INDEPENDENT TECHNOLOGY RESEARCH s TECHNOLOGY JANUARY 2014
GP BULLHOUND TECHNOLOGY PREDICTIONS 2014 2014 PREDICTIONS For the seventh year running, GP Bullhound is publishing its Technology “BREAKTHROUGH IN INDOOR Predictions for the year. LOCATION, COMMUNICATION AND MARKETING” Over the past year, we witnessed a booming technology sector led by new stock market highs with the Dow and S&P 500 both up more than 20%, while “EYE-TRACKING REACHES the Nasdaq soared over 30%. Nonetheless, we predict a continued growing, CONSUMER MASSES” dynamic technology sector in 2014 led by new innovation. “SHOPPING GOES ‘CLICK & MORTAR’” Our predictions range from indoor mobile location technology that look set to fundamentally change how individuals communicate with corporations and “SMART MACHINES MARKET TAKING-OFF” institutions indoors, to eye tracking human machine interface technology reaching the mass markets. “THE BATTLE OF “WHERE“ WILL UNFOLD” We’re also excited to see how consumers will pursue cross-channel purchasing decisions due to the intersection of retail and online shopping. “SOCIAL MESSAGING MARKETS WILL Smart machines will see increased adoption, because of the continued growth CONSOLIDATE” of highly intelligent personal assistants, advanced global industrial systems “ADVANCED DATA and autonomous vehicles. Technology companies in the map data market ANALYTICS CLIMBS TO TOP sector are also expected to see a big 2014 as the battle for the number one OF CORPORATE AGENDA” position unfolds. “MARKETPLACES WILL GO Other trends include the mobile messaging app landscape consolidating, data VERTICAL” analytics experiencing increased adoption by businesses and individuals alike “CLOUD STORAGE and marketplaces becoming increasingly vertical with many new winners PLATFORMS GO MAINSTREAM” emerging. Cloud technology is also firmly here to stay with user adoption growing rapidly due to pricing and free space. “CURVED SMARTPHONES WILL FLOP IN 2014” As an anti-trend, we also believe that the latest hype - curved smartphones - will fail to gain widespread adoption in 2014.
All in all, we expect 2014 to witness significant growth and mainstream adoption of new exciting technologies with plentiful opportunity to investors CHRISTIAN LAGERLING and entrepreneurs that are able to navigate around and distinguish between [email protected] San Francisco: +1 415 986 0196 pockets of hype and real opportunities. PER ROMAN [email protected] Stockholm: +46 8 545 074 03 STIRLING ADELHELM [email protected] San Francisco: +1 415 986 7480 LILJANA XHEKA [email protected] San Francisco: +1 415 200 4281
Important disclosures appear at the back of this report GP Bullhound LLP is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
TABLE OF CONTENTS
A RECAP OF GP BULLHOUND’S 2013 PREDICTIONS...... 1 BREAKTHROUGH IN INDOOR LOCATION, COMMUNICATION AND MARKETING ...... 3 EYE-TRACKING REACHES CONSUMER MASSES ...... 4 SHOPPING GOES ‘CLICK & MORTAR’ ...... 5 SMART MACHINES MARKET TAKING-OFF ...... 6 THE BATTLE OF “WHERE” WILL UNFOLD ...... 7 SOCIAL MESSAGING MARKETS WILL CONSOLIDATE ...... 8 ADVANCED DATA ANALYTICS CLIMBS TO TOP OF CORPORATE AGENDA ...... 9 MARKETPLACES WILL GO VERTICAL ...... 10 CLOUD STORAGE PLATFORMS GO MAINSTREAM ...... 11 CURVED SMARTPHONES WILL FLOP IN 2014 ...... 12
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GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
A RECAP OF GP BULLHOUND’S 2013 PREDICTIONS
Before we dig into this year’s exciting list, here’s a brief recap of last year’s
predictions and how we saw the development in the year. Collaborative consumption A year ago, we predicted that collaborative consumption would become the new becomes the economy and 2013 supported this trend. We saw a breakthrough in collaborative new economy models across industries with entire product and company lifecycles now incorporating social elements. For example, the iPhone tripod Glif was funded via crowdfunding platform Kickstarter, co-conceived by 3D design community Disruption of Shapeways, later sold through CMS online commerce Shopify using online education to payment solution Braintree, and produced on demand by Premier Source. All the accelerate steps in the development of the iPhone tripod Glif were managed through collaborative consumption platforms. The rise of We also predicted that education disruption would accelerate in 2013, which did curated and / – occur. The Massive Open Online Courses (MOOC) addressable community was personalized 1 content estimated to reach 2bn last year as more than 70% of users cannot afford higher education. Major brands including Google, LinkedIn, SAP and Bank of America – joined in to address this huge market opportunity by partnering with leading Gesture and MOOC companies. While online education adoption accelerated, one drawback touch controls has been course completion rates, which currently average at less than 10%2. emerge as standards Curated and personalized content did surge in 2013. Pinterest blew past 70m users in July and is currently expanding in 10 new countries after seeing 125% growth internationally. Other traffic theme and plugin curation companies (e.g. Consolidation to snip.it, Scoop.it, Storify.com), enterprise level curation tools (e.g. Curata, continue, led by big four bagtheweb, Darwin Ecosystem, Storination), secondary content platforms (e.g. Flashissue, Zootool, mySyndicaat Utopic) and curation reading platforms (e.g. Feedly, Pulse, Pocket, Trapit) also witnessed strong user adoption growth in 2013. Video calling goes corporate – Gesture and touch controls were big breakthroughs in 2013 and began to reach mass adoption. Leap Motion began shipping its eponymous motion-control device
in the summer and launched software to control both OSX and Windows Microsoft to applications. In addition, Apple’s acquisition of PrimeSense in November dominate next highlighted the industry shift in human-computer-interactions to gesture and touch game console controls. cycle We predicted that the ‘big four’ Internet players would dominate the technology M&A landscape, which broadly proved correct. Google led the pack and acquired Gamification – 22 companies for $2.2bn3. Google’s largest transaction was the mapping start-up an explosion of Waze, which cost $966m followed by other acquisitions such as innovation SurveyMonkey.com, LendingClub Corporation, Makani Power and Wavii, Inc. The acquisition of PrimeSense by Apple and Onavo Mobile by Facebook also IP arms race supported our prediction that the technology goliaths would acquire companies in intensifies in a number of high growth areas such as smart mobility, wireless, cloud computing, 2013 social networking, business intelligence and e-commerce.
We predicted that video calling would have a more prominent place in the Wearable tech – corporate arena and improvements in user-interface and underlying technology the health app / – provided some support for the trend, although widespread adoption has yet to breaks through occur. One interesting addition to the market was Sqwiggle, a new emerging – platform that offers an all-day online service to help remote business teams stay connected via text and instant video calling. The company closed a $1.1 million
1 Source: McKinsey Research 2013 2 Source: Sebastian Thrun from Udacity Nov 2013 3 Source: Capital IQ as of Dec 2013
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round of seed funding in August, raising about 30% through AngelList's newly launched Syndicates.FA
Contrary to our prediction, almost two months since Sony’s PS4 and Microsoft’s Xbox One were released; actual sales numbers show that the Sony console was favored over Microsoft’s. Both platforms performed well with the PS4 and Xbox One selling out almost immediately and each company selling over 1m consoles during the launch period. However, Sony came out on top in absolute numbers and the reviews have been more favorable as well. The PS4 appears to be more competitively priced, offering more games and it is ~47% smaller in size compared to the Xbox One.
We predicted that gamification would play an increasingly important role in business processes and become an essential tool for brand loyalty. This trend proved true primarily because of the always-on mobile age, the explosion of social media usage, the rise of big data, and the emergence of wearable computing. JetBlue introduced TrueBlue Badges, a rewards-based social game platform last summer. Also, InterContinental Hotels Group launched its “Win it in a Minute” gamification program with over 100,000 games played and more than 100m priority club points won during the first two weeks alone. With more than 120m people participating in gamification in the hospitality and travel industry in 2013, other sectors are also adopting gamification mechanics to improve customer engagement. M2 research predicts that by 2016 gamification programs designed entirely for workplace audiences will represent 62% of all activity in this market.
The IP arms race did intensify in 2013 as key players strived to dominate and protect their ecosystems. Data from the U.S. Patent & Trademark office shows that Google has accelerated its activity of patent filing to such a degree that in 2013 the company was winning 10 patents every day that the patent office was open and Google is expected to be awarded ~1,800 patents compared to 1,151 in 2012, representing a 56% increase. Google is on the top 10 patent recipients list for 2013 ahead of giants such as General Electric and Intel. Moreover, U.S. patent applications in 2013 for Apple increased 32% from the 2012 level. Samsung’s patent filings were three times more than Apple’s patent filings in 2013 and more importantly, Samsung is taking its patent business into the Patent Troll arena in 2014, which will further intensify its IP arms race.
We have all witnessed the countless mobile applications tracking everything from calories and weight loss to workouts and sleep cycles. We predicted a breakthrough for health applications and whereas the trend is strong, adoption remains gradual rather than exponential. A new entrant in 2013 with potential to revolutionize wearable health technology is AIRO Health, a product that covers all core pillars of personal health to improve self-awareness and help people change their personal habits. In addition, new augmented reality (AR) apps, aimed at enabling healthcare professionals to spend less time on administrative paperwork and more time with patients, gained a lot of traction. 72% of physicians now use tablets in their everyday routines according to a survey by Manhattan Research, and more importantly AR apps can also be installed on Google Glass, which is currently being tested as a standard tool in surgeries and bedside care. This year’s CES conference saw wearable and health applications as one of the main features of the show so anticipation remain high.
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GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
BREAKTHROUGH IN INDOOR LOCATION, COMMUNICATION AND MARKETING COMPANIES TO WATCH Indoor mobile location determination and the associated communication and marketing opportunity will break through in 2014. We believe that this technology and its associated applications and solutions will reshape how San Francisco, CA companies, institutions and organizations communicate with individuals indoors. Content will be specifically tailored to an individual’s geographical location and delivered to mobile devices in real time.
Indoor positioning technology will eventually give technological capabilities to
Cupertino, CA brick and mortar retailers rivaling those of online stores. Retailers will be able to track and analyze physical movements in stores with unprecedented detail. By intercepting Wi-Fi signals emitted by shoppers’ smartphones and triangulating on those signals, alongside other technical approaches, retailers will be able to estimate phone positions to within a few meters. In addition, Mountain View, CA stores will collect unique identifiers (MAC addresses) for each phone allowing retailers to build up behavioral information on return visitors.
One of the biggest players in the mobile location market, Apple recently added a feature into its devices and iOS7 mobile operating system called iBeacon, San Jose, CA which utilizes battery-friendly low-energy Bluetooth connections to transmit
messages or prompts directly to a smartphone or tablet.
San Diego, CA IBEACON TECHNOLOGY
Reston, VA
Novato, CA Source: Forbes
Customers will experience significant benefits from personalized location- based notification and actions, although privacy is still a challenge. For example, a customer may walk into a mall, approach a specific store and automatically receive relevant coupons and directions to items based on San Jose, CA preferences or past behavior.
Placecast, a mobile marketing company, recently launched a demand-side platform that connects mobile ad networks with location technology so that advertisers deliver campaigns based on location, as well as other user-specific Sunnyvalle, CA criteria like gender, age, interests, time of day, device type/operating system and weather. Google is also looking to participate in this trend by expanding its maps applications to include diagrams of the inside of airports, museums and
Espoo, Finland large stores in 17 countries, such as Hong Kong’s Tai Po Mega Mall.
In an interview with Business Report Don Dodge, a Google executive who has invested in several indoor location companies said that “indoor technology will be bigger than GPS or online maps – and it’s the biggest thing to hit retailing St. Louis, MO and couponing.” We couldn’t agree more with the market potential.
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EYE-TRACKING REACHES CONSUMER MASSES
COMPANIES TO WATCH New Human Machine Interface (HMI) technologies such as gesture, touch screens and eye-tracking / gaze control stand to revolutionize the way individuals interact with controls and commands. Whereas touch is well established and gestures firmly emerging, we expect that the first commercial mass market products for eye tracking will emerge in 2014.
Mountain View, CA Eye-tracking / gaze interaction solutions for individuals with communication disabilities and B2B marketing analytics have been broadly adopted within their
respective segments for almost a decade now. Nevertheless, what we are San Diego, CA finding particularly exciting today is the recent technology advancements that have dramatically lowered price points and decreased hardware size now enabling broad adoption in consumer applications. We have reached a point where mass consumer markets such as laptops, tablets, automotive and
gaming will fuel the next wave of eye-tracking adoption. Danderyd, Sweden 4 One forerunner in the eye tracking / gaze control space is Tobii . This past December, Tobii announced a partnership with SteelSeries to bring eye tracking to gamers. An initial prototype of EyeX playing Deus EX using Tobii’s SDK and APIs was released at CES this January and the potential for the technology is immense. The EyeX middleware enables developers to create
Canberra, Australia quick menus on top of the game screen at a touch of a button, and gamers can simply use their eyes to select icons. Using intuitive interface such as natural eye movements to control devices allows for faster in-game navigation and a more natural experience.
Umoove, an Israeli start-up, attracted a lot of attention by making its technology platform with a new SDK private beta available to applicants willing to test and Mulhouse, France build basic functionalities for any camera budget within the smartphone market.
We expect OEMs and other enterprises to test and develop new applications for this technology. The market potential of eye tracking is huge as shown by Samsung’s Smart Scroll, Eye Pause and the anticipated release of Galaxy S5’s eye scan security feature.
Herzliya, Israel GAZE AND EYE - TRACKING CONTROL SYS TEM
Jerusalem, Israel
Gyeonggi-do, South Korea
Source: Tobii.
4 Tobii Is a client of GP Bullhound Ltd.
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GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
SHOPPING GOES ‘CLICK & MORTAR’
COMPANIES TO WATCH We predict that online shopping will ‘blend back’ with offline shopping experiences in 2014 as the market defines optimized consumption experiences. Smartphones, tablets, personal computers, and brick-and-mortar stores are increasingly intersecting with payments, banking, social networking,
London, UK and commerce. Consequently, consumers seamlessly cross between online and offline channels in pursuit of value, convenience, validation and a buying experience personalized to their specific preferences.
Retailers have gained access to more and more channels for reaching
customers, but the main problem is that businesses manage retail channels London, UK separately. Many retailers do not currently take into account customers’ fluid movements from smartphones to tablets to PCs to social media and so on. At the same time, customers today desire a high level of cross-channel accessibility.
Amsterdam, Netherlands Business practices that are enabled by online-offline convergence are information driven, which means personal information is more valuable in a convergent business environment. In turn, a harmonized customer experience provides unparalleled commercial opportunity. Customers expect the same outstanding shopping experience whether the venue is a store, smartphone, website, or tablet and CIOs are at the center of the 'omnichannel’ retail revolution, according to CIO Magazine Editor in Chief, Maryfran Johnson5. Santa Monica, CA For example, UK department store Selfridges has made the first step in linking physical experience to digital efficiency with a major commitment to its “Click & Collect” campaign, which offers next day delivery in store. Meanwhile, for digital merchants, ability to supplement high touch experience is becoming increasingly important. E-retailers have realized how important it is to get the New York, NY product into the hands of the consumer and win over the human senses. Some of the companies that have gone from pure online to opening standalone stores are eyewear brand Warby Parker and men’s apparel seller Bonobos in New York, NY New York. Amazon’s failure to deliver packages on time for the holidays in 2013 could potentially lead the company to consider standalone stores in 2014.
C ONVERGENCE OF ONLINE AND OFFLINE S HOPPING EXPERIENCE San Francisco, CA
Minneapolis, MN
Source: Selfridges & Co, Bonobos London, UK We will see more and more retailers working towards crafting a single shopping experience across all customer touch points. Online-offline convergence enables merchants and financial institutions to differentiate themselves through the experiences and service levels as well as enabling consumers to build their own engagement experience.
5 Source: CIO Magazine
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SMART MACHINES MARKET TAKING-OFF
COMPANIES TO WATCH Through 2014, the smart machine era will blossom due to the exponential growth of highly intelligent personal assistants, advanced global industrial systems and autonomous vehicles. The way we live and interact with our surrounding objects or “things” is on the verge of a technological revolution in 2014. More than ever we are introduced with a new digitally connected object
Mountain View, CA that will become part of our ecosystem. The tech giants have already invested heavily in the next wave of intelligent machines. Google this year alone has acquired no fewer than nine companies specializing in robotic technology including Industrial Perception, Redwood
Palo Alto, CA Robotics, Meka, Boston Dynamics, Schaft, Holomni, plus the startups Bot & Dolly and Autofuss. Only three years after Google invented automated cars in California, other states in the US are rewriting the rules of the road to make way for driverless cars. Also, Amazon’s Jeff Bezos recently announced plans to deliver its goods via airborne drones, which suggests that real-world robots will potentially soon be a key part of Amazon’s long-term plans. Gyeonggi-do, South Korea We believe that environments such as manufacturing plants and warehouses are ripe for automation using robotic systems. For example, an order could be placed into an inventory system automatically once a customer’s payment is approved. Afterwards, robotic systems could find the inventory, pack the box, and load it onto a truck for delivery. Other areas ripe for automation include
Seoul, South Korea pharmacies and libraries. Robots are already highly used in drug manufacturing and packaging. Furthermore, automated storage and retrieval systems have been a big business for decades aimed at areas that have clear commercial potential.
Retailers are also attempting to tackle the home automation market by launching Internet-connected appliances. For example, the nest thermostat Cupertino, CA device learns your habits and creates a program to meet your energy needs in the most efficient way possible. Both Samsung and LG demonstrated “smart refrigerators” that had some promising features at CES this year. Models
Redmond, WA feature touch-screen displays that can serve as 21st century photo displays. In addition, touchscreens also allow full Web browsing and integrate with Google calendar, which allows a family to maintain schedules in sync.
NEW WAVE OF I NTELLIGENT MACHINES
Armonk, NY
Cambridge, MA
Source: Google, Microsoft Although customers are interested in the latest cross-channel integrated Boston, MA technologies, they are typically concerned about security, privacy and spam. Recent reports state that Internet connected TVs are coming under fire as it was discovered that manufacturers are spying and collecting data about viewing habits even after deactivating television’s privacy settings. Nonetheless, we expect that smart machines will continue to see increased adoption rates by both enterprises and individuals.
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THE BATTLE OF “WHERE” WILL UNFOLD
COMPANIES TO WATCH After Google won the war on “what” and Facebook won the war on “who,” there is now an open battle on who will own the map data landscape, the “where.” The map data industry is what drives an increasingly broad number of services from dating to m-commerce to mash-ups to self-driving cars. In September 2012, Apple started a complete overhaul of its maps software, completed a
top-down review, hired mysteriously named ‘ground truth managers,’ and Mountain View, CA acquired multiple navigation-based start-ups. As a result, 35 million iPhone owners in the US now use Apple Maps at least once a month, compared to just six million using Google Maps6.
Another recent contender in the maps war is Microsoft Bing, which arguably offers more accurate address locations, better directions and higher resolution 7 Baltimore, MA aerial images than Google Maps . Bing’s “bird’s eye,” is available for all locations across the U.S. and Western Europe thanks to the aerial images collected by Microsoft’s ambitious Global Ortho project. However, a main drawback for Bing at the moment is the lack of a standalone app for iOS and Android devices.
San Francisco, CA Google introduced Maps Engine Pro in October last year, designed to help small businesses create business strategies more easily by enabling map- based visualization of a plethora of information related to the functions of the company. This new product will allow companies to import onto a map data Mountain View, CA such as addresses, names, office locations and sales leads. This data can then
be analyzed and shared to improve and streamline business processes.
Nevertheless, Google isn’t the only company working on mapping out the
entire world with satellite imagery and detailed information. The Skybox team Redmond, WA also offers a professional mapping tool that records changes in daily global activity. For example, a company would turn to Skybox if it needs to monitor its fleet of ships and know when the ships dock or leave.
OpenStreetMap (OSM) is also making a name for itself, gaining favor among United Kingdom many apps and services that rely heavily on maps, such as Foursquare and Evernote. OSM uses open database license and all of the data is made
available to all users versus Google’s closed data system. In addition, if we compare speed of updates, OSM takes about two days. On the other hand, Google could take up to a year or more to have the data updated.
S KYBOX HIGH FIDELITY IMA GERY
Source: Skybox Indeed, many technology companies are now competing to provide the most innovative, end-to-end map solutions. Although Google was once the clear forerunner in the maps industry, the category leader position is no longer clear and the battle will continue to unfold in 2014.
6 Source: comScore (Nov 2013) 7 Source: Digital Trends (Oct 2013)
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SOCIAL MESSAGING MARKETS WILL CONSOLIDATE
COMPANIES TO WATCH After waves of hype and market fragmentation, we expect a consolidation trend in social messaging in 2014 with one or two consolidator groups emerging. According to industry rumors, SnapChat recently turned down a cash acquisition offers of $3bn and $4bn from Facebook and Google respectively. Santa Clara, CA We believe that the hype around mobile messaging apps will continue through 2014 as usage of over-the-top messaging services reaches an inflection point.
The mobile messaging app landscape continues to be highly geographically fragmented with different messaging services doing well in different global Venice, CA regions. Despite on-going localized variety, messaging veteran WhatsApp remains dominant in multiple global regions although several challengers exist including Viber, Line, Path, Facebook messenger, BBM and KaKaoTalk.
Ovum says it expects that the number of messages to be “transacted” on social
Gyeonggi-do, South Korea messaging apps like WhatsApp and Line will grow from 27.5 trillion in 2013 to 71.5 trillion by the end of 20148. This growth represents more than two and a half times in messaging volumes within only one year. As a result, we expect new companies to add messaging capabilities and the established platforms to
Waterloo, Canada acquire point vendors of scale.
Larger social messaging players have successfully started generating revenues off their large user-bases. For example, Line generates revenue via in-game purchases and sticker sales, which contributed to revenues of more
Seoul, South Korea than $132 million in Q2 2013. Also, KakaoTalk is a pioneer in mobile chat services and played a significant contribution in parent company Kakao’s grossed revenues of more than US $300 million in the first half of 20139. Most of the bigger players have moved beyond the stage of accumulating a large user base and are now focused on growing revenues. San Francisco, CA Whereas the major platforms are likely to attract further attention, we do expect that another wave of venture capital will continue to support smaller and emerging players for a while longer. A new potential buyer group could be carriers or service providers that are increasingly open to working with social Los Angeles, CA messaging players due to the “exponential” growth of OTT services, the corresponding decline in their own traditional SMS messaging revenues and the need for them to seek replacement revenues.
Limassol, Cyprus M OBILE MESSAGING SCRE ENSHOTS
Menlo Park, CA
San Francisco, CA Source: Whisper, Google, Snapchat, WhatsApp The mobile messaging market is ripe for consolidation as the larger technology enterprises seek to bolster existing platforms and the independent, smaller players pursue stronger revenue models. New York, NY
8 Source: Ovum Ltd. Consultancy (2013) 9 Source: Kakao Corporation (2013)
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ADVANCED DATA ANALYTICS CLIMBS TO TOP OF CORPORATE AGENDA COMPANIES TO WATCH
Data Analytics is entering a new era where technology is capable of supporting data-driven businesses in real-time. Enterprise adoption of enabling technologies and in-memory computing is currently limited. However, organizations across industries are beginning to recognize the opportunity to London, UK combine advanced analytics with new sources of external data to extract valuable insights. We expect this trend to pick up pace in 2014.
The Big Data software market is forecast to grow at a 56% CAGR (2011-2017)
Paris, France to reach $7.4bn by 2017 and Predictive Analytics and Visualization are the top two emerging sub-segments10. We expect Big Data Analytics to remain one of the hottest sectors globally for VC and growth capital investment. Investment activity has grown over 200% year-over-year with $1.4bn of capital deployed into the sector in the last twelve months alone11. Karlsruhe, Germany Although this technology revolution remains in its early stages, we believe that Big Data Analytics has the potential to unleash a wave of productivity and efficiency gains across virtually all industries. Without a doubt, this technology will have a significant impact on the economy and society as a whole. Reading, UK Ultimately, we believe that the last 50 years of history and more recently the emergence of the Big Data phenomenon, has been a prelude to the era that the world is now entering. Big Data Analytics will start to emerge as a critical part of the decision making process for business leaders across all sectors of Dortmund, Germany the global economy and hence reach the top of corporate agendas.
Drilling into the software segment of the Big Data market, we expect that applications (analytical and transactional), as opposed to infrastructure software and databases, will see the highest levels of growth. While Eidinburgh, UK applications currently represent 44% of the Big Data software segment, Wikibon expects this share to increase to 60%+ by 2017, growing at a 56% CAGR (2011-2017) to $7.4bn in 201712.
13 A MINUTE IN THE LIFE O F THE INTERNET
Milan, Italy
Zwijnaarde, Belgium
Source: GP Bullhound
London, UK
10 Source: IDC (2013) 11 Source: Capital IQ, GP Bullhound 12 Source: Kelly, J, et al “Big Data Market Size and Vendor Revenues” Wikibon (Feb 2013) 13 Source: GP Bullhound Big Data Analytics Report (Nov 2013)
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MARKETPLACES WILL GO VERTICAL
COMPANIES TO WATCH Today, the e-commerce market continues to grow and is sufficiently large that multiple vertical marketplaces exist with no overarching, clear winner. In 2014, category leaders will be vertical marketplaces as consumers will reap the benefits due to the highly specialized product offerings.
In addition to regular e-commerce, marketplace and auction sites are also Brooklyn, NY following this trend. Leading vertical marketplaces such as Homeaway
(vacation rentals), Etsy (niche artisan goods), OpenTable (restaurant reservations), Glyde, Threadflip, Reverb, and several others are attracting
Austin, TX customers with their unique selections, clean user interfaces, community elements, and symmetrical buyer-seller relationships. Navin Chaddha, managing director at Mayfield Fund, recently explored these marketplace features in an article for TechCrunch. According to Navin, “the e- commerce market is large enough to support vertical marketplaces that super-
serve consumer needs and are defying the ‘winner take all’ theory that eBay or San Francisco, CA Amazon will be the only game in town.”14 He further categorized marketplaces under the acronym “ACCESS: accessibility, curation, community, efficient commerce, simplicity, and symmetry. 15 ” These are the reason that niche vertical marketplaces are able to steal some of the pie from bigger players such as eBay.
Palo Alto, CA High commission costs and eBay’s horizontal system have led a lot of online eBay shops to transform into their own ventures. For example, Reverbs wanted better search options, more music-specific categories, a cleaner layout, and other features catering to music lovers. As a result, the company chose to build
its own platform and to not rely on eBay solely. Chicago, IL Reverb’s user experience is superior compared to the overly cluttered sponsored advertisements on eBay action website. Furthermore, highly curated content with category lists like “Japanese Vintage Guitar” or “Weird Gear” that you could never search for on eBay are some of the elements that
San Francisco, CA have contributed to a 3-4x month over month growth in transaction volume and revenues for Reverb.
Even though Etsy had roughly nine years of slow growth it more than doubled its merchant sales numbers from early 2012 to 2013 with total membership of 22 million. The company acquired the app Mixel to boost its mobile sales and help release its Android and iPad app. The highly personalize content of Etsy’s Paris, France marketplace of handmade goods is one of the key growth factors for the company.
R E V E R B U SER INTERFACE Paris, France
San Francisco, CA
Source: Reverb
14 Source: Mayfield Fund 15 Source: Tech Crunch Interview
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GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
CLOUD STORAGE PLATFORMS GO MAINSTREAM
COMPANIES TO WATCH Once highly debated over security, performance and cost, cloud storage platforms are firmly here to stay and we expect a big adoption year in 2014. A recent TwinStrata report found that 8% of large enterprises and 85% of SMBs use or plan to use cloud storage. The survey also found that although London, UK storage density is increasing 20% each year, demand for storage capacity is
increasing 40% to 60% each year.16
The number of cloud veterans is on the rise, as well, with 37% saying that
San Francisco, CA they've been using cloud services for three or more years, up from 27% last year.15 Cloud storage services allow consumers access to a kind of network storage, hosting files remotely so that you can get access to them at any time from a number of computers and devices.
Cloud storage platforms are not very different in functionality, which makes
San Francisco, CA pricing and free space the main drivers of user adoptions. If you simply want to take advantage of as many free accounts on various platforms as possible, there are now also services such as Otixo, which offer a single-stop platform for managing multiple cloud storage accounts.
London, UK A new cloud subscription service, Space Monkey, launched on Kickstarter in early December and allows you to add large file sizes such as movies onto the cloud to be accessed as long as you can get online. The company charges a small amount of $10 per month for 1TB of storage on Space Monkey’s cloud.
San Francisco, CA Due to its included hardware, one of the additional perks that Space Monkey provides is data transfer time is ~15-60x faster than Dropbox or iCloud.
C L O U D S T O R A G E D ENSITIES AND C APACITY
Storage Densities Storage Capacity Demands
Boston, MA are growing each year by are growing each year by
Surrey, UK 40-60% 20%
London, UK Enabling organizations to fit more Outpacing density growth capacity in less space
Source: TwinStrata We are seeing a lot of new activity in the space. For example, cloud storage Midvale, UT platform Box recently raised $100 million in new venture capital funding at around a $2 billion valuation. 17 Even though security and/or loss of control of the data still remains the biggest inhibitor to mass adoption, it’s clear that organizations require immediate solutions to increasing problems such as Boulder, CO disaster recovery requirements and rapidly escalating data growth pushing organizations to implement cloud storage earlier than expected.
16 Source: TwinStrata (2013) 17 Source: Forbes
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GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
CURVED SMARTPHONES WILL FLOP IN 2014
COMPANIES TO WATCH Honestly, who really needs a curved mobile phone? The CES show floor last week was filled with curved screens ranging from smart-phones to +100" flat panel TV displays. Whereas there are arguments
why a large curved screen can enhance peripheral vision for certain Gyeonggi-do, South Korea applications (gaming in particular), curved mobile phone seem to make little sense to us.
It’s a well-known fact that the screen industry is struggling with innovation since we’re already flooded with affordable, large flat panel high definition screens. 3D was a big theme last year and now the big thing is the curvature of the screen. Seoul, South Korea Both Samsung and LG showcased their curved smartphones and have made arguments around ergonomics, comfort, IMAX-like video experience, "pocket- ability" and other rather wage consumer benefits. Interestingly, the two
Corning, NY producers have curved the phones in different directions making us even more confused…
None of the new handsets have been officially priced yet, but expectations are that the curved screens will ship at a meaningful premium. Tokyo, Japan We think it’s a fad that may well be gone by the time we write this report next year.
This may also indicates the bubbly environment out there, ending on a word of Espoo, Finland caution into 2014…
LG A N D S AMSUNG CURVED SMARTP HONES
Palo Alto, CA
Osaka, Japan
Source: LG, Samsung
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