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J'son & Partners Consulting presents the results of their own research of the Russian market of distributed systems, telemetry services and remote control.

 

Penetration and scale of the studied systems are evaluated by the number of connected wired and wireless devices of machine-to-machine communications (M2M), that automatically, without or with minimal human involvement, generate and transmit to telemetry and remote control systems data and executive commands of these systems. Devices which data are processed locally, are not included.

 

The main objective of this study was the assessment of the prospects for the transformation of distributed telemetry systems into systems of industrial Internet of things (Industrial Internet of Things IIoT).

 

Conducted by J'son & Partners Consulting research has shown that there are no full IIoT systems in Russia now: more than 99% of devices used in distributed telemetry systems are connected not to the industrial IoT platforms, but to proprietary hardware and software with very limited functionality. In fact, this control system is machine to human (M2H). Thus, as defined in the present study, the number of connected devices is the number of devices used in distributed systems of telemetry and remote control, which in future can be transformed into IoT systems.

 

Another feature of this market is its severe fragmentation: a united market for distributed telemetry services and solutions in Russia just does not exist. There is a set of almost unrelated markets, which one way or another can be attributed to the study. The main ones of them are:

  • the market of systems and services for vehicle monitoring, including so-called "smart insurance";
  • the market of systems and services for remote security control and video surveillance, still the only major segment of the market of systems and services, so-called "smart home";
  • the developing market of systems and services for commercial accounting of resources consumption (electricity, water, heat, gas) by industries and households, which can also be seen as a segment of the market "smart home";
  • the market of payment systems with the corresponding set of connected devices: ATMs, payment terminals, cash registers with WAN connection, mobile payment terminals.

 

The total number of telemetry devices used in such systems in Russia as well as the growth of their number by years are shown in Fig. 1.

 

 

The main drivers of growth in the number of installed and connected devices in distributed telemetry systems in Russia 2010-2013 were obligatory state programs.

 

These are monitoring systems for cargo and passenger vehicles, programs for providing utilities with resource consumption sensors (electricity, heat, water, gas) and development of geographically-distributed video surveillance systems. The only large segment of the market, formed in this period under the influence of general market factors, was the segment connected to payment systems, cash registers (POS-terminals) and payment terminals.

 

In 2014 we saw the only decline in the dynamics of growth of connected devices in history of the IoT/M2M market in Russia. The main reason of this was reducing the influence of abovementioned mandatory government programs.

 

Nevertheless, in 2015 the increase in the number of connected devices in distributed telemetry systems not only resumed, but also fully compensated for the decline in 2014, the growth rate reached the level of 2013. The drivers were the implementation of so-called "Platon" on hundreds of trucks, the activation of M2M applications in utilities and starting the program for connection cash registers to USAIS (The unified state automated information system).

 

Highest growth in the number of connected devices in 2015-2018 will be determined by the mix of mandatory state programs and market mechanisms.

 

So, in terms of mandatory state programs the drivers are the programs for connecting cash registers to the unified state automated information system and to the system of fiscal accounting, as well as development of IoT/M2M software in utilities.

 

Along with these programs, we expect probable emergence of market-based incentives like smart car insurance, available “smart home” services including intelligent protection services and services for connected household appliances.

 

Мeanwhile we think that the IIoT segment will possibly start developing in the longer term, in 2018, when some the proprietary process control systems and MES will be replaced by systems and services for industrial automation, built on the principles of IoT.

 

In terms of connected devices network technologies the IoT/M2M Russian market has some specific characteristics. For instance, unlike the world, where, according to Ericsson, only 9% (0.4 billion) out of 4.6 billion connected M2M devices have a cellular connection. In Russia the number of devices connected via the cellular technology has a significantly higher proportion, and most devices with cellular connection use GPRS and data transmission in the SMS format, as well as modems over the wireless voice channel.

 

One consequence of this structure of the WAN connectivity devices for distributed telemetry system in Russia, dominated by the technologically outdated connection via a cellular network, combined with the absence in Russia of Wi-Fi networks are carrier-class, is the inability or for the solution developer or provider of communications services to provide the user of the telemetry system SLAs for availability, security, and other key quality characteristics. For example, systems of security and fire alarm along with the mandatory wired connection usually have two SIM modules with installed SIM cards from different operators of cellular networks. But even this does not allow the service provider of console (telemetry) security to provide its customers with an SLA, even on the level of system availability.

 

Largely that is why all distributed systems deployed at the moment in Russia implement only the function of monitoring (telemetry) without components of data analysis in real time, and do not implement control functions. Such functions are implemented only in isolated proprietary systems with process control systems and BMS (Building Management Systems) which have no access to the external (public) network. Moreover, this control is carried out mainly manually by a dispatching service and it is not an optimization control.

 

This in turn defines a relatively low economic effect from the implementation/use of such systems, combined with high implementation costs.

 

However, qualitative changes of the Russian market of the distributed telemetry system are inevitable. But the economic situation will accelerate the transition of telemetry systems designers and providers from proprietary systems to industrial IoT platforms, which in turn will contribute to the growth of the number of connected devices IoT/M2M in Russia.

 

Forecast volume and market dynamics of distributed telemetry systems and services in Russia for the period till 2018, in terms of quantity (attached devices) are shown in Fig. 1.

 

According to the forecast, the market in future will show steady growth, despite the crisis effects in the economy, and in 2018 will reach 32 million connected devices, in 2020 – almost 50 million. Meanwhile the share of devices connected to the industrial IoT platforms will in 2020 exceed 50% of the total number of devices in distributed telemetry systems. Moreover, it can be expected that in 2018 we will see the first implementation of remote control functions with use of appropriate industrial IoT platforms functions.

 

If to talk about qualitative changes in the market, it should be noted that under the influence of different crisis effects in the Russian economy it will be possible in the foreseeable future to speak about formation of a full IoT ecosystem, which includes following basic components:

  • sensors and actuating devices connected to the public Internet and able to interact with different specialized cloud IoT services;
  • open analytical IoT platforms and specialized IoT services based on them;
  • libraries of open APIs which allow to integrate specialized services with other IoT cloud services.

 

Сontinuing the analysis of qualitative changes in the market, it should be noted that under the influence of different crisis effects in the Russian economy it will be possible in the foreseeable future to speak about formation of a full IoT ecosystem, which includes following basic components:

  • sensors and actuating devices connected to the public Internet and able to interact with different specialized cloud IoT services;
  • open analytical IoT platforms and specialized IoT services based on them;

 

In conclusion we would like to note that the team of J'son & Partners Consulting together with the JSON.TV visited the largest specialized conference in the field of the Internet of things – Internet of Things World 2016 (IoT World), held in May, 10-12, in Santa Clara, California, USA.

 

We are beginning to publicate a series of materials on the forum: keynote speeches translated into Russian, panel discussions and exclusive interviews about real implementation of the IoT, new business models, the results obtained in different industrial verticals and other issues.

 

You can find all our materials from IoT World 2016 in the special news section on the website JSON.TV which will be constantly updated.

 

 

Detailed results of the research are presented in the full version of the report «The Russian market of distributed telemetry systems and services in 2015, prospects of transforming it into the market of industrial Internet of things»

 

Contents:

 

Summary

 

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

1.1. Definition of the Internet of things and its difference from the existing distributed telemetry systems (M2M, automated manufacturing systems and technology control systems, etc.)

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

– the total volume and dynamics of the number of connected sensors/counters;

– their structure and dynamics by types of sensors and applications;

– their structure by types of connection of sensors.

1.3. General description of development trends, analysis of the prospects for transformation of the distributed telemetric systems market into an IoT ecosystem in Russia (feasibility study for IoT), including:

– country-specific drivers and barriers;

– ranking of the sectors (fields of application) according to the degree of their readiness for IoT.

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

– fleet management;

– automobile security systems;

– connected entertaining systems;

– smart insurance systems;

– "Platon";

– smart roads infrastructure..

Note: the key owners of these systems will be named.

1.5. Description of the distributed telemetry systems use for "smart homes" and "intelligent buildings", including:

– systems and services for home security;

– systems and services for CCTV;

– smart metering of electricity, water, heating and other engineering management systems.

Note: the key owners of these systems will be named.

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

– ATMs;

– connected POS-terminals;

– connected vending machines.

Note: the key owners of these systems will be named.

 

2. Description of the key players’ roles (vendors, operators, system integrators and distributors) and their strategies in the IoT

2.1. Vendors

2.1.1. Key international manufacturers of IoT platforms, their position and strategy in Russia

2.1.2. Key international manufacturers of sensors and electronic components, their position and strategy in Russia

2.2. Operators

2.2.1. The operators’ role in the market of distributed telemetry systems in Russia

2.2.1.1. Telecom operators as providers of the connections

– the number of connected M2M devices in Russia;

– ARPU and revenue;

– market shares of telecom operators;

– tariffs.

2.2.1.2. Operators as system integrators

2.2.2. The possible role of telecom operators as a part of the IoT ecosystem in Russia

2.2.2.1. The business model of managed connections

2.2.2.2. The business model of a provider of IoT services

2.3. System integrators and distributors

2.3.1. The role of system integrators and distributors in the market of distributed telemetry systems in Russia

2.3.2. The possible role of system integrators and distributors as a part of the IoT ecosystem in Russia

 

3. Conclusions and recommendations

 

 

List of figures

Fig. 1. Сonnected sensors installed in Russia: the number and dynamics, thousand units, fact for 2010-2015, forecast for 2016-2021.

Fig. 2. Сonnected sensors installed in Russia: the structure by usage areas, thousand units, fact for 2010-2015 forecast for 2016-2021.

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

Fig. 4. Connected sensors installed in Rusia: the structure by connection types, fact for 2015, forecast for 2021, compared to the global structure.

Fig. 5. Typical structure of a major project to deploy a distributed telemetry system in Russia.

Fig. 6. Key international vendors of IoT platforms by the number of implemented projects and applications.

Fig. 7. The market of M2M communication in Russia: market shares of mobile operators by revenues and SIM cards.

 

 

List of tables

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

Table. 2. Connected sensors installed in buildings, thousand pieces, actual for 2010-2015, forecast for 2016-2021.

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

Table. 4. The market of M2M communication in Russia: revenue, ARPU and number of connected devices.

Table. 5. The market of M2M communication in Russia: tariffs (MTS, VimpelCom, MegaFon).

 

 

The newsletter was prepared by the J'son & Partners Consulting. We work hard to provide factual and prognostic data that fully reflect the situation and which are available at the time of the release. J'son & Partners Consulting reserves the right to revise the data after new official information publications from the individual players.