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Internet of Things Forecast Book 2018



Being successful in the digital age doesn’t just require knowing the latest buzzwords; it means identifying the transformational trends – and where they’re heading – before they ever heat up.

BI Intelligence

Take the Internet of Things (IoT), for example, which now receives not only daily tech news coverage with each new device launch, but also hefty investments from global organizations ushering in worldwide adoption. By 2023, consumers, companies, and governments will install more than 40 billion IoT devices globally. And it’s not just the ones you hear about all the time, like smart speakers and connected cars.

To successfully navigate this changing landscape, individuals and organizations must understand the full extent and functionality of the “Things” included in this network, the key drivers of each market segment, and how it all relates to the work they do every day.

Business Insider Intelligence, Business Insider’s premium research service, has forecasted the start of the IoT’s global proliferation in The IoT Forecast Book 2018— and the next five years will be transformational for consumers, enterprises, and governments.

  • Consumer IoT: In the US alone, the number of smart home devices is estimated to surpass 1 billion by 2023, with consumers dishing out about $725 per household — a total of over $90 billion in spending on IoT solutions.
  • Enterprise IoT: Comprising the most mature segment of the IoT, companies will continue pouring billions of dollars into connected devices and automation. By 2023, the total industrial robotic system installed base will approach 6 million worldwide, while annual spending on manufacturing IoT solutions will reach about $450 billion.
  • Government IoT: Governments globally are ushering in IoT devices to spur the development of smart cities, which would be equipped with innovations like connected cameras, smart street lights, and connected meters to provide a real-time view of traffic, utilities usage, crime, and environmental factors. Annual investment in this area is expected to reach nearly $900 billion by 2023.

Want to Learn More?

People, companies, and organizations all over the world are racing to adopt the latest IoT solutions and prevent growing pains amidst a technological transformation. The IoT Forecast Book 2018 from Business Insider Intelligence is a detailed three-part slide deck outlining the most important trends impacting consumer, enterprise, and government IoT — and the key drivers propelling each segment forward.

Representing thousands of hours of exhaustive research, our multipart forecast books are considered must-reads by thousands of highly successful business professionals. These informative slide decks are packed with charts and statistics outlining the most influential trends on the leading edge of your industry. Keep them for reference or drop the most valuable data into your own presentations to share with your teams.

Whether you’re newly interested in a topic or you already consider yourself a subject matter expert, The IoT Forecast Book 2018 can provide you with the actionable insights you need to make better decisions.

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WeWork’s $47 billion and $4 billion lease disparity is a recipe for disaster




The paperwork WeWork filed last week in advance of its planned public offering had lots of numbers in it.

But two sets of related figures stood out — $4 billion and $47.2 billion on the one hand, and 15 months and 15 years on the other.

The first pair of figures represent lease obligations: $4 billion is how much the coworking company is due to receive from its own clients in coming years, mostly by the end of 2020; and $47 billion represents the lease obligations that WeWork must pay to its own landlords, with the vast majority of that amount not coming due until after 2024.

The second set of figures represent lease durations. The first, 15 months, is the average lease commitment of WeWork’s customers. The second, 15 years, is the average length of the leases WeWork is signing with building owners.

With those four numbers, you basically have WeWork’s business model — it signs long term leases on properties that it turns around and subleases for relatively short durations. And it also clearly illustrates the big risk facing WeWork. Even as the company has attracted larger corporate customers and convinced them to sign longer contracts, its own obligations have outpaced its clients’ commitments by more than a factor of 10.

“They’ve got big long-term liabilities, and if the people who are their customers don’t have long-term commitments to them, the risk is high,” said Robert Siegel, a lecturer in management at Stanford Graduate School of Business. “Forty-seven billion dollars,” he continued, “is a lot of money.”

WeWork touted the $4 billion and 15-month numbers

As might be expected, WeWork was much more eager to highlight some of those numbers than others.

In its IPO filing, the company bandied about the $4 billion number, which it described as its “committed revenue backlog.” It touted the fact that that backlog had grown about eight times larger from $500 million in just 18 months.

WeWork CEO Adam Neumann
Michael Kovac/Getty Images for WeWork

Overall, the company mentioned the $4 billion figure at least eight times, starting on page four of the document, right in the part where it’s pitching its stock offering to investors. WeWork also mentioned the number further down in a section where the company explains how it expects to fare in a downturn — a big concern of potential shareholders.

“We believe that the growth in committed revenue backlog provides greater visibility and predictability of our future revenue to help mitigate the impact of short to medium-term downturns in the economy,” the company said in the filing.

It gave a similarly prominent place to the 15-month figure. That figure too has grown recently, it noted on page four. At the beginning of December 2017, the average contract its customers were signing was just 8 months. It also argued that these lengthening contracts will help it in a recession.

“Going forward, we believe that we are well positioned to navigate through further economic downturns,” the company said.

It wasn’t so eager to highlight the $47 billion number

But the company didn’t seem nearly as eager to highlight the other two numbers. It mentioned the $47.2 billion figure only three times and the 15-year figure just four times. It didn’t bring either of them up until page 26, buried within a section of the document devoted to the potential risks to its business, a section often ignored because it’s typically filled with boilerplate, cover-your-derriere type items.

Forty-seven billion dollars is a lot of money.

However much WeWork wanted to tout or bury the particular numbers, the four numbers have to be taken together to understand the company’s real business model. For all of its attempt to portray itself as a tech company — it mentions the word “technology” some 93 times in its filing — those numbers show its business is really more akin to that of a car or furniture rental company — or that of coworking pioneer IWG, said Scott Galloway, a professor of marketing at New York University.

“This is a company that buys assets and [arbitrages] them” — takes advantage of price discrepancies — “through selling them short term,” Galloway said, continuing, “Hertz does the same thing.”

Read this: NYU professor calls WeWork ‘WeWTF,’ says any Wall Street analyst who believes it’s worth over $10 billion is ‘lying, stupid, or both’

Taken together, the two sets of figures are also key to understanding the real risk WeWork faces. In an economic downturn, it may not have enough revenue coming in to match all the money it’s committed to spending. The contracts WeWork’s own customers have with it will likely give them much more flexibility to renegotiate their leases than WeWork’s contracts with its landlords will give it.

“As long as the economy holds up … [WeWork’s] business model works,” said Jeff Langbaum, a real-estate industry analyst for Bloomberg Intelligence. “If there’s a pullback,” and its customers start dropping their spaces or forcing the company to lower their rent, he continued, “WeWork is still on the hook for whatever leases it has signed for the long term.”

WeWork has tried to insulate itself from its lease commitments

WeWork has protected itself from some of this risk. Most of its leases are held by so-called special purpose entities, or SPEs. That structure means that those particular obligations are held by subsidiaries that are legally separate from their corporate parent. If the company got into trouble filling particular properties, it could put those subsidiaries into bankruptcy and protect the larger corporation.

WeWork has occupied buildings around the world, including this space in Shanghai.
Courtesy of WeWork

Of the $47.2 billion in outstanding obligations, WeWork’s corporate parent itself has only guaranteed $4.5 billion. It has another $1.6 billion in letters of credit, security deposits, and surety bonds that it’s also committed toward paying those obligations. But that leaves some $41.1 billion that’s essentially unguaranteed and that WeWork could potentially walk away from in a downturn.

However, it might not be as easy as all that. Its landlords would almost certainly try to enforce their agreements with WeWork if it tried to skip out on them. It also would face reputational harm — and a huge risk to the future of its business — if it started sending its subsidiaries into bankruptcy and having them default on their loans instead of keeping up with the rent they owe.

“If one of the SPEs were to default, no landlord’s ever going to rent to a WeWork SPE after that,” said Walter Johnston, who focuses on the real estate market as a vice president of credit ratings at the research firm Morningstar.

Even shorter term, the company could see its revenue and cash flow constrict markedly if it started shuttering some of its subsidiaries. That decline in cash flow could still imperil the corporate parent, even if it’s able to protect itself from the outstanding leases.

“At the end of the day, it’s cash flow that WeWork had been receiving that it’s no longer receiving,” Langbaum said. In a downturn, he continued, “we don’t know, exactly, how their business will hold up.”

But WeWorks’ customers could have an easier time breaking their agreements

And while, because of the SPEs and WeWork’s limited corporate guarantees, the $47.2 billion number may not be all it seems, neither is the $4 billion in lease commitments that WeWork says it has. Indeed, that number may be more at risk in a downturn than the larger figure.

In its filing, WeWork notes that the vast majority of its own leases with landlords don’t include any kind of early termination clauses. By contrast, the contracts its clients sign with it are much more flexible. As it noted in the document, many of its customers can cancel their deals with only a month’s notice. That’s part of the intrinsic appeal of WeWork — there’s no need for members to commit to a long term lease.

This four billion has to be massively discounted

And even customers who have signed up with WeWork for longer terms would likely have a relatively easy time breaking their agreements, said Tom Smith, a cofounder of Truss, an online commercial real-estate marketplace. In addition to its short notice provisions, the company often asks for much smaller security deposits and has much lower early termination fees — when it requires them — than other landlords, he said.

What’s more, traditional landlords often require individual business owners to personally guarantee that they will pay their leases, Smith said. Those guarantees provide a big disincentive to the owners to default on those obligations, even if their businesses start struggling, because they, and not just their corporations, are on the hook.

But Smith said he’s never seen WeWork, which lists space on his site, ask for a personal guarantee as part of its member contracts.

“Its almost a feature of WeWork’s membership agreement that it does not,” he said.

There’s no way to tell from the company’s filing how much of its $4 billion revenue backlog number is at risk if there’s a downturn and its clients start terminating their agreements early or simply defaulting on them. It would be good to know — but WeWork doesn’t disclose — what portion of a member’s outstanding lease obligation it typically recovers when the member cancels or defaults, Smith said.

But thanks to the ease with which WeWork members can get out from under their commitments, Smith thinks WeWork could see only a small portion of that backlogged revenue in the case of a downturn.

“This four billion has to be massively discounted,” he said. “This four billion,” he continued, “is not like another real-estate company’s four billion in revenue backlog, I assure you.”

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Davis, Semien hit 2-run homers as A’s beat Yankees 6-4




OAKLAND, Calif. (AP) — When slugger Khris Davis cleared the fences again at last, he gave it an animated trot around the bases complete with a salute approaching third before celebrating with his teammates back in the dugout.

When top pitching prospect A.J. Puk made his major league debut at last, the crowd went crazy and he felt the love. His teammates razzed him afterward and he assured everybody, “I can take it.”

Davis and Marcus Semien each hit a two-run homer to back Mike Fiers, and the Oakland Athletics held off the New York Yankees 6-4 on Wednesday night to clinch another series win against an AL division leader after taking three of four games from Houston last weekend.

Oakland moved a percentage point in front of Tampa Bay for the second AL wild card.

Davis snapped an 0-for-17 slump — three at-bats shy of the longest hitless drought of his career — with his first home run since July 30 and second since June 18. He sent a full-count pitch down the right field line in the second inning for just his 18th homer after he led the majors last season with 48 for his third straight year with 40 or more.

“He needed that,” manager Bob Melvin said. “He’s been grinding hard. He takes this pretty seriously. He’s been so instrumental for this team, as consistent a power hitter as we’ve ever had around here.”

Stephen Piscotty added a solo home run in the sixth after the Yankees got Mike Tauchman’s sacrifice fly in the top of the inning. Mike Ford homered in the seventh for New York, and Didi Gregorius added an RBI double.

Liam Hendriks struck out DJ LeMahieu and Aaron Judge in the eighth to escape a jam after Puk started the inning.

“He handled it well,” Fiers said of Puk. “We’re going to see a lot of him.”

Hendriks finished for his 15th save as Oakland (73-53) moved a season-best 20 games over .500 and earned Melvin his 1,200th career victory as a manager.

Fiers (12-3) loaded the bases with one out in the sixth, and his night was done. He struck out four and walked three, allowing two runs on six hits over 5 1/3 innings. This marked the anniversary of the first of his two no-hitters on Aug. 21, 2015, for the Astros against the Dodgers.

The A’s won for the sixth time in seven games and reached 201 home runs. They have ample time to close in on the club record of 243 set in 1996.

Yankees lefty J.A. Happ (10-8) allowed five runs and four hits in four innings. He struck out four and walked two.

“He hasn’t gotten away with a mistake with a single. It seems like it’s been slugged,” manager Aaron Boone said. “That’s hurt.”


Puk drew huge applause when the shaggy-haired lefty came on for his first big league appearance. Puk hit 99 mph on the radar gun and issued a walk and Ford’s single one out later before giving way to Hendriks.

Puk, called up Tuesday after he missed last season following Tommy John surgery, will remain a reliever in the majors this season but a future starter. What about an opener?

“He’s going to be a starter,” Melvin said, then joked: “He can open and go seven innings.”


Yankees lefty CC Sabathia’s farewell in the Bay Area means so much as he returns to his roots for the final time during the regular season before the 39-year-old pitcher heads into retirement.

On Monday, Sabathia spent a day off handing out his 50,000th backpack to first-graders and second-graders at home in Vallejo as kids returned to school.

“This is always going to be a special trip to me,” said Sabathia, who will conclude his career following 19 big league seasons and the last 11 with the Yankees. “Coming here I got a chance to go to Vallejo first day of school giving backpacks away. Just being here with my family, my kids getting to see Vallejo and hang out in Vallejo, my kids are there now, so it’s always a special time for us.”


Yankees: OF Brett Gardner had an ingrown toenail removed Sunday that had bothered him all last week. He missed his second straight game but Boone expected Gardner to be in the lineup for Thursday night’s series finale. “It was pretty sore yesterday, still,” Boone said, expecting Gardner to go through a full on-field workout. … RHP Dellin Betances (right shoulder impingement) threw a bullpen at the team’s complex in Florida — a pair of 16-pitch simulated innings. He could throw another bullpen as soon as Friday. … CF Aaron Hicks (right flexor strain) is yet to resume baseball activity.

Athletics: LHP Sean Manaea is likely to get another rehab start with Triple-A Las Vegas as he continues to work back from shoulder surgery last September. … LHP Brett Anderson is scheduled to make his next start Sunday against San Francisco after dealing with a blister his last time out on Sunday. … LHP Jesus Luzardo has returned to a full regimen with Las Vegas after being sidelined by a strained pitching shoulder. “All good. I still don’t know what the plan is for him yet, but encouraging to see him get stretched out again,” Melvin said.


Yankees RHP Masahiro Tanaka (9-6, 4.56 ERA) makes his team-leading 26th start on an extra day of rest looking to reach double-digit victories for the sixth time in as many major league seasons. Oakland goes with RHP Tanner Roark (1-1, 2.55) in his fourth start since joining the A’s from the Reds at the July 31 trade deadline.


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Fitbit targets 1 million new users with Singapore government tie-up




(Reuters) – Fitbit Inc (FIT.N) said on Wednesday it signed a contract with the Singapore government to provide fitness trackers and services in a health program it said could reach up to one million users.

FILE PHOTO: Visitors walk past an advertising billboard for Fitbit Ionic watches at the IFA Electronics Show in Berlin, Germany, September 1, 2017. REUTERS/Fabrizio Bensch

Fitbit will supply its trackers free of charge on the condition users spend S$10 ($7.22) each month, for a year, on the company’s premium subscription.

“The program’s goal is to ultimately reach up to one million people,” a spokeswoman for Fitbit said in an email.

The company’s shares closed up 2% on Wednesday on the New York Stock Exchange.

The program could be a boost for the San Francisco-based wearables pioneer, which has seen its shares sink in the past two years in the face of competition from Apple (AAPL.O), Samsung Electronics (005930.KS) and a raft of cheaper rivals.

“This is Fitbit’s first major integration of a digital health platform and wearables into a national public health program globally,” the company said in a statement.

Singapore, a city-state of 5.6 million people, has the longest life expectancy in the world and widespread access to healthcare. However, the government has raised concerns about relatively high rates of heart disease and diabetes among its fast-ageing population.

Subscribers will receive personalized health advice and nudges to encourage physical activity, healthy eating and better sleep, said Zee Yoong Kang, chief executive of Singapore’s Health Promotion Board (HPB).

Fitbit said the program, which begins in October, will ask users if they consent to share their data with the HPB, which will use the information for health promotions.

Fitbit was among several bidders, an HPB spokeswoman said.

“There were many bidders and some were significant international players,” she said, adding that Fitbit had set the target for one million users.

Apple was among those vying for the bid, Fitbit Chief Executive James Park told CNBC here

Reporting by Neha Malara, Munsif Vengattil in Bengaluru and John Geddie; Editing by Marguerita Choy, Patrick Graham and Darren Schuettler

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