindustrial techconverge The industrial Internet is the second wave of the internet revolution. A revolution which has already transformed the consumer environment is now beginning to spread to the industrial environment, thanks to a rapid decline in the cost of sensors and in the cost of data storage and computing. Marco Annunziata GE Chief Economist Source: https://www.youtube.com/PxvKbt8pByA | Davos World Economic Forum, Jan 2015 “ Angela Merkel German Chancellor We must deal quickly with the fusion of the online world and the world of industrial production. In Germany, we call it Industrie 4.0. Because otherwise, those who are the leaders in the digital domain will take the lead in industrial production. We enter this race with great confidence. But it's a race we have not yet won. “ 53

53. IoT Megatrends 2016 | © 2015 VisionMobile54 Consumerand enterprise technology are increasingly converging in most industries. Consumernot enterprise technology will be the foundation for the converged future. Developers will be increasingly mobile between consumerand enterprise markets. take-aways read more Smart Home Landscape 2015 Wearables Landscape 2015 IndustrialIoT Landscape 2015

55. IoT Megatrends 2016 | © 2015 VisionMobile Value quadrants: mapping business model evolution 56 services tangible products revenue at time of sale post-sales revenue traditional product sales when money is earned with what money is earned

56. IoT Megatrends 2016 | © 2015 VisionMobile Value quadrants: some examples 57 services tangible products revenue at time of sale post-sales revenue consumables (razer and blade model) sell services on a monthly contract traditional product sales work on commission

57. IoT Megatrends 2016 | © 2015 VisionMobile Business models shiftinIndustrial IoT 58 services tangible products revenue at time of sale post-sales revenue sales of industrial asset, typically with yearly service contract vendor retains ownership of the asset, sells utility as a service

58. IoT Megatrends 2016 | © 2015 VisionMobile Industrial machines: from product toservice 59 “Sell locomotion, not locomotives” -- GE “Power by the Hour” -- Rolls Royce IoT data zero unplanned downtime vendors take on the risk of ownership sales of additional software and data services (e.g. capacity optimization) enables enables enables

59. IoT Megatrends 2016 | © 2015 VisionMobile Business models shiftinSmart Home 60 services tangible products revenue at time of sale post-sales revenue sale of connected product (Smart Home device) connected product is point of sale for consumables Smart Home: e-commerce

60. IoT Megatrends 2016 | © 2015 VisionMobile Every Smart Home device becomes ane-commerce point of sale 61 E-Commerce revenue enables subsidized hardware, i.e. the Kindle model. IoT extends e-Commerce affiliate and user acquisition schemes beyond websites, mobile and apps, into every physical object.

61. IoT Megatrends 2016 | © 2015 VisionMobile Business models shift: consumer getspaid 62 services tangible products revenue at time of sale post-sales revenue sale of connected product (smoke detector, car data dongle, wearable) subsidized IoT device bundled with service (e.g. insurance, energy rebates)

62. IoT Megatrends 2016 | © 2015 VisionMobile From ‘consumer pays’ to‘consumer gets paid’ Subsidizing devices from other revenue streams enables more growth 63 Nest Safety Rewards smoke detector bundled with home insurance Nest Rush Hour Rewards allowing energy providers to control the thermostat in exchange for rebates

63. IoT Megatrends 2016 | © 2015 VisionMobile From ‘consumer pays’ to‘consumer gets paid’ Subsidizing devices from other revenue streams enables more growth 64 Oscar Health Insurance health insurance bundled with Misfit activity tracker Automatic ConnectedCar app & services connected to usage-based car insurance

64. IoT Megatrends 2016 | © 2015 VisionMobile65 The prevalent business models in the Internet of Things are moving from product sales to recurring revenue, and from products to services. Product-as-a-Service, devices as a distribution channel for e-commerce, and for insurance, are some of the key business models to watch. take-aways read more The Commerce of ThingsIoT Report Series

66. IoT Megatrends 2016 | © 2015 VisionMobileCopyright VisionMobile 2011 Knowledge. Passion. Innovation. Updated: 12 November 2010 Getintouch withUs Matos Kapetanakis matos@visionmobile.com Senior Manager, Get the latest Developer Economics reports: www.DeveloperEconomics.com/reports 67

67. IoT Megatrends 2016 | © 2015 VisionMobile About VisionMobile ™ VisionMobileTM is the leading analyst company in the app economy and thedeveloper ecosystem. Our surveys and app analytics track the changing landscape of mobile, IoT, desktop, and cloud developers. We help clients like Microsoft, Intel, Google and Twitter decode the complex developer ecosystem and stay one step ahead of competition. Developer Economics is VisionMobile’s flagship research program, tracking the latest mobile, IoT, desktop and cloud developer trends via our surveys and app analytics. VisionMobile runs the largest, most global developer surveys, collecting data from thousands of developers across the globe, across regions, platforms and revenues. Our mantra: distilling market noise into market sense. VisionMobile Ltd. 90 Long Acre, Covent Garden, London WC2E 9RZ +44 845 003 8742 www.visionmobile.com/blog Follow us on twitter: @visionmobile Terms of re-use 1. License Grant. Subject to the terms and conditions of this License, VisionMobile™ hereby grants you a worldwide, royalty-free, non-exclusive license to reproduce the Report or to incorporate parts of the Report (so long as this is no more than five pages) into one or more documents or publications. 2. Restrictions. The license granted above is subject to and limited by the following restrictions. You must not distribute the Report on any website or publicly accessible Internet website (such as Dropbox or Slideshare) and you may distribute the Report only under the terms of this License. You may not sublicense the Report. You must keep intact all notices that refer to this License and to the disclaimer of warranties with every copy of the Report you distribute. If you incorporate parts of the Report (so long as this is no more than five pages) into an adaptation or collection, you must keep intact all copyright, trademark and confidentiality notices for the Report and provide attribution to VisionMobile™ in all distributions, reproductions, adaptations or incorporations which the Report is used (attribution requirement). You must not modify or alter the Report in any way, including providing translations of the Report. 3. Representations, Warranties and Disclaimer VisionMobile™ believes the statements contained in this publication to be based upon information that we consider reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. Opinions expressed are current opinions as of the date appearing on this publication only and the information, including the opinions contained herein, are subject to change without notice. Use of this publication by any third party for whatever purpose should not and does not absolve such third party from using due diligence in verifying the publication’s contents. VisionMobile disclaims all implied warranties, including, without limitation, warranties of merchantability or fitness for a particular purpose. 4. Limitation on Liability. VisionMobile™, its affiliates and representatives shall have no liability for any direct, incidental, special, or consequential damages or lost profits, if any, suffered by any third party as a result of decisions made, or not made, or actions taken, or not taken, based on this publication. 5. Termination This License and the rights granted hereunder will terminate automatically upon any breach by you of the terms of this License. Copyright © VisionMobile 2015 - v.1