Smart City Industry Report

The Smart City vision is a big one and so is the global market opportunity. Smart Cities are interconnected, sustainable, low carbon cities striving to be more competitive, livable and attract more investment than traditional counterparts. The vision spans mobility, transport, buildings, infrastructure, energy and water management, security, even healthcare and governance. The market will grow to $1.5 Trillion in 2020.

Many of the biggest players are involved. IBM’s Smart City is part of their “Smarter Planet”. Microsoft calls it CityNext. Cisco is after the Internet of Everything and GE is focused on the Industrial Internet. Accenture and Siemens have formed the Omnetric. ABB, Schneider, Hitachi and Toshiba are there. Gartner has a Hype Cycle for it. Exciting young companies building innovative technology and new business models are making a big impact, too.

The fabric of Smart City is diverse and there are major opportunities in each thread. This integrated technology market is driving extraordinary M&A opportunity. Some high profile deals include Schneider’s acquisition of Invensys for $5.6B and Google’s purchase of Nest for $3.5B. Cisco paid 12x sales for startup JouleX. Marlin Equity and Toshiba each bought 2 energy management companies. Corum is in the thick of it with multiple clients and several recent closes.

Some of the dominant technology themes are:

  • Internet of Things – IoT devices connect other devices, appliances, equipment machines and buildings. Advanced sensors that drive big data analytics and automation are central to this change.
  • IT and OT Convergence - information technology and operations technology come together to make the asset infrastructure more connected, automated and remotely controlled.
  • Big Data Analytics – tools to mine the vast volume, velocity and variability of data from the IoT to deliver more insight and better, faster decision making.
  • Smart Grid and Smart Meters – IT and OT to make the electric power grid more self-healing and secure.
  • Energy Management including distributed generation, micro-grids and power storage.
  • Location tracking and contextual intelligence.
  • High Bandwidth Internet - new business models like public/private partnerships that deliver broadband as a municipal service. Google Fiber experiments in Kansas City and Provo are just a start.

If you are building a company capable of becoming an important thread in the smart city fabric, one that can flourish in the middle ground where sustainability and carbon friendly technologies create better living conditions, competitive and economic advantage, then you have a unique opportunity.

Posted by , Senior Vice President on 10 February 2014
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