Machina Research White Paper for ThroughTek. Combining the four pillars of innovation within the Internet of Things in one platform

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1 Machina Research White Paper for ThroughTek Combining the four pillars of innovation within the Internet of Things in one platform Emil Berthelsen, Principal Analyst February, 2015

2 2 Executive Summary The Internet of Things is made up of four significant pillars of innovation: smarter connected products, cloud service architectures, advanced data analytics, and quicker application development technologies. Each of these innovations has started to contribute to changes in businesses and IT processes. Brought together in one platform, the Internet of Things becomes a market-changing tool for retailers, service providers, consumer electronics OEMs and system integrators enabling new products and services, delivering new revenue streams, operational efficiencies and improved customer engagement models. Smarter connected products Enterprises have recognized significant opportunities in the Internet of Things. Smarter connected products are allowing (amongst others) retailers, service providers, and consumer electronics OEMs opportunities to provide customers with products and integrated services, allowing new business models, creating new and longer customer engagement and promising new revenue streams. Machina Research forecasts close to 38 billion connected devices by the end of and we are already well into the growth curve. Enterprises have started to move beyond the smaller trial and proof-of-concept scenarios to exploring and launching significant networked device solutions. Service providers such as ThroughTek are also driving and enabling this rapid growth, managing more than 5 million devices with over 75 million connections per month on their platform. As more and more devices become smarter, embedded with advanced chips and modules, opportunities to deliver new and innovative services will follow. The main challenge for platform providers in this market will be to create as open, flexible and scalable environments as possible. Cloud service architectures Integral to the growth of the Internet of Things are cloud service architectures. Without the ability to quickly scale services and manage growing data requirements, the Internet of Things will not meet the requirements of enterprises and customers. Being able to deliver quicker and easier integrations, enabled through the cloud, or accessing available service modules are significant benefits. However, one of the most important contributions cloud services have made to data and applications has been the introduction of substantially more flexible and cost effective business models for the storage and processing of data, turning this entire opportunity into reality. 1 From Machina Research Global M2M Forecast Database. The forecast of 38 billion by the end of 2023 includes M2M devices, PC, tablets and handsets.

3 3 Advanced data analytics The Internet of Things will not deliver on its promises without data analytics. IoT and data analytics are two sides of the same coin: devices producing the data, analytics securing the value from the data. Retailers, service providers, consumer electronics OEMs and system integrators are definitely aware of the opportunities from smarter, connected devices and recognise that the value add and richer applications will come from data analytics. Application development technologies The game changer in the Internet of Things will be the combination of analytics AND the ability to develop and implement new applications quickly. IoT platforms will need to avoid becoming closed, stand-alone, and siloed solutions. IoT platforms will need to encourage and deliver integrated and open architectures on a single platform. The openness of the platform will require an ability to address the diversity of devices and connectivity technologies as well as provide APIs and SDKs for further and future development. This White Paper shares the significant advantages for retailers, service providers, consumer electronics OEMs and system integrators of a single flexible and scalable IoT platform. Bringing together the four innovations of smarter connected products, cloud service architectures, advanced data analytics, and quicker application development technologies in one platform delivers a cost effective, quicker and substantially easier route to market.

4 4 1 A world of smarter, connected devices Enterprises have recognized significant changes in the opportunities in the Internet of Things. In a world of smarter connected devices, products such as home lighting, home cameras, heating and airconditioning systems, entry access systems and personal monitoring devices are set to become increasingly integrated into new and innovative services. Such services will include home environmental settings that respond to the proximity of home owners to the home, access and security cameras that work in unison to enhance home security, and home lighting which responds to home owner preferences and interacting intelligently with TV and audio sources. Figure 1: Global machine-to-machine connections by connectivity technology [Source: Machina Research M2M Forecast Database, 2015] Cellular LPWA MAN Satellite Short range Wide area fixed Two important building blocks appear in most M2M and IoT solutions: the devices and, where necessary, a gateway. Depending on the nature of the M2M and IoT application, devices may either connect directly via some wide area network to the enabling platform, or as is the case in home solutions, connect via local area networks to a home gateway (or controller). In either model, the build of the device will need to include capabilities to transfer data across a range of networks using different protocols, recognized either by the receiving platform or gateway. In the rich home environment of protocols these may include Zigbee, Wi-Fi, Bluetooth, Z-Wave as well as a range of proprietary protocols. Working with more than 30 integrated circuit manufacturers such as Qualcomm, Intel, Broadcom, Hisilicon, TI, NXP, MediaTek and Ambarella, ThroughTek looks to make this connection as simple and economical as possible. With over 100 different Systems on Chips (SOCs) pre-configured to work

5 5 with the Kalay Platform, ThroughTek has simplified the process for retailers, service providers and consumer electronics manufacturers to launch products which can then seamlessly connect to other devices and ultimately the Kalay platform. In one significant move, having pre-configured over 100 SOCs and enabling quicker connections, ThroughTek assists retailers, service providers and consumer electronics manufacturers reduce overall launch times of products and services. As more and more different devices by different manufacturers are introduced in, for example, the home environment, enabling this degree of simple interoperability benefits retailers, service providers, consumer OEMs and ultimately customers. In bringing together and connecting all the different devices into one platform, Kalay Connect ultimately opens up the opportunity to design services across all devices. Through fully documented and published external application programming interfaces (APIs), developers can design new and innovative services for these smarter connected devices, and ensure that these are intelligently implemented and managed through the platform. One such service is the Kalay platform s unique and simple ability to establish secure connectivity between two devices without having to go through a cloud server all the time. Using a unique identifier (UID) assigned and managed by the Kalay platform for each individual device, the platform is able to establish a secure and direct connection between, for example, a home camera and a mobile phone via P2P. Consumers will only need to scan a barcode and input a password in their smartphone to connect either a controller or a standalone device, all managed within the application. This connection will manage the direct transmission of data from the device to the smartphone. The solution supports Linux, Android, Windows, ios and RTOS amongst others. In a world of smarter, connected devices, retailers, service providers and consumer OEMS will become more and more involved in designing and enabling new services. This will require platforms that are highly agile, flexible and scalable, supporting the diversity of devices, protocols, and applications that will be designed and implemented. Time to market and suitable price points will remain important factors, and most important, delivering robust and secure connectivity will be key. 2 Adding value to your services from the cloud Enabling smarter, connected devices to connect to the cloud via the Kalay Platform opens a host of opportunities for retailers, service providers and system integrators to design, integrate and deliver new services to customers. Within the cloud-based services of the Kalay Platform, ThroughTek delivers a significant range of ready-made modules which retailers, service providers and system integrators can make use of in

6 6 designing new services. A few of these modules include Video Surveillance as a Service, Logic Engine, and ThroughTek Push Notification Service (TPNS): VSaaS (Video Surveillance as a Service) provides a one-stop service which includes P2P realtime live viewing, cloud recording and potential integration of video analytic tools. One example using this service is that of the connected IP camera where video recordings are triggered once sensors have detected movement, and service providers could charge user monthly fee for the cloud recording and video playback services. Logic Engine is in effect a service that allows customers to define interdependent tasks between smarter, connected devices and third-party applications based on shared data, applied data analytics rules and execute commands. As an example, integrating weather information from Yahoo Weather, Wunderground, and World Weather Online may help manage home air-conditioning and heating systems. ThroughTek Push Notification Service enables customizable push messages including scheduled and targeted push messaging in rich notification forms such as videos and images in particular. The module works on different push networks such as Apple Push Notification Service, Google Cloud Messaging and Baidu. Built as a framework to add value to the services of retailers, service providers, consumer electronics OEMs and system integrators, the cloud based service architecture of Kalay with all its modules certainly provides this. With available APIs and SDKs, customers may opt to combine these available and modular services from Kalay with their own developments, As mentioned, delivering cloud-based service modules allows Kalay to offer highly scalable and flexible service options to its customers. In the next section, the paper will look in more detail at the benefits from data analytics but before moving away from this range of cloud services, it is worth noting that the Kalay Box service offers the ability to quickly and easily connect with other personal cloud services such as Dropbox, Google Drive and social networks, and delivers a highly scalable cloud storage facility, allowing customers easy access to a private personal storage solution that would compete with portable hard drives and USB flash drives, and allow as an example, data from an IP camera to be stored in the cloud similar to that of a Network Video Recorder (NVR). Before delving into the topic of analytics as a third pillar in the internet of Things, the issue of security should be mentioned as it emerges whenever topics of data and cloud services are raised. Platforms in this space should certainly provide: Intrusion detection systems on both devices, controllers and networks to prevent malware function DDoS protection before attacks shutting down the services Strict rule-based firewalls block for all unnecessary access and threats Around-the-clock monitoring to detect anomalies in network traffic And in terms of data communication, one approach taken by Kalay involves: HTTPS connection for device-to-cloud and cloud-to-cloud services 128/256-bit AES, XTEA encryption for device-to-device data transferring Auto-generate AES key using ECDH (key exchange algorithm)

7 7 Authentication mechanism using ECDSA (digital signature algorithm) Packet scrambling with supported devices With server and data security, cloud service architecture provides a secure and robust framework for the management and development of IoT services. 3 Advanced data analytics delivers richer services for customers A major innovation in the Internet of Things is the increased sharing and analysis of data. Data analytics is not new but in the Internet of Things, the scale, speed and diversity of data, generated by growing estates of networked devices in subnets of things 2 provides game changing business models and services. As illustrated in Figure 2, products are becoming smarter and moving away from being isolated to being connected. With these developments, an increasing amount of data from devices is now available and information technology has started to play an increasing role in operational technologies. With the Internet of Things, this convergence of operational and information technology is certainly taking place, and behind it is the processing and analysis of data. Take the example of a home security camera. Previously, this would record images over a given period, and store them in a highly efficient operational manner. With the convergence of operational and informational technology, these recordings have now become more intelligent, capturing only images where changes may have occurred, and combining potentially other sources of data (temperature, movement sensors, and lighting) to ultimately deliver the highest quality security images. With smarter, connected devices, cloud services and data analytics, retailers, service providers and consumer OEMs are a stage where the delivery of products with integrated services has emerged as a new business model, captured in the term servisation. 2 For an early view on the concept of Subnets of Things, read Machina Research White Paper, Big Data in M2M: tipping points and subnets of things published in February 2013

8 8 Figure 2: The changing business models in IoT [Source: Machina Research, 2014] Data analytics can add value in a number of ways. It can provide customers with insights on the performance of connected devices, and where trends or issues may be identified early on, allowing for a degree of preventive action. It can also enable such services as Logic Engine (see Section 2, above) to perform automated actions based on data from other smarter, connected devices and third-party applications. Analytics at this level is not what could be termed advanced but delivers practical if-this-then-that routines such as dimming lights when certain programmes appear on the television screen, or increasing room lighting and heating as the home owner approaches his or her home, or allowing for the limited entry access to homes for delivery people. In contrast, advanced data analytics is about analysing multiple data sets to either predict or optimise business outcomes and processes. In many cases, advanced analytics will involve complex algorithms or machine learning approaches that analyse and improve on those algorithms when working with data. One such example is the cloud recording application with video analytics. In this use case, recorded video is analysed to acquire shopper demographics based on appearance such as age, gender and behaviour, providing valuable customer information and ultimately improving product placement, inventory, and the overall shopping experience. All without compromising customer privacy. Creating improved services for customers remains a constant goal for all enterprises. With such a diverse range of sources and types of data from all sorts of sensors and other edge devices, the analytics tools required will need to be agile, flexible and highly scalable. Delivered as a cloud-based service, these tools for data analytics will need to be continuously developed and accessible for retailers, service providers and others to design new services with. ThroughTek, in launching data analytics as a service is well onto this path for its customers.

9 9 4 Arrival of data and applications in IoT The emergence of the mobile phone introduced a massive change in communications. More recently, the emergence of smart phones have introduced users to a range of new applications, once again adding many new features to customers of mobile communications. A similar trend is underway in IoT, extending the basic functionality of connected devices. This trend sees a shift from simply monitoring and communicating with connected devices to developing and designing new applications based on the data generated and shared by these devices. In effect, the focus of the market has moved from focusing on connecting and managing devices to that of managing data streams and building applications. In practice though, all components need to work in unison to deliver the main benefits in the Internet of Things. Bringing all these innovations in IoT together is where the value of an integrated architecture and a single platform emerges. In a platform where applications can be easily developed with SDKs and made accessible through available APIs, the opportunities to design and deliver cross platform applications becomes substantial. This not only creates additional opportunities for developers but creates a more exciting and dynamic market for customers. Cross platform applications, easily integrated through available APIs and developed with SDKs, become a significant advantage for retailers, service providers, system integrators and anyone else wanting to develop IoT applications. Understanding this dynamic and adopting an appropriately flexible platform will allow stakeholders to better exploit not just the opportunities of today but ensure also a quick and secure entry to the market in the future. 5 Enterprises will need to consider flexible and scalable IoT platforms Combining the four IoT innovations of smarter connected products, cloud architecture services, advanced data analytics, and application development into one framework will deliver huge benefits for enterprises and consumers. Machina Research has identified that such IoT platforms will need to be scalable, agile, and flexible. These platforms will need to handle unexpected rates of growth and diversity in devices and data, and will need to be flexible enough to adapt to the changing requirements of new applications. Where one set of devices and applications will have, for example, addressed child tracking through smart bracelets, the follow-on application and solution may relate to home security and child monitoring at home. In these two cases, given the agility and flexibility of a suitable IoT platform, developing a new application which would connect the child tracking with the security application becomes a new application and service.

10 10 For retailers, service providers, consumer electronics OEMs and system integrators, the IoT platform needs to deliver: Ease of management of devices and connectivity Enable rapid development of new applications Provide ready-made integrations and extensions to other applications and services Enhanced security encryptions and cloud service protection With all these requirements, the Kalay Platform of ThroughTek delivers one such solution to IoT with additional benefits. The Kalay Platform The Kalay 3 Platform is an innovative cloud-based solution, delivering in one unified framework, the seamless integration and connection between smart, connected devices; cloud architecture services, advanced data analytics and application development. It is a platform designed for M2M and IoT applications and markets, and delivers both operational and additional business value to enterprises and consumers. It is a market proven platform, managing more than 5 million devices with over 75 million connections per month. 3 Kalay means holding hands in the language of Taiwan s aboriginal people, signifying the unifying aspects of the platform.

11 11 Figure 3: The Kalay Platform [Source: ThroughTek, 2015] The platform and approach of ThroughTek delivers additional value to enterprises and consumers by: Working with over 100 SOCs to deliver quicker and more price competitive components for smarter, connected devices to the Kalay platform Delivering APIs for cloud services as well as additional and unique APIs for improved media performance and easier connection setup for users through simplified UID Enables enterprises to provide a much better service to their end customers by interpreting the device data, streamlining operations processes, and delivering additional customer support information. For retailers, service providers, consumer electronics OEMs and system integrators, the Kalay platform provides an important and significant partner in addressing IoT opportunities in Smart Homes, Smart Healthcare, Smart Buildings and ultimately Smart Cities.

12 12 6 About ThroughTek Established in 2008, ThroughTek Co., Ltd. is a world leading solution provider in the IoT (Internet of Things) & M2M (Machine to Machine) with its Kalay Platform. Based on extensive experience in the integration of P2P connections in surveillance systems, ThroughTek applied this leading technology to assist the entry of enterprises into IoT and M2M markets, transforming the business into an M2M and IoT solution provider in ThroughTek is committed to the development of online internet platform solutions and further delivery of innovative and convenient user-oriented total solutions. Their Kalay Platform leverages a wealth of APIs (Application Programming Interface) for a growing variety of operating systems, quickly and easily incorporating a wide variety of devices into online application. The range of Kalay Platform enabled applications includes surveillance, personal cloud storage, smart homes, and consumer electronics. ThroughTek has successfully initiated a specialized ad-hoc online (peer-to-peer) technology to provide optimum overall solutions. Looking forward, the company is currently cooperating with IC design companies, telecom operators, and home appliance manufacturers for continued implementation of vertical integration into the marketplace. Please visit the ThroughTek website at 7 About Machina Research Machina Research is the world s leading provider of market intelligence and strategic insight on the rapidly emerging Machine-to-Machine (M2M), Internet of Things and Big Data opportunities. We provide market intelligence and strategic insight to help our clients maximise opportunities from these rapidly emerging markets. If your company is a mobile network operator, device vendor, infrastructure vendor, service provider or potential end user in the M2M, IoT, or Big Data space, we can help. We work in two ways: Our Advisory Service consists of a set of Research Streams covering all aspects of M2M and IoT. Subscriptions to these multi-client services comprise Reports, Research Notes, Forecasts, Strategy Briefings and Analyst Enquiry. Our Custom Research and Consulting team is available to meet your specific research requirements. This might include business case analysis, go-to-market strategies, sales support or marketing/white papers. Machina Research s Advisory Service provides comprehensive support for any organisation interested in the Internet of Things (IoT) or Machine-to-Machine (M2M) market opportunity. The Advisory Service consists of thirteen Research Streams (as illustrated in the graphic below), each

13 13 focused on a different aspect of IoT or M2M. They each provide a mixture of quantitative and qualitative research targeted at that specific sector and supported by leading industry analysts. Advisory Service Research Streams [Source: Machina Research, 2014] Machina Research s analysts also have a wealth of experience in client-specific consultancy and custom research. Typical work for clients may involve custom market sizing, competitor benchmarking, advice on market entry strategy, sales support, marketing/promotional activity, and white papers. For more information, refer to our website at or us at enquiries@machinaresearch.com..