Copyright 2010 IDC | Reproduction is forbidden unless authorized. All rights reserved.

Smart Cities: Proving Ground for the Intelligent Economy

Rick NicholsonVice President, IDC Energy Insights

©2010 IDC | 2

Agenda

What are the mega-trends behind smart cities?

Why make cities smart?

What is a smart city?

What role do specific industries play?

Smart city case studies

How big is the opportunity?

Essential guidance

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Urbanization

“The 19th century was a century of empires, the 20th century was a century of nation states, the 21st century will be a century of cities”

5141

64

39 41

7278 81

62 66

8489 90

1715

0102030405060708090

100

Africa Asia Europe LatinAmerica

NorthAmerica

1950 2007 2050

– Wellington Webb, former Mayor of Denver

The Percent of the Population Living in Urban Areas is Projected to Rise Rapidly in the Less Developed

Regions—Asia, Africa and Latin America

Source: UN Population Division, World Urbanization Prospects: The 2007 Revision, Executive Summary (2007)

People living in cities:– Are more economically

successful– Are better educated– Are generally healthier

However, urban citizens also:– Use more energy– Consume more goods and

services– Create more pollution and waste

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Intelligent technologies

010,00020,00030,00040,00050,00060,00070,00080,000

2009 2010 2011 2012 2013

Smartphones Smart meters

Intelligent devices (e.g., smart phones, smart meters, sensors) provide cost effective “telemetry” for infrastructure, vehicles, people, etc.

Pervasive broadband networks enable real-time communications among intelligent devices and back-end systems

Analytics and social mediaprocess the real-time data streams, enable real-time decision making, and provide a platform for information dissemination and collaboration

U.S. Intelligent Devices (Units x 1,000)

400,000

450,000

500,000

550,000

600,000

650,000

700,000

2009 2010 2011 2012 2013

Worldwide Broadband Connections (Units x 1,000)

Source: IDC, 2009

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Why make cities smart?Sustainability– Reduce greenhouse gas

emissions/carbon footprint– Reduce water waste/make clean

water available

Economic development– Make it easy to do business/attract

new business– Promote job growth– Increase per capita GDP– Drive economic diversity

ARRA funding (U.S.)– $4 billion in smart grid grants– $2.4 billion for battery manufacturing

and electric vehicles– $2 billion to promote telemedicine

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What is a smart city?

IntelligentDevices

Pervasive BroadbandNetworks

Analytics andSocial Media

City Infrastructure

Citizens Businesses

Energy Water Communications Transportation Buildings City Services

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Infrastructure: EnergyWorldwide CO2 Emissions

$76

$78

$80

$82

$84

$86

$88

Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12

Energy Prices (Oil)

Sources: International Energy Agency (IEA) and Consensus Economics, 2009

Worldwide Energy Consumption Worldwide Energy Demand

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Infrastructure: Energy

Opportunities– Smart grid

• Smart meters, grid sensors• Neighborhood/wide area networks (wireless

mesh, WiMAX)• Meter data mgmt and grid mgmt systems

– Energy efficiency and demand response• In-home displays, smart thermostats, smart

appliances• Home area networks• CRM systems, analytics and customer portals

– Electric vehicles• Charging infrastructure (smart charging stations)• Wide area networks• Charging management systems

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Infrastructure: TransportationWorldwide Growth of Electric Vehicles

Source: International Energy Agency (IEA), 2009

Transportation as a Service (Car 2.0, Mobility on Demand)

– Rent a car, scooter, bike via subscription

– One-way sharing (pick up and drop off in different locations)

– Enabled by smart grid, GPS, wireless communications, analytics

– Integration with public transit (multi-modal)

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Infrastructure: Transportation

Opportunities– Smart charging, vehicle-to-grid (V2G)

• In-car technology (software, communications)• Charging infrastructure• Wide area networks/GPS

– Back office systems• Billing and settlement systems• CRM and account management systems• Analytics (demand forecasting, GHG emissions)• Enterprise asset management (EAM)

– Driver/consumer services• Portals• Mobility• Social media

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Infrastructure: Health

Drivers– Aging population– Increasing costs– Prevalence of chronic

disease– Consumer expectations of

service quality and life style continuity

– Provider staffing shortages that are significant and accelerating

Source: U.S. Centers for Disease Control and Prevention, 2009

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Infrastructure: Health

Opportunities– Telemedicine and remote patient

monitoring• Intelligent/connected medical devices

(glucometers, pulse oximeters, blood pressure monitors)

• Wide/home area networks

• Care management systems (enables remote care by clinicians)

• Electronic medical record (EMR)/personal health record (PHR) systems

• Patient portals

• Telepresence/video conferencing

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Businesses: Retail

Drivers–Smaller urban stores vs. big-box suburban stores–Product/service differentiation–Consumer focus/”customer first”–High energy and transportation costs–Carbon footprint/sustainability

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Businesses: RetailOpportunities– Real-time in-store systems

• PoS/self-checkout• Kiosk• Mobile/personal shopping assistant• Digital signage• Video intelligence

– Centralized back office systems• eCommerce, mobile and social media• Merchandising and supply chain management• Business intelligence and customer analytics

– Energy management systems• HVAC• Lighting• Refrigeration

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Businesses: Financial ServicesDrivers– Fewer and smaller branches will

need to handle more activity with smaller footprints

– Specialists (wealth, insurance, mortgage, etc.) inefficiently distributed in branch network

– Customer acceptance of self-service

Source: IDC, 2009

Future Mobile Banking Initiatives

Most Frequent Transaction Types Conducted

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Businesses: Financial Services

Opportunities–Smart banking

• Personal teller machines (video, centralized specialists)

• Mobile banking (smart alerts, integration with ATMs and home PCs)

• Back office systems (dynamic pricing, fraud analytics)

• Security

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Austin, Texas

– Goal to “design and implement an energy system that generates a power plant’s worth of power from clean sources… and delivers it over an advanced delivery system that allows for customer energy management”

– Want the infrastructure (grid) to be a platform for innovation

– Focus is on economic development

Pecan Street Project– Started with no budget and

200 volunteers– Leveraged resources of

founding and corporate partners including:• Austin Energy• Cisco• City of Austin• Dell• Environmental Defense Fund• University of Texas at Austin

– $10.4 million ARRA smart grid demonstration grant

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Austin, Texas

car2go

– First launched in Ulm, Germany

– Austin pilot launched in late 2009 with 200 cars used by city employees and their families

– Owned by Daimler AG

– Smart Fortwo cars

– No reservations required

– Per minute/per hour rental fee includes fuel, maintenance, insurance

– Locate available cars via phone or web site

– Car unlocked and started by smart card and PIN code

– In-car touchscreen– Park in any non-

metered/restricted space

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Amsterdam

– Focuses on “innovative technology, sustainable economic investments and changing the behavior of the people in Amsterdam”

Amsterdam Smart City– Collaboration between:

• Municipality of Amsterdam• Liander (utility)• Amsterdam Innovation Motor (AIM)

– Series of pilot projects over two years in four focus areas• Sustainable living• Sustainable working• Sustainable mobility• Sustainable public space

– Technology partners• Accenture• Cisco• IBM• Phillips

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AmsterdamWest Orange project– 500 homes with smart meters and in-home displays

Geuzenveld project– 700 homes with smart meters and in-home displays

Sustainable living

Ship to Grid project– 154 shore power connections for river cruisers and inland

freighters– Pay-by-phone system

Sustainable mobility

Sustainable working

ITO Tower project– 38,000 square meter office building– Sensors managing lighting, heating, cooling and security

Sustainable public space

Climate Street project– City center street with 140 SMBs (mostly retail)– Waste collection and goods delivery with electric vehicles– Intelligent street/facade lighting– Solar powered tram stops, billboards and waste bins

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How big is the opportunity?

Examples for a city of 1 million people

Smart metering 600,000 smart meters

$120 million opportunity

Electric vehicle charging infrastructure

45,000 electric vehicles

$225 million opportunity

Remote patient monitoring (diabetes)

70,000 people w/diabetes

$14 million opportunity

Smart retail establishments

4,000 stores

$200 million opportunity

Smart bank branches

3,200 PTMs

$160 million opportunity

Total Worldwide ICT Opportunity ≈

$200 Billion

Note: These are high level estimates – not to be used for formal market sizing

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Vendor universe

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Essential Guidance

Learn how to sell to consortia that include both private and public sector organizations

Look for smart city initiatives in:– Medium sized cities in mature economies (North America,

Europe)– Developing cities in developing economies (Asia, Middle East)

Get in early and establish brand recognition

Leverage initial projects into multi-sector deals

Develop partnerships with other key vendors– Intelligent device vendors– Engineering, procurement, construction (EPC) companies

©2010 IDC | 24

Email us at:

rnicholson@idc.com

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