Strategic Opportunity Analysis of the Global Smart City Market

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Information about Strategic Opportunity Analysis of the Global Smart City Market
Business & Mgmt

Published on February 28, 2014

Author: FrostandSullivan



Topic: Strategic Opportunity Analysis of the Global "Smart City" Market till 2025.

The lecture sets the stage for visionary thinking by identifying and analyzing one of the significant Mega Trends, Smart is the New Green. 'Smart' as a value proposition has been increasingly replacing 'Green' concepts. This presentation would highlight examples of projects, companies and technologies that will invade and change the smart city space globally in the next decade. It also provides information on the total addressable smart city market size opportunity and discusses smart city business models, funding mechanisms, and stakeholder analysis. It also provides analysis of macro-to-micro implications of smart cities on various industries in driving convergence of competition.

Strategic Opportunity Analysis of the Global Smart City Market Smart City Market is Likely to be Worth a Cumulative $1.565 Trillion by 2020 M920-MT 1

What is Smart City? Smart City Concepts Smart cities are cities built on ‘Smart’ and ‘Intelligent’ solutions and technology that will lead to the adoption of at least 5 of the 8 following smart parameters—smart energy, smart building, smart mobility, smart healthcare, smart infrastructure, smart technology, smart governance and smart education, smart citizen Smart Governance and Smart Education Smart Citizen Smart Healthcare Smart Building Smart Energy 4G Smart Mobility Smart Technology Smart Infrastructure Note: Smart Security is included as a part of Smart Infrastructure segment in this illustration. Source: Frost & Sullivan M920-MT 2

Key Parameters that will Define a Smart City in 2020 Parameter Smart energy Smart building Smart mobility Smart technology Smart healthcare Smart infrastructure Smart governance and smart education Smart security Smart citizens Definition Smart energy uses digital technology through advanced meter infrastructure (AMI), distribution grid management, and high-voltage transmission systems, as well as for demand response for the intelligent and integrated transmission and distribution of power. Smart buildings are green, energy efficient, and intelligent, with advanced automated infrastructure that controls and manages aspects such as lighting and temperature, security, and energy consumption independently or with minimal human intervention. Smart mobility enables intelligent mobility through the use of innovative and integrated technologies and solutions, such as low emission cars and multimodal transport systems. Smart technology will connect the home, office, mobile phone, and car on a single wireless IT platform. Smart technology includes adoption of a smart grid system, smart home solutions, a highspeed broadband connection, and roll-out of 4G technology. Smart healthcare is the use of eHealth and mHealth systems and intelligent and connected medical devices. It also involves the implementation of policies that encourage health, wellness, and wellbeing for its citizens, in addition to health monitoring and diagnostics as opposed to treatment. Smart infrastructure includes intelligent and automated systems that manage, communicate with, and integrate into different types of intelligent infrastructure, such as energy grids, transportation networks, water and waste management systems, and telecommunications. Smart governance and smart education includes policies and digital services from the government that help and support the adoption of green and intelligent solutions through incentives, subsidies, or other promotions. Smart security includes technology and solutions such as video surveillance, public safety LTE, and managed security services that are designed to protect people, property, and information. Smart citizens possess interest in embracing smart and green solutions in daily activities. More citizen proactivity is expected in adopting smart concepts and smart products, including lifestyle choices. Source: Frost & Sullivan M920-MT 3

Understanding the Difference Between Smart City and Sustainable City Smart City • Smart cities are cities built on 'Smart' and 'Intelligent' solutions and technology that will lead to adoption of at least 5 of the 8 following smart parameters. • As of 2011, there is no smart city; however, 26 smart cities are expected by 2025. Smart 'projects' within a city have been excluded in this count, as they do not apply to an entire city. Sustainable City • Sustainable cities are cities that are built on ecofriendly basis. These may not necessarily include 'intelligent' systems but are built more on an energy-efficient or environment-friendly objective. • 92 sustainable cities are expected by 2025. Image Source: Dreamstime Source: Frost & Sullivan M920-MT 4

Introduction to Smart City Concept Smart is the New Green—3 Levels of Smart Products and Technologies A smart product is characterized by an intelligent sensing technology that is increasingly being integrated with Internet technologies, thereby allowing the product to react to and communicate with the changing environment around it. This leads to optimal operations and improvement in efficiency. Basic Sensing Mechanism Smart Bandages LEVEL 1 Basic Sensing Mechanism + One-way Data Communication LEVEL 2 Smart Chip Smart Lighting Sensing Mechanism + Two-way Flow of Data Communication LEVEL 3 Smart Clouds Smart Windows Smart Mobility Smart Technology Smart Buildings Image Source: Dreamstime and Connected Digital World Source: Frost & Sullivan M920-MT 5

Key Parameters that will Define a Smart City in 2020 Smart Energy: Digital Management of Energy Smart Buildings: Automated Intelligent Buildings Smart Mobility: Intelligent Mobility • • • • Smart grids Smart meters Intelligent energy storage Smart Technology*: Seamless Connectivity • • • • 4G connectivity Super broadband Free Wi-Fi 1Gbps download speeds Smart Healthcare: Intelligent Healthcare Technology • • Use of eHealth and mHealth systems Intelligent and connected medical devices • • Building Automation Intelligent Buildings: Advanced HVAC, Lighting Equipment Smart Infrastructure: Digital Management of Infrastructure • • • Smart Governance and Smart Education: Government-on-the-Go • • • Sensor networks Digital water and waste management Smart Citizen*: Civic Digital Natives • • • Use of green mobility options Smart lifestyle choices Advanced traffic management system (ATMS) Parking management ITS-enabled transportation pricing system eGovernment eEducation Disaster management solutions Smart Security: Next Generation 911 • • • • Surveillance Biometrics Simulation modeling and crime protection C2 and response *Smart citizen and smart technology are integrated and not covered separately in this analysis. Source: Frost & Sullivan M920-MT 6

Executive Summary—Global Smart Cities in 2025 More than 26 global cities will be smart cities in 2025, more than 50% of which will be from Europe and North America. Smart Cities, Global, 2025 Vancouver Calgary Seattle Chicago San Francisco Los Angeles San Diego Toronto Boston New York Amsterdam Copenhagen Stockholm Oslo Helsinki Glasgow Berlin London Vienna Paris Luxembourg Barcelona Beijing Tokyo Chengdu Tianjin Seoul Wuhan Singapore Delhi Shenzhen Select smart city projects* in 2025** Smart cities in 2025 Jakarta Sydney *Smart City projects are city projects that are being trialled/implemented within a small-scale for a specific industry/public entity/industry cluster. e.g., The Buffalo (United States) Smart Education Initiative Johannesburg **This list is not exhaustive. The cities highlighted here have implemented at least one of six smart city aspects in their smart city projects. Image Source: Dreamstime Source: Forbes Smart City List 2009; Innovation Cities Global Index 2012-2013; specific Smart Project Websites for each city; Frost & Sullivan M920-MT 7

Executive Summary—Summary of Smart City Market Smart cities are anticipated to create huge business opportunities with a market value of $1.565 trillion by 2020. Smart City Market by Segments*, Global, 2012-2020 Smart Building 7 Smart Governance and Smart Education** 1 9.7 24.6 Smart Healthcare 6 14.6 Smart City Market Smart Mobility 2 8.7 Smart Security 13.5 5 13.1 15.8 Smart Infrastructure*** 3 Smart Energy 4 Note: The graph represent the market share of each segment in the smart city market. For more information on smart city market sectors please refer to appendix. *These numbers represent the entire smart solutions eco-system in each segment for both urban and non-urban panoramas. **Smart Education includes eLearning services for schools, universities, enterprises, and government entities. ***Smart Infrastructure includes sensor networks and digital management of water utilities not included in other segments. Source: Frost & Sullivan M920-MT 8

Smart Convergence Companies in the smart city space will not only partner and converge among themselves to offer ‘smart’ capabilities but would also start converging with different participants in the ecosystem. Smart City Market: Convergence of Competition, Global, 2012–2025 Point of Convergence Microsoft SAP Telecom Participants • Broadband and Internet service providers • Phone lines • Mobile communications • Networked IT services Security • Firewalls, Internet protocol security • Physical implementation of systems and monitoring • Managed and monitoring services • Cloud-based services • Identity management, smart cards IT Participants • IP networks • Digital technology • Analysis software • Technology integration Google • Network security HP Oracle ST Electronics AlcatelLucent Cisco Ericsson Senergy IBM O2 ALSTOM Grid AT&T Verizon Deutsche Telekom Serco Securitas Symantec Eaton General Electric Siemens AG ABB Honeywell Johnson Controls Rockwell Automation Tyco Schneider Electric Energy and Infrastructure Participants • T&D technology • Power electronics • Renewable energy • Integrated distribution management • Substation automation • AMI-enabled metering Automation and Building Control Participants • Building automation • Demand-side management • Device connectivity • Monitoring and sensing • Smart grid integration Source: Frost & Sullivan M920-MT 9

Case Study—Amsterdam Smart City IBM, Cisco, Accenture, Philips, Vodafone are coming together to power Amsterdam Smart City. Smart City Market: Highlights of Smart Projects and Developers, Amsterdam City, 2012 Projects • Ship to grid • Energy management • Fuel cell technology Project Developers • Vattenfall-Nuon • Liander • Cisco Projects • Almere Smart Society • Online Portal • Open network Project Developers • Vodafone • Philips • Cisco • IBM M920-MT Smart Energy Smart ICT Projects • Smart Workplace • TPEX-Smart Airmiles • Almere Smart Society • Health Lab Project Developers • Accenture • IBM • Cisco Smart Communication Source:; Frost & Sullivan 10

Smart Governance and Smart Security—Government-on-the-Go Smart governance and smart security includes rolling out of policies and digital services from the government that help and support adoption of green and intelligent solutions through incentives, subsidies, or other forms of promotional schemes. eGovernment 100% rate of access to a full range of government services through digital technology eAdministration Online Transactions (eFiling of tax returns) eEducation Virtual Classrooms Distance Learning Computer-based Training Security 50% reduction in crime rate Urban Security Critical Infrastructure Protection ID Management Cyber Security Image Source: Dreamstime Source: Frost & Sullivan M920-MT 11

Smart Citizen—The Digizens of the Future Smart citizens possess interest to embrace smart and green solutions in their day-to-day work schedule. More proactiveness of citizens in adopting smart concepts and smart products, which includes making 'smart' lifestyle choices, is expected. Green Mobility At least 70% of citizens travelling to work by public transport, bicycle, or foot Initiative to Reduce Air Pollution At least 40% of citizens follow the city's green action plan; at least 30% of citizens have taken initiative to reduce air pollution Smart Lifestyle Choices Recycling of Waste Reduction of Energy Consumption Preference for Eco-friendly Products and Services Image Source: Dreamstime Source: Frost & Sullivan M920-MT 12

Executive Summary—Smart City Funding Mechanisms Most services are financed by either the central government or the city itself. Smart City Market: Most Adopted Funding Mechanisms for Smart City Projects*, 2012 Funding Mechanism 1% 22% Special development funds Self-financing (Majority) Funded and operated through a partnership of government and one or more private sector companies (e.g., CiscoSongdo Partnership) Self-financing (majority) 37% Special Development Funds Public-private Partnerships 40% Specific funds set up for implementing and scaling up urban development or smart city initiatives (e.g., European Commission ‘JESSICA’) Self-financing of smart city projects from public budgets in collaboration with central governments or state governments (e.g., Seoul Smart City) Private Investment Financed through commercial stakeholders, service providers, private investors, and venture capitalists (e.g., Amsterdam Smart City Platform) Public-private partnerships Private investment *Based on a sample size of 15 smart city projects. Source: Frost & Sullivan M920-MT 13

Smart City Services—eService More than 60% of citizens in smart cities will have full access to eServices by the next decade. Smart City Market: Types of eServices Delivered to Citizens and Business, Global, 2012–2015 Information sharing through Internet— information sharing can be between individuals, organizations or firmware (e.g., files sharing, eBooks sharing, etc.) Electronic health record system, telemedicine, consumer health informatics, healthcare information system, etc. eSharing eHealthcare eCitizens eServices Online currency exchange, online fund transfer, micropayment and microcommerce, etc. eExchange eBusiness Online tax payment, online electronic passport system, eApplication, etc. Digitalized product stores, online customer management, online marketing, online order management, etc. ePayments Online banking payments, online bill payments, online credit card payment, online debit card payment, etc. Source: Frost & Sullivan M920-MT 14

How to Measure Smart City Plans? Factors describing the impact of smart city initiatives and potential scalability of ICT infrastructure serve as key efficiency monitors of current smart city plans. Smart City Scoring Criteria* Global, 2013 1 2 3 4 5 CO2 emissions (<10%) CO2 emissions (10%–50%) CO2 emissions (>50%) Zero CO2 emissions Innovating to Zero Project Timeline More than 20 Years Up to 20 Years Up to 15 years Up to 10 years Up to 5 years Infrastructure Development Lesser possibility to link existing infrastructure Medium possibility to link existing infrastructure High possibility of linking existing infrastructure Upgrading existing infrastructure Building new infrastructure Secure, fast, and wireless technology Cloud-based services/ enterprise-grade platform Open data central/ holistic platforms Better assimilation of data through predictive technologies Fully networked, open and expandable ICT architecture Only public/only private investment Contractor/vendor model Private consortiums Public-private partnerships Open collaboration Smart city vision Smart city strategy Dedicated organization Smart city leadership Smart city consortium Energy Efficiency Technology Approach Business Model Governance Maturity *Scorecard based on Guidance Document published by European Commission Initiative, Smart Cities and Communities. Source: Frost & Sullivan M920-MT 15

Singapore—The Next-generation Smart City Singapore aims to have 80% of all its buildings meet its minimum ‘Green Mark Certified' energy efficiency standards by 2030. Key Aspects of Singapore Smart City, Asia-Pacific, 2013 Smart Energy Smart Citizen • • • 90% to 95% of electricity generated from natural gas Smart grid systems installed in more than 30% of the households • • One in two residents to commute to work by public transport 100% population with access to sanitation Target to recycle 65% of waste by 2020 Smart Healthcare • • Integrated health information system across Singapore Cloud computing models used in most healthcare organizations Smart Governance Establishment of Inter-Ministerial Committee on Sustainable Development to create Singapore’s national strategy on sustainable development Smart Technology • • • 100% broadband penetration rate Initialization of 4G LTE service 50% of households to have smart home solutions Smart Mobility • • • 70% of traffic to be public transport by 2020 Availability of real-time travel information on Internet and mobile phones 40% rebate on purchases of green vehicles, such as hybrid, electric cars, etc. Smart Buildings • • M920-MT 80% of all its buildings to meet its minimum 'Green Mark Certified' energy efficiency standards by 2030 Zero energy buildings in the next five years Source: Siemen's Green Index; Frost & Sullivan 16

Smart Cities—Key Conclusions and Future Outlook M920-MT 17

Future of Technology In next 10 years, technology advancement will lead to automation of nearly 150,000 electric utility substations and a $280 million investment in vehicle to building technology. Energy 2015 Smart Homes Building and Automation Use of inductive charges, bioenhanced fuels. Smart appliances, such as Internet refrigerator, Internet air conditioner, next-generation microwave ovens will be used widely. Depth imaging sensors, near-field communication, biometric sensors, and smart power meters will be used. Increased use of cloud computing, cyber warfare, mesh networking, and 50% deployment of 4G is likely. Zero-size intelligence for computer chips, rise in computer chips powered by just 5 atoms, or just one atom, and launch of 5G are likely to propel the Internet era even further. Technologies based on microelectronics and miniaturization will be used in surgery, specialty care, and primary care. End of digital divide— the gap between information haves and have-nots will narrow considerably. Merging of health records and social networks will create a sharing medical society. Internet 2020 The advent of multi-segmented smart grids, photovoltaic glass, and piezoelectricity is anticipated by 2020. Robots will play more active roles as replacements for living, breathing humans. Convergence of ICT with BMSes and other systems within buildings will replace traditional networked devices, with ICTenabled building devices. 2025 Kinetic energy from walking or cycling will be used to power homes, offices, and cities. Compact high performance urban housing with movable walls, and the use of wireless applications to control lighting and home security devices will be widely prevalent. New low-carbon materials, smart and biomimetic materials are to be used in constructing buildings. This will reduce waste and counter resource scarcity. Healthcare Doctors will prescribe medical apps to patients. Source:;;; Frost & Sullivan M920-MT 18

Contact Information Maxim Perevezentsev Sales Manager, Russia, CIS, CEE Tel: +7 (925) 390 08 44 Email: “The Growth Partnership Company” M920-MT 19

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