W33August2014

BUSINESS & TECHNOLOGY INNOVATION REPORT

Week 33

2014

Prepared by

Ferhat Ünlükal

8/17/2014

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BUSINESS & TECHNOLOGY INNOVATION REPORT Week 33

Headlines

Consumer Electronics (CE)

• Samsung has just laid down a reported $200 million for home automation startup SmartThings.

• The Mexico government will hold an open bid to procure 13.7 million LCD TVs over three years as part of a subsidy program for low-income families in line with the digitization of terrestrial TV broadcasts.

• Curved TV market was valued at USD 0.14 billion in 2013 and is expected to reach USD 8.4 billion by 2019, growing at a CAGR of 96.7% from 2013 to 2019.

ICT

• Cisco Systems Inc said its plan to slash 6,000 jobs will result in restructuring charges of $700 million in cash in the year ending July 2015.

• The AllSeen Alliance announced that Bosch, Cloud of Things, Revolv and Shaspa have joined the effort to advance the AllJoyn.

• Total tablet display shipments declined 10% on year in the first half of 2014, while combined tablet display shipments to Apple and Samsung fell 34%.

• Parks Associates announced Internet of Things (IoT) research showing nearly 4% of U.S. households will have a

smart home controller by the end of 2014.

• IoT and M2M Communication Market is expected to grow from $128.7 billion in 2014 to $498.92 billion in 2019, at an estimated CAGR of 24.42% from 2014 to 2019.

• Spending on smart home systems and services in the US will hit $18 billion in 2014 and more than double to $39 billion by 2019.

• The Global Interactive Whiteboard market by revenue will grow at a CAGR of 15.95 percent over the period 2014-2018.

• IT market in Turkey to grow at a CAGR of 8.43 percent over the period 2013-2018.

Flat Panel Industry

• AU Optronics (AUO) will begin production of 1.6-inch AMOLED panels for use in smart wearable devices in the fourth quarter of 2014.

• Innolux and AU Optronics (AUO) are looking to increase Ultra HD TV panel shipments.

• Innolux recorded the highest net profit margin for the second quarter of 2014.

• BOE Technology will appropriate a portion of its tablet panel production capacity for making notebook and TV panels.

• Taiwan-based makers will ship 134.7 million large-size (9-inch and above) TFT-LCD panels in the second half of 2014.

• The market for plastic and flexible AMOLED displays will rise to $16bn by 2020.

Semiconductor Industry

• Intel formally unveiled its 14nm manufacturing technology.

• Worldwide revenues for communications processors rose to $1.8 billion in 2013.

Software Industry

• Google Inc is buying JetPac Inc.


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Retail and Payment Industry

• First Data has dramatically expanded its presence in Brazil.

• Gilbarco Veeder-Root and VeriFone Systems announced that they are partnering to offer next generation forecourt payment solutions.

• Cardtek USA announced Cordis4Net to satisfy the payment system needs of e-commerce, m-commerce, transportation and mobile network operator companies.

Consumer Electronics (CE)

Samsung

Acquisition of SmartThings

• Samsung has just laid down a reported $200 million for home automation startup SmartThings, a company born out of a popular Kickstarter campaign back in 2012.

• SmartThings announced the buyout on its blog on Thursday, with CEO and co-founder Alex Hawkinson highlighting Samsung’s “full support” of his company’s vision to “create a totally open smart home platform that brings together third-party developers, device makers, and consumers.”

• SmartThings, which employs around 50 people, is currently based in DC, though following the acquisition it’ll shift most of its operations across the country to Palo Alto to work with the Korean tech giant’s Open Innovation Center. However, Hawkinson said SmartThings will continue to act as an independent company.

Samsung’s stock performance

Foxconn

Mexico Government Open Bid

• The Mexico government will hold an open bid to procure 13.7 million LCD TVs over three years as part of a subsidy program for low-income families in line with the digitization of


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terrestrial TV broadcasts. Foxconn Electronics stands a considerably large chance of winning the procurement orders, and affiliate Innolux is likely to supply panels, according to Digitimes Research.

• So far, six vendors/makers with TV production in Mexico, including Samsung Electronics, LG Electronics and Foxconn, will participate in the bidding, Digitimes Research indicated.

• Meanwhile, in the China market, web video portals have been forced to give up delivering video services via the Internet and become pure providers of video content due to the State Administration of Radio, Film and Television's IPTV regulatory measures. However, as many white-box OTT (over the top) models, most of which are not in compliance with regulations, are available for sale, web video portals are likely to maintain their market status by virtue of OTT devices, Digitimes Research noted.

Foxconn’s stock performance

CE Market

Curved TV Market

• According to a new market report published by Transparency Market Research "Curved Televisions Market (By Screen Size - Large-sized Curved Televisions, Mid-sized Curved Televisions and Small-sized Curved Televisions) - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2013 - 2019", the market was valued at USD 0.14 billion in 2013 and

is expected to reach USD 8.4 billion by 2019, growing at a CAGR of 96.7% from 2013 to 2019. North America was the largest contributor to the global curved televisions market in 2013, which accounted for around 53% revenue share. The rest of the world region is expected to be the fastest growing market for curved televisions during the forecast period from 2013 to 2019 followed by Asia-Pacific with CAGRs of 147.6% and 111.3% respective. The enhanced features and reducing prices of LED televisions across the globe are the major factors driving the market growth.


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ICT Industry

Cisco

Cost Cutting

• Network equipment maker Cisco Systems Inc said its plan to slash 6,000 jobs will result in restructuring charges of $700 million in cash in the year ending July 2015.

• The latest round of layoffs, announced on Wednesday, is at least the fourth workforce reduction in about as many years for a company once synonymous with the Internet boom and could spark a shakeup in management, analysts said.

Cisco’s stock performance

AllSeen Alliance

New Members

• The AllSeen Alliance, the broadest Internet of Everything open source project, announced that Bosch, Cloud of Things, Revolv and Shaspa have joined the effort to advance the AllJoyn open source project as the common, universal framework for autonomous, intelligent interoperation among a range of everyday objects and devices.

• With the addition of these four companies, the AllSeen Alliance now totals 62 members. Alliance members include leading consumer electronics

manufacturers, home appliance makers, automotive companies, Internet of Things cloud providers, enterprise technology companies, innovative startups, chipset manufacturers, service providers, retailers and software developers.

ICT Market

Tablet Market Competition

• As the tablet market matures and growth slows, the dominance of market leaders Apple and Samsung is weakening. According to the latest NPD DisplaySearch Monthly Tablet PC Panel Shipment & Value Chain report, total tablet display shipments declined 10% on year in the first half of 2014, while combined tablet display shipments to Apple and Samsung fell 34%. While the two companies had a 42% share of tablet panel shipments in the first half of 2013, their combined share dropped to 29% in the first half of 2014.

• "As the tablet PC category matures, Apple and Samsung are facing new growth challenges," said Brian Huh, senior analyst for small/medium displays for NPD DisplaySearch. "The tablet leaders have been dealing with an increase in large-screen smartphone sales, a slowdown in the consumer replacement cycle, and greater competition from white-box brands and other low-cost tablets."

• Total tablet panel shipments to Apple were just 31 million in the first half of 2014, down 14% on year. During that same period, 14.7 million panels shipped to Samsung, down 29% on year.


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IoT

• Parks Associates announced Internet of Things (IoT) research showing nearly 4% of U.S. households will have a smart home controller by the end of 2014, with an estimated increase to nearly 6% by 2015. The firm's Evolution of Smart Home and the Internet of Things, which includes data from a 1Q 2014 survey of 10,000 U.S. broadband households, also reports 64% of all smart devices currently in households operate as part of a security or home controls system. Smart devices include motorized door controls, lighting controls, networked security camera, and programmable thermostats, among other devices.

IoT & M2M Market

• The Internet of Things (IoT) & Machine-to-Machine (M2M) Communication Market is expected to grow from $128.7 billion in 2014 to $498.92 billion in 2019, at an estimated CAGR of 24.42% from 2014 to 2019.

Smart Home Systems Market

• Spending on smart home systems and services in the US will hit $18 billion in 2014 and more than double to $39 billion by 2019 according to Strategy Analytics' Smart Home Strategies latest forecast. Apple, Google and Samsung are among the big consumer brands posturing for position in the market as ADT, Vivint, Comcast and AT&T drive growth in the interactive security market.

Interactive White Board Market

• The analysts forecast the Global Interactive Whiteboard market by revenue will grow at a CAGR of 15.95 percent over the period 2014-2018.

Turkish IT Market

• TechNavio's analysts forecast the IT market in Turkey to grow at a CAGR of 8.43 percent over the period 2013-2018.


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Flat Panel Industry

AUO

AMOLED Panels

• AU Optronics (AUO) will begin production of 1.6-inch AMOLED panels for use in smart wearable devices in the fourth quarter of 2014, according to Taiwan-based supply chain makers.

• AUO has been developing small- to medium-size OLED panels since 2011, and it has supplied 5-inch HD and 5.5-inch Full HD panels used in smartphones for China- and Taiwan-based vendors, the sources indicated.

• Addressing demand for small-size OLED applications, Japan government-sponsored Innovation Network Corporation of Japan (INCJ), Sony, Panasonic and Japan Display will jointly invest JPY20 billion (US$196 million) to set up an OLED panel production line in 2015 and kick off volume production in 2018, the sources noted.

• Samsung Display currently has 90% of the gloabl market for small- to medium-size OLED panels, but AUO believes the market may take off only when there is competition from more players.

• AUO had previously expected the small- to medium-size OLED market to take off in 2012. As demand for smart wearable devices has emerged, there is expected to be considerable demand for small-size OLED panels in 2015, the sources noted.

AUO’s stock performance

Ultra HD TV Panel Shipments

• Taiwan-based Innolux and AU Optronics (AUO) are looking to increase Ultra HD TV panel shipments and their global shares in the market segment in second-half 2014, but the goal is not easy to attain because their production capacities are fully occupied and it is difficult to increase output, according to sources with supply chain makers.

• Another obstacle is that their Korean competitors Samsung Display and LG Display have seen growing support from TV vendors, the sources said.

• Innolux and AUO together occupied over 70% of global UHD TV panel supply in 2103, but Samsung Display and LG Display overtook them to gain a combined share of nearly 50% in second-quarter 2014 mainly by supplying low-cost RGBW (RGB + white) UHD TV panels for China-based TV vendors, the sources indicated.

• Faced with increasing competition from the Korean competitors, Innolux is making efforts to reinforce its UHD panel operation in the China market, as well as in Europe and North America. And AUO will offer 50-, 55- and 65-inch UHD TV panels, the sources said.

• As the price gap between Full HD LCD TVs and UHD models is closing, UHD's penetration of the global LCD TV market is expected to rise from over 3% currently to 6-8% by the end of 2014, and global demand for UHD TVs will reach 10 million units in second-half 2014, the sources indicated.

Innolux

High Profit Margin

• Taiwan-based Innolux, among fellow makers AU Optronics, Samsung Display, LG Display and Sharp, recorded the highest net profit margin for the second quarter of 2014 mainly due to large increases in shipments of Ultra HD TV panels and notebook panels, according to Digitimes Research.


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• As Samsung Display has a large portion of revenues coming from panels used in Samsung smartphones and tablets and LG Display has so from panels used in iPhone and iPad, both panel makers saw decreasing profitability mainly because sales of these devices in the second quarter were short of expectations, Digitimes Research indicated.

• Sharp is one of the three suppliers of panels used in iPhone and therefore its profitability highly hinges on orders for iPhone panels.

• The Japan government-sponsored Innovation Network Corporation of Japan, Japan Display, Sony and Panasonic in late July decided to establish a joint venture, JOLED, specifically for R&D of OLED panels for use in tablets and notebooks.

Innolux’s stock performance

BOE

Tablet Panel

• China-based panel maker BOE Technology, in view of slow growth in global tablet sales, will appropriate a portion of its tablet panel production capacity for making notebook and TV panels, while LG Display will shift part of its notebook panel capacity to produce smartphone and industrial-use panels in the third quarter, according to industry sources.

• BOE is the largest supplier of tablet panels, with a global market share of 29% in the first half of 2014, followed by 15% for Samsung Display and

Chunghwa Picture Tubes, and 13% for LG Display, the sources cited NPD DisplaySearch as indicating. BOE will shift some of its table panel capacity to HD notebook-use panels for Lenovo, Dell and Hewlett Packard, and 32-inch TV panels, the sources said.

Flat Panel Maret

Large Size Panel Shipments

• Taiwan-based makers will ship 134.7 million large-size (9-inch and above) TFT-LCD panels in the second half of 2014, up 3.8% from the first half, according to Digitimes Research.

• As Taiwan-based makers will appropriate portions of large-size panel production capacities for making small- to medium-size models, their combined large-size panel capacity in the second half of 2014 will shrink by 0.1% from the first half, Digitimes Research indicated. In contrast, China-based BOE Technology will expand capacity at an 8.5G factory in the second half of 2014 and LG Display and Samsung Display will do so at their 8.5G factories in China as well, rendering it difficult for Taiwan-based makers to increase large-size panel shipments.

• In addition, LG Display and Samsung Display will see increased supply of panels used in iPad and Samsung tablets respectively, allowing their large-size panel shipments in the second half of 2014 to grow more than Taiwan-based makers' average.

Plastic and Flexible Displays

• The next evolution is plastic and flexible displays with the first flagship phone with a flexible display to ship in 2017. Based on this scenario, the market for plastic and flexible AMOLED displays will rise to $16bn by 2020.


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Semiconductor Industry

Intel

14 nm Technology

• Intel formally unveiled its 14nm manufacturing technology, a capability the company believes will usher in a new generation of fanless Ultrabooks and tablets.

• Intel’s 14nm technology will generally be known as Broadwell—the manufacturing technology that will underscore a new generation of products from tablets up through processors powering servers. Within the notebook and tablet market.

• Intel is expected to launch the Core M products and the Broadwell generation at the IFA show in September. An Intel spokeswoman said the Core M will ship before the end of 2014, with systems on shelves by the end of 2014. Broadwell chips for the desktop, using the Core brand name, will follow shortly thereafter, she said.

Intel’s stock performance

Semiconductor Market

Communication Processor Market

• Worldwide revenues for communications processors rose to $1.8 billion in 2013, an increase of 8.8% compared to 2012, according to the latest communications processor market share and forecast study from International Data Corporation (IDC).

Software Industry

Google

Acquisition of JetPac

• Google Inc is buying JetPac Inc, the startup that designs social travel applications disclosed on its website, without providing details.

Google’s stock performance


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Retail and Payment Industry

First Data

Mobile Payment

• First Data, the global leader in payment processing solutions and e-commerce, has dramatically expanded its presence in Brazil with the launch of Bin, the company’s acquiring solution developed specifically for the local market. Leveraging over 40 years of experience in the payments industry and international markets, First Data will differentiate itself in the Brazilian market with an information rich, easy-to-use solution that will be delivered to merchants via a compelling client experience and competitive prices.

• Bin arrives in the Brazilian market with agreements signed with the primary card schemes and has already begun its operations with MasterCard for credit, debit and installment payments, anticipation of credit receivables and other services. Card acceptance with other card schemes such as Visa and Cabal, will be enabled in coming weeks, signaling the start of broader commercial operations.

Verifone

Cooperation with Gibarco for pump payment solution

• Gilbarco Veeder-Root, the worldwide leader in retail petroleum technology, and VeriFone Systems, Inc. (PAY), the global leader in secure electronic payment solutions, announced that they are partnering to offer next generation forecourt payment solutions and to create the largest at-pump interactive digital media network worldwide.

• The two companies will collaborate on future fuel dispenser payment platforms to be developed and supplied by VeriFone. The solutions will meet convenience and fuel retailers’ functionality and regulatory needs in an increasingly complex payment

ecosystem, as well as offer at-pump media advertising and entertainment.

• Gilbarco will become the software and solutions integration lead and sales and service provider for forecourt payment systems developed under the partnership. The companies will work together to transition the payment electronics in Gilbarco’s global dispenser product lines to VeriFone technology. However, both companies will continue to develop and market their point of sale systems for the petroleum and convenience market independently.

Verifone’s stock performance

CardTek

Cordis4Net Payment Platform

• Cardtek USA, the American division of Cardtek Group - the global leader in software for financial transactions and EMV migration, announced Cordis4Net to satisfy the payment system needs of e-commerce, m-commerce, transportation and mobile network operator companies. The Cordis4Net platform will play a big role in the continuous growth of these key markets in the dynamic payments systems industry. The platform offers a multi-layered infrastructure solution for these companies to retain customers by expanding their service offerings with less customization efforts in a cost-effective, easy, end-to-end secure and competitive manner.

• "With over a decade of international experience of EMV implementation, we have developed robust, high quality and cost-effective solutions for financial


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institutions and other companies providing secure environment solutions for the public," said Gokhan Inonu, President of Cardtek USA. "We have developed Cordis4Net to enable these vertical players to enrich their customer service offerings."

• With Cordis4Net, companies can effectively manage the entire virtual POS infrastructure through a single interface, monitor customer profiles and card inventories, process open/closed loop transportation card solutions, provide NFC Mobile payment solutions, create their own wallets and apply cross-loyalty programs.

• The platform also offers a "payment gateway," and a web-based and mobile compatible interface, provides a "3D Secure Support and Rule Management" and detailed, effective, parametric reports based on the registered cardholders and/or merchants, supports a prepaid card management system, and enables the entire electronic payment system.

References

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W33August2014

Technology

Transcript of W33August2014