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J’son & Partners Consulting presents the results of research of Russian market of distributed systems and services of telemetry and telecontrol. Penetration and scale of studied systems are evaluated in quantity of connected wired and wireless devices of machine-to-machine (M2M) communications that automatically (without or with minimal human involvement) generate and transmit data into systems of telemetry and telecontrol and execute commands of these systems. Devices with local data processing were not taken into account. The main goal of the research was an assessment of prospects for transformation of distributed telemetry systems into Industrial Internet of Things (IIoT) systems.

 

Executive summary

 

The research performed by J’son & Partners Consulting has shown that currently there are no full-fledged IIoT systems in Russia – more than 99% of devices being used in distributed telemetry systems are not connected to industrial IoT platforms, but to closed proprietary hardware and software suits that have very limited functionality. In fact, these are dispatching systems of machine to human (M2H) class. Thus, the quantity of connected devices defined in the research is the quantity of devices being used in distributed telemetry and telecontrol systems, which in perspective can be transformed into IoT-systems.

 

Another feature of this market is its severe fragmentation: there is no single market of distributed telemetry services and solutions in Russia. There is a set of virtually unrelated markets, which can be attributed to the study area in one way or another. The main of these are:

  • Market of vehicle tracking systems and services, including so-called ‘smart insurance’.
  • Market of consolesafeguarding systems and services and protective video surveillance. Yet this is the only one large segment of market of ‘smart home’ systems and services.
  • Emerging market of systems and services of commercial metering of resource consumption (electricity, water, heat, gas) by industries and households. This one also can be considered as a segment of ‘smart home’ market.
  • Market of payment systems with a corresponding set of connected devices: ATMs, POS terminals, cash registers with WAN-connection, modules for mobile payment terminals.­

 

Total number of telemetry devices being used in such systems in Russia is shown in Fig. 1, together with dynamics of their quantity by years.

 

 

Mandatory government programs were the main drivers for growth in the number of devices that had been installed and connected into distributed systems of telemetry in Russia in 2010-2013.

 

These are systems for monitoring of freight and passenger vehicles, programs for equipping housing and public utilities with resource consumption meters (electricity, water, heat, gas) as well as development of geographically distributed video surveillance systems.

 

A segment of cash registers connected to payment systems (POS-terminals) and payment terminals was the only one large segment that had been formed in this period under the influence of market factors.

 

The only decline in growth of connected devices during the whole history of Russian IoT/M2M market took place in 2014. The main reason of that was the influence reduction of mandatory government programs.

 

Nonetheless already in 2015 the growth in quantity of devices connected into distributed telemetry systems had continued, and moreover, had fully compensated the decline of 2014 with growth rate level of 2013. The drivers were: introduction of ‘Platon’ system on transport, activation of M2M programs in housing and public utilities and the beginning of the program of cash registers connection to EGAIS.

 

The combination of mandatory government programs as well as market mechanisms will determine the high dynamics of quantity growth of connected devices in 2015-2018.

 

The programs of connection of cash registers to EGAIS and fiscal accounting system, as well as the development of IoT / M2M programs in housing and public utilities will be the main drivers in terms of obligatory state programs.

 

Along with these programs, the emergence of market incentives can be expected in the form of smart car insurance, available services of ‘smart home’, including services of intellectual security and services for connected household appliances.

 

At the same time the development of IoT segments in industry could be expected only in a distant prospect, from 2018, when proprietary process control systems and MESs will start to be replaced with upcoming systems and services for industrial automation. Such systems and services will be built on IoT principles.

 

Russian market has a pronounced specificity in terms of network connectivity technology of IoT/M2M devices. Thus, in contrast to the world, where, according to Ericsson, from 4.6 billion of connected M2M devices, only 9% (0,4 billion) are connected via cellular network, the structure of connected devices in Russia has a much higher share of mobile technology. The most part of mobile devices use GPRS technology, transfer of data in SMS format, as well as modems over wireless voice channel.

 

One of the consequences of such a structure of WAN-connection of devices in distributed telemetry systems in Russia, where connection through technologically obsolete cellular network dominates, in combination with the absence of carrier-class Wi Fi networks, is absence of a possibility both for a developer of a solution and for a telecom provider to provide telemetry systems with SLA by its availability, security, and other key quality characteristics to a user. For example, in security and fire alarm systems, along with required wired connections, normally there are two SIM modules where SIM-cards of different operators of mobile communications networks are installed. But even this fact does not allow a service provider of a console(telemetric) safeguarding to provide its customers with SLA at least on the level of system availability.

 

In a large extent this is the reason why all deployed distributed systems in Russia at the moment are implementing only functions of monitoring (telemetry), at that with absence of components of real time data analysis, and these do not implement the function of control. This function for now is implemented only in isolated proprietary process control systems and BMSs (Building Management Systems), which do not have access to external (public) network. Moreover, this control is carried out mainly by dispatching service personnel manually, and this is not optimization control.

 

This, in turn, defines a relatively low economic efficiency of introduction / usage of such systems, along with high cost of implementation.

 

Nevertheless, qualitative changes in Russian market of distributed telemetry systems are inevitable. But economic situation will contribute to an accelerated transition of developers of telemetry systems and service providers from proprietary systems for the use of industrial IoT-platforms, what in turn will boost the number of connected IoT / M2M devices in Russia.

 

Prognosis of value and dynamics of distributed systems and services of telemetry in Russia up to 2018 in quantitative terms (connected devices) is shown in Fig. 1.

 

According to the presented forecast, in considered horizon the market will show a steady growth despite signs of a crisis in economics, and will reach 32 million of connected devices in 2018, and almost 50 million in 2020. With this the share of devices connected to industrial IoT platforms will exceed 50% of all quantity of devices in distributed telemetry systems in 2020. Moreover, it can be expected that already in 2018 there will be first implementations of telecontrol functions with usage of an appropriate functionality of industrial IoT platforms.

 

In the part of quantitative changes in the market it is worthy to note that exactly due to the influence of crisis developments in Russian economy, already in foreseeable future it will be possible to talk about the formation of complete IoT ecosystems, which will comprise the following basic components:

  • Sensors and execution units that can interact with a variety of specialized cloud IoT services with a connection to public Internet.
  • Open analytical IoT platforms and specialized IoT services based thereon.
  • Libraries of open API allowing integration of specialized IoT services with other cloud services.

 

 

Detailed results of the research are presented in the full version of the report: Russian market of distributed telemetry systems and services in 2015, prospects for its transformation into market of Industrial Internet of Things

 

Table of contents:

 

EXECUTIVE SUMMARY

 

1. Distributed telemetry systems market in Russia: current situation and development trends analysis, including analysis of possibility of its transformation into IoT ecosystem

1.1.    Definitions of IoT and its difference from existing distributed telemetry systems (M2M, automated manufacturing and technology control systems and others), other key definitions, scope of analysis and methodology description

1.2.    Volume, dynamics and structure of distributed telemetry systems market in Russia, including:

         - general volume and dynamics by number of sensors/meters connected

         - structure and dynamics by types of sensors and spheres of use

         - structure by types of sensors connection

1.3.    General development trends description, analysis of prospective for distributed telemetry systems market transformation into IoT-ecosystems in Russia (IoT feasibility study), including:

- country-specific drivers and inhibitors/barriers

- ranking of industries (spheres of use) by their readiness for IoT

1.4.    Description of use of distributed telemetry systems in automobile transport and logistics, including:

- fleet management systems

- automobile security systems

- connected infotainment systems

- smart insurance services

- ‘Platon’ system

- toll roads

- smart roads infrastructure

Note: key owners of these systems will be named

1.5.    Description of use of distributed telemetry systems for ‘Smart homes’ and ‘Intellectual buildings’, including:

- home security systems and services

- video surveillance systems and services

- smart metering for electricity, water, heat and other engineering systems control

Note: key owners of these systems will be named

1.6.    Description of use of distributed telemetry systems in finance and trade, including:

- ATMs

- connected POS-terminals

- connected vending machines

Note: key owners of these systems will be named

 

2. Description of roles of key market players (vendors, telecom operators, system integrators and distributors) and their IoT strategies

2.1.    Vendors

2.1.1. Key international vendors of IoT-platforms and their positions and strategies in Russia

2.1.2. Key international vendors of sensors and electronic components, their positions and strategies in Russia

2.2.    Telecom operators

2.2.1.  Role of telecom operators in distributed telemetry systems market in Russia

2.2.1.1. Telcos as connectivity providers

- number of M2M connected devices in Russia,

- ARPU and revenues,

- telcos’ market shares

- tariffs

2.2.1.2.        Telcos as systems integrators

2.2.2.  Possible role of telecom operators as a part of IoT-ecosystem in Russia

2.2.2.1. Managed connectivity business model

2.2.2.2. IoT service provider business model

2.3.    System integrators and distributors

2.3.1.  Role of system integrators and distributors in distributed telemetry systems market in Russia

2.3.2.  Possible role of system integrators and distributors as a part of IoT-ecosystem in Russia

 

3. Conclusions and recommendations

 

 

List of diagrams

Fig. 1. Connected sensors installed Russia: quantity and dynamics, thousands, fact for 2010-2015, forecast for 2016-2021

Fig. 2. Connected sensors installed Russia: structure by spheres of use, thousands, fact for 2010-2015, forecast for 2016-2021

Fig. 3. Evaluation of IoT/M2M market structure in Russia by vendors of wireless communication modules, 2015

Fig. 4. Connected sensors installed Russia: structure by type of connectivity, fact for 2015, forecast for 2021, compared to world-wide structure

Fig. 5. Typical structure of a large project of a distributed telemetry system deployment in Russia

Fig. 6. Key international vendors of IoT-platforms, by number of projects implemented and spheres of use

Fig. 7. M2M connectivity market in Russia: telcos’ market shares by revenues and SIM-cards

 

 

List of tables

Table 1. Connected sensors installed in transport sector thousands, fact for 2010-2015, forecast for 2016-2021

Table 2. Connected sensors installed in buildings, thousands, fact for 2010-2015, forecast for 2016-2021

Table 3. Connected ATMs, POS-terminals and vending machines, thousands, fact for 2010-2015, forecast for 2016-2021

Table 4. M2M connectivity market in Russia: revenues, ARPU and number of connected devices

Table 5. M2M connectivity market in Russia: tariffs (MTS, Vimpelcom, Megafon)

 

This Information Note is prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.