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  • November 14, 2019

    Webscale Playbook: Baidu

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    Baidu, often referred to as “China’s Google”, is embarking on a new journey to pursue growth outside its core search and advertising business. That’s vital as the online advertising business is maturing, yet Baidu continues to rely heavily on it (80% of 2017 revenues).
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  • October 30, 2019

    Webscale Playbook: Alphabet

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    Alphabet is out to prove that it is more than just an advertising business. That’s important as the company remains heavily exposed to ads, which accounted for about 86% of 2017 revenues. Yet, Alphabet is facing new competition in ads from Amazon, plus ongoing regulatory scrutiny in Europe. Fortunately the company is generating incredible amounts of cash each quarter, and now has just under $102B in cash & stocks on hand. That has allowed the company to invest heavily in its network, with capex amounting to a telco-like 17.2% of revenues over the last four quarters. Alphabet also spends another ~15% of revenues on R&D. The goal of these investments is help the company enter (or create) new markets, with less ad-dependent business models. Alphabet’s vast network infra supports the company’s cloud computing and device portfolio, as well as AI-based projects in transportation (Waymo), logistics (Project Wing), and healthcare (Verily). As a result, Alphabet’s network, IT & software capex has soared, to $8.2B over the 4Q17-3Q18 period (from $4.1B the year prior).
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  • October 24, 2019

    Webscale Playbook: Alibaba

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    Alibaba, once viewed as China’s answer to Amazon, has grown into a giant since its inception in 1999. Though still just about a fifth of Amazon’s size (by revenues), Alibaba has grown rapidly and outshines Amazon in some areas. Its scale in e-commerce is impressive: (i) Alibaba ships 12 million packages a day, 4x of Amazon; and, (ii) Alibaba’s “Singles Day” has become the world’s biggest shopping event. Alibaba has invested heavily in network infrastructure to support its businesses, not just e-commerce but also cloud computing, audio/video streaming, and devices. As a result, Alibaba’s network-related demand has soared in the recent times. It now accounts for over 5% of global webscale network/IT capex, from about 1% in 2012. Alibaba’s network spend share will continue to grow, but will be reshaped by the ongoing US-China trade war.
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  • October 16, 2019

    Webscale Playbook: Amazon

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    Amazon has evolved leaps and bounds since its creation. From an online bookstore more than two decades ago, it has become a global internet giant that relies heavily on scale and network infrastructure for its diverse businesses. At present, the company’s businesses beyond e-commerce include physical stores, cloud computing, audio/video streaming, advertising, and devices – all of which have millions of customers/users serviced by a strong network infrastructure. The sheer growth across its businesses in the recent years has primed Amazon as one of the leading operators in the network space. Naturally, to cope up with its ever increasing network-related demand, the company is not just spending massively to shore up its infrastructure through vendor partnerships but could be mulling to build some on its own, especially on the hardware side. Below are a few key highlights from the report: As a percentage of revenues, Amazon spends more on R&D than capex, which is typical of WNOs. The gap between the two spending, however, is somewhat shrinking which goes to show Amazon’s greater efforts in building datacenters and warehouses in the recent years. Amazon also emerged as the top R&D spender among WNOs over the past two years, due to Prime Video. Amazon currently manufactures some of the network components such as routers, chips, network interface cards, and network gears to meet the growing needs of its cloud business (AWS). The internet giant, known for disruption, could foray into the enterprise networking market and sell its own custom-made hardware by 2020, taking the incumbent network vendors head-on. However, Amazon is also creating a host of new opportunities for network vendors, as it looks to disrupt different industries such as automotive (driverless cars) and healthcare (online pharmacy and heart-rate detection device), both requiring a strong network infrastructure to enable data transfers and communication between sensors and components.
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  • October 8, 2019

    Australian Data Centres and Submarine Cables Report

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    The Australian data centre (DC) market is rapidly expanding, forecast to reach over A$3bn by 2026 with nearly 1,200 MW of capacity. Current revenues are A$1.5bn with 530 MW capacity. Currently, a majority of data stored in outsourced DCs are from enterprise and government clients. However, the market is moving towards the hyperscale segment, due to ongoing shift to cloud-based computing. We predict hyperscale to generate 35% of total DC revenue in 2026, occupying 50% of total supply. The major providers of DC capacity in Australia are a mix of international players and Australian based DC specialists. We predict that relative market shares of these players will converge over time due to relatively small areas of product and service differentiation.Driving the DC market is the submarine cable industry with four new cables planned. Perth and Brisbane are key growth areas, while Sydney will continue to remain the market leader by a large margin. A cable landing station was completed in Sunshine Coast in September 2019.
  • October 4, 2019

    Follow the Money – Australian VC in Tech

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    Venture Capital funding continues to offer potential for growth in Australia, despite reaching new peaks in aggregate capital in 2018. Overseas funds continue to maintain their contribution levels to total funding, while local institutions have also joined the fray. Australian has a thriving startup ecosystem which is driving growth across all parameters such as funds raised, funds deployed, revenue metrices and exits.
  • September 24, 2019

    Amazon’s pivot to Marketplace

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    Amazon, the gatekeeper to 100 million Prime members, is increasingly reliant for growth on Marketplace, where third-party sellers compete with first-party products. Amazon’s multi-channel platform strategy delivers choice and low prices to customers, but third-party sellers have increasingly complained that their playing field is not level. After Amazon’s seller agreements were modified in August to implement a competition ruling in Germany, the European Commission is now investigating the data layer.
  • September 18, 2019

    The pre-order market has taken off, is consolidation next?

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    Australia’s pre-order market, serviced by players like UberEats, Deliveroo and MenuLog, has grown quickly and is highly competitive. We anticipate the market will experience strong, ongoing growth, market concentration via consolidation as well as horizontal integration. Over the next three years we anticipate that the key players will seek to expand both organically and via acquisition, which will increase the scale and scope of the remaining players. This is likely to be a global phenomenon, though it’s recognised that Australia is an attractive market given its early adoption status.
  • September 17, 2019

    Cut-price iPhones: Apple’s innovative approach

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    Apple’s iPhone launch event was relatively light on iPhone, which shared the stage with games, TV, Watch, iPad and retail announcements. This reflects Apple’s developing priorities: as iPhone sales soften, it needs to find new ways to extract value from the wealthy user base it has spent a decade nurturing. Apple has embraced this new strategy, offering a range of cheaper points of entry into its ecosystem, making the lost profits back on accessories or content subscriptions
  • Spotify’s freemium model gains traction
    Spotify’s freemium model gains traction
    September 16, 2019

    Spotify’s podcast play

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    Spotify is investing heavily in podcasting through acquisitions, original content and product innovation. It is under pressure to reduce dependence on record labels, whose power makes generating large profit margins difficult. Podcasts promise a non-music content genre where Spotify can capture more value. Secondary benefits abound: Spotify can take an active and lucrative role in modernising online audio advertising, it can solve the podcast discovery problem, and engagement across more forms of audio will improve retention
  • September 5, 2019

    AI in ANZ: Our coolest homegrown startups

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    AI is expected to be the next revolution in computing with broad commercial applications. This has resulted in a significant amount of private investment flowing into the industry with funding in ANZ growing by 70% CAGR to reach $48mn.
  • August 21, 2019

    Elephant in the room? No energy policy

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    On 13 August 2019, Infrastructure Australia tabled a comprehensive Audit on Australia’s infrastructure across transport, water, energy, telecommunications and social infrastructure. The objective of the Audit is to take a user perspective of Australia’s infrastructure and create discussion around key challenges and opportunities. We believe the Audit is an excellent forum for lively debate around key issues that will have material impacts on Australians.  We welcome the Audit and congratulate Infrastructure Australia on bringing this Audit forward and into the public domain for healthy and constructive debate. Venture Insights is a market-leading commentator on how technology disrupts the world we live in. We believe that technology can be a force for good and that if harnessed well can provide significant benefits to people. We call this the “technology dividend” and have focused on a number of key sector groups including digital media, telecommunications, finance, energy and health. In this report, we review the energy component of the Audit and provide some of our own views on what is being presented. The Audit was broken into 6 areas (which originated from the Finkel review): (a) Affordability and competitive prices; (b) Secure and reliable and sustainable energy); (c) Planning for our future energy networks; (d) New opportunities for community choice; (e) Delivering energy in remote communities; and (f) Harnessing Australia’s energy advantage. We respond in turn to each of these areas.
  • August 21, 2019

    What Amazon and Uber can learn from Chinese food delivery apps

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    On 15th August 2019, Telstra announced its FY19 earnings. Falling ARPUs and NBN related impacts outweighed subscriber gains resulting in earnings declines. The Australian telco market remains competitive with nearly all sub-segments experiencing varying degrees of pricing pressure. Telstra as the market leader is most at risk as competitors increase share across different segments.
  • August 7, 2019

    Do EVs change everything, and by when?

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    Venture Insights hosted a webinar with leading city planning experts Nic Frances Gilley (Councillor, Chair of the Transport Portfolio, City of Melbourne), Deb Cailes (Acting Director, City Strategy and Place, City of Melbourne) and electric vehicle expert Johan Karlsson (Head of New Technology, DC Power Co) to discuss the future of electric vehicles in Australia. The topic for discussion was “Do electric vehicles (EVs) change everything, and by when?”. Certainly, the view from the guest speakers and Venture Insights is that there will be an aggressive adoption of Electric Vehicles in Australia. In a world focusing on climate change and emission reduction, renewables will be the main source of energy in the future.
  • July 17, 2019

    Monthly Australian TMT Wrap: June 2019

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    June was a relatively quiet month for Australian TMT space although few significant announcements.
  • July 15, 2019

    Ad blocking update – Publishers and tech giants work togeth [...]

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    Digital publishers are using a variety of strategies to counter the impact of ad blockers from requesting users to turn off ad blockers or whitelisting websites to blocking access to content. Publishers have also found unlikely allies in Google and Facebook that are making it harder for third party ad blockers to block ads on their platforms.
  • July 11, 2019

    100% EVs by 2050

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    Electronic Vehicles (EVs) in Australia are forecast to reach 100% of new car sales within 15-20 years. EVs are an alternative to the internal combustion engine (or ICE) and use electric motors or traction motors for propulsion. ICE vehicles typically run on petrol or diesel and currently make up nearly 100% of the Australian private vehicle market. EVs are charged typically from the grid and as such source energy from both renewable and fossil fuel sources. Reduction in technology costs and the mass production will result in EVs having lower upfront and running costs which will lead to mass market adoption and ultimately replace the entire commercial market for private vehicles. In this report, we review the various factors driving the uptake of EVs, the way in which EVs will be charged, and the potential impact on residential homes’ production and consumption of electricity. As the market moves towards a distributed renewable market, EVs will increasingly be charged by cheaper renewable energy during off peak times when renewables are abundant in supply. We also review the cost of charging EVs (versus the equivalent cost for an ICE car) under various scenarios where a household charges its EV using grid electricity and using their own solar panels and batteries.
  • July 10, 2019

    Google’s Icarus moment

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    ­­­­Google’s advertising business has begun losing market share in the US, with competition from Amazon, Facebook and Microsoft intensifying in search and display. In response, the company is redoubling efforts to reshape its apps, services, and the entire web for more efficient monetisation, spelling uncertainty for partners and users. The adaptability and complexity of Google’s services reduce business risk from targeted regulatory measures, but increase the pressure for a radical intervention
  • July 1, 2019

    Reader-first news media: From transition to transformation

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    The number of people willing to pay for online news now roughly matches print paid circulation, and will soon be substantially greater, with publishers increasingly demonstrating that their strategies are influencing industry outcomes. Our thesis is that subscriptions work in some cases, but that a more systematic reader-first approach benefits all cases, recalibrating management focus to media’s core purpose. Effectively implementing such an approach is a more radical, transformative development than is sometimes assumed. The winners will deploy sophisticated, bespoke audience acquisition and retention funnels and undergo detailed appraisals of the trade-offs necessary for optimal user experiences.
  • June 26, 2019

    Do batteries change everything, and by when?

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    Webinar Review: Venture Insights hosted a webinar with leading solar and battery experts Nick Brass (Co-Founder, DC Power Co) and Ryan Wavish (Principal, Marchment Hill Consulting) to discuss the role of household batteries in Australia. The topic for discussion was “Do batteries change everything, and by when?”. Certainly, the view from the guest speakers and Venture Insights is that batteries are a ‘game changer’ technology on the horizon for residential electricity markets. In a world made up of cheaper renewable electricity (zero marginal cost) there are profound opportunities for all participants in the electricity supply chain, from battery manufacturers, demand side software models, fossil fuel and renewable generators, transmission and distribution network owners and the incumbent and challenger retailers.
  • June 26, 2019

    Facebook Libra – the cryptocurrency arms race has begun…

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    Facebook announced the launch of Libra, a new digital currency that aims to transform how we pay and transfer money. Calibra, Facebook’s Libra ewallet, has the potential to shake the entire payments industry through its scale and value. However, Libra faces multiple challenges, including regulatory hurdles and Facebook’s chequered past with privacy and data security.
  • June 24, 2019

    Monthly Australian TMT Wrap: May 2019

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    May was another busy month for the telco sector with significant announcements on three major M&A deals in the market. Furthermore, M&A activity continued to be strong in May with several deals announced.
  • June 24, 2019

    Advertising Pays 7: UK Advertising’s Digital Revolution

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    Online advertising plays a larger role in the UK economy than anywhere else in the world, having grown hand-in-hand with the highest ecommerce spend per capita and a business creation boom. There are many factors behind this success, access to investment and top talent (both technical and creative) structural characteristics in the economy and society—not least a culture of experimentation and entrepreneurship. As with all maturing industries, sustaining future growth will bring new challenges: along with economic headwinds, UK online advertising now faces an urgent need to restore public trust, with a combination of statute and self-regulation.
  • May 23, 2019

    Monthly Australian TMT Wrap: April 2019

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    We have seen an uptick in M&A activity in April on the back of a relatively quiet period in March. Strong deal activity has been distributed throughout the telecommunications, media and technology industries.