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Concord Medical Reports Third Quarter 2012 Financial Results

BEIJING, Nov. 20, 2012 /PRNewswire-FirstCall/ -- Concord Medical Services Holdings Limited ("Concord Medical" or the "Company") (NYSE: CCM), a leading specialty hospital management solution provider and operator of the largest network of radiotherapy and diagnostic imaging centers in China and the parent of Chang'an Hospital, today reported its unaudited consolidated financial results for the third quarter ended September 30, 2012.

For the third quarter of 2012, the Company consolidated the financial results of Chang'an Hospital, in which the Company had acquired a 52% equity interest. In order to properly reflect the different business units, the Company has changed its reporting structure and will now report its financial results under two reporting segments, namely, the network business, which includes the financial results in connection with the management services provided for the 134 centers nationwide, and the hospital business, which reflects the financial results of Chang'an Hospital. 

In addition, the Company engaged an appraisal firm to conduct an appraisal on the purchase price allocation in connection with the Chang'an Hospital acquisition. The preliminary results of the appraisal work have been reflected in the unaudited consolidated financial statements. The appraisal results are expected to be finalized by the end of the fiscal year and the preliminary appraisal results are thus subject to changes.

Third Quarter 2012 Highlights

Total net revenues were RMB206.1 million ($32.8 million)(a), a 65.2% increase from the third quarter of 2011. Total revenues for the third quarter of 2012 consisted of:

  • Net revenues from the network business in the amount of RMB114.3 million ($18.2 million), an 8.3% decrease from the third quarter of 2011. Net revenues from the network business consisted primarily of net revenues from lease and management services in the amount of RMB103.6 million ($16.5 million), a 3.2% decrease from the third quarter of 2011. The decrease was mainly due to the exclusion of management fees from Chang'an Hospital and the closing of one center during the third quarter of 2012 upon the expiration of its service agreement; and
  • Net revenues from Chang'an Hospital in the amount of RMB91.7 million ($14.6 million).

Cost of revenue was RMB121.4 million ($19.3 million) for the third quarter of 2012, as compared to RMB41.8 million for the third quarter of 2011. The increase was mainly due to the consolidation of the financial results of Chang'an Hospital, which had a lower gross profit margin compared to the network business.

Gross profit was RMB84.7 million ($13.5 million) for the third quarter of 2012, representing a 2.1% increase from the third quarter of 2011. The gross profit margin for the third quarter of 2012 was 41.1%. Gross profit for the third quarter of 2012 consisted of:

  • gross profit from the network business in the amount of RMB70.0 million ($11.1 million), representing a gross profit margin of 61.3%; and
  • gross profit from the hospital business in the amount of RMB14.6 million ($2.3 million), representing a gross profit margin of 15.9%.

Operating expenses were RMB29.7 million ($4.7 million) for the third quarter of 2012, as compared to RMB25.0 million for the third quarter of 2011.

Operating income was RMB55.0 million ($8.8 million) for the third quarter of 2012, as compared to RMB57.9 million for the third quarter of 2011.

Income tax expense was RMB12.9 million ($2.1 million) for the third quarter of 2012, representing a 22.4% decrease from RMB16.6 million for the third quarter of 2011. The effective tax rate for the third quarter of 2012 was 24.7% as compared to 30.3% for the third quarter 2011, reflecting the lower effective tax rate of Chang'an Hospital.

Net income was RMB39.5 million ($6.3 million) for the third quarter of 2012, representing a 3.0% increase from the third quarter of 2011. The net profit margin in the third quarter of 2012 was 19.2%, as compared to 30.7% for the third quarter of 2011.

Basic and diluted earnings per American depositary share ("ADS") for the third quarter of 2012 were both RMB0.82 ($0.13), as compared to RMB0.81 for the third quarter of 2011. Each ADS represents three ordinary shares.

Non-GAAP net income(b) was RMB41.8 million ($6.6 million) for the third quarter of 2012, representing a 3.0% increase from the third quarter of 2011. Non-GAAP basic and diluted earnings per ADS were both RMB0.87 ($0.14) for the third quarter of 2012.

Adjusted EBITDA(c) (non-GAAP) was RMB101.1 million ($16.1 million) for the third quarter of 2012, representing a 8.7% increase from the third quarter of 2011.

As of September 30, 2012, the Company had RMB294.1 million ($46.8 million) in cash and RMB57.7 million ($9.2 million) in current portion of restricted cash.

Dr. Jianyu Yang, Chairman and Chief Executive Officer of Concord Medical, stated,

"We are very glad to welcome Chang'an Hospital into the CCM family. CCM has become the only US-listed Chinese healthcare service company that owns a general hospital with nearly 1,000 patient beds. The over 1,000 team members of Chang'an Hospital have worked very hard to build the hospital into one of the leading private hospitals in China. Chang'an Hospital celebrated its ten-year anniversary in September 2012. We are confident that it will see continued growth during the next decade."

"The Company's network business was stable in this quarter," Mr. Yang continued. "Since the beginning of 2012, we have been focusing on improving the operating efficiency of the existing centers and enhancing the performance of the new centers in the network. The initiative is starting to bear results. The cost structure has been stabilized and new centers are making significant contribution to both our top and bottom lines."

"We are very glad to see the positive developments in China's healthcare system," Mr. Yang continued. "The high demand for quality healthcare services is translating into solid results in our network and hospital businesses. We expect the growth momentum to continue strongly in the future."

Recent Developments

Guangzhou Specialty Hospital construction -- The Company has received approval for the land use right for the designated site of the Guangzhou Specialty Hospital in Guangzhou and made the relevant payments subsequent to end of the third quarter. The hospital is now under the design stage and construction is expected to commence during the second half of 2013.

Framework agreement with Beijing International Medical Center ("BIMC") to establish a cancer specialty hospital -- The Company entered into a framework agreement with BIMC to establish a cancer specialty hospital in BIMC. BIMC is expected to be developed into a world-class healthcare service industry park over the next decade. Under the agreement, the caner specialty hospital, as part of BIMC, is expected to be wholly owned by the Company. The hospital plans to provide comprehensive high-end cancer therapies, including surgery, chemotherapy, radiotherapy and gene therapy, to cancer patients. The Company has agreed to provide management support, treatment, technology and research to the hospital, including protocols and clinical practice guidelines, by collaborating with top-notch cancer institutions around the world. The Company plans to begin design stage of the hospital and other early-stage works soon. 

Share repurchase program -- On October 9, 2012, the Company announced that its board of directors has approved the extension of its current share repurchase program which was approved by the board of directors on September 30, 2011.  Through November 15, 2012, the Company has repurchased 2,162,903 ADSs, representing 6,488,709 ordinary shares, in the open market, for a total consideration of $7,512,467 (including commissions) under the share repurchase program.

Third quarter 2012 results by segment

Total net revenues consist of net revenues generated from the network business and hospital business.

Network business

The Company added two radiotherapy and diagnostic imaging centers in the third quarter of 2012 and closed one center upon the expiration of its contract, bringing the total number of centers in operation to 134 in 53 cities in China as of September 30, 2012. As of the same date, the Company had entered into agreements to establish 36 additional centers.

Net revenues from the network business were RMB114.3 million ($18.2 million) for the third quarter of 2012, representing a decrease of 8.3% from the third quarter of 2011, primarily due to the exclusion of management fee from Chang'an Hospital and the closing of one center upon the expiration of its contract during the third quarter of 2012.

Gross profit margin of the network business was 61.3% for the third quarter of 2012, as compared to 66.5% for the third quarter of 2011. The lower gross profit margin was primarily due to exclusion of Chang'an Hospital management fee from the network business revenues.

Capital expenditure of the network business was RMB131.4 million ($20.9million) for the third quarter of 2012.

Accounts receivable from the network business was RMB174.4 million ($27.8 million) as of September 30, 2012, as compared to RMB244.2 million as of December 31, 2011. The average period of sales outstanding for accounts receivable (also known as days sales outstanding) was 167 days for the third quarter of 2012, as compared to 159 days for the second quarter of 2012.

As of September 30, 2012, the Company had bank credit lines of RMB941.0 million ($149.7 million), of which RMB456.6 million ($72.7 million) was utilized.

During the third quarter of 2012, the Company handled 10,632 patient treatment cases and 73,922 patient diagnostic cases, representing 18.9% and 47.9% increases from the third quarter of 2011, respectively.

Hospital business

Net revenues from the hospital business were RMB91.7 million ($14.6 million) for the third quarter of 2012, which consisted of:

  • outpatient revenues of RMB18.3 million ($2.9 million), representing 20% of the net revenues from the hospital business;
  • inpatient revenues of RMB30.7 million ($4.9 million), representing 33% of the net revenues from the hospital business; and
  • pharmacy revenues of 42.8 million ($6.8 million), representing 47% of the net revenues from the hospital business.

Cost of service for the hospital business for the third quarter of 2012 was RMB77.1 million ($12.3 million).

Gross profit margin of the hospital business was 15.9% for the third quarter of 2012.

As of September 30, 2012, Chang'an Hospital had accounts receivable of RMB37.2 million ($5.9 million), representing days sales outstanding of 34 days. The accounts receivable was mainly from medical revenues covered by various government-sponsored insurance programs. Chang'an Hospital settles the balance with the local social insurance bureau on a periodic basis. The Company considers the collection risk to be low.

Based on the preliminary purchasing price allocation (the "PPA") results, we have identified intangible assets as well as prepaid land lease payments valued at RMB184.8 million ($29.4 million). The intangible assets include information system, healthcare qualification and oncology operation licenses. The resulting amortization expense in the third quarter of RMB4.3 million ($0.7 million) was included in Chang'an Hospital's cost of revenue and operating expenses. The PPA results are subject to changes.

Chang'an Hospital received 121,092 outpatients and 7,309 inpatients for the third quarter of 2012. The average bed utilization for the quarter was 93%. The average days of hospital stay was 10.2 days per patient for the quarter. Chang'an Hospital operated 978 beds as of September 30, 2012.

Chang'an Hospital is a leading private-owned, general service, for-profit hospital, located in Xi'an, Shaanxi Province. Established in 2002, Chang'an Hospital had 51 departments with over 1,000 medical and non-medical staff as of September 30, 2012. The total number of hospital beds reached 978 in the third quarter 2012.

Results for the nine months ended September 30, 2012

Net revenues were RMB449.3 million ($71.5 million) for the nine months ended September 30, 2012, representing a 33.7% increase from the nine months ended September 30, 2011.

Cost of revenues was RMB208.5 million ($33.2 million) for the nine months ended September 30, 2012, representing a 81.9% increase from the nine months ended September 30, 2011, which was primarily due to the consolidation of the financial results of Chang'an Hospital in the third quarter of 2012.

Gross profit margin was 53.6% for the nine months ended September 30, 2012, compared with 65.9% for the nine months ended September 30, 2011. The decrease in gross profit margin was primarily due to the consolidation of the financial results of Chang'an Hospital in the third quarter of 2012, as gross profit margin for the hospital business was lower than that for the network business.

Operating expenses were RMB91.6 million ($14.6 million) for the nine months ended September 30, 2012, representing a 24.6% increase from RMB73.5 million for the nine months ended September 30, 2011, which was primarily due to the consolidation of the financial results of Chang'an Hospital in the third quarter of 2012.

As a result, operating income was RMB149.2 million ($23.7 million) for the nine months ended September 30, 2012, representing a 0.9% increase from RMB147.8 million for the nine months ended September 30, 2011.

Income tax expense was RMB38.6 million ($6.1 million) for the nine months ended September 30, 2012, as compared to RMB39.5 million for the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2012 was 27.3%, as compared to 28.6% for the first nine months of 2011, primarily attributable to the lower effective tax rate of Chang'an Hospital.

As a result, net income was RMB102.8 million ($16.4 million) for the nine months ended September 30, 2012, representing a 4.2% increase from RMB98.7 million for the nine months ended September 30, 2011.

Basic and diluted earnings per ADS for the nine months ended September 30, 2012 were both RMB2,20 ($0.35), representing a 5.8% increase from the basic and diluted earnings per ADS of RMB2.04 for nine months ended September 30, 2011.

Revenue Outlook for Fourth Quarter 2012

Based on the current market and operating conditions, planned business expansion, and estimated patient volume from Chang'an Hospital, Concord Medical estimates total net revenues for the fourth quarter of 2012 to be between RMB193 million and RMB210 million, including net revenues from the network business to be between RMB105 million to RMB115 million and net revenues from the hospital business to be between RMB88 million and RMB95 million.

These estimates are based on current market and operating conditions, are subject to change, and may be influenced positively or negatively by factors outside the Company's control, including but not limited to macroeconomic events in the markets in which the Company operates. See "Safe Harbor Statement" below for additional information regarding forward-looking statements.

Conference Call Information

Concord Medical will hold an earnings conference call at 8:00 a.m. Eastern Standard Time (New York) on November 21, 2012, which is also 9:00 p.m. in Beijing and Hong Kong on the same day.

The dial-in details for the live conference call are as follows:

U.S. Toll Free: 1-866-519-4004
International: 65 67239381
U.K. Toll Free: 08082346646
China Toll Free: 400-620-8038 / 800-819-0121
Hong Kong Toll Free: 800-930-346
Passcode: CCM

A replay of the conference call may be accessed by phone at the following numbers for 7 days:

U.S. Toll Free: 1 646 254 3697
International: 1 855 452 5696
Passcode: 64801557

A live webcast of the conference call will be available on the investor relations section of the Company's website at http://ir.concordmedical.com. A replay of the webcast will be available for one month.

About Concord Medical

Concord Medical Services Holdings Limited operates the largest network of radiotherapy and diagnostic imaging centers in China, measured by revenues and the number of centers in operation and is the parent of Chang'an Hospital. As of September 30, 2012, the Company operated a network of 134 centers with 75 hospital partners that spanned 53 cities and 24 provinces and administrative regions in China. Under long-term arrangements with top-tier hospitals in China, Concord Medical provides radiotherapy and diagnostic imaging equipment and manages the daily operations of these centers, which are located on the premises of its hospital partners. The Company also provides ongoing training to doctors and other medical professionals in its network of centers to ensure a high level of clinical care for patients. For more information, please see http://ir.concordmedical.com.

Safe Harbor Statement

This news release may contain "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions. These forward looking statements are based upon management's current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. Such factors include: the number of new radiotherapy and diagnostic imaging centers opened; the increase in the number of patients in existing centers; the establishment of specialty cancer hospitals; changes in the healthcare industry in China, including changes in the healthcare policies and regulations of the PRC government; technological or therapeutic changes affecting the field of cancer treatment and diagnostic imaging; and possible effects on consumers and hospitals, hospital construction, and suppliers, as a result of inflation and the Chinese government's policies and actions to control inflation. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission, which are available at www.sec.gov. The Company does not assume any obligation to update any forward-looking statement, except as required by law.

About Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Concord Medical uses certain non-GAAP measures. The Company presents certain of its financial information that is adjusted from results based on GAAP to exclude the impact of share-based compensation expense. The Company believes excluding share-based compensation expense from its GAAP financial measures is useful for its management and investors to assess and analyze the Company's core operating results, as such expense is not directly attributable to the underlying performance of the Company's business operations and do not impact its current cash earnings. Concord Medical also believes these non-GAAP measures excluding share-based compensation expense are important in helping investors to understand the Company's current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. In addition, Concord Medical also presents the non-GAAP measure of Adjusted EBITDA, which is defined in this announcement as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses, and other adjustments. Other adjustments include foreign exchange losses and other expense income. Furthermore, Adjusted EBITDA eliminates the impact of items that the Company does not consider to be indicative of the performance of the network business and hospital business. The Company believes investors will similarly use Adjusted EBITDA as one of the key metrics to evaluate its financial performance and to compare its current operating results with corresponding historical periods and with other companies in the healthcare services industry. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial information.

For more information, please contact:

Concord Medical Services

Mr. Adam J. Sun (Chinese and English)
+86 10 5957 5266
[email protected]

Ms. Gloria Huang (Chinese and English)
+86 10 5903 6688 (ext. 639)
[email protected]

Solebury Communications

In China:
Ms. Vickie Zhao
[email protected]
(+86) 10 6563-0288 (ext. 801)

In the United States:
Mr. Richard Zubek
[email protected]
(+1) 203-428-3230


Notes

(a) This news release contains translations of certain renminbi ("RMB") amounts into U.S. dollars at specified rates solely for the convenience of the reader and do not represent the Company's financial performance in US dollars, since its presentation currency is RMB, the currency of the People's Republic of China. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.2848 to US$1.00, the effective noon buying rate as of September 30, 2012 in the City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

(b) Non-GAAP net income is defined in this news release as net income excluding share-based compensation expenses. Share-based compensation was RMB2.3 million ($0.36 million) in the third quarter 2012 and RMB2.2 million in the third quarter 2011.

(c) Adjusted EBITDA is defined in this news release as net income plus interest expense, income taxes, depreciation and amortization, share-based compensation expenses, and other adjustments, including foreign exchange gains or losses and other (expense) income.  


Concord Medical Services Holdings Co., Ltd. 

Unaudited Condensed Consolidated Balance Sheets

(in thousands)


December 31, 2011 (*)

September 30, 2012


RMB

RMB

US$





ASSETS




Current assets




Cash 

219,078

294,051

46,788

Restricted cash, current portion

2,512

57,668

9,176

Held-to-maturity securities

100,466

-

-

Time deposits with original maturities exceeding three months

50,372

29,970

4,769

Accounts receivable

244,189

211,662

33,678

Inventories

1,364

20,505

3,263

Prepayments and other current assets

60,266

62,015

9,867

Net investments in direct financing leases, current portion

49,821

67,635

10,762

Deferred tax assets, current portion

5,589

4,705

749

Total current assets

733,657

748,211

119,052





Non-current assets




Property, plant and equipment, net

1,068,703

1,425,173

226,765

Goodwill

-

229,360

36,494

Acquired intangible assets, net

129,018

229,456

36,510

Deposits for non-current assets

207,287

230,248

36,636

Net investments in direct financing leases, non-current portion

97,262

132,012

21,005

Deferred tax assets, non-current portion

20,866

17,898

2,848

Equity method investments

540

660

105

Other non-current assets

86,731

92,408

14,703

Restricted cash, non-current portion

22,012

-

-

Prepaid land lease payments

27,370

90,756

14,441

Total non-current assets

1,659,789

2,447,971

389,507





Total assets

2,393,446

3,196,182

508,559









LIABILITIES AND EQUITY




Current liabilities




Short-term bank borrowings

15,000

43,799

6,969

Long-term bank borrowings, current portion

77,479

147,873

23,528

Accounts payable

2,170

129,255

20,566

Accrual for purchase of property, plant and equipment

13,294

35,633

5,670

Obligations under capital leases, current portion

3,582

2,987

475

Accrued expenses and other liabilities

59,097

105,419

16,774

Income tax payable

20,936

24,885

3,960

Deferred revenue, current portion

13,115

16,596

2,641

Contingent business acquisition consideration 

11,999

-

-

Total current liabilities

216,672

506,447

80,583





Non-current liabilities




Long-term bank borrowings, non-current portion

108,700

275,986

43,913

Deferred revenue, non-current portion

6,839

3,776

601

Obligations under capitalized leases, non-current portion

2,289

400

64

Lease deposits

2,000

2,000

318

Deferred tax liabilities, non-current portion

18,850

61,633

9,807

Total non-current liabilities

138,678

343,795

54,703





Total liabilities

355,350

850,242

135,286





Commitments and contingencies








EQUITY




Ordinary shares

105

105

17

Treasuary stock

(1)

(4)

(1)

Additional paid-in capital

2,551,877

2,522,193

401,315

Accumulated other comprehensive loss

(17,595)

(17,207)

(2,738)

Accumulated deficit

(599,886)

(501,016)

(79,719)

Total Concord Medical Services Holdings Limited shareholders' equity

1,934,500

2,004,071

318,874

Non-controlling interests

103,596

341,869

54,399





Total equity

2,038,096

2,345,940

373,273





Total liabilities and equity 

2,393,446

3,196,182

508,559





(*) Amounts for the year ended December 31, 2011 were derived from the December 31, 2011 audited consolidated financial statements.

 

Concord Medical Services Holdings Limited

Unaudited Condensed Consolidated Statements of Comprehensive Income

(in thousands, except for per  ADS data)


For The Three Months Ended


September 30, 2011 (*)

September 30, 2012


RMB

RMB

US$

Revenue, net of business tax, value-added tax and related surcharges




Network

124,723

114,341

18,193

Hospital

-

91,722

14,594

Total net revenues

124,723

206,063

32,787





Cost of revenues




Network

(41,799)

(44,296)

(7,048)

Hospital

-

(77,094)

(12,267)

Total cost of revenues

(41,799)

(121,390)

(19,315)





Gross profit

82,924

84,673

13,472





Operating expenses








Selling expenses

(8,422)

(17,745)

(2,823)

General and administrative expenses

(16,626)

(13,365)

(2,127)

Other operating income

-

1,433

228





Operating income

57,876

54,996

8,750

Interest expenses

(1,312)

(3,599)

(573)

Foreign exchange loss

(3,682)

(135)

(21)

Loss from disposal of property, plant and equipment

-

(161)

(26)

Interest income

2,617

1,188

189

Other (expense) income

(519)

102

16





Income before income taxes

54,980

52,391

8,335

Income tax expenses

(16,642)

(12,920)

(2,056)

Net income

38,338

39,471

6,279





Net income attributable to noncontrolling interests

1,234

1,832

291





Net income attributable to ordinary shareholders

37,104

37,639

5,988





Earnings per ADS




Basic /Diluted

0.81

0.82

0.13





Weighted average number of ADS outstanding:




Basic /Diluted

47,451,177

45,795,431

45,795,431





Other comprehensive (loss) income, net of tax




Foreign currency translation

(615)

176

28

Total other comprehensive (loss) income, net of tax

(615)

176

28





Comprehensive income

37,723

39,647

6,307





(*) Certain amounts in the prior year quarterly financial information are being reclassified for comparison purposes.

 

Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (*) (in RMB thousands except for per ADS data, unaudited)









For the three months ended September 30, 2011

For the three months ended September 30, 2012


GAAP Result

Adjustment

Non-GAAP Results

GAAP Result

Adjustment

Non-GAAP Results

Operating income

57,876

2,200

60,076

54,996

2,279

57,275

Net income

38,338

2,200

40,538

39,471

2,279

41,750

Basic earnings per ADS

0.81

0.05

0.86

0.82

0.05

0.87

Diluted earnings per ADS

0.81

0.05

0.86

0.82

0.05

0.87








(*) The only adjustment is share-based compensation.

 

Reconciliation from net income to adjusted EBITDA(*) (in RMB thousands, unaudited)











 For the three months ended

 For the three months ended



September 30, 2011

September 30, 2012


Net income

38,338

39,471


   Interest (income) expenses, net

(1,305)

2,411


   Income tax expenses

16,642

12,920


   Depreciation and amortization

32,870

43,839


   Share-based compensation

2,284

2,279


   Other adjustments

4,201

194






Adjusted EBITDA

93,030

101,114






(*) Definition of adjusted EBITDA: Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, share-based compensation expenses and other adjustments. Other adjustments include foreign exchange losses, loss from disposal of property, plant and equipment and other (expense) income.

SOURCE Concord Medical Services Holdings Limited

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The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happens, where data lives and where the interface lies. For instance, it's a mix of architectural styles ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example t...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device experiences grounded in people's real needs and desires.
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps, abiding by privacy concerns and making the concept a reality. These challenges can't be addressed w...
The Domain Name Service (DNS) is one of the most important components in networking infrastructure, enabling users and services to access applications by translating URLs (names) into IP addresses (numbers). Because every icon and URL and all embedded content on a website requires a DNS lookup loading complex sites necessitates hundreds of DNS queries. In addition, as more internet-enabled ‘Things' get connected, people will rely on DNS to name and find their fridges, toasters and toilets. According to a recent IDG Research Services Survey this rate of traffic will only grow. What's driving t...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics is e...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) i...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect at Hookflash, will walk through the shifting landscape of traditional telephone and voice services ...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
Bit6 today issued a challenge to the technology community implementing Web Real Time Communication (WebRTC). To leap beyond WebRTC’s significant limitations and fully leverage its underlying value to accelerate innovation, application developers need to consider the entire communications ecosystem.
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.