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August 25, 2012

Machima forecasts 24 billion connected devices will have a US$4.5 trillion financial impact in 2020

Between 2011
and 2020 the number of connected devices globally
will grow from 9 billion to 24 billion as the benefit of connecting more and varied devices is realised. The latest research by Machina Research on behalf of the GSMA examines the global impact of this emerging Connected Life on businesses, government and people, in terms of opening up new revenue streams, facilitating new business models, gaining efficiency savings and improving the way existing services are delivered. In total the global impact of the Connected Life is valued at USD4.5 trillion by the end of 2020.

NBF - This is basically taking the smart phone, tablet and mobile commerce markets and adding in various smart grids and machine to machine markets.

The Connected Life describes a world in which consumers and businesses use many different devices to experience compelling new services and ubiquitous Internet access delivered by advanced mobile networks. These devices will include the next wave of smartphones, tablets and consumer electronics, as well as many so-called machine-to-machine (M2M) communications. It’s a world where everything intelligently connects.

Connected devices will assist us with a wide range of daily tasks. For example, an intelligently connected vehicle will be able to identify when maintenance is required, assist with making the appropriate booking at a local garage, notify the garage in advance of specific work needed and then assist with navigation to the garage via the most efficient route. People with chronic diseases will use wirelessly-connected monitors to automatically transmit high-quality, granular and potentially real-time information to their healthcare providers. A smart meter will help to identify opportunities to save money by automatically monitoring homes’ and businesses’ energy consumption.



Connected Life Market Revenue is a sum of all of the revenue accruing from the sale of connected devices and services as well as the related services that are provided over those devices, such as pay-as-you-drive car insurance, or the ability to charge for electric vehicle recharging. In total we value this element at USD2.5 trillion. Of this, USD1.2 trillion is revenue could be addressed by operators.

Connected Life Cost Reduction & Service Improvements relate to less direct, but nevertheless tangible, benefits to businesses, organisations and consumers stemming from the evolution of the Connected Life. The value of this element is calculated at USD2 trillion consisting of:

USD1 trillion stemming from cost reductions, such as smart meters removing the
requirement for manual meter reading, or assisted living solutions allowing people to live in their homes longer rather than move into care homes.

• USD1 trillion from service improvements directly associated with Connected Life products and services. Examples include improvements in care for people suffering chronic illnesses through clinical remote monitoring solutions

Connected car

Over the next ten years, connectivity will increasingly become the norm in vehicles. Today the automotive sector is dominated by after-market devices such as satellite navigation or stolen vehicle recovery devices. Between now and 2020, however, the focus will shift as the number of vehicles with built-in platforms grows. The drivers for growth are two-fold. Firstly Automotive OEMs are seeking to differentiate their offering and build new revenue streams. Secondly, plug-in electric vehicles, which will account for an increasing proportion of new vehicles, will demand connectivity. By 2020, Machina Research anticipates that 90% of new passenger cars sold will have some form of vehicle platform, up from less than 10% today.

Between now and 2020 built-in connectivity will increasingly become a must-have in vehicles. It will become an integral part of the driving experience. Machina Research has sought to value the impact of this improvement in the driving experience, and the increasing necessity of connectivity. Nominally USD600 billion, or 20% of the value of new connected vehicles, can be attributed to the Connected Life in 2020.

Clinical remote monitoring

Today healthcare is a massive government and private expense. Health spending in the OECD (which accounts for 70% of the world economy) today is USD5 trillion (of which 40% is private). With populations aging worldwide this expense can be expected to grow rapidly both in absolute terms and as a proportion of GDP. Clearly, reducing the ‘unit cost’ of healthcare will be a priority over the coming decade. In particular, there is a huge benefit to be gained from the remote monitoring of the condition of patients with serious chronic illnesses such as heart disease. Such monitoring
improves the subject’s quality of life, improves the care that they receive and reduces the cost of delivering it. In 2020, Machina Research estimates that the use of clinical remote monitoring will generate USD350 billion in healthcare cost savings and benefits from pre-emptive action.

Assisted living

The world’s population is aging. The proportion of the people over the age of 60 is expected to rise from 11% to 14% between 2010 and 2020, and will continue to rise to 22% in 20501. The cost associated with caring for the infirm is set to grow dramatically, particularly in relation to the growth in working-age populations worldwide. Assisted living solutions are predominantly aimed at enabling the continuing independence of old and infirm people. This includes a range of applications from the more consumer electronics style Vitality Glow-Caps medicine dispensers and people tracking devices, through to comprehensive living solutions. As well as the emotional benefit that results from postponing or mitigating the need to move to a care home, there is also a cost saving associated with people remaining in their own home compared to the cost of moving to a care home. Machina Research estimates that in 2020 the saving associated with people being supported in their own homes rather than care homes will be USD270 billion.

Security - $250 billion in 2020
Pay as you drive car insurance USD210 billion by 2020 and $35 billion for casualty insurance companies in efficiency gains
purchase-type arrangements.
New business models for car
usage will represent USD150bn in additional revenue and USD75bn cost savings for vehicle users.
Smart Meters will save utilities USD20 billion in 2020 and end users tend to save 3-13% which would be $85 billion.
Traffic management - by connected tolling, road charging and congestion charging will have reached USD100 billion.
Electrical vehicle charging - USD75 billion.
Building Automation will generate savings of US$40 billion in 2020.

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