Smarter Cities is a hot topic with IBM, CIsco, Schneider Electric and many other data center vendors targeting the growth.
A common approach is to leverage the cloud as Barron's writes.
Dawn of the Smart City
The next generation will see a historic migration to urban areas around the world. So who's going to benefit?
Cities are experiencing one of the biggest booms since the Industrial Revolution got under way.
In 2008, the number of urban dwellers for the first time in history eclipsed the number living far from the madding crowd. The United Nations projects that by mid-century, cities will be home to 70% of the world's 9.2 billion inhabitants, a figure that tops today's population by 30%.
The Cloud is mentioned.
Like Siemens and ABB, most of the beneficiaries of urbanization will be infrastructure and technology outfits that provide or utilize smartphones, sensors and software and services to track the use of a city's assets and commit resources when and where they're needed. Cloud technology, which can cut costs while boosting computing capacity, will play a big role. Even social media will participate, as cities multiply the ways a citizen can spot a problem–anything from a water-main break to a traffic snarl–and then alert others to avoid it or do something about it.
Technology researchers at IDC estimate the size of the smart-city information-technology market is now $34 billion annually and will gain 18%-plus a year to $57 billion by 2014. That's not a huge amount to global giants, but certainly enough to help drive growth. (The companies don't break out earnings related to these projects.) The market has broadened to include items like broadband connectivity, green belts, renewable energy, green buildings and other intelligent-city systems. "You are talking about smart water, smart transportation, better public safety," says Jennifer Bélissent, a consultant at Forrester.
And, more details including a Microsoft Windows Azure case study are referenced.
Says Bob Djurdjevic of Annex Research, who follows big-cap tech stocks: "The cloud and smarter cities work hand-in-glove. The 'what' is the idea of the smarter city. The 'how' is the cloud, which provides the means for bringing it about."
Typically, a city funds big capital investments by issuing 15-20-year bonds, which require voter approval. But for many of these improvements the city doesn't need a public referendum or a bond sale; it can pay subscription fees for computer usage to a cloud provider like IBM or Microsoft. That saves major capital expenses for physical infrastructure upgrades and repairs, and keeps the investment as an operational expense. Cities can start small and scale up as usage rises.
Miami built a 311 service, which lets city dwellers call in for information or report a problem, on Microsoft's Windows Azure cloud platform. The service, which tracks progress on the issue from the time it was reported until it's been solved, produced a 75% savings on projected first-year costs because Miami didn't need to buy, host and manage physical servers. When Hurricane Irene churned up the coast in August, the city was able to add a special site on its platform to handle reports about the deadly storm. Says Eric Basha of Microsoft: "The cloud is transforming how government delivers services, driving down costs and time to market." That also provides opportunities for any vendor with cloud-related products, including Accenture (ACN), Hewlett-Packard (HPQ) andOracle (ORCL).
But, another view that will not get as much press is building data centers in cities to support the new services and a low latency work environment is just as valuable as the cloud. Look at the large US cities and their data centers - NYC, Atlanta, Chicago, Dallas, LA, SF/SJ, Seattle, Denver, and Phoenix. They all have large data centers. Cities not thinking about the data center infrastructure they need to build out are going to be sorry they put their solution in the cloud without a clear migration strategy into local data center assets.