Navigant Research Blog

Microsoft Builds Smart City Cred with CityNext

Eric Woods — July 29, 2013

Microsoft is the latest technology giant to announce a smart city initiative.  CityNext is positioned as a portfolio of technologies and products that can be used by Microsoft’s global partner network to develop solutions for a range of city challenges.  Along with products such as its Azure cloud platform, mobile application support, and data management capabilities, Microsoft is also contributing training and educational services.

The CityNext initiative embraces the core elements associated with smart cities, focusing  on eight critical functions: government administration, public safety, healthcare, buildings, tourism, education, transportation, and energy and water.  Microsoft has also lined up nine partner cities that will participate in CityNext projects: Auckland (New Zealand), Barcelona (Spain), Buenos Aires (Argentina), Zhengzhou and Hainan Province (China), Hamburg (Germany), Manchester (United Kingdom), Moscow (Russia), and Philadelphia (United States).

Microsoft’s preeminence in the government software market makes it, by default, a key player in any move toward smarter cities.  However, its engagement with the new city agenda has so far largely been confined to its work with government IT departments.  CityNext looks more like a marketing initiative rather than a significant product innovation, but it is a good start.  Its ambitions for CityNext rely heavily on its extensive partner network, but Microsoft itself can play a significant role in helping cities rethink their use of IT across a range of operations.

On the Board

In Seattle, Microsoft’s home turf, the company is showing the role it can take in supporting smart city developments.   Microsoft is working on a new smart building pilot with Seattle’s Office of Economic Development, the city’s utility Seattle City Light, and the Seattle 2030 District – a public-private collaborative of downtown Seattle property owners and managers – that aims to reduce energy use by 50% by 2030.  Funded through a grant from the U.S. Department of Energy, the project is using Accenture’s Smart Building Solutions, based on Microsoft’s Azure cloud technology, to increase energy efficiency across around 2 million square feet of commercial building space, with the possibility of future expansion.  The pilot was inspired by a project at Microsoft’s Redmond campus that is using big data analysis to provide energy savings that could reach 10% per year.  The expectation is that the pilot will surpass this figure, achieving energy and maintenance savings between 10% and 25%.

Microsoft’s announcement of CityNext came too late to have an influence on its rating in our Navigant Research Leaderboard Report: Smart City Suppliers.  IBM and Cisco have been pathfinders in the smart city concept, but as our Leaderboard grid shows, the main competition has come from the infrastructure suppliers like SE, Siemens, Hitachi, Toshiba, and others.  Other IT players have been somewhat slower to move beyond their siloed government and utility businesses.  This is changing.  In addition to Microsoft’s CityNext program, Oracle and SAP have also launched broader smart city offerings and IT services companies like Accenture, Capgemini, and Atos are following a similar route.  Increasing competition in the smart city market can only be good for cities – but, as ever, they’ll need to be able to separate hype from real innovation.

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