Happy Weekend! IoT Weekender is a collection of our favorite internet of things news of the week from BI Intelligence, Business Insider’s paid research service.
M2M CONNECTIONS IN CHINA TO REACH 336 MILLION BY 2020: Last year, China led the globe with 74 million machine-to-machine (M2M) connections, which are connections that use cellular connectivity to bring machines – including vehicles – online, according to a new report from GSMA, a global association for mobile network operators. The number of M2M connections in China is expected to grow at a CAGR of 29%, to reach 336 million by 2020; no other country in the world has more than 50 million M2M connections today, according to the report. Additionally, China’s Ministry of Industry and Information Technology estimates the value of the country’s IoT market, including hardware and associated services, to reach $80.5 billion this year. Several factors are driving IoT adoption in China, and the Chinese government is pushing that adoption with a number of initiatives:
- The Chinese government established a national IoT center in Shanghai and funded a program for promoting research and development in IoT technologies in 2010, when it first set its sights on the IoT. In 2012, the Ministry of Industry and Information Technology stated its goal of developing the country’s IoT market to reach $163 billion by 2020.
- Unlike the US government, China’s government has a strategy in place to boost economic growth – called “internet +” – which will help to develop the IoT in cooperation with cloud and big data technologies. An inter-agency body that brings together the Chinese government’s various agencies and initiatives for economic and technological development is overseeing this strategy.
- The government developed an IoT Action Plan in 2013 for setting interoperability standards that enable different IoT systems to communicate with each other, as well as developing laws and regulations around IoT technologies.
- Last year, the central government picked more than 200 cities across the country to pilot various smart city projects. Several of the country’s largest cities have deployed sensor networks that gather data on transportation, pollution, and public safety. Several of the country’s biggest technology companies are getting in on the action: Alibaba plans to close agreements on smart city projects with 50 Chinese cities by the end of this year.
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AUTONOMOUS CARS WOULD COST LOCAL GOVERNMENTS BIG BUCKS: Fully autonomous cars’ ability to prevent traffic violations, like speeding and running red lights, could be very bad for local municipalities that rely heavily on traffic violation fees for revenue, according to a report from the Brookings Institution. The report said that the City of Los Angeles collected $161 million for parking violations alone last year, which could be lost if cars no longer speed/break the law.
As a result of this loss of revenue, municipalities will look for other sources of revenue, including increasing tolls or introducing a tax for the express purpose of funding road maintenance. However, the Brookings report noted that such measures would likely be unpopular with voters since Americans are used to driving on roads for next to nothing. Charging for that privilege would require a big shift in public attitudes about cars and transportation.
BI Intelligence predicts that the first user-operated self-driving cars – a car that still has a wheel and driver but can drive itself- will come to market in 2019. Currently, regulations on fully autonomous cars are one of the largest barriers delaying adoption, as lawmakers try to find solutions to these types of problems resulting from fully autonomous cars.
CONSUMER INTEREST IN AN APPLE CAR: The Apple car might not receive a warm reception, even among iPhone owners, according to a Nielsen and SBD survey of 14,000 recent car buyers. Respondents who owned an iPhone were asked how likely they’d be to buy an Apple car, and the most popular response (47%) was “not likely at all.” (Apple has not said that it is building a car, but rumors have been growing for months that it is.) Here’s a full breakdown of the responses:
INTEL’S IoT STRATEGY IS STARTING TO PAY OFF: Intel’s Q2 earnings beat Wall Street expectations with help from its burgeoning IoT group. The company reported $13.2 billion in revenues, topping expectations of $13.04 billion. The small but growing IoT group reported $559 million in revenues, up four percent from $539 million in the same quarter last year.
Intel is going through a massive business shift as offerings in new areas like data centers and the IoT start to make up lost revenue from declines in the PC market (Intel’s traditional stronghold).
Intel has invested heavily in building up its IoT group, which it created in late 2013. The company lost out on the chip market for mobile, and is determined to get in on the next big device market – the IoT.
Earlier this year Intel acquired Lantiq, a German chipmaker with patents for broadband chips that can connect devices to broadband DSL networks. Combined with Intel’s offerings for Wi-Fi and 3G/4G connectivity, the Lantiq acquisition will allow Intel to provide chips with both wired and wireless connectivity. Such chips would be perfect for routers and other gateway devices that connect IoT devices to broadband networks and to each other.
Intel can also provide auxiliary services like cloud-based analytics and security services (thanks to its ownership of McAfee) through its IoT platform, giving it more advantages in the IoT chip market. Qualcomm, which has its own IoT platform and a portfolio of chips for low-power IoT devices, is Intel’s biggest competitor in that market.
HOMEKIT DEVICES DELAYED BECAUSE OF SECURITY REQUIREMENTS: Apple is telling smart home companies that they need to put specific security chips and firmware in their devices to be considered HomeKit compatible, according to The Register. Thus far, only a handful of smart home providers have announced compatibility with Apple’s HomeKit but many others have said that they will make their products HomeKit-compatible in the near future.
Apple’s requirement of specific chips and firmware may delay smart home device releases because companies will have to re-engineer their products to include these Apple-approved components. But it’s probably worth it, since security has been a big concern with smart home devices. A security test conducted with six smart home devices a couple of months ago found that only one of the six included basic protections like strong passwords and encryption to prevent man-in-the-middle attacks. The chips and firmware that Apple is requiring will provide those basic protections so the devices can communicate securely with apps running on iOS devices.
APPLE WATCH SHIPMENTS TOP 3 MILLION, EARLY ADOPTERS NOT JUST INDUSTRY FOLK: In the three months since the launch of the Apple Watch in April, it’s estimated that Apple has sold just over 3 million of its inaugural smartwatch, according to data from Slice Intelligence obtained by MacRumors. The actual sales figures are higher still as Slice Intelligence’s estimates do not include Apple Watch sales in most international markets or walk-in purchases made in Apple Store locations. Averaging 1 million sales a month is an enormous figure in the smartwatch market; competing Android Wear smartwatches are estimated to have sold just 720,000 in all of 2014. Here’s how the Apple Watch sales break down:
- The Apple Watch Sport is the runaway leader, accounting for 1.95 million, or almost two-thirds of all Apple Watch sales thus far. As the most affordable of the Apple Watch trio at an average price of $381, it will maintain this lead moving forward.
- The mid-range Apple Watch sold around 1.1 million units, at an average price of $69.
- The luxury Apple Watch Edition sold fewer than 2,000 units, and so far has an average price of $13,700.
Notably, most Apple Watch buyers are enthusiastic users and not industry-immersed specialists. Data collected by Wristly and reported on by Forbes show that while “tech insiders” and “app makers” do account for significant portions of Apple Watch sales, the vast majority of those 3 million Apple Watches are currently on the wrists of standard consumers who have no other major industry incentive to purchase the watch like developers and investors do.
BI Intelligence Research Analyst Jessica Smith Contributed to this briefing.
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