GP BULLHOUND TECHNOLOGY PREDICTIONS · PDF fileGP BULLHOUND TECHNOLOGY PREDICTIONS 2014 ......

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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

CHRISTIAN LAGERLING [email protected]

San Francisco: +1 415 986 0196

PER ROMAN [email protected] Stockholm: +46 8 545 074 03

STIRLING ADELHELM [email protected]


LILJANA XHEKA [email protected]


GP BULLHOUND – TECHNOLOGY PREDICTIONS 2014

0

GP Bullhound LLP

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 LLP

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.

A year ago, we predicted that collaborative consumption would become the new

economy and 2013 supported this trend. We saw a breakthrough in collaborative

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

Shapeways, later sold through CMS online commerce Shopify using online

payment solution Braintree, and produced on demand by Premier Source. All the

steps in the development of the iPhone tripod Glif were managed through

collaborative consumption platforms.

We also predicted that education disruption would accelerate in 2013, which did

occur. The Massive Open Online Courses (MOOC) addressable community was

estimated to reach 2bn1 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

MOOC companies. While online education adoption accelerated, one drawback

has been course completion rates, which currently average at less than 10%2.

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.

snip.it, Scoop.it, Storify.com), enterprise level curation tools (e.g. Curata,

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.

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

applications. In addition, Apple’s acquisition of PrimeSense in November

highlighted the industry shift in human-computer-interactions to gesture and touch

controls.

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

22 companies for $2.2bn3. Google’s largest transaction was the mapping start-up

Waze, which cost $966m followed by other acquisitions such as

SurveyMonkey.com, LendingClub Corporation, Makani Power and Wavii, Inc. The

acquisition of PrimeSense by Apple and Onavo Mobile by Facebook also

supported our prediction that the technology goliaths would acquire companies in

a number of high growth areas such as smart mobility, wireless, cloud computing,

social networking, business intelligence and e-commerce.

We predicted that video calling would have a more prominent place in the

corporate arena and improvements in user-interface and underlying technology

provided some support for the trend, although widespread adoption has yet to

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

Collaborative consumption becomes the new economy

Disruption of education to accelerate

The rise of curated and personalized content

Gesture and touch controls emerge as standards

Consolidation to continue, led by big four

Video calling goes corporate

Microsoft to dominate next game console cycle

Gamification – an explosion of innovation

IP arms race intensifies in 2013

Wearable tech – the health app

breaks through

/–

–

–

/–

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GP Bullhound LLP

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 LLP

BREAKTHROUGH IN INDOOR LOCATION, COMMUNICATION AND MARKETING

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

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

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,

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,

which utilizes battery-friendly low-energy Bluetooth connections to transmit

messages or prompts directly to a smartphone or tablet.

I B E A C O N T E C H N O L O G Y

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

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

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

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

and couponing.” We couldn’t agree more with the market potential.

COMPANIES TO WATCH

San Francisco, CA

Cupertino, CA

Mountain View, CA

San Jose, CA

San Diego, CA

Reston, VA

Novato, CA

San Jose, CA

Sunnyvalle, CA

Espoo, Finland

St. Louis, MO


4

GP Bullhound LLP

EYE-TRACKING REACHES CONSUMER MASSES

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.

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

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.

One forerunner in the eye tracking / gaze control space is Tobii4. 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

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

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.

G A Z E A N D E Y E - T R A C K I N G C O N T R O L S Y S T E M

Source: Tobii.

4 Tobii Is a client of GP Bullhound Ltd.

COMPANIES TO WATCH

Mountain View, CA

San Diego, CA

Danderyd, Sweden

Canberra, Australia

Mulhouse, France

Herzliya, Israel

Jerusalem, Israel

Gyeonggi-do, South Korea


5

GP Bullhound LLP

SHOPPING GOES ‘CLICK & MORTAR’

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,

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

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.

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.

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

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. 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 O N V E R G E N C E O F O N L I N E A N D O F F L I N E S H O P P I N G E X P E R I E N C E

Source: Selfridges & Co, Bonobos

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

COMPANIES TO WATCH

London, UK

London, UK

Amsterdam, Netherlands

Santa Monica, CA

New York, NY

New York, NY

San Francisco, CA

Minneapolis, MN

London, UK


6

GP Bullhound LLP

SMART MACHINES MARKET TAKING-OFF

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

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

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.

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

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

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

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.

N E W W A V E O F I N T E L L I G E N T M A C H I N E S

Source: Google, Microsoft

Although customers are interested in the latest cross-channel integrated

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.

COMPANIES TO WATCH

Mountain View, CA

Palo Alto, CA


Seoul, South Korea

Cupertino, CA

Redmond, WA

Armonk, NY

Cambridge, MA

Boston, MA


7

GP Bullhound LLP

THE BATTLE OF “WHERE” WILL UNFOLD

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

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

aerial images than Google Maps7. 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.

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

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

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

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 K Y B O X H I G H F I D E L I T Y I M A G E R Y

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)

COMPANIES TO WATCH

Mountain View, CA

Baltimore, MA

San Francisco, CA

Mountain View, CA

Redmond, WA

United Kingdom


8

GP Bullhound LLP

SOCIAL MESSAGING MARKETS WILL CONSOLIDATE

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.

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

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

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

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

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.

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

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.

MO B I L E M E S S A G I N G S C R E E N S H O T S

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.

8 Source: Ovum Ltd. Consultancy (2013) 9 Source: Kakao Corporation (2013)

COMPANIES TO WATCH

Santa Clara, CA

Venice, CA


Waterloo, Canada

Seoul, South Korea

San Francisco, CA

Los Angeles, CA

Limassol, Cyprus

Menlo Park, CA

San Francisco, CA

New York, NY


9

GP Bullhound LLP

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


10

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

(vacation rentals), Etsy (niche artisan goods), OpenTable (restaurant

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


11

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


12

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


Seoul, South Korea

Corning, NY

Tokyo, Japan

Espoo, Finland

Palo Alto, CA

Osaka, Japan


13

GP Bullhound LLP

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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.


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GP Bullhound LLP

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