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A short post today on a few interesting articles I came across on IoT chip businesses over the past few weeks. 1) IoT business small but growing fast and profitable This article talks about Intel's IoT group (used to be called the Intelligent Systems Group) and its profitability. The group's revenue grew from $1.6B in 2012 to $1.8B in 2013, and is expected to surpass $2B in 2014. While this is small compared with Intel's total revenue of $53B (2013), the group's operating income was a very impressive 31% (Intel's total operating income was 23% in the same year). The author says this high profitability is due to the company's ability to leverage existing technology and high margin on related software sales. 2) New chips that serve the needs of IoT Some IoT devices need to operate in a very different environment from PCs and smartphones. Many of them have limited access to power (ie. iBeacons) and some need to operate in harsh environments. Adesto Technologies announced a new memory chip called CBRAM that consumes 1/100 less energy and can withstand high levels of gamma rays and electron beam sterilization treatments, meaning "it can be used in a surgery room, even after sterilizing". A new line of sensors from Spansion can harvest its own energy from the sun, vibration, or heat. Company spokesman says that the chips could operate "for a decade to 30 years, perhaps even more". Chip makers have been eager to find future applications beyond PCs and smartphones to drive their next growth. Will IoT fill that role? The industry sure hopes so as we're seeing forecasts that say IoT will surpass PCs, smartphones, and tablets around 2020. Check out our full scan of IoT on the Venture Scanner website!Read More
Last week, Google held their annual conference and made some major announcements including the Android TV software platform. As some of you may recall, this isn’t the company’s first foray into online TV. Back in 2010 the company launched its first initiative with the unsuccessful Google TV, a software platform that worked on top of Logitech and Sony devices. After the V1 showed lackluster sales, the company launched a V2 that gave users a better interface and access to Android apps, which still wasn't enough. Then in 2012, the company unveiled the Nexus Q, a decent looking set-top box that was so poorly received that it never made it to production. Not to be discouraged, the company released the Chromecast in 2013, a streaming HDMI stick that broadcasts content directly from your mobile device or computer.
I recently did some research for a friend who was looking at the online escrow space in the world of Financial Technology. There has been much talk about how bitcoin has the potential to ‘decentralize trust’, with implications on services like online escrow. Escrow services are used for a variety of transactions, from domain name purchases to investments. Sites like escrow.com and Agreed exist to facilitate the escrow of online transactions. The transaction fees for such services range from around 1-6%, depending on the amount (source). Escrow fraud — where sellers receive notice of payment from an “escrow service”, which turns out to have never existed at all — is a common form of fraud; online escrow sites have to be licensed, under existing escrow law at the state level.
Last week GE and Frost announced a joint effort to create an incubation program called Frost I3 incubator. It focuses on the industrial internet—solutions that utilize big data and sensors that drive efficiency and productivity. This past week Microsoft Ventures and American Family Insurance also announced the creation of an accelerator for the connected home.
This week I came across a very thought-provoking report recently released by the Vitality Institute that provides recommendations on the promotion of health and prevention of chronic disease for working-age Americans. There is a lot of insightful detail (I highly recommend having an extended peek), but in sum, the Commission developed evidence empirically linking the health of the US’ workforce to the long-term competitiveness of the US economy – the proposition: unhealthy workforce = unhealthy economy. Said another way, lower worker productivity and soaring US healthcare costs ($2.7T or 17.7% of US GDP in 2011 – the below graphic provides perspective on magnitude) impede innovation and reduce overall investment in education and R&D.
The hot IoT news this weekend was Nest's acquisition of DropCam for $555M. Compared with the multi-billion dollar hardware deals this year so far, $555M seems small but in my mind incredibly large for a connected home market that's still far from reaching the mass market. Google surely is betting big in anticipation for future growth by shedding out $3.2B for Nest and DropCam.
Sony made an interesting announcement at the E3 gaming conference in Los Angeles last week. The company presented its Playstation TV set-top box that will enable users to watch video content, stream games, and remotely play their Playstation 4 consoles on other TV’s. FYI, the Playstation TV is just the North American/European version of Vita TV that was launched in Japan last year. The device starts at $99 dollars but with a controller it comes out to $139, similar to the Amazon Fire. So why bother writing about another device? I think that Sony may actually have the leg up in this game, especially when you take into consideration the massive reach and niche focus in gaming.
TransferWise announced a $25M funding round last week, with investors including Richard Branson, Peter Thiel’s Valar Ventures, IA Ventures, and Index Ventures. The London-based startup aims to disrupt the remittance market by offering lower fees. They do this by operating a peer-to-peer (P2P) transfer model, where money destined for transfer does not actually leave each country unnecessarily (i.e. rearranging cash from other transactions in the same country). Software automation and the absence of physical branches also allow them to pass on cost-savings to the consumer. Consumers are also offered a mobile app (iOS and Android). Co-founder, Taavet Hinrikus, was the first employee at Skype.
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