The Internet of Things remains at the center of digital development in Italy with a market that reached 2,8 billion euros in 2016, 40% more than the previous year, driven both by consolidated applications that exploit cellular connectivity (1,7 billion euros, +36%) and from those that use other technologies (1,1 billion euros, +47%). A very significant growth, in line with or higher than that of other Western countries, even if largely the result of the obligations relating to Smart Metering gas, which require utilities to put at least 11 million smart meters into service by the end of 2018 However, even "purging" the value of the IoT market from the effects of the legislation, in 2016 there is still a respectable growth, exceeding 20%. In addition to gas meters, the Smart Car is leading the market, with 7,5 million connected cars in circulation: these two areas alone account for more than half of IoT turnover. And if we add the applications in buildings (Smart Building), above all for security, we exceed 70% of the total value.
The number of objects is growing together with the market: in Italy there are already 14,1 million connected via cellular network (+37%), without counting objects that use other communication technologies, such as the 36 million electricity meters connected via PLC (Power Line Communication), the 1,3 million gas meters that communicate via radio frequency and the 650 street lamps for Intelligent Lighting connected via PLC or radio frequency.
These are some of the results of the research by the Internet of Things Observatory of the School of Management of the Milan Polytechnic presented this morning at the conference "Internet of Things: beyond objects, towards services".
“In 2016 we observed important signs of maturity of the Internet of Things in Italy: new 'Low Power Widearea' communication networks, greater offer of solutions, significant growth of the market – says Angela Tumino, Director of the Internet of Things Observatory -. The time has come to go beyond the current level of connectedness of objects to shift the focus towards services. For example, the connected car will enable new services for safety, maintenance, navigation, energy saving and shared mobility. The Smart Home devices will allow you to monitor energy consumption to reduce waste or indicate infringement attempts. In the factory, the monitoring of the production plants will allow predictive maintenance logics and even the payment of the machinery based on actual use. In the Smart City, the data collected could lead to the development of 'operating systems' to better govern the territory and develop services of value for the community”.
The areas of the IoT market – The main segment of the IoT market (34% of the total) is made up of Smart Metering and Smart Assetanagement in utilities, an area in which the regulatory obligation relating to gas meters has led to an explosion of solutions: the market went from 500 million euros in 2015 to 950 million in 2016 (+90%). In second place (20% of the total) is the Smart Car, which grows by 15% and reaches 550 million euros. The reduction in the prices of the GPS/GPRS boxes attenuates the growth in terms of market value, but connected cars continue to increase: at the end of 2016 there were 7,5 million (+40% compared to 2015), equal to about one fifth of the fleet in circulation in Italy.
Then follow the solutions for the Smart Building (510 million euros, 18% of the market), an area that shows a growth of +45% compared to 2015, especially with solutions related to security in buildings and a progressive shift of the market from large industrial buildings to small offices and shops. And again the Smart Logistics solutions to support transport (250 million euros, 9% of the market), used for the management of company fleets and satellite anti-theft devices: at the end of 2016 there were over 800.000 goods transport vehicles connected via SIM . The Smart Home is worth 185 million euros and 7% of the market (+23%), with a clear prevalence of security applications.
In the near future, further acceleration of the IoT market is expected in various areas, among which Smart Metering, Smart Car, Smart Home and Industrial IoT stand out in particular. Smart Metering will continue to expand in 2017 driven by legislation relating to gas and recent developments in the electricity sector. The Smart Car will continue to grow at significant rates thanks to the increase in natively connected cars. For the Smart Home, development will be favored by the emergence of new sales channels that multiply purchasing opportunities (multi-channel retailer, utility, telco), by the market launch of new products and services at affordable prices, by the focus on of some large Over-The-Top, Google and Amazon in primis, and from the development of partnerships and alliances aimed at reducing the interoperability problem. But a dynamism is also expected for the Industrial IoT, supported by the incentives envisaged within the National Industry 4.0 Plan which provides for investments in research and development and tax incentives over the next four years for the benefit of companies that will invest in technologies and projects to support of the Fourth Industrial Revolution.
Among the IoT areas still in an embryonic state, three in particular must be monitored: the Smart City, whose potential is still largely to be expressed, Retail with the possibility of collecting a great deal of data on customer behavior inside the store, and the Smart Agriculture, where the IoT offers opportunities not only in terms of product traceability, but also for the management of agricultural activities, especially when looking at high-value crops.
The delay in the Smart City – Smart City applications continue to have a relatively limited weight in the IoT market: 230 million euros, equal to 8% of the total. With the exception of some limited areas – such as public transport with 200.000 remotely monitored vehicles and intelligent lighting with 650.000 connected light poles – the Italian potential of the smart city is still blocked. The Observatory's survey shows that, despite 51% of medium-large municipalities having launched at least one Smart City project in the last three years, 56% of the initiatives are still in the experimental stage. The propensity to experiment is confirmed for 2017 but the administrations are struggling to extend the projects to the entire city area and to integrate them into a clear medium-long term strategy. Large cities, such as Milan and Turin, represent the positive exception with their recent wide-ranging programmes: the direction is the right one, but it is still too limited to be able to reap the benefits of Smart Cities at the national system level.
"The Smart City in Italy is still in search of an author: there are many experiments launched, but they remain poorly integrated with each other and in many cases without a clear development strategy for the territory - says Giulio Salvadori, Researcher of the Internet of Things Observatory -. The survey carried out on Italian Municipalities shows the usual barriers: scarce economic resources, lack of adequate skills and, above all, unclear governance models. The result is that most of the initiatives stall after the first phase of experimentation. To overcome this situation it is essential to formulate a shared national strategy: at a central level it is necessary to establish commitments and priorities for the municipalities, trying to find the right compromise between the current 'anarchy' of projects and excessive centralisation”.
To be able to overcome the crucial problem of financing it is important to be able to clearly evaluate the economic benefits, as well as the social ones. For this reason, the Internet of Things Observatory has developed some models for estimating the costs and benefits of four Smart City applications, applying them to the city of Milan. It emerges that all the projects analyzed can be repaid thanks to the size of the benefits: in 1-2 years in the case of parking management, in 2-5 years for waste collection, in 3-5 years for lighting intelligent, in 6-9 years for Smart Building solutions in public buildings. Added to this are the benefits linked to better community services, sustainability and livability: in Milan, every city user could save the equivalent of 3 days a year by avoiding wasting them looking for a free parking space and emissions would be reduced of carbon dioxide of over 60.000 tons of CO2 per year, with positive impacts on the environment.
The Industrial IoT – L'Osservatorio carried out a survey involving 110 companies based in Italy, with the aim of understanding the projects carried out and expectations for the future. 45% of the companies interviewed have recently started at least one project in the Industrial IoT field, but as many as 25% have never even heard of it. A result that demonstrates that the development of the Internet of Things for industry is still in its infancy. However, it is an area in which growing dynamism is expected in 2017 for the innovation process of production systems linked to the Industry 4.0 paradigm. “It emerges that the Industrial IoT is a reality still at the starting line, far from the stage of maturity – says Giovanni Miragliotta, Director of the Internet of Things Observatory -. The most widespread applications, in 52% of cases, concern intelligent factory management - the Smart Factory - for real-time production control and preventive and/or predictive maintenance, and then logistics, in 43% of the cases analysed. .
Lack of skills is the number one obstacle in starting Industrial IoT projects, indicated by 57% of companies. While the resources
economic costs are not perceived as a problem, even in the light of the incentives coming from the National Industry 4.0 Plan. "In the near future, the Industrial IoT has two important development directions ahead of it - adds Miragliotta -: on the one hand, focusing on the skills necessary to analyze and manage the data collected by the connected plants and machinery, on the other hand, progressively move from the sale of hardware alone to the offer of valuable services enabled by the I-IoT, for example machines managed remotely or sold according to a pricing model based on operating hours”.
Data between monetization and privacy – As part of the Observatory's research, information was collected on 53 projects launched in Italy and abroad in which the data collected from connected objects were exploited: the most widespread strategies are those relating to process optimization (75% of projects) and the new generation of products/services (49%). The personalization of the product/service follows at a distance (26%), while those relating to direct monetization through the sale of data and Advertising & Commerce are still marginally adopted (albeit very interesting in perspective).
“Connected devices make it possible to collect a lot of information on their functioning and on the people who use them: the definition of appropriate strategies to exploit the data collected, both in the consumer and business fields, represents an increasingly important issue for companies – underlines Angela Tumino , Director of the Internet of Things Observatory -. However, attention to privacy and cyber security issues is growing hand in hand: consumers tend to be reluctant to share their data, unless they receive concrete benefits in return. These aspects must be properly addressed in order to avoid creating barriers to user adoption”.
Technologies – Recent evolutions in the field of connectivity give important support to the development of IoT applications. "The availability of new long-range IoT networks relieves developers of the need to implement a dedicated communication infrastructure and greatly lowers the entry barrier for products and services based on innovative ideas" underlines Antonio Capone, Professor of Telecommunications and member of the group of work of the Internet of Things Observatory.
On the long-range protocols front, in particular, some important milestones have also been reached in our country: the SigFox network, in partnership with Nettrotter, at the end of 2016 was already able to cover over 70% of the Italian population (all municipalities with more than 100.000 inhabitants), becoming the first public LPWA (Low Power Wide Area) network dedicated to IoT applications available nationwide. This network will cover about 90% of the population by the end of 2017, thus guaranteeing support for mobile and/or implementable applications on almost the entire national territory and also on a continental scale. LoRaWAN technology is being tested in various Italian cities by several players, such as iNebula, Ray Way, Telemar, Unidata, while the creation of A2A Smart City in the territories of Milan, Brescia and Bergamo is more mature. Finally, the ratification of the Narrow-Band IoT standard (NB-IoT, June 2016) was completed and the operators also announced in Italy the availability of commercial services by the end of 2017, while the experimentation on services for the IoT of the future 5G networks thanks to a tender from the MISE on the use of the 3.6-3.8 GHz frequencies.
