The Internet of Things market in Russia today and tomorrow

The market of the “Internet of Things” in Russia today and tomorrow


MarketTrends and forecasts

Petr Chachin | 01/21/2021

The Internet of Things market in Russia today and tomorrow

This year, the Internet of Things (Internet of Things, IoT) in Russia, according to analytical companies, will decrease slightly due to the general economic crisis,
caused by the pandemic. But in the medium term, it is expected that it will soon re-enter the trajectory of sustainable development and by 2025 will grow by 30%, and the number of connected devices – more
than twice.

The Internet of Things is a concept of remote interaction and data exchange between devices and people via the Internet anywhere and anytime, formulated in 1999, and the possibilities
Home IoTs were described in Scientific American in 2004. According to Cisco analysts, the Internet of Things began to spread throughout the world in 2008-2009,
since it was in this interval, according to their estimates, that the number of devices connected to the global network exceeded the population of the Earth. A nStarting from 2011 analytical
company
Gartner puts the Internet of Things in a shared hype cycle of new technologies to the stage of “technological trigger” indicating the formation period of more than 10 years, and
from
2012 periodically a specialized “IoT hype cycle“.

Today IoT is a whole ecosystem that includes hardware, network equipment, software platforms for processing and analyzing received data, data storage, and
also tools for their effective use. But even before the emergence of the IoT, for a number of years in industry, transport, energy and the financial sector, there was enough
large market for machine-to-machine (M2M) devices. These were wired and wireless sensor monitoring systems. temperature, stock level,
locations, etc. They are still used today in ATMs, payment terminals, security and protection systems, industrial telemetry systems, positioning devices for mobile
objects, etc.
As a result, M2M tools smoothly merged into the overall technical and statistical picture of the Internet of Things.

Main areas of IoT application in Russia

Currently, there is a transition from individual pilot projects to a wider introduction of IoT already in many sectors of the economy. “The IoT market is growing steadily by 15-17% per year,” says Andrey, Director of the Internet of Things Association (AIV).
Kolesnikov. “But the main thing today is the prevailing understanding that IoT is not a goal, but a tool that only works in combination with business processes.”

The goal of IoT implementation is to reduce costs and increase revenues, which is why, in order to implement IoT solutions, you need to start any project considering key expenditure items. Special
great hopes are pinned on the IoT in the areas of electric power, housing and communal services and transport. So, in the electric power industry, its application can lead to significant changes that will allow
transform a traditional electromechanical system into a digital one. The definition of the “Internet of Things” here includes not only “smart” networks (smart grids), but also “smart” meters (smart
meters).

New technologies are especially relevant for Russia with its existing large-scale centralized power supply system, which is over 2.5 million km of power transmission lines, about 500 thousand substations and 700
power plants with a capacity of more than 5 MW. In the electric grid sector, the wider introduction of intelligent technologies could lead to an increase in the reliability of systems and a decrease in operating
expenses, which would make it possible to switch to the management of the network “on condition”, and not to carry out repairs in accordance with strict regulatory deadlines.

However, today the penetration of the Internet of Things into the Russian energy sector is still at a low level, although there are a number of successful examples of the introduction of intelligent grid technologies. By the way,
most of the new equipment (transformers, circuit breakers, etc.) has remote diagnostics systems designed to work in an IoT environment. In the field of “smart” housing and communal services large
telecom operators such as Rostelecom, VimpelCom, MTS and MegaFon. According to the latter, by 2022 the volume of this market will be 1.2 billion rubles. In turn, Rusatom
Infrastructure Solutions ”estimated that within ten
years, only the market for “smart” electricity meters can exceed 60 billion rubles a year, and taking into account the control of heat, hot and cold water, the market for “smart” housing and communal services will reach 100 billion rubles.

The elements of smart housing and public utilities services are part of larger systems of smart cities. The struggle for this market has intensified between large enterprises. So, Rostelecom wants to become
as the operator of the Digital City project, Rosatom also has certain ambitions in this direction. Sberbank also indicated interest in this topic, having concluded an agreement with Orange Business Services and
having acquired a minority stake in Smart Resident this year.

The main problem of smart housing and communal services is that it is not clear who will pay for the IoT infrastructure. The necessary devices, multiplexers, controllers, information transmission and processing systems are already
are presented on the market, but the management companies are still in no hurry to install meters with automatic data transfer – for them it is still unprofitable. “All projects of IoT solutions in this area are not about
energy and not about IT, they are about money and about expenditure parts of budgets, – noted the director of the AIV. –
Estimated “found losses” after the introduction of digital metering systems for electricity and water are 7-12%. But in especially severe cases, the figure reaches 50%. This is the KPI of mess and mismanagement,
which nobody wants to admit. ”

The Internet of Things has penetrated much deeper into transport. In an industry where the length of various types of communication lines exceeds 1.6 million kilometers, and the number of freight transport is 7 million units, in
In principle, it is impossible to do without remote monitoring systems. At the rate Json & Partners Consulting, by the end of 2019 in Russia there were
about 8.4 million connected commercial and non-commercial vehicles (15-16% of the vehicle fleet), and, according to forecasts, by 2025 this figure will approach 20 million.

The “Internet of Things” is also used by the state to organize the transport system in Russia. So, on its basis the “Plato” system was built
for collecting tolls on roads for trucks weighing 12 tons and more, in which at the end of 2020 481 stationary control system frames, 100 mobile control vehicles and
about 2 million vehicle on-board devices. In 2019, on the scale of Plato, 31 billion rubles were collected. In addition, the country has a regulatory obligation to install systems
remote monitoring and control of vehicle traffic for commercial transportation of passengers and delivery of dangerous goods. The construction of a unified federal system is currently being completed
monitoring and control of passenger transportation by buses (ESF MKPP), however, the timing of its implementation is likely to go beyond this year. Examples of state policy for digitalization of transport
it is possible to attribute the obligation of automakers to equip all cars with the “ERA-GLONASS” emergency notification system.

At the same time, the potential for the implementation of the “Internet of Things” in our country is very significant both in the railway, pipeline and other types of transport industry. Intellectual
transport systems (ITS) in the coming years will become key areas for the development of transport infrastructure. It is expected that “smart” roads will help to significantly reduce the number of accidents, reduce
waiting time at traffic lights and total travel time.
The traffic management center of the Moscow government will equip 400 smart intersections in 2020. In general, the average crossing time is reduced by 15-20%.

At the rate Json & Partners Consulting, by the end of 2019, there were about 85 thousand connected road infrastructure devices in Russia
(“Smart” traffic lights, complexes of photo-video recording and weight and dimensional control, traffic flow sensors, etc.). It is expected that by 2025 this figure will grow 1.5 times. In general, the ITS market
estimated at 5-10 billion rubles.

Meanwhile IoT in the agro-industrial complex (AIC) it is still very weakly used, the evolution of the industry is only at the very beginning of the digital chain.
The factors holding back this process are financing, infrastructure and human resources. “Only on the horizon of 20-30 years will we see when agriculture and the agro-industrial complex, which in fact
it is impossible to consider without accompanying industries – mechanical engineering, medicine, etc. – will become such a full-fledged cluster, built into the global digital environment of the economy, ”said
Anna Nikitchenko, Vice President of the National Institute for Systems Research of Entrepreneurship Problems.

М2М market /IoT in Russia in 2019/2020

According to analytical company report Json
& Partners Consulting, in 2019 year M2M / IoT market size in
Russia has reached 64 billion rubles, and the number of connected to the global network
WAN-devices
IoT/M2M was

22.5 million, an increase of 21% compared to 2018.

The М2М / IoT market has been developing in Russia for more than 15 years, and its individual segments, in particular console security services, have existed for more than 40 years (the figure shows its indicators for the last five
years and forecast until 2025). It should be noted that there are other assessments of the Russian market, some of them differ by almost 10 times from those given in this study.

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In the sectoral structure of the distributed telemetry systems market, there is an extremely low share of IoT applications for monitoring and controlling industrial equipment and engineering systems of buildings and
structures. This is happening against the background of the prevalence of technical security systems, connected infrastructure for making payments and transport monitoring systems. The reason for this market structure
by IoT / M2M applications, analysts say Json &
Partners, is that the main drivers of growth in the number of installed and connected IoT / M2M devices in Russia were and remain
mandatory state programs, among which there are no programs for the digitalization of industry. In this regard, it is worth recalling what Andrei Kolesnikov said recently,
Director of AIV: “The most important trend in IoT now is the industrial Internet, a combination of operational technologies, the” Internet of things “, production and life cycle management systems.”

According to IKS-Consulting estimates, the volume of the industrial “Internet of Things” (Industrial IoT, IIoT) market in 2019 increased by 4% compared to 2018, to 7.92 billion rubles, with an increase in production volumes
at the 3% level. At the same time, 40 large projects were implemented last year, most of them were in manufacturing, mining and mechanical engineering. The most
Monitoring systems, management of a mining transport complex and projects based on the “Digital twin of a plant, mine, well or field” technology have become common solutions in the field of IIoT.

So, according to the forecast of IKS-Consulting, against the background
the expected reduction in production and cuts in budgets for digitalization, investments in IIoT projects in 2020 will fall by 10%, to 7.1 billion rubles. According to Pavel Svarnik, Executive Director
Center for Strategic Development and Digital Transformation “LANIT. Integrations ”, the prerequisites for the development of the industrial“ Internet of Things ”market in Russia are now absent. This is due to the fact that IIoT
requires from enterprises significant capital investments, which are unlikely to be massive in the post-pandemic period. At the same time, large manufacturing enterprises that have incorporated IIoT
to their investment budgets earlier, are unlikely to abandon the planned projects. And while IIoT is just one of the areas of IoT, the decline in 2020 is likely to affect most
other areas of the Internet of Things.

In general, it can be noted that in 2015–2019. the foundation was laid for the further development of the IoT / M2M market.

(The ending follows)

Internet of Things (IoT)

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