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Internet of Things: Patent Landscape Analysis

TABLE OF CONTENTS

Internet of Things: Patent Landscape Analysis

EXECUTIVE SUMMARY

Internet of Things (IoT) is possibly the most widely discussed technological concept in today's technology circles. This technology is expected to dramatically change not only how we work but also how we live. The concept of IoT basically means a web of connected devices which can be controlled over a data network. With cost of technology required to control these devices going down and increasing internet connectivity through smartphones, IoT is expected to be an all pervasive technology in the next 10 years.

In this report, we study the technological landscape of this fast growing technology domain from an Intellectual Property (Patents) perspective. We find that the majority of Patenting activity in this domain occurred in technology areas related to Resource Management in a Wireless network. We find that the patent distribution in this domain is very fragmented with the Top patent filer in the field holding around 5% of the total patents. LG holds the largest patent portfolio and, it is closely followed by Ericsson and Qualcomm. The US geography has seen the maximum patent filings and is closely followed by the big Asian markets of Japan, Korea and China.

Using our proprietary patent analytics tool LexScoreTM, we identify Qualcomm as the leader in this technology domain with high patent portfolio quality as well a good patent filing activity. NPEs like Interdigital and ETRI hold substantial patents in their portfolio. With a very fragmented patent holding pattern and a high patent filing activity, we expect to see significant patent licensing activity in this technology domain. Using our Licensing Heat-map framework, we predict significant patent licensing activity in the Wireless Communication Protocol and Device Control Systems technology segments.

In the following paragraph we present our analysis of the Patent Landscape of this technology domain.

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INTRODUCTION

The internet of things refers to use of sensors, actuators and communication technology embedded into physical objects that enables such objects to be tracked and controlled over networks like the internet. The use of these devices would involve three main steps: capture of data using sensors, collection of data over the network and decision making based on analysis of data. This decision making can result in improved productivity of current processes as well as enable new types of products and services being offered in multiple application areas.

A McKinsey study1 estimates the potential economic impact of Internet of Things to be $2.7 trillion to $6.2 trillion per year by 2025 with applications in Healthcare, Manufacturing, Power, Urban Infra-Structure, Security, Vehicles and Agriculture. The impact in Healthcare is expected to be between $1.1 trillion to $2.5 trillion per year by 2025 and the greatest benefit could come from improved efficiency in treating patients with chronic conditions through efficient use of sensors, like glucose sensors, for remote monitoring.

By efficient use of sensors to track machinery status and real-time updates to reduce downtime, gains in Manufacturing are pegged at $900 billion and $2.3 trillion per year by 2025. Additionally sensors can be used to monitor the flow of inventory around factory floors or between different workstations, resulting in improved inventory management.

Demand prediction and better management of resources using embedded technologies in the Power segment can potentially save between $200 billion to $500 billion by 2025. Power consumers can use internet of things technologies to power down their high-use systems and appliances during periods of peak demand to avoid peak demand charges.

Urban Infrastructure today faces several challenges which can be better tackled using smart technologies. Traffic and waste management are problems that are better managed scientifically. $100 billion to $300 billion is the annual projected gains in this industry by 2025. Currently the cities of Doha, Sao Paulo, and Beijing all use sensors in pipes, pumps, and other water infrastructure to monitor conditions and manage water loss, identifying and repairing leaks or changing pressure as necessary. On average, these cities have managed to reduce leaks by 40 to 50 percent. Smart meters at the consumer end allow real-

1990: A Thing Is Born ?the bare beginnings of Internet of Things

John Romkey and Simon Hackett create the world's first connected device (other than a computer): a toaster powered through the Internet.

1999: "Internet of Things": Kevin Ashton coins the term "Internet of things" and establishes MIT's Auto-ID Center, a global research network of academic laboratories focused on RFID and the IoT.

1 Disruptive technologies: Advances that will transform life, business and the global economy, May 2013, McKinsey Insights and Publications

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time monitoring of demand and leak detection by residents and property managers, reducing costs. Dubuque and Indianapolis in the United States, as well as Malta, New Delhi, and Barrie (Ontario), have seen, on average, a 5 to 10 percent reduction in water usage via the use of smart water meters. This can be a step forward in the development of smart infrastructure, smart waste and water handling techniques.

Security is expected to benefit largely from improved surveillance techniques in the form of inexpensive sensors on light poles and sidewalks. Gains of $100 billion to $200 billion are expected due to the ability to heavily eliminate the cost of crime. Internet of Things has the potential to add significant value in agricultural sector by raising global yields through `precision farming' which allows farmers to utilize sensor data. The ability to reduce property damage from vehicle crashes using sensors would also significantly cut unnecessary expenses by close to $50 billion.

The vision of the internet of things is that individual objects of everyday life such as cars, roadways, pacemakers, wirelessly connected pill-shaped cameras in digestive tracks, smart billboards which adjust to the passersby, refrigerators, or even cattle can be equipped with sensors that can track useful information about these objects. Furthermore, if the objects are uniquely addressable and connected to the internet, then information from these objects can flow through the same protocol that connects our computers to the internet. Thus, such objects can help understand complexity in systems and allow automated responses that don't require human intervention.

As market players compete to realize the huge economic potential offered by the Internet of Things, we have seen a flurry of M&A activity in this domain. Google's $3 billion plus acquisition of Nest, and Qualcomm's $2.5 billion acquisition of CSR are the biggest transactions in this domain yet. Further Samsung, Dell and Intel among others recently announced a partnership to develop standards in this field quite akin to the telecom standards such as 3G and 4G. Existing IoT players like KT Corporation and SomFy will continue to feel the heat from tech giants vying to enter this fast growing market.

In such a financially lucrative and fast evolving market safeguarding a company's interest using Intellectual property is an important strategy for market players. Assessing the IP landscape is therefore an important exercise for current market players as well as companies who are looking to enter this market. In the following paragraphs we analyze the patent landscape of Internet of Things. First, a technological taxonomy is presented, followed by a discussion on the important players in this market. The report concludes by highlighting future licensing areas in the field of Internet of Things.

Google has spent $5.5 billion in acquiring IoT companies like Nest, Boston Dynamics, Waze and Dropcam.

Samsung has collaborated with Intel, Dell, Atmel, Broadcom, Wind River, NEST, ARM Holdings, Freescale Semiconductor, Silicon Labs, LG, SK Telecom and KT Corp. to develop the standards of IoT.

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