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Posts Tagged ‘convergence’

NFC mobile payments headed for $100B by 2016

Thursday, October 18th, 2012

ABI ResearchABI Research forecasts that the total value spend of NFC (near field communication) mobile payments will rise from $4 billion in 2012 to $191 billion in 2017, breaking the $100 billion mark in 2016.

Mobile payments and more importantly the convergence between payment types – proximity, P2P and online – stored on a single NFC handset will be the initial trigger driving market convergence across a host of other markets, including ticketing, retail, loyalty, and access control.

Market convergence is not quite ready for mass commercial roll out, but the potential value add that NFC brings has been identified. Smart card and IC vendors, device OEMs, MNOs, partnering service providers, and payments networks are all set to benefit should convergence prove successful.

Market convergence two years away

Research analyst Phil Sealy says, “Market convergence is at least two years away from reality. At ABI Research, we believe transportation and ticketing will be the first market to benefit from convergence, with 26% of all NFC handsets forecast to house a contactless ticketing application in 2017.

“Transport authorities will have the ability to offer additional added value services, including route planners, delay bulletins, time tables, as well as retail and loyalty, or advertising applications offering own brand or partnering/local business a platform to offer additional solutions to generate new revenue streams.”

Practice director John Devlin added, “There remains a number of barriers and limiting factors that need addressing before convergence success.

“The business models have not yet been clearly identified and proven with no real-world case studies to demonstrate the potential returns. Current mobile network operator (MNO) pricing strategies makes market entrance and investment difficult for potential partners.

“This is demonstrated by MNOs holding back from large-scale investment in NFC smartphones. Also Telefonica O2’s mobile wallet and Barclays PingIt have not included NFC functionality at launch. Although NFC is in their roadmaps, initial convergence is based upon the use of other technologies.”

Convergence shaping ISP industry, broadband expansion driving growth

Thursday, August 23rd, 2012

The move toward ubiquitous internet access and the exponential growth of internet traffic has benefited theInternet Service Providers industry in the past five years.

“Regulatory overhaul in 2012 will necessitate government-subsidized network expansion and increase the number of US broadband connections, driving revenue growth,” says IBISWorld industry analyst Kevin Boyland.

From 2007 to 2012, IBISWorld estimates industry revenue will grow at a 3.4% annualized rate to $79.3 billion, with a push toward broadband expansion in rural markets boosting industry revenue 7.6% in 2012.

Business customers have emerged as the most lucrative growth market in the Internet Service Providers industry.

“Businesses yield high profit margins for ISPs, with dedicated internet access services contributing about a quarter of all industry revenue,” adds Boyland. The increasing usage of cloud computing (which involves accessing data and software through the internet) is boosting demand for high-speed access services.

ISPs increasing value-added services offered

“Additionally, ISPs are increasing their array of value-added services, acquiring cloud and infrastructure consulting firms to profit further from the business market. As demand for value-added business services continues to increase, industry revenue is forecast to grow over the next five years.

The Internet Service Providers industry has a moderate level of market share concentration and is characterized by a dominant group of larger players and numerous small players. Concentration increased over the past five years because of merger and acquisition activity.

Major player Century Link’s acquisition of Qwest Communications more than doubled its market share in 2011. In an effort to increase subscriber numbers and to expand business service offerings, major firms like AT&T and Comcast have acquired rural ISPs and cloud infrastructure providers.

Over the next five years, industry consolidation will continue as ISPs increase subscriber bases and network scope. As the market converges, distinct technological systems are evolving toward a set of data services that are bundled together and marketed as one product.

Packages bundle TV, voice, Internet, mobile

Major operators now offer packages that bundle TV, voice, internet and mobile services together. Smaller ISPs that are unable to compete on price with larger operators’ economies of scope will find niche markets, such as small businesses, or leave the industry.

Consumer sentiment about the internet as a necessity rather than a luxury will pressure industry operators in the future; service prices and network management practices will fall under increasing scrutiny. As internet traffic continues to increase, ISPs will exercise more control over their networks and will likely restructure their pricing to a usage-based model despite opposition from consumers.

Issues like net neutrality (i.e. treating all internet traffic the same) may lead the FCC to assert more regulatory authority over the industry, pressuring profitability. For more information, visit IBISWorld’s Internet Service Providers in the US industry report page.

Tech M&A falls in Q2, but five trends still drive deals

Friday, August 17th, 2012

Ernst & YoungResurgent macroeconomic uncertainty worldwide caught up with the technology industry, which had outpaced merger and acquisition deal value for all industries in the first quarter of 2012 but fell behind in the second quarter.

Deal value slowed to $33.4 billion of aggregate deal value in the second quarter of 2012, down 43 percent year-over-year (YOY), according to Ernst & Young’s Global technology M&A update: April-June 2012.

Nevertheless, a steady volume of deals (728 in 2Q12 versus 729 in 2Q11) reflected the ongoing drive of five disruptive technology megatrends: smart mobility, cloud computing, social networking, big data and cross-industry blur.

Sequentially, 2Q12 aggregate deal value increased 33% from US$25.1b in 1Q12; however, as the report highlights the first quarter is historically the lowest-value quarter for technology deals.

Cross-boarder deals see sharp increase

Cross-border (CB) technology deals showed a sharp increase in 2Q12. CB aggregate deal value surged 58% sequentially to US$17.4b and represented 52% of all global disclosed value for the quarter (compared with 44% in both 1Q12 and 4Q11).

Europe, Japan and Canada all saw substantial growth in CB transaction value, while US CB deal value declined 54% sequentially, to US$4.1b in 2Q12.

Joe Steger, Global Technology Industry Transaction Advisory Services Leader at Ernst & Young, says: “There were several surprises in the second quarter, with US buyers ‘sitting out’ a sequential increase in transaction value that was driven out of Europe, Canada and Japan.

“But despite macroeconomic uncertainty that just won’t go away, we continue to see spreading strength from the disruptive megatrends of ‘social mobile cloud’ and big data analytics, which drive strategic transactions and enable innovation throughout the global economy.”

Deals shed light on transformation

Many 2Q12 deals involved smart mobility cloud computing, software as a service (SaaS), social networking, big data analytics, and a growing sense of blur, with convergence of these technologies an increasing factor in global technology M&A.

Cross-sector and cross-industry deals underscored the way in which these five long-term megatrends are generating disruptive innovation in the technology sector while also leading to technology-enabled innovation in other industries.

The cloud/SaaS megatrend drove the highest volume and value of global technology transactions for the second consecutive quarter.

There were four cloud-driven deals among the quarter’s top 10, including the purchase of a SaaS company that also hosts a web-based B2B business exchange, two deals in which companies outside of the technology sector are buying data centers to offer cloud services and a purchase of a cloud hardware and software company.

In addition, a handful of deals pointed to a blurring between cloud data centers and high-performance computing, typically the domain of research scientists and defense agencies.

Advertising and marketing technology targeted by diverse buyers

All five disruptive megatrends came together to drive dozens of advertising and marketing technology transactions in 2Q12, including several by the largest global advertising firms.

Big data analytics that understands customers’ and prospects’ social networking activity was key to many of these deals. Other targeted technologies included marketing automation, SaaS and tools for optimizing mobile and online campaigns.

Social M&A value driven up by enterprise, patent-related deals

The integration of social functions into enterprise software continued to grow in 2Q12 as a deal-driving trend, with a related transaction appearing for the first time among the quarterly top 10 deals.

Patent-related deals involving diverse technologies topped US$2b, with social networking representing more than a quarter of the related disclosed value deals.

Strategic deal-making will continue, despite economic headwinds

“Disruptive technology megatrends continue to fuel strategic deal-making around the world, in spite of a difficult economic context,” says Steger.

“In the second quarter, we even saw new sub-trends emerge to drive deals, such as alternative input technologies like speech and handwriting recognition, in addition to the ‘social-mobile-cloud’ and big data analytics deal drivers.

While the current macroeconomic challenges may dampen the appetite for large, transformative deals in the near term, expect to continue to see smaller, strategic deals — especially in the technology megatrends. “The long-term outlook for global technology M&A remains strong,” Steger concludes.

Five megatrends driving tech M&A as overall deal volume falls

Tuesday, May 15th, 2012

Ernst & YoungTechnology merger & acquisition activity slowed in the first quarter of 2012, but not as much as in other industries, according to Ernst & Young’s Global technology M&A update: JanuaryMarch 2012 report.

The report says five megatrends – smart mobility, cloud computing, social networking, big data analytics and convergence maintain a positive outlook for tech M&A.

The biggest increases in tech M&A deals, the report says, came from online video technology and SaaS companies. Deal volume was also strong in mobile apps, healthcare IT, advertising/marketing tech, patents, social networking and big data analytics.

Aggregate deal volume fell

Aggregate deal value of global technology mergers and acquisitions (M&A) fell 12% year-on-year (YOY) to US$25.1b in the first quarter of 2012.

This was only half the value decline of M&A in all industries, as ongoing economic uncertainty continues to take its toll on global deal-making.

Private equity (PE) deal values for technology, meanwhile, climbed 171% YOY in 1Q12, despite falling significantly in all industries, according to Ernst & Young’s Global technology M&A update: JanuaryMarch 2012 report.

The total volume of announced 1Q12 deals was 756 (counting both disclosed- and non-disclosed-value deals), up just 1% from 748 in 1Q11.

Growth flattens

Quarterly deal volume appears to have reached a plateau after two years of strong growth in 2009 and 2010 — for the last five quarters the number of deals has ranged from a low of 722 to a high of 756.

Joe Steger, Global Technology Industry Transaction Advisory Services Leader at Ernst & Young, says: “Even though technology M&A activity is down YOY, it’s doing a lot better than M&A in other industries.

“During the first quarter of 2012, the same disruptive megatrends that have been fueling global technology M&A since 2009 are now sustaining technology M&A against the continuing macroeconomic pressures that are holding back other industries.

“And the long-term outlook for technology M&A remains positive because those megatrends represent the driving force of disruptive innovation that is revitalizing and reshaping the technology industry.”

Five megatrends continue to drive technology deal-making

Steger was alluding to five long-term “megatrends” that are generating disruptive innovation in technology and leading to technology-enabled innovation in other industries.

They are smart mobility, cloud computing, social networking, “big data” analytics and a growing sense of “blur” and convergence, as technology sectors come together and the technology industry enters other industries as enabling innovation. In addition, all five megatrends are driving increased information security requirements.

Online video, SaaS deals surge

Though the 1Q12 technology report details many influential deal-driving factors, the biggest increases in transaction volume came from deals targeting online video technology and SaaS companies. These also generated the largest deals of 1Q12 by dollar value.

These were a US$5b transaction targeting technology that can relay video to mobile devices and aUS$2b deal targeting a provider of workforce management SaaS. In China, meanwhile, the country’s largest video website announced a US$1.1b agreement to acquire its chief rival.

At the same time, a multitude of smaller transactions demonstrated that both online video and SaaS deal-driving trends have widespread strength, according to the report.

Similar deal volume strength was seen in mobile applications, health care information technology, advertising/ marketing technologies, patents, social networking and “big data” analytics deals.

Patents, social networking deals change character

Ernst & Young’s Global technology M&A update: JanuaryMarch 2012 report notes that the increasing importance of intellectual property (IP) caused transactions targeting patents to grow in 1Q12.

Social networking transactions also seemed to change in character, as post-IPO companies appeared to focus on acquiring strategic mobile technologies instead of talent acquisitions or geographic expansion, as they previously did.

Ongoing rise of PE changes M&A landscape

Despite a typical fourth-to-first-quarter dip, the report shows that the YOY value of disclosed PE deals soared 171% to US$5.8b, mostly in three big-ticket deals.

This continues a three-year PE growth trend. The 1Q12 report describes how the increasing reliance on technology of companies throughout the economy, combined with the developing maturity of technology companies themselves, is attracting more PE companies to technology transactions.

Increasing PE activity is changing the global technology M&A landscape by increasing the competition for deals and by providing better exit opportunities for corporate divestiture of non-core assets, according to
the report.

Social media trends: sharing, influence, convergence (infographic)

Thursday, February 16th, 2012

By Allan Maurer

Social media trends are evolving as I write. Convergence, the “cult of influence,” social television, and what seems like a new major player in the social media field every month, among them.

I just joined Pinterest, latest of the hot social startups out there (so, we hear, did Facebook founder/CEO Mark Zuckerberg. He’s been active on the new site for about seven weeks. He liked a colorful photo of lemons and his three pins include the movies “Bridesmaids” and “Moneyball.”

I found Pinterest useful right away, perhaps because a handful of my Facebook friends who already share numerous interests with me are already on the site and pinning away.

I’m finding Google+ useful for insight into tech, marketing, social media, and other topics, although it is a less personal social site for me, at least. Facebook, of course, remains the mainstay of actual social interaction with friends for me. How about you?

Twitter always steers me to a browser bar full of links that interest me, but again, it is as useful to me professionally, or more so, than it is personally. It is continually interesting to see how some celebrities use Twitter, though. For a while, movie director Kevin Smith, who has a new show called “Comic Book Men,” made Twitter almost a second career for a while. You may recall his dustup with an airline that removed him from a flight for being too fat.

I haven’t gotten into social TV much yet, but it’s obviously coming down the media superhighway at high speed, whether people use connected sets or second screens.

Here’s 4340’s infographic on social media trends:

 

More than a quarter of TVs shipped in 2011 connect to networks

Thursday, November 3rd, 2011
networked TV

Networked TVs can steam movies or music, go to the net, show smartphone photos and more.

In 2011, more than 27 percent of TVs shipped worldwide will be able to connect to a network, a figure that is expected to rise 54 percent to 155 million by 2015, according to the Q3’11 DisplaySearch Quarterly TV Design and Features Report. The convergence of connected devices, long heralded, is underway.

This has implications for marketers, retailers, programmers, and hardware makers.

“The products shown at IFA Berlin this September demonstrate how networking is becoming a core feature of TVs,” said Paul Gray, DisplaySearch Director of TV Electronics Research. “The idea of TVs and companion screens is a powerful value proposition, both for selling smart phones and tablets that communicate with the TV, but also for mobile services to be enjoyed on the best screen.”

The latest generation of TV semiconductors, combined with digital broadcasting, is providing a fertile platform for rapid innovation in TV, in both mature and emerging markets.

At the same time, the TV semiconductor business is struggling with the problems of hyper-competition. Consolidation is still playing out, including the rise of MStar Semi and Mediatek.

TV manufacturers are restructuring their business models following losses in the first half of 2011.

In addition, new lower cost LCD panel technology using LED backlights, shifts to out-sourcing, and new set designs are being investigated.

Integration and innovation in semiconductors is powering new capabilities, with networking emerging as an important new function. Consumer research suggests that the connection rate of TVs doubles when they have a wireless networking capability. TV manufacturers are responding and analysis of product ranges shown at IFA Berlin reveals how far wireless is filling product ranges.

Consumers: no new wires

“Consumer wishes are very clear – no new wires,” said Gray. “The incorporation of wireless allows more than just networking, with powerful ad-hoc functions such as transfer of photos and video from a smart phone to a TV using Wireless Direct, or a program guide to be navigated without interrupting viewing.”

At the same time, TV IC innovation is not just extra featuring; it is enabling a re-shaping of the TV value chain.

With TV manufacturers re-structuring their value chains, the latest TV ICs enable them to assemble sets from ‘open cell’ LCDs instead of buying complete LCD modules. One of the key enabling technologies is integration of the LCD timing controller into the main TV chip. This is examined in detail in the report.

“IC innovation is not just about decorating sets with extra featuring, but enables set makers to slim down their manufacturing,” added Gray.