GP BULLHOUND TECHNOLOGY PREDICTIONS 2014 For the seventh year running, GP Bullhound is publishing its Technology Predictions for the year. 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 the Nasdaq soared over 30%. Nonetheless, we predict a continued growing, dynamic technology sector in 2014 led by new innovation. Our predictions range from indoor mobile location technology that look set to fundamentally change how individuals communicate with corporations and institutions indoors, to eye tracking human machine interface technology reaching the mass markets. We’re also excited to see how consumers will pursue cross-channel purchasing decisions due to the intersection of retail and online shopping. Smart machines will see increased adoption, because of the continued growth of highly intelligent personal assistants, advanced global industrial systems and autonomous vehicles. Technology companies in the map data market sector are also expected to see a big 2014 as the battle for the number one position unfolds. Other trends include the mobile messaging app landscape consolidating, data analytics experiencing increased adoption by businesses and individuals alike and marketplaces becoming increasingly vertical with many new winners emerging. Cloud technology is also firmly here to stay with user adoption growing rapidly due to pricing and free space. 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 and entrepreneurs that are able to navigate around and distinguish between pockets of hype and real opportunities. INDEPENDENT TECHNOLOGY RESEARCH TECHNOLOGY JANUARY 2014 2014 PREDICTIONS “BREAKTHROUGH IN INDOOR LOCATION, COMMUNICATION AND MARKETING” “EYE-TRACKING REACHES CONSUMER MASSES” “SHOPPING GOES ‘CLICK & MORTAR’” “SMART MACHINES MARKET TAKING-OFF” “THE BATTLE OF “WHERE“ WILL UNFOLD” “SOCIAL MESSAGING MARKETS WILL CONSOLIDATE” “ADVANCED DATA ANALYTICS CLIMBS TO TOP OF CORPORATE AGENDA” “MARKETPLACES WILL GO VERTICAL” “CLOUD STORAGE PLATFORMS GO MAINSTREAM” “CURVED SMARTPHONES WILL FLOP IN 2014” 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 CHRISTIAN LAGERLING [email protected]San Francisco: +1 415 986 0196 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
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GP BULLHOUND TECHNOLOGY PREDICTIONS 2014
For the seventh year running, GP Bullhound is publishing its Technology
Predictions for the year.
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
the Nasdaq soared over 30%. Nonetheless, we predict a continued growing,
dynamic technology sector in 2014 led by new innovation.
Our predictions range from indoor mobile location technology that look set to
fundamentally change how individuals communicate with corporations and
institutions indoors, to eye tracking human machine interface technology
reaching the mass markets.
We’re also excited to see how consumers will pursue cross-channel
purchasing decisions due to the intersection of retail and online shopping.
Smart machines will see increased adoption, because of the continued growth
of highly intelligent personal assistants, advanced global industrial systems
and autonomous vehicles. Technology companies in the map data market
sector are also expected to see a big 2014 as the battle for the number one
position unfolds.
Other trends include the mobile messaging app landscape consolidating, data
analytics experiencing increased adoption by businesses and individuals alike
and marketplaces becoming increasingly vertical with many new winners
emerging. Cloud technology is also firmly here to stay with user adoption
growing rapidly due to pricing and free space.
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
and entrepreneurs that are able to navigate around and distinguish between
pockets of hype and real opportunities.
INDEPENDENT TECHNOLOGY RESEARCH TECHNOLOGY JANUARY 2014
2014 PREDICTIONS
“BREAKTHROUGH IN INDOOR LOCATION, COMMUNICATION
AND MARKETING”
“EYE-TRACKING REACHES CONSUMER MASSES”
“SHOPPING GOES ‘CLICK &
MORTAR’”
“SMART MACHINES MARKET TAKING-OFF”
“THE BATTLE OF “WHERE“
WILL UNFOLD”
“SOCIAL MESSAGING MARKETS WILL CONSOLIDATE”
“ADVANCED DATA
ANALYTICS CLIMBS TO TOP OF CORPORATE AGENDA”
“MARKETPLACES WILL GO
VERTICAL”
“CLOUD STORAGE PLATFORMS GO MAINSTREAM”
“CURVED SMARTPHONES
WILL FLOP IN 2014”
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
ADVANCED DATA ANALYTICS CLIMBS TO TOP OF CORPORATE AGENDA
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
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)
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
.
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.
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
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
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
.
A M I N U T E I N T H E L I F E O F T H E I N T E R N E T13
Source: GP Bullhound
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)
COMPANIES TO WATCH
London, UK
Paris, France
Karlsruhe, Germany
Reading, UK
Dortmund, Germany
Eidinburgh, UK
Milan, Italy
Zwijnaarde, Belgium
London, UK
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
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GP Bullhound LLP
MARKETPLACES WILL GO VERTICAL
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
following this trend. Leading vertical marketplaces such as Homeaway
reservations), Glyde, Threadflip, Reverb, and several others are attracting
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
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.
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.
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
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
marketplace of handmade goods is one of the key growth factors for the
company.
R E V E R B U S E R I N T E R F A C E
Source: Reverb
14 Source: Mayfield Fund 15 Source: Tech Crunch Interview
COMPANIES TO WATCH
Brooklyn, NY
Austin, TX
San Francisco, CA
Palo Alto, CA
Chicago, IL
San Francisco, CA
Paris, France
Paris, France
San Francisco, CA
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
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GP Bullhound LLP
CLOUD STORAGE PLATFORMS GO MAINSTREAM
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
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
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
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.
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.
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 E N S I T I E S A N D C A P A C I T Y
Source: TwinStrata
We are seeing a lot of new activity in the space. For example, cloud storage
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
disaster recovery requirements and rapidly escalating data growth pushing
organizations to implement cloud storage earlier than expected.
16 Source: TwinStrata (2013) 17 Source: Forbes
COMPANIES TO WATCH
London, UK
San Francisco, CA
San Francisco, CA
London, UK
San Francisco, CA
Boston, MA
Surrey, UK
London, UK
Midvale, UT
Boulder, CO
20%
Storage Densities are growing each year by
Enabling organizations to fit more capacity in less space
40-60%
Outpacing density growth
Storage Capacity Demands are growing each year by
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
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GP Bullhound LLP
CURVED SMARTPHONES WILL FLOP IN 2014
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
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.
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
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.
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
caution into 2014…
LG A N D S A M S U N G C U R V E D S M A R T P H O N E S
Source: LG, Samsung
COMPANIES TO WATCH
Gyeonggi-do, South Korea
Seoul, South Korea
Corning, NY
Tokyo, Japan
Espoo, Finland
Palo Alto, CA
Osaka, Japan
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
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GP Bullhound LLP
DISCLAIMER
No information set out or referred to in this research report shall form the basis of any contract. The issue of this research report shall not be deemed to be any form of binding offer or commitment on the part of GP Bullhound LLP. This research report is provided for use by the intended recipient for information purposes only. It is prepared on the basis that the recipients are sophisticated investors with a high degree of financial sophistication and knowledge. This research report and any of its information is not intended for use by private or retail investors in the UK or any other jurisdiction. cYou, as the recipient of this research report, acknowledge and agree that no person has nor is held out as having any authority to give any statement, warranty, representation, or undertaking on behalf of GP Bullhound LLP in connection with the contents of this research report. Although the information
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addition, GP Bullhound LLP, the members, directors, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this research report and may from time-to-time add or dispose of such interests. GP Bullhound LLP is a limited liability partnership registered in England and Wales, registered number OC352636, and is authorised and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Any reference to a partner in relation to GP Bullhound LLP is to a member of GP Bullhound LLP or an employee with equivalent standing and qualifications. A list of the members of GP Bullhound LLP is available for inspection at its registered office, 52 Jermyn Street, London SW1Y 6LX. In the last twelve months, GP Bullhound LLP is or has been engaged as an advisor to and received compensation from the following companies mentioned in this report: Tobii, IMSI/Design and SteelSeries. For US Persons: This research report is distributed to U.S. persons by GP Bullhound Inc. a broker-dealer registered with the SEC and a member of the FINRA. GP Bullhound Inc. is an affiliate of GP Bullhound LLP. This research report does not provide personalized advice or recommendations of any kind. All investments bear certain material risks that should be considered in consultation with an investors financial, legal and tax advisors. Christian Lagerling, Stirling Adelhelm, and Liljana Xheka are employees of GP Bullhound Inc. that engages in private placement and mergers and acquisitions advisory activities with clients and counterparties in the Technology and CleanTech sectors.
GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014
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