Written by Lisa Ann Cairns, Ph.D.
Connectivity is a core driver for today's semiconductor and electronics industry. IoT drivers are changing everything from infrastructures to networks, and devices to chip architectures. These positive changes are tracking our industry for exciting new growth and innovation with greater market sector reach.
There's quite a bit to be said for a "US $14.4 trillion Value at Stake" opportunity, as Cisco's recent report offers. What could propel that level of forecasted growth in the next nine years, from 2013 to 2022? The Internet of Everything (IoE), also known as the Internet of Things (IoT) or the Connected Life.
So, what does this exciting forecast mean for the semiconductor and electronics industry itself? Cisco's report forecasts a rapid growth in the number of devices that will be included in IoE, namely 50 billion connected devices by 2020, up from approximately 10 billion today. The drivers behind this present and continued growth trajectory include the popularity of enterprises supporting the Bring Your Own Device (BYOD) trend, increased familiarity, adoption of smart wireless devices (SWD) and the number of their experienced users, and the demand for ubiquitous computing through cloud computing and Big Data analytics.
How everything is something special
IoE, or Connected Life, as many industry pundits argue, is not a new concept, nor a new path, but really is simply the continued realization of where we've been heading for a while (see work by Mark Weiser since the 1990s). That position is certainly logical and acceptable, and doesn't change the importance of the path we are on, nor the dramatic impact it is having on multiple aspects of our industry's value chain. As was discussed in detail in the companion article in this issue of Quarterly , the increased adoption of mobile devices, particularly smartphones and tablets, is directly informing the direction of chip design and component architectures and is pushing the commoditization of architectures for mobile solutions, especially favoring System in Package (SiP) and System on Chip (SoC) designs due to power efficiencies, size, and functional processing and networking capabilities.
How did the mobile path open so widely to span everything in our daily lives? As users have adopted SWDs into daily, functional use cases and have grown to expect connectivity anywhere, anytime, the barriers to providing that connectivity have fallen. We witnessed a very concrete aspect of this increased connectivity recently with the adoption of IPv6 (as discussed in this recent MarketWatch Quarterly article), which increased the number of Internet Protocol (IP) addresses from 4.3 billion to 340 undecillion (340 trillion trillion trillion).
Why do the number of IP addresses matter to the semiconductor industry? Isn't that really a software event? Well, no; connectivity requires the means to communicate, certainly involving software applications (apps). But the connection itself and the devices to transfer and manipulate the data and people involved in the connection is squarely in hardware's domain, and that involves devices with diverse Bills of Materials (BoMs) that support growth along the entire semi supply chain. As Frost & Sullivan recently reported, "the market shipped over 6.06 billion units in 2011 and estimates this to reach 9.29 billion units by 2016."
Units count: The connected life grows legs
Significantly, the forecasted unit growth rates for devices supporting (or expanding, depending on your IoE path view) IoE are really not that far off across analysts, OEMs, and research reports. The reason for this is that, when looking at the level of and rapid rise in SWD adoption to date, and then realizing the extent to which other machines could be connected to a smartphone and/or tablet to enable M2M connectivity, the numbers start really adding up.
Connected life includes the machines encountered and used in daily life, as well as city infrastructures (e.g., roads, traffic signals, electricity demand, police, etc.), workplaces, retailers, and, really, almost any activity, chore, or engagement that we participate in as part of life. The connected aspect "simply" means adding the capability for devices to connect and transfer the data that the user needs or wants to facilitate whatever is going on, whether for personal, work, or other needs.
The IoE is the state at which the Connected Life is realized (even in part) and seamless data transfer and M2M connectivity are leveraged for user benefits and productivity in those anywhere, anytime events. This state of seeming M2M autonomy for the user's benefit rests on next generation, collaborative app and device infrastructures. The drivers for IoE arise from users' demands for increased ability to manage various aspects of daily life – from work to personal events – remotely as noted in the Frost & Sullivan research. As they report, "Consumers favor technology that allows them to manage home security, energy consumption, and video streaming from anywhere, as well as engage in activities like working from home, online shopping and social interaction."
The network infrastructure for communication systems, as well as data storage and servers, is phenomenal, and, alongside of cost and standards, is the present bottleneck to realizing some next phase of IoE. It is out of the need and growth for these various infrastructures, from servers and networks to communications equipment and SWDs, that the billions begin to add up and the numbers across forecasts align.
Market impact of IoE
The vast and significant market impact of IoE includes a few critical categories of industry change and opportunities. Among them are the following:
- Changes to chip architecture and component design , which is the focus of the companion article in this Market Watch Quarterly (to name one example, Nvidia's enterprise virtualization GRID series, and, for mobile devices, the Logan and Parker Tegra chips forthcoming in 2014);
- The network and communications challenges from the increased M2M and Big Data transfer requirements necessary to realize the forecasted 30.1% CAGR from 2012-2017, and, as discussed in recent issues of MarketWatch Quarterly, the challenge "to be smarter at the node [because…] you can't just transmit all the data that you collect," according to Frank Schirrmeister, group director at Cadence. These challenges include:
- LTE base station load-balancing essential to handle data transfer rate increases from IoE connectivity rise of LTE-enabled devices (e.g., Nokia Siemens Networks MWC solutions);
- Application-aware network traffic management in sync with enterprise demands;
- End-device growth in traditionally-isolated vertical markets that intercept in users' lives and connect, both through users' M2M activity and through "smarter" devices within those markets (e.g., automotive, medical electronics and eHealth, smart grid, and smart home, etc.).
IoE is ubiquitous computing. It is based on the integration of existing, relatively common devices into a connected, ubiquitous network by designing in even just rudimentary processing and ebbing technologies, because cost and availability are eminent and high-power processors are not necessary. The challenge, as noted in this System-Level Design (SLD) article, "[…] is much less about the wonders of technology and more about basic efficiency and cost in familiar areas such as network management, I/O, integration with mobile devices and software that can fuse it all together." As the System-Level Design author notes, "[…] flexibility is key here. […] The Internet of Things involves everything from cars to chips that will be used inside the human body or even inside livestock."
Let's briefly consider two significant IoE growth markets – automotive and medical electronics – to understand just how these drivers are affecting these once more-isolated semiconductor and electronics markets by bringing them front and center into much of today's market focus.
As the System-Level Design article offers, Wally Rhines, chairman and CEO of Mentor Graphics, is cited as noting that, "[IoT automotive integration] enters into the world of complex systems because you have to be able to simulate large numbers of things interacting together." Certainly the opportunities for increased automotive infotainment integration are compelling to anyone who is often in a vehicle – that is, most of us.
Why and how IoE is driving changes in auto ICs and infotainment is compelling to both the semiconductor and automotive industries, simultaneously. As ABI Research recently released, "[s]hipments of connected automotive infotainment systems will grow from 9 million in 2013 to more than 62 million in 2018 with connected navigation, multimedia streaming, social media, and in-car Wi-Fi hotspots becoming key features." The competitive arena is tightening as the need for compatible, hence flexible, designs are being juggled with the complexities of multiple systems and data collection points simultaneously interacting, as Rhines' comment underscores.
From auto's perspective, the market competition is very tight and brand differentiation is paramount. Yet there are only so many differences from a generalized frame, so differentiation comes down to both the feature details that are mandated, such as safety requirements and fuel efficiency ranges, and the driver and passenger experiences. These are the precise features differences that are realized through innovative component changes.
The expansion of micro-electromechanical sensors (MEMS) in automotive electronics has played a significant role in experiential and safety features, as explored in depth recently in MarketWatch Quarterly. Yet here we are concerned with those features relating to IoE, specifically.
As we learned just recently at Mobile World Congress (MWC) in Barcelona, the Connected Car is just as much a part of the leading auto OEM feature strategies for next year's lineup as additional safety systems, including various levels of autonomous driver assistance features. As Jennifer Baljko reported for EBN, MWC's leading connected car announcements included GM's statements that every brand in their fleet will have optional, built-in 4G LTE WiFi connectivity starting in 2014, and GM vice chairman Steve Girsky’s statement that "[o]ur vision is to bring the customer's digital life into the car, and bring the car into the customer's digital life. To do so requires a new way of thinking in the automotive industry." Ford announced at MWC that they will continue to offer wireless, voice-controlled, driver commands that connect to the Ford SYNC on-board system.
The rate of consumer-ready features, options, and connectivity is happening at ever-quickening paces in the auto infotainment market sector. The forecast for voice-controlled applications for the automotive sector is significant: IHS iSuppli forecasts that by 2019 roughly 55% of all cars will integrate this capability. Similarly, IHS iSuppli notes that in-dash touchscreens are continuing their rise in vehicles for the same period:
Following the lead of smartphones that utilize touch-screen technology, the availability of touch screens in vehicles also will grow at a rapid rate during the next seven years, reaching 35.7 million units by 2019, up from 5.8 million units in 2011. Touch-screen revenue is forecast to reach $1.3 billion by 2019, up from $2.6 million in 2011.
Not only are significant efficiencies and safety improvements at the fore of governments' agendas, as well as drivers’, but the competitive differentiation for a tight market share is driving automotive OEMs and leaders in the semiconductor industry to invest heavily and rapidly in increased levels of on-board semiconductors and electronics (cf., the latest automotive MCU from Freescale). The Connected Car is here, and the inclusion of the automotive industry as part of the set of connected, consumer electronics devices is evidenced by the continued presence of auto at major electronics events such as the Consumer Electronics Show (CES) and MWC, to name just the most recent two.
Medical electronics, health, and fitness markets
Another rising growth market for the semiconductor and electronics industry is medical electronics and the wearable health and fitness sector, as explored recently in this MarketWatch Quarterly article. Medical electronics, like the automotive market, has long been one of the core market sectors for our industry, but, until recently, has (again like auto) only held a relatively stable and small slice of the overall market share. Also as in the case of auto, medical electronics have been at the fore of significant growth and increasing prominence at traditionally consumer-focused electronics shows, namely CES and MWC.
Medical electronics is a broad market in its own right, spanning from wearable health and fitness devices to highly regulated implantable and surgical devices. Just as with the automotive sector, it is necessary to carve out that domain of medical electronics that is relevant for the present IoE discussion. That subsector is certainly the wearable, monitoring devices that are proliferating at significant rates and are also holding steady headlines due to growth estimates that reach into the millions of devices and high, double-digit CAGR over the next five-plus years. Estimates for biomedical MEMS (bioMEMS) alone are estimated to reach US $6.6 billion in 2018, according to recent research.
Drilling down into subcategories, the demand for portable medical monitoring devices holds a solid data backing for growth; it is rooted in the unfortunate, correlated rise in chronic diseases such as cardiac and pulmonary ailments, diabetes, and hypertension, to name the most prominent. In order for health providers to deliver the best preventative and ongoing care to patients, having remote monitoring capabilities is essential, and that need supports the rise in "telehealth" that is forecasted to include 1.8 million patients by 2017, according to research by InMedica, an IHS subsidiary. There are numerous studies and reports forecasting the telehealth, or mobile health (mHealth), market's growth. Recent data show that, in 2011, the mHealth dedicated-device and software market was roughly US $740 million and is expected to grow by 300% to roughly US $2.5 billion by 2018. The ability to quickly provide health solutions via a smartphone or tablet represents immediate opportunities that leverage existing technologies by adding medical applications and additional wearable devices.
Beyond the mobile monitoring are the flexible, wearable health and fitness devices which are projected to grow from US $ 8.5 billion in 2012 to $16.8 billion by 2018, according to MarketResearch.com, as reported by SEMI. These devices serve both a purely consumer electronics (CE) market as well as remote monitoring for medical reporting. The ambulatory opportunities for patients, coupled with the continued treatment and care for health providers, is a powerful combination, and all the more so when backed by the cost-savings advantages that health service providers and insurers see from these devices and mHealth information relay.
In a very real and personal way, the IoE not only includes the personal activities engaged in daily as we move through work and personal domains, but is also coming to include our bodies and healthcare. With aging populations, rises in chronic diseases, and the continued need to reach rural and remote populations, wearable medical devices and remote medical care opportunities are solid growth drivers for the semiconductor and electronics industry, and are made possible through the increases in connectivity that enable these critical, remote data transfers.
Going everywhere and up
A different way to think about the terms IoE and ubiquitous computing is turning the steep M2M connectivity rise away from the plethora of device connections and back to the question of why this demand exists. The increased demand for personalized computing and connectivity can be understood as a guiding driver for IoE momentum. “Bring Your Own Device,” or BYOD, is certainly a tangible expression of exactly that new, increased level of personalization. No longer beholden to specific devices, OSs, apps, or service providers, let alone having to haul around multiple devices for work and personal use, BYOD demonstrates that the connected world is about improving the efficiencies and transportability of the individual as she or he interacts, seamlessly, with the connected world to accomplish whatever is at hand.
Connectivity is a core driver for today's semiconductor and electronics industry. The ability to personalize and thereby increase the efficiency of activities through highly individualized, anywhere, anytime M2M interactions is changing everything from infrastructures to networks, and devices to chip architectures. These changes are very positive and are tracking our industry for exciting new growth and innovation with greater market sector reach than we've seen in a while. The thanks go to the disruptive change that smart wireless devices brought along, and how users and innovators alike have envisioned their new capabilities and functionality.