EXECUTIVE SUMMARY

REMOTE MONITORING:AN INDUSTRY PERSPECTIVETechVentures / Professor Mohan SawhneyMarch 7, 2006Prepared by Michael Dickman, William Nicolau, and Alfonso Yanez

EXECUTIVE SUMMARY • Remote monitoring (RM) a diverse sector that requires multiple competencies and applies across industries • Industry-specific definitions but several characteristics in common • RM been around in some form for a long time, but RM now enabling both new uses for existing technologies and entirely new types of applications • Research shows RM applications best classified by interactivity and mission criticality • How active or passive is the technology? • How critical is this use to the organization? Catastrophe-prevention or nice-to-have? • Complexity of RM value chain indicates players likely to specialize in one to two segments • Have analyzed five industry verticals, highlighting importance of customizing technology, deployment, and sales efforts to industry needs • Government & homeland security, retail & consumer goods, transportation & logistics, oil & gas, and health care & medical devices • Many exciting opportunities exist in RM for both entrepreneurs and existing companies with relevant technologies and/or capabilities • Winners will provide software driven applications with real-time, interactive remote control capability that offers almost unlimited, fast, wireless information gathering/reporting, easy-to-use for relevant field personnel Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

AGENDA • Introduction and framework • Definition, brief history, and what is new • Overview of remote monitoring landscape and value chain • Industry vertical deep-dives • Government & homeland security • Retail & consumer goods • Transportation & logistics • Oil & gas • Health care & medical devices • Takeaways and opportunities Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

WHAT IS REMOTE MONITORING? • Definition is different by industries: • Computing: A network management protocol that allows network information to be gathered at a single computer • Transportation (Brazil): Service that enables companies increase the security of their fleet • Health Care: technology that enables doctors to remotely check their patients’ health status The ability of an entity, such as a human being, hardware or software, to communicate with other entities that are distantly located from one another, in order to passively receive information about its behavior and/or influence such behavior Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Communication Infrastructure (coaxial wire, wireless, RF, bluetooth, etc) INFRASTRUCTURE PERSPECTIVE Receiver Transmitter Display/processor Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

WHAT IS NEW HERE? Yesterday Today Tomorrow Defining features • Manual • Slow • Single piece of information (on/off) • Manual response • Analog and wired • Fast • Limited information flow (e.g. product ID) • Manual response • Digital and wireless • Real-time • Explosion of sensor-based information • Automated response (from BPO to battlefield) Typical applications Smoke signals Battlefield flag signals CCTV Battlefield radio GPS locators RFID in supply chain “Remote sentries” Full battlefield mgmt Remote fleet control Cargo container sensors “Smart dust” Example: Surveillance Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality RESEARCH SHOWS RM APPLICATIONS BEST CLASSIFIED BY INTERACTIVITY AND MISSION CRITICALITYHowever, Few Non-Military Technologies Commercialized for Active, Critical Uses UAV attack missions UAV border patrol Automated digital control (e.g. HVAC) Traffic monitoring / traffic signals Intra-body device monitor & control Flow monitoring / gate control (fluids) Oil & gas pipeline integrity Cargo portals Industry Verticals Satellite reconnaissance Oil & gas Battlefield vehicle location/status Fleet en-route location Transportation & Logistics Installation surveillance Configuration and maintenance fleet tracking Retail & Consumer Goods Vital signs monitoring Retail inventory tracking Health care & medical devices Patient compliance Tank level monitoring Government & Homeland Security Macro-geological remote sensing Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Capture Transmission Receipt Processing Monitoring/ action COMPLEXITY OF VALUE CHAIN INDICATES PLAYERSLIKELY TO SPECIALIZE IN ONE TO TWO SEGMENTS Interactivity / remote control Remote data step in value chain: Technologies • Cameras • Motion capture devices • Smart sensors • RFID TAGs • Robots • Coaxial Wire • DSL • Optic fiber • Satellite • WI-FI • GPRS • Reader systems • Antennas • Servers • PCs • Database • Storage • Display technologies • Algorithms Requirement for success • Miniaturization • Low power consumption • Use standard protocols • Reliability • Compatible speed • Low infra-structure cost • Spectrum • Seamless mobility • Reliability • Speed • Reliability • Scalability • Translation of signals to readable front-end applications Example players • ADT • Dust networks • Philips semiconductors • Robodynamics • Mobile and fixed telecom companies • Infra-structure companies • Intermec • Symbol • Zebra • Sun, HP • HP,Dell • Oracle, Microsoft, Sybase • EMC2, CA • Medtronic • IBM • Dust networks Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality GOVERNMENT AND HOMELAND SECURITY Interactivity and mission criticality RM industry overview • Government’s role as direct purchaser of almost all applications explains three themes • Stringent security controls drive RM as an enabler for new interactions with existing technologies • Integration with legacy systems and non-technology processes critical (e.g. surveillance with sentry) • Special class of applications for battlefield use • Technologies often not the differentiator, with a few exceptions • RFID, Wireless Internet ubiquitous across industries • Exceptions in military applications (e.g. military vehicle GPS locators with inertial stabilization) • Current players a mix of large and small • Large players usually long-time government contractors adding RM (e.g. UNITE alliance) • Small players carefully customize for government needs (e.g. Crossbow, Intuicom, and others) • Data capture and monitoring/action most important areas for development • Winning combination will be new types of sensors on front-end with information-efficient interface on back-end, all utilizing existing secure infrastructure UAV Satellite RM / redirection Vehicle GPS Integrated CCTV Remote sensing Value chain opportunities Capture Transm-ission Receipt Process -ing Monitor/ action Opportunity area Not a pain point Already mature Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality RETAIL AND CONSUMER GOODS Interactivity and mission criticality RM industry overview Situation • High volume, low prices strategy have generate a great focus on optimizing the supply chain Uses • Tracking inventory • Process Automation – e.g. SAP’s Electronic Proof of Delivery (E-POD), invoice reconciliation • heating, ventilation and air conditioning (HVAC), lighting, refrigeration, electrical systems Who is leading the use? • Major retailers driving change (e.g. Wal-Mart) • Forcing upstream supply chain to adopt RM Technologies: • RFID • Automated digital control Opportunity • Maturity • Pain point – Cost on the capture side (cost of transponders is still high to massify) • Specific applications of automated digital control, but they are not mission critical Automated digital control (e.g. HVAC) Retail inventory tracking Value chain opportunities Capture Transm-ission Receipt Process -ing Monitor/ action Opportunity area Not a pain point Already mature Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality TRANSPORTATION AND LOGISTICS Interactivity and mission criticality RM industry overview Situation • RM linked to core business of transportation companies • Increasing service levels drive tracking and visibility Uses - Fleet • Fleet en-route location • Configuration and maintenance fleet tracking Uses – Infrastructure • Asset monitoring – bridges, roads, subways Who is leading the use? • Major carriers – UPS, Fedex, etc • Government (Department of transportation) Technologies: • RFID • Sensors, RF, and specific optical communication devices • Software capable to distinguish “abnormal” variations of temperature, pressure, seismic movements, etc Opportunity • Monitor/action - specific applications for fraud prevention through remote fleet management (cutting engine remotely) • Transmission - New communications tech (e.g WIFI) will generate large infrastructure upgrade Fleet en-route location Asset monitoring Configuration and maintenance fleet tracking Value chain opportunities Capture Transm-ission Receipt Process -ing Monitor/ action Opportunity area Not a pain point Already mature Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality OIL & GAS Interactivity and mission criticality RM industry overview Situation • Maximize asset utilization - Throughput and increase uptime • Environmental compliance Uses - Upstream • Reservoir management – control gas lift and reduce maintenance Who is leading the use? • Major oil companies due to Environmental compliance Technologies: • Specific sensors to control leak detection, temperature and other conditions • Software capable to distinguish “abnormal” variations of temperature, pressure, etc Opportunity • Monitor/action – RM testing may be used for environmental test compliance • Transmission – Off-shore drills (e.g VSAT) Oil & gas pipeline integrity Flow monitoring / gate control (fluids) Tank level monitoring Value chain opportunities Capture Transm-ission Receipt Process -ing Monitor/ action Opportunity area Not a pain point Already mature Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

Active Interactivity Passive Low High Mission criticality HEALTH CARE AND MEDICAL DEVICES Interactivity and mission criticality RM industry overview • Two important drivers: health management costs and technological development • Prevention is cheaper • Development in Microelectronics and Communication • The industry is moving towards the idea of the “Body Area Network”. • Intra-body devices such as pacemakers • On-body devices to control vital signs • Off-body devices for patient compliance • Users will be the patients and health care management companies (insurance, clinics, hospitals, etc) • Big players are not only the traditional medical devices companies (Medtronic and J&J), but also the IT ones (IBM, SIEMENS) Intrabody devices Vital signs monit-oring Patient compliance Value chain opportunities Capture Transm-ission Receipt Process -ing Monitor/ action Opportunity area Not a pain point Already mature Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

KEY TAKEAWAYS • Customization key • Don’t see a single large player across industries • Mix of new apps and new categories • Monitoring will become control, the next wave is real-time automation, centrally controlled • Software needed to turn data into information as centralization explodes complexity • RM dramatically expands opportunity for BPO services Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

QUESTIONS TO ASK OF AN RM BUSINESS PLANNine Critical Questions Maturity today Drivers of adoption Hurdles to overcome • How many players are there today? • Big or small? Deep pockets? • Is the end-use a mature market? • E.g. better pipeline management vs. “smart dust” deployment • How much technology risk? • Repurposing existing technologies or something new? • Who is ultimate customer? Who is willing to pay? • If RM provider is far upstream, who creates primary demand? • How badly do target customers need this product? • Pricing must reflect cost of BAT • Does RM accelerate/support existing business plans? • E.g. supply chain focus • Is infrastructure in place to accommodate system needs? • Reliability, security, integrity • Is training required? • For purchaser? • For end-user in the field? • How well does RM fit into existing business processes? • Best business models will be easy for customers to implement across the entity Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

OPPORTUNITIES BY VERTICAL (I) Maturity today Forces for adoption Challenge/hurdles HEALTH CARE & MEDICAL DEVICES • The traditional medical device companies are leading innovation in this field. • However, IT companies are also important players. • There is a visible opportunity for development in the capture devices and monitoring services fields • Health management costs are high. So, there will be a force towards prevention, as well as the desire to keep the patient home • Development of smart devices • 100% reliability and security of wireless connections • Development of monitoring service companies Maturity today Forces for adoption Challenge/hurdles TRANSPORT & LOGISTICS • High maturity • Clients demanding real-time tracking and visibility • Infrastructure costs high (transmission) Low/Few High/Many Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

OPPORTUNITIES BY VERTICAL (II) Maturity today Forces for adoption Challenge/hurdles RETAIL & CONSUMER GOODS • Medium maturity, high in certain areas • RM application integrated with ERP applications • Major players forcing adoption • E.g. Wal-Mart • Cost of RFID transponders is still high to fully replace bar codes Maturity today Forces for adoption Challenge/hurdles OIL & GAS • Increasing demand for RM technologies • Shift from “analog” to digital equipment • Environmental compliance • High on-site maintenance costs • Must have new technologies certified for compliance use • Cost/benefit can be unclear versus other alternatives Maturity today Forces for adoption Challenge/hurdles GOVERNMENT & HOMELAND SECURITY • Many large contractors in specific segments • E.g. UAV • Opportunities for smaller players in networking existing military equipment • Bigger federal government spending for RM that satisfies higher security needs in post-9/11 environment • Better gov’t deployment of satellite, wireless infrastructure • Ensure security within and between all steps in value chain • Customize technologies for specific government needs • Legacy database systems • Rugged military requirements Remote Monitoring: An Industry Perspective by Dickman, Nicolau, and Yanez, 2006.

EXECUTIVE SUMMARY