During last 12 month or so I have been posting tech topics that I have seen in different tech sources that are reshaping our digital world. I call it “Tech Age of Acceleration” and the exponential forces that are reshaping industries and would like to share it with you.

1. Tech
Age of Acceleration
NOV 2016
Reza Malekzadgan
The exponential forces that are reshaping industries

2. Outline
- Interface – Force that accelerate adoption of innovation
- Computing – Force that accelerate digitalization
- Business Model – Force of disruption
- Cybersecurity – Force to protect digitalization
- Enterprise Cash – Forces that push M&A
- China – Force of mas market creation
November 2016 AM2 2

3. Interface
Force that accelerates adoption of innovation
November 2016 AM2 3

4. Interface & Computing
From
Punch-cards & Mainframe to
Client & Servers to
Mobile & Cloud has been the biggest tech
platform shifts of our time.
But there is a major shifts happening that will
change the landscape again in a big way and
that is “Race to the Single Interface” &
“Machine learning, Deep learning & AI”.
- Interface; will be a personal assistant like
Apple-Siri, Amazon-Alexa or Microsoft-
Cortana and
- Computing; will be based Machine learning,
Deep learning & AI like Google- Deepmind,
IBM-Watson or Facebook-FAIR.
Interface & Computing : Paradigm
The new paradigm;
“Race to the Single Interface” & “Machine learning, Deep learning & AI”.
November 2016 AM2 4

5. UBER
Uber creates certainty from a situation that,
before Uber, was anything but.
Uber app, consumers can reliably get taxi
service, track the car while it’s in route,
And be transported to their final destination
in style.
But the Uber experience also eliminated the
friction at the end of the ride – paying for it.
A big part of the “Uber experience” was
about jumping out of the car at the end
without having to pay, an experience many
described as “making payments invisible.”
Interface: The best experience
Empowered by smartphones, people have developed a sense of
entitlement to get what they want in a simple, convenient, and efficient
manner.
November 2016 AM2 5

6. Disruptive Innovation
happening to iPhone?
”As companies tend to innovate faster than
their customers’ needs evolve, companies
eventually end up producing products that
are actually too sophisticated, too expensive,
and too complicated for many customers in
their market…
However, by doing so, companies unwittingly
open the door to “disruptive innovations” at
the bottom of the market”
Clayton Christensen.
India market is interesting to look at as lower
gross margins, smaller target markets, and
simpler Smartphone makers are disruptive
competitors that are emerging.
Interface: “Disruptive innovation”
Source: Bloomberg
“Disruptive Innovation” is the most misunderstood business jargon,
most of time disconnect from the theory
November 2016 AM2 6

7. Apple Q2,16
In my view there are two things that are
interesting to reflect on in Apple Q2 results:
1. As the Smartphone market grow by 7%
iPhone sales declined by 18%.
2. Apple is now truly an iPhone company
with more than 2/3 of revenue from
iPhone as iPad sales declines in 9
consecutive quarter!
Source: Bloomberg
Interface: “Disruptive innovation”
iPhone once-in-a-lifetime kind of product. When was the last time a
piece of technology became so ubiquitous, so fast, around the world?
And when will it happen again?
November 2016 AM2 7

8. Amazon echo
Plays all your music from Prime Music, Spotify,
Pandora, iHeartRadio, TuneIn, and more using
just your voice
Hears you from across the room with far-field
voice recognition, even while music is playing
Answers questions, reads audiobooks and the
news, reports traffic and weather, gives info on
local businesses, provides sports scores and
schedules, and more using the Alexa Voice
Service
Controls lights, switches, and thermostats with
compatible WeMo, Philips Hue, Samsung
SmartThings, Wink, Insteon, Nest, and ecobee
smart home devices
Always getting smarter and adding new
features, plus thousands of skills like Uber,
Domino's, and more
Interface: “Race to the Single Interface”
“The intelligent interface to everything” for consumers, and “the next
major marketplace and channel for offering content, commerce, and
services,”
Kittlaus co-founded Siri
November 2016 AM2 8

9. Amazon echo
Only when you start to dig into what Amazon
Echo is and how it works do you begin to truly
understand
not only its brilliance, but its potential to
completely disrupt traditional mobile platforms
and app models.
The Amazon Echo is arguably one of the best
examples of invisible technology to date.
It’s not difficult to imagine a time in the not-too-
distant future
when smartphones get relegated to being more
specialized devices for specific tasks,
in the same way that PCs fell into that more
specialized role with the growing importance of
smartphones.
Bob O'Donnell
Founder and Chief Analyst, Technalysis Research
Interface: “Race to the Single Interface”
What smartphones did to PC can Alexa do to smartphones
November 2016 AM2 9

10. Design thinking
“There is going to be a boom for design
companies,
because there’s going to be so much
information people have to work through
quickly,”
said Diane B. Greene, the head of Google
Compute Engine, one of the companies
hoping to steer an A.I. boom.
“Just teaching companies how to use A.I. will
be a big business.”
Interface: Design is key
You need to do more then just thinking design in your organization. You
need to create a design culture.
November 2016 AM2 10

11. Modularity &
Flexibility
Organizations need to be flexible to adapt to
customer needs in real-time.
That means that adapting to change will be
come core to organization operations.
Radical shift in the organization culture may
be required.
There will be a tradeoff between efficiency
vs. flexibility
This will have a direct impact on Targeted
Operating Modell where managing change
needs to be core
Interface: Operational flexibility
Living Services: The Third Wave of the Internet | Mark Curtis, FJORD
To maximizing return on investment in 12-18 months focus on
efficiency. To empowering innovations that takes 5-10 years to yield a
return focus on flexibility
November 2016 AM2 11

12. Computing
Force that accelerate digitalization
November 2016 AM2 12

13. Affordable computing
Moore’s law: Number of transistors that fit
on a chip, double every two years.
But now, the model is drawing to a halt.
Because transistors are getting too small
to actually manufacture efficiently
But chips are get chipper, computing is
becoming affordable to be embedded to
“Everything” IoT!
Automation and data exchange in
manufacturing technologies.
These developments empower people,
transform industries, and enable smart
city solutions.
And they are reshaping our future,
creating a positive legacy for generations
to come.
Computing: IoT
All that chips will be connected and part of the mobile network, which
will enable fourth industrial revolution.
November 2016 AM2 13

14. Nest
Google Ventures might have intended to get
a foot into the nascent Internet of Things
market.
Hardware plays a key enabling role in this
market, but producing hardware is outside of
Google’s core competencies.
The Internet of Things, however, is also
predicted to produce unprecedented
amounts of data,
The mining of which is clearly of strategic
importance for Google.
Equipped with insights and a better under-
standing of the market thanks to its venture
arm’s investment.
Computing: Best IoT e.g.
Google might have come to the conclusion that hardware, such as
produced by Nest, was the best means to get access to this promising
new data pool
November 2016 AM2 14

15. Cloud market share
In aggregate the big four grew their cloud
infrastructure service revenues 68% in Q2,
while the next 20 largest cloud providers
grew by 41% and all other smaller providers
grew by 27%.
The market as a whole grew by 51%.
Amazon remains in a league of its own,
almost three times the size of its nearest
competitor.
Meanwhile Microsoft and Google can point
to substantially higher growth rates,
while IBM continues to feature strongly
thanks primarily to its leadership in the
hosted private cloud segment.
Computing: Cloud-Race
Amazon AWS is a clear market leader. Focused on marketing AWS
service to SW developers. Excellent bottom up enterprise sales
approach.
November 2016 AM2 15

16. AWS – Q2,16
Impressive Q2 numbers by Amazon
where AWS revenue growth by 58%YoY
and becoming the profit machine for
Amazon.
AWS is now very efficient business unit,
their Supplier/Demand modeling works
perfectly
where they have figured out how to use SW
to make HW more efficient.
Source: Bloomberg
Computing: Cloud - AWS
AWS is a state of the art business machine. Not only AWS delivers its
51st price cut with reductions as high as 5 percent for some Linux
instances its also Amazon’s profit machine.
November 2016 AM2 16

17. Old vs New,
On-premise Vs. Cloud and
SW licenses Vs. Pay-as-you-go.
Transformation from the Old to the New is
hard.
Oracle Q3-2016 SW license sales down -
15.2% and total sales down -3.4%.
However market still believes that Oracle can
pull it off as stocks are up in the aftermarket
and as Oracle Cloud SW revenue grow by
56.7%.
But remember that’s only 8% of the Oracle
business!
Computing: Transformation to Cloud
If we knew future would be exactly the same as the past, change would
be easy. But if the future’s different—and it almost always is—then it’s
the hard thing to transform form licensing to pay-as-you-go
November 2016 AM2 17

18. Mover from AWS to
Google
In the race to grab market share in the Cloud,
Google just got a big win, Google Cloud Platform
team to provide platform infrastructure for
Spotify, everywhere.
“What really tipped the scales towards Google
for us,
however, has been our experience with Google’s
data platform and tools.
Good infrastructure isn’t just about keeping
things up and running,
it’s about making all of our teams more efficient
and more effective, and Google’s data stack
does that for us in spades. “
Nicholas Harteau/VP, Engineering &
Infrastructure,
Spotify
https://news.spotify.com/us/2016/02/23/announcing-spotify-infrastructures-googley-future/
Computing: Cloud-Wars
Google secret weapon, Diane Greene, she co-founded and was CEO at
VMware for a decade, building it into a virtualization powerhouse. In
fact, under Greene’s watch, EMC bought VMware in 2003 for $635
million.
November 2016 AM2 18

19. Shift in IT sourcing:
Reasons, why gravity in enterprise sales
shifting from IT/I&O to DevOps:
1) Infra as a services from e.g. AWS or
Google, DevOps can use computing and
other services directly without the
involvement of internal I&O.
2) OpenSource as a marketing channel will
by passing procurement. E.g. GitHub or
Atlassian (profitable company with over
$300 million in revenues and 1,400
employees)
DevOps use it free/pay a small monthly fee
and will be promoting it internally and the
big money for new vendors will come from
enterprise contracts asked by internal
DevOps!
Computing: Cloud- Enterprise IT
Developers are more than just influencers inside the enterprise —
they’re now buyers, too. That’s a huge shift from before, when only IT
and other departments had that kind of purchasing power
November 2016 AM2 19

20. Feature-Cloud vs
Smart-Cloud:
When sift from Feature-phones to Smart-
phones happened, ODM platforms changed,
from Nokia/Symbian & Motorola/
MontaVista to Apple/iOS & Google/Android.
We went from basic services e.g Call & SMS
to advanced, Apps & Siri.
Are we experiencing similar phenomena but
this time in the Cloud?
From Feature-cloud to Smart-could:
- Feature-Cloud: Scalable, elastic services
like compute resources, storage and
networking capabilities to
- Smart-Cloud: Advanced natural language
processing, knowledge representation,
machine learning and deep learning
technologies e.g IBM/Watson &
Google/DeepMind
Computing: Smart-Cloud
By Jeremy Hsu
November 2016 AM2 20

21. Apple catching up
Acquired AI startup Turi for about $200
million.
Apple also acquired Emotient, a startup that
uses AI to recognize and act upon facial
expressions.
Last year, Apple acquired a pair of voice-
centric AI startups, VocalIQ and Perceptio, to
bolster Siri.
VocalIQ specialized in using machine learning
to allow voice assistants to engage in more
realistic conversation.
Perceptio focused on helping AI systems run
on devices while sharing limited amounts of
personal user data.
Computing: Smart-Could
Apple’s move is part of a broader battle among Google, Facebook and
Amazon
November 2016 AM2 21

22. World Wide Web
Computing: Blockchain is the next big thing, not Bitcoin, Bitcoin is just an app
•A centralized Client/Server architecture
•Protocol Servers validate and commit
transactions.
•Shared protocols (TCP/IP, HTTP, SMTP,
etc.)
•The Internet stack, in terms of how
value is distributed, is composed of
"thin" protocols and "fat" applications.
•As the market developed, we learned
that investing in applications produced
high returns whereas investing directly in
protocol technologies generally
produced low returns.
Blockchain
•A decentralized peer-to-peer
architecture.
•Protocol peers validate and commit
transactions in order to reach consensus.
•This relationship between protocols and
applications is reversed in the blockchain
application stack.
•Value concentrates at the shared
protocol layer and only a fraction of that
value is distributed along at the
applications layer.
•It's a stack with "fat" protocols and
"thin" applications.
This is a big shift. The combination of shared open data with an incentive system that prevents “winner-take-all” (think Google,
Facebook and so on) markets changes the game at the application layer and creates an entire new category of companies with
fundamentally different business models at the protocol layer.
November 2016 AM2 22

23. Business Model
Force of disruption
November 2016 AM2 23

24. SaaS
Areas where there were already existing
businesses, where new business models are
disrupting the landscape.
In many situations a business model
breakthrough will have been created by one
company
and applied to a single area, and there will
still exist considerable opportunity for that
same business model innovation to be
applied to other areas.
As an example, Salesforce.com pioneered the
SaaS business model, but only applied it to
CRM.
There are now many other application areas
where the SaaS business model could be
applied to create new businesses.
Business Model: SaaS
November 2016 AM2 24

25. Salesforce
Once again the Salesforce numbers are
impressive and the platform play is
paying off for Marc Benioff, revenue
grew 25% year-to-year.
One may argue that they are spending
heavily in marketing, $3.2 bn, 49% of
sales,
But as analyst Brent Thill at UBS
outlined, Salesforce is drinking the Red
Bull and its working.
I think what he means is that they can
get off the marketing spend once the
sales growth slows down.
Source: Bloomberg Business
Business Model: SaaS
SaaS/subscription businesses are much more complex than traditional
businesses, and SaaS performance cannot be measured in the same way
as traditional businesses are measured.
November 2016 AM2 25

26. Sales growth
Thing that moves the needle in sales
growth for SaaS companies is the same
thing that dose it for all IT vendors.
In the case of Box (40% growth YoY) big
businesses include Home Depot, AIG,
Genentech and Unilever.
Success of Box’s sales growth can be
partly explained by its strategic
partnership
with IBM and Microsoft channel sales
that helps Box up the funnel to bigger-
sized customers like the ones Box added
above.
Business Model: SaaS
Source: Box Q1 2016 Earnings Presentation
Unlike traditional software sales, the job of sales doesn’t end when a
new customer signs a contract. Instead, it is crucial to retain customers
over many years, as that is how you maximize your revenues.
November 2016 AM2 26

27. Offline-to-Online
Like all major disruptions, on-demand
economy startups are challenging industry
incumbents with new business models
The largest category of on-demand spending
is online marketplaces (e.g. Ebay, Etsy), with
16.3 million consumers each month spending
almost $36 billion annually.
Transportation (e.g. Uber, Lyft) comes in
second with 7.3 million monthly consumers
and $5.6 billion in annual spending, followed
by food/grocery delivery (e.g. Instacart) at
5.5 million monthly consumers and $4.6
billion annual spending.
Existing companies will need to embrace the
on-demand economy and transform their
service and delivery systems to meet
consumer demand, or find themselves
disrupted by those who do embrace this
shift.
https://mattermark.com/on-demand-economy/
Business Model: On-Demand
November 2016 AM2 27

28. UBER
Looks like, not only on-demand
economy startups are challenging
industry incumbents with new business
models
and new ways of engaging customers
they are also creating jobs e.g Uber &
Lyft.
Existing companies will need to
embrace the on-demand economy
and transform their service and delivery
systems to meet consumer demand.
Business Model: On-Demand
On-Demand - Tech-savvy customers and residents of big cities in the
advanced nations have already figured out how beneficial it is. They’re
a perfect target audience to work with.
November 2016 AM2 28

29. Cybersecurity
Force to protect digitalization
November 2016 AM2 29

30. 04, $3.5bn -> 15, $75bn-> to
$170bn by 2020.
“IT analyst forecasts are unable to keep pace
with the dramatic rise in cybercrime,
the ransonware epidemic, the refocusing of
malware from PCs and laptops to
smartphones and mobile devices,
the deployment of billions of under-
protected Internet of Things (IoT) devices,
the legions of hackers-for-hire, and the more
Sophisticated cyber-attacks launching at
businesses, governments, educational
institutions, and consumers globally.”
Cybersecurity: A monster
In the last reported period, the annual loss of complaints referred to
amounted to USD 1.07 bn , up from 781.84 million in 2013.
November 2016 AM2 30

31. Phone Hacking
A lot of modern life is interconnected
through the Internet of things
A global empire of billions of devices and
machines.
Automobile navigation systems. Smart TVs.
Thermostats. Telephone networks. Home
security systems. Online banking.
Almost everything you can imagine is linked
to the world wide web.
And the emperor of it all is the smartphone.
You've probably been warned to be careful
about what you say and do on your phone,
But after you see what we found, you won't
need to be warned again.
http://www.cbsnews.com/news/60-minutes-hacking-your-phone/
Cybersecurity: The interface hacking
During the day, the lab advises Fortune 500 companies on computer
security. But at night, this international team of hackers looks for flaws
in the devices we use everyday: smartphones, USB sticks and SIM cards
November 2016 AM2 31

32. Old Guard vs.
New Guard
Where Old Guard (e.g. Mcafee & Symantec)
use to keep the bad guys out by building
walls around digital enterprise,
New Guard (e.g. Tanium & Fireeye) believe
that bad guys will get in, no matter what,
trick is how to minimize damage on the
digital assess that really matters.
Now as the Old Guard is not relevant to
today's modern cyber security threats and
New Guard need to deliver growth,
where both Old and New are targeting the
same IT budget,
will we see consolidation in the cyber
security domain
Image: 451 Research
Cybersecurity: The enterprise IT
Over the last two years, investors have poured capital into private
security companies. Twelve security companies have raised more than
$100 million each from venture capitalists, according to Dow Jones
November 2016 AM2 32

33. Enterprise
Forces that push M&A
November 2016 AM2 33

34. Largest Companies by
Market Cap
The world’s best tech companies are
also able to gain competitive
advantages that are extremely difficult
to supplant.
While oil companies are fighting over a
limited supply and have a commoditized
end product, Google and Facebook have
key businesses that are truly unique and
the best at what they do.
For these reasons, tech is likely to top
the leaderboard for the largest
companies by market cap for the
foreseeable future.
Enterprise: Cash force of M&A
November 2016 AM2 34
The Oil Barons have been replaced by the Whiz Kids of Silicon Valley.

35. Cash is king
Five US tech giants are hoarding more
than half a trillion dollars,
Apple, Microsoft, Alphabet, Cisco and
Oracle had amassed $504bn of cash by
the end of 2015,
Nearly a third of the total $1.7tn held
on the balance sheets of US non-
financial companies, according to a new
report from rating agency Moody’s.
The top 50 holders accounted for $1.1tn
of that amount.
Enterprise: Cash force of M&A
November 2016 AM2 35
Tech is, by definition, a product-driven business. Products have cycles. Revenue tracks cycles.
So when a company gets to the other side of a product cycle, revenue growth rates decline
until the company finds a way to re-invigorate that cycle or, more likely, to invent — or
acquire — a new product that is on the leading vs. lagging side of its product cycle.

36. Tech love affairs with
bond sales
Google, Apple and Microsoft responsible
for 40% of the tech bond sales
Debt financing is very cheep, interest
rates below zero
You can borrow for 30 yes of low rate
Tech companies have been issuing bonds
in part to avoid taxes on overseas cash.
Rather than use the offshore cash to fund
debt repayments, acquisitions and
shareholder rewards,
it is far cheaper for large multinationals to
borrow the funds domestically.
Enterprise: Cash force of M&A
November 2016 AM2 36
Tech M&A bulking up lots of optimism
Tech companies need to invest in infrastructure e.g. datacenters
Putting more poker chip on the table and getting ready to bid

37. Global Tech M&A
At 959 deals, 4Q14 volume set a fourth
consecutive post-dotcom-bubble quarterly
record. Full-year 2014 posted 3,512 deals,
besting 3,345 in 2007 to achieve the highest
volume of any year except 2000.
Advertising and marketing, security and
internet of things (IoT) aggregate deal values
jumped, with the first two roughly doubling
their year-to-date (YTD) totals through 3Q14.
Private equity (PE) and non-technology
buyers both also increased aggregate value.
PE buyers appeared to target companies
struggling with mobile-social-cloud
transitions (companies we call “in the
crosshairs”).
Enterprise: M&A
November 2016 AM2 37
With most companies in this position — that is, in between short-term
product cycles and long-term investment payoff or seeking new
directions altogether — we might expect them to look to M&A as a way
to address that gap and decline in core revenue growth

38. Focus on
transportation
Tesla
Over 100,000 Tesla vehicles on the road. Aiming to
deliver 500,000/ year by 2018. Endured recalls of
the both its Model S sedan and Model X SUV. Took
pre-orders for an astonishing 400,000 Model 3
mass-market vehicles.
Google
Self-driving car project has more than 1.5 million
miles. In to "lean manufacturing," and it's
revolutionized the way cars and trucks are built.
Google closer Fiat Chrysler to develop self-driving
technologies. Google wants to be a supplier of
technology, not a manufacturer of vehicles.
Apple
Has its top-secret "Project Titan," which could be
anything at this point: an actual car, a super-
advanced infotainment system. Hired Chris Porritt,
from Tesla, real claim to fame was his time at Aston
Martin, where he created extremely expensive
luxury cars
Enterprise: Car industry evolution
November 2016 AM2 38
Tech companies, Google, Apple & Tesla want to reimagine cars
“We wanted flying cars, instead we got 140 characters” Peter Thiel

39. Ride-hailers
Investing in ride-hailing services can be a
way for automakers to sell more cars.
Toyota is investing in Uber alongside Mirai
Creation Investment Limited Partnership,
an investment fund backed by Toyota and
Japanese bank Sumitomo Mitsui Banking
Corp.
Earlier this year, General Motors Co.
invested $500 million US in Uber rival Lyft.
The five biggest ride-hailers are
collectively valued at USD 115bn
Competing interests ahead for ride-hailing
investors
Would mean more M&A and consolidation
Enterprise: Car industry evolution
November 2016 AM2 39
Small group of 15 investors are deep in investing in more than just one

40. China
Force of mas market creation
November 2016 AM2 40

41. China M&A
China's tech are moving fast from
Copy & Learn to Mastery of
innovation.
Five years ago we had copycats of
Silicon Valley like Baidu, called
Google of China.
But now tech like musical.ly which
newly released live streaming app
Live.ly
has secured top slot in the App
Store puts live.ly above FB
Messenger, Snapchat and
Instagram.
China : Copy & Learn to Mastery
November 2016 AM2 41
There is a shift that is interesting to follow as China's tech companies
are doing strategic M&A outside of china
not looking for innovation but for a beachhead to enter new markets
out side China.

42. China Tech
For the fist time ever two of China’s
handset manufactures are entering
to the top 5 list.
Huawei and OPPO.
Is this end of Nokia, Blackberry, HTC
and Sony?
This is a big shift in the global
Smartphone market!
Apple has recently invested $1
billion in Chinese ride-sharing giant
Didi Chuxing
China : Copy & Learn to Mastery
November 2016 AM2 42
Tim Cook ($1 billion investment in DiDi)
“We are making the investment for a number of strategic reasons,” he said, “including a
chance to learn more about certain segments of the China market. Of course, we believe it
will deliver a strong return for our invested capital over time as well.”

43. China Tech
Whereas Xiaomi once became a
market leader in China by focusing
almost exclusively on online sales,
Oppo and Vivo’s recent growth is
largely based on strong sales in
smaller Chinese cities
where people still prefer traditional
brick-and-mortar stores, according
to IDC
China : Copy & Learn to Mastery
November 2016 AM2 43
Very aggressive competition in China .

44. Thanks
NOV 2016
Reza Malekzadgan
November 2016 AM2 44