This document provides a weekly business and technology innovation report covering the week of July 27, 2014. Key headlines include: - Samsung is in talks to acquire home automation company SmartThings for around $200 million. - Samsung will invest $375 million to construct a new TV plant in South Africa. - LG reported a 26.5% rise in operating profit for the second quarter driven by strong smartphone sales. - Global shipments of Ultra HD TVs are expected to reach 20 million units in 2014.

1. BUSINESS & TECHNOLOGY
INNOVATION REPORT
Week 30
2014
Prepared by
Ferhat Ünlükal
7/27/2014

2. } BUSINESS & TECHNOLOGY INNOVATION REPORT
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BUSINESS &
TECHNOLOGY
INNOVATION
REPORT
Week 30
Headlines
Consumer Electronics (CE)
• Samsung is reported to be in talks to
by home automation company
SmartThings.
• Samsung Electronics is planning to
make a $375 million investment in the
Dube TradePort special economic zone.
• LG said operating profit rose 26.5
percent to 589.04 million in April-June.
• 2014 global Ultra HD TV shipments will
reach 20 million units.
ICT
• Apple may introduce a new mobile-
payment system.
• Apple has acquired BookLamp.
• Cisco and Barcelona City Council
announced plans to open a Cisco Global
IoE Innovation Center in Barcelona.
• The Global HD STB market will grow at
a CAGR of 2.38 percent over the period
2014-2018.
• Apple remained the largest single
vendor but its market share fell to 26.9
percent from 33 percent last year.
• Global LCD monitor shipments in 2014
may drop 5-10% on year.
• Taiwan-based server ODMs may obtain
orders arising from the beginning of
Project Scorpio 2.0, the second version
of a project to boost low-cost and
highly scalable data center
infrastructure.
• The IoT will account for an increasingly
huge number of connections: 1.9 billion
devices today, and 9 billion by 2018.
• The IT market in Turkey to grow at a
CAGR of 8.43 percent over the period
2013-2018.
Flat Panel Industry
• Japan Display (JDI) has started
production of IPS-NEO.
• For April-June, LG Display reported a
55.4 percent fall in operating profit to
$159.23 million.
• Innolux and AU Optronics (AUO) face
strong competition from South Korea-
based makers.
• CSOT has become the largest supplier
of 32-inch panels worldwide.
• Pricing for 32-inch open cell TV panels
has increased from about US$85 in
mid-June 2014.
• Pricing for 32-inch open cell TV panels
has increased from about US$85 in
mid-June 2014.
• The market for ultra high definition
panel globally is estimated to reach
USD 30,404.6 million by 2020.
• The market for plastic and flexible
AMOLED displays will rise to $16bn by
2020.
Semiconductor Industry
• Broadcom will downsize employees,
affecting 2,500 individuals.
• STMicroelectronics announced it has
opened a new MEMS Microphone Lab
(Anechoic Chamber) in Taiwan.
• The market for LED drivers, MCUs,
sensors and other chips used in smart
lighting will grow from around $67
million in 2014 to $1.05 billion in 2019.
Software Industry
• Google has purchased Helsinki-based
3D graphics start-up DrawElements.
• Oculus VR which Facebook finished
purchasing for $2 billion, is working
with Samsung Electronics on a headset
that uses mobile devices to create a VR
experience.

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• LinkedIn has purchased marketing-
platform startup Bizo in a deal worth
$175 million.
Service Industry
• The total pay-TV subscriber base is
expected to surpass 936.4 million at
the end of 2014, generating $280.4
billion in service revenue
Consumer Electronics (CE)
Samsung
Negotiation with SmartThings
• Korean electronics conglomerate
Samsung is reported to be in talks to
by home automation company
SmartThings. The deal is said to be
around $200 million, though it isn't yet
a done deal. Samsung buying up
SmartThings follows Google's $3.2
billion acquisition of Nest back in
January and Apple's introduction of
HomeKit at WWDC 2014 just last
month. Buying up SmartThings would
give Samsung a big leg up in the home
automation space (their smart
appliances haven't exactly taken off as
they would have hoped), and for a
fraction of the cost of Nest.
Samsung’s stock performance
Investment in South Africa
• Samsung Electronics is planning to
make a $375 million investment in the
Dube TradePort special economic zone,
located near the city of Durban, South
Africa, to construct a TV plant.
LG
Financial
• LG Electronics Inc (066570.KS)
signalled further improvement in its
mobile business after record
smartphone sales propelled the South
Korean manufacturer to its highest

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quarterly profit in more than three
years.
• Chief Financial Officer Jung Do-hyun
said mobile income should improve
again in the current quarter with the
help of LG's flagship G3 smartphone,
which has been well-received by critics
since its late-May launch.
• LG said operating profit rose 26.5
percent to 606 billion won ($589.04
million) in April-June, versus a 524
billion won mean estimate of 39
analysts polled by Thomson Reuters
I/B/E/S.
LG’s stock performance
CE Market
Ultra HD TV Shipments
• The makers said TV vendors estimate
2014 global Ultra HD TV shipments will
reach 20 million units while TV ODMs
expect 16 million units.
ICT Industry
Apple
Mobile Payment
• Apple may introduce a new mobile-
payment system as soon as the fall,
which would add yet another tech giant
to a particularly hot trend in mobile.
• Conversations between Apple and
payments-industry companies have
heated up in recent months, with
several people briefed on the talks
saying that Apple executives have
discussed launching a mobile “wallet”
as soon as this fall for people to use
their iPhones to pay for goods in
physical stores.
• Apple has long been expected to make
such a move, but it’s been cautious so
far amid failed efforts by Google and
others to enable payments and other
transactions by phone. Now, though,
the company’s plans are coming into
greater focus.
Apple’s stock performance
Acquisition of BookLamp
• Apple has acquired BookLamp, a site
that used “book DNA” and computer
algorithms to yield better book
recommendations. BookLamp had
seemingly shut down earlier this year,
but Apple confirmed that it’s acquired
the Boise, Idaho-based company.

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Cisco
IoE Innovation Center
• Cisco (NASDAQ: CSCO) and Barcelona
City Council announced plans to open a
Cisco Global IoE Innovation Center in
Barcelona. The Innovation Center will
provide a platform for research,
technological development and new
market opportunities related to the
Internet of Everything for smart cities.
Cisco’s stock performance
ICT Market
Global HD STB Market
• The Global HD STB market will grow at
a CAGR of 2.38 percent over the period
2014-2018.
• STBs are devices that are connected to
televisions at home. They connect a TV
to an external signal source and
transform the transmitted signal into
video content, which is then displayed
on the screen. The source may be
cable, satellite, broadband, telephone
line, or DSL connection. There are
primarily two types of STBs, namely SD
DTB and HD STB. HD STB has the
ability to show both SD and HD
channels as well as providing better
sound and picture quality and greater
viewing experience. HD STBs are
further classified into four types: cable,
satellite, IPTV, and hybrid STB. HD
STBs also provide interactive services
such as VOD, video conferencing, high-
speed internet television, and/or home
networking.
Tablet Market
• Apple and Samsung have lost ground in
the tablet computer market as growth
cools in the once-hot segment, the
research firm IDC said Thursday (July
24). An IDC survey said sales of tablets
in the March-June period were 49.3
million, up a modest 11 percent from a
year ago but down 1.5 percent from
the previous quarter.
• Apple, which popularised tablets with
its iPad, remained the largest single
vendor but its market share fell to 26.9
percent from 33 percent last year.
IDC's survey showed Apple shipped
13.3 million iPads, above Apple's own
report this week showing 12.3 million
sold. South Korean Samsung saw
essentially flat sales in the period of 8.5
million units, while its market share
slipped to 17.2 percent from 18.8
percent a year ago.
LCD Monitor Shipments
• Global LCD monitor shipments in 2014
may drop 5-10% on year due to
competition from tablets and notebooks
and the tight supply may affect
shipments as well.
• Amid the declining monitor market,
vendors are looking to niche markers
with value-added, high profit products
in order to maintain profits. Higher
resolutions and larger sizes are also a
focus for vendors, the makers noted.
Project Scorpio 2.0 Datacenter Project
• Taiwan-based server ODMs including
Quanta Computer, Wistron and
Inventec may obtain orders arising
from the beginning of Project Scorpio
2.0, the second version of a project to
boost low-cost and highly scalable data
center infrastructure jointly by China-
based Internet service operators Baidu,
Alibaba and Tencent through
collaboration with Intel, in September

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2014, according to Taiwan-based
supply chain makers.
• Established in 2011 and similar to
Facebook's Open Compute Project,
Project Scorpio is intended to specify
hardware standards on rack modules,
network modules, power supply
modules, servers, cooling modules of
data centers as well as standard
centralized operational management,
the sources said.
• Since the release of Project Scorpio 1.0
in 2012, development of standard
specification has progressed slowly
mainly because Baidu, Alibaba and
Tencent have had differing hardware
needs and coordination has taken much
time, the sources noted. However,
development of Project Scorpio 2.0 is
expected to proceed faster as the
parties concerned have reached a
consensus.
• While Taiwan-based ODMs stand a
good chance of landing orders for data
center servers, they are expected to
face competition from China-based
fellow makers in 2-3 years mainly
because the China government has
been actively helping local industries,
the sources indicated.
IoT Market
• The Internet Of Things represents a
major departure in the history of the
Internet, as connections move beyond
computing devices, and begin to power
billions of everyday devices, from
parking meters to home thermostats.
• Estimates for Internet of Things or IoT
market value are massive, since by
definition the IoT will be a diffuse layer
of devices, sensors, and computing
power that overlays entire consumer,
business-to-business, and government
industries. The IoT will account for an
increasingly huge number of
connections: 1.9 billion devices today,
and 9 billion by 2018. That year, it will
be roughly equal to the number of
smartphones, smart TVs, tablets,
wearable computers, and
PCs combined.
• In a new report from BI Intelligence,
we look at the transition of once-inert
objects into sensor-laden intelligent
devices that can communicate with the
other gadgets in our lives. In the
consumer space, many products and
services have already crossed over into
the IoT, including kitchen and home
appliances, lighting and heating
products, and insurance company-
issued car monitoring devices that
allow motorists to pay insurance only
for the amount of driving they do.
• Connected advertising and
marketing. Cisco believes that this
category (think Internet-connected
billboards) will be one of the top three
IoT categories, along with smart
factories, and telecommuting support
systems.
• Intelligent traffic management systems.
Machina research, in a paper prepared
for the GSM Association, sees $100
billion in revenue by 2020 for
applications such as toll-taking and
congestion penalties. A related revenue
source will be smart parking-space
management, expected to drive $30
billion in revenue.
• Waste management systems. In
Cincinnati, residential waste volume fell
17% and recycling volume grew by
49% through use of a “pay as you
throw” program that used IoT
technology to monitor those who
exceed waste limits.
• Smart electricity grids that adjust rates
for peak energy usage. These will
represent savings of $200 billion to
$500 billion per year by 2025,
according to the McKinsey Global
Institute.

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• Smart water systems and meters. The
cities of Doha, São Paulo, and Beijing
have reduced leaks by 40 to 50% by
putting sensors on pumps and other
water infrastructure.
• Industrial uses including Internet-
managed assembly lines, connected
factories, and warehouses, etc.
Turkish IT Market
• The analysts forecast the IT market in
Turkey to grow at a CAGR of 8.43
percent over the period 2013-2018.
Flat Panel Industry
Japan Display
IPS-NEO Panel Production
• Japan-based TFT-LCD panel maker
Japan Display (JDI) has started
production of IPS-NEO, high-contrast
technology evolved from IPS, panels at
its 6G LTPS factory in Japan.
• In a bid to compete for orders from
smartphone vendors with products
offering a better price and performance
ratio in addition to improved viewing
fuctions, JDI has been developing the
technology on its 6G (1,500 x 1,850mm
glass substrate) LTPS line in its Mobara
Plant and has begun mass producing
the IPS-NEO technology as of July, said
industry sources.
• LCD panel manufacturing requires an
orientation process that aligns liquid
crystal molecules in a uniform direction.
In this process, an orientation
membrane is rubbed in a fixed direction
with a rubbing roller with cloth wound
on it. With this method, unevenness of
the circuit pattern formed on the glass
substrate could impede proper
orientation and the involvement of
foreign particles in the rubbing process
may affect the production yield.
Adopting JDI's unique photo alignment
method, IPS-NEO is free from these
issues and achieves a higher contrast,
improved viewing angle characteristics
and an improved production yield, the
company said.
LG Display
Financial
• LG Display Co Ltd said quarterly profit
fell more than 50 percent for the
second time in three quarters, pulled
down by a stronger South Korean won
and subdued demand for personal
computers (PC) and tablet devices.

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• The world's No.1 maker of liquid crystal
displays (LCD) had forecast a pickup in
panel shipments during April-June,
while analysts were expecting stronger
second-half earnings as TV demand in
key markets improved.
• LG Display, which counts affiliate LG
Electronics Inc and Apple Inc as major
customers, on Wednesday said
shipments volume improved from a
year earlier but that the average sales
price of panels slipped further from
January-March.
• For April-June, LG Display reported a
55.4 percent fall in operating profit to
163 billion won ($159.23 million),
compared with a 184 billion won mean
estimate of 37 analysts polled by
Thomson Reuters I/B/E/S. Revenue fell
9 percent on year to 6 trillion won.
LG Display’s stock performance
AUO
Strong competition in Ultra HD TV Panels
• While still being the main suppliers of
Ultra HD TV panels to China-based TV
vendors, Innolux and AU Optronics
(AUO) face strong competition from
South Korea-based makers which have
offered low-cost RGBW models to cater
to the growing demand for inexpensive
Ultra HD TVs in the China market,
according to Taiwan-based supply
chain makers.
• Korea makers were previously focused
primarily on high-end Ultra HD TV
panel production but have now shifted
to production of entry-level and mid-
range units as well in order to tackle
orders from China vendors.
AUO’s stock performance
CSOT
AMOLED
• Following its aggressive investments in
8.5G production lines, China Star
Optoelectronics Technology (CSOT) has
become the largest supplier of 32-inch
panels worldwide. The company has
also established a joint venture with
the government of Wuhan, China,
through which CSOT will officially enter
the small-to-medium-size panel
application market using the joint
venture's 6G LTPS/AMOLED production
lines.
• CSOT has already begun trial
production of AMOLED panels, and by
2016 is expected to start mass
producing the technology. The
company's AMOLED production facilities
will contribute to a total of 10 overall
AMOLED production lines in China that
will go into production or have already
begun production from 2014-2016.
• China panel makers continue to receive
financial assistance both from the
central government in China as well as
from many local governments to
develop AMOLED panel facilities. The
makers are also receiving various bank
loans, subsidies and plentiful access to
state property in China, and are making
efforts to use talent from Taiwan and
Korea to develop the AMOLED panel
industry.
• Despite China makers' efforts to
establish AMOLED facilities through
2016, Digitimes Research believes they
will face high production costs and low
yields, making the technology less

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competitive in terms of pricing
compared to TFT LCD technology, and
limiting the influence China makers will
have in the segment in the short term.
Flat Panel Market
Open Cell TV panel Prices
• Pricing for 32-inch open cell TV panels
has increased from about US$85 in
mid-June 2014 to US$87 in mid-July,
up from about US$79 in mid-April,
according to DisplaySearch.
• Pricing for 40- and 42-inch 60Hz open
cell TV panels meanwhile has remained
between US$128-142 in July, flat on
month, while 48- and 50-inch Full HD
TV panels have also shown flat pricing
between US$186-206.
Ultra HD TV Panel Shipments
• Ultra HD TV panel shipments reached
4.47 million units in second-quarter
2014 for a total of 6.27 million in the
first half of 2014. The penetration rate
for Ultra HD TVs witnessed an increase
from 3.2% in the first quarter to 7.2%
in the second quarter for an overall
5.3% growth during the first half of
2014, according to WitsView.
• Taiwan panel makers held a 76%
market share in overall Ultra HD TV
panel shipments during 2013 but that
percentage dropped to 54% in the first
quarter of 2014 and further to 43% in
the second quarter due to increased
competition from Korea panel makers,
the firm added.
Ultra HD TV Panel Market
• The market for ultra high definition
panel globally is estimated to reach
USD 30,404.6 million by 2020. In terms
of volume sale, the market for UHD
panel is expected to reach 5,704.5
thousand units by 2020, at a CAGR of
9.2% from 2014 to 2020. Factors such
as increasing use of UHD displays in
commercial sector and proliferating use
of UHD TVs in media and broadcasting
industry are supporting the growth of
ultra high definition panel market.
Plastic and Flexible AMOLED Display
• The next evolution is plastic displays
and flexible displays. IDTechEx expects
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.
• Glass-based displays will remain an
important technology, especially in TV
applications where scale-up and cost
reduction are still big challenges. Flat
and curved OLED TVs were recently
launched by Samsung and LG. While
the market for OLED TV panels will be
relatively small in 2014, it will
experience strong growth in the next
ten years, with a projected 42% CAGR.

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Semiconductor Industry
Broadcom
Cost Cutting
• Broadcom will downsize employees,
affecting 2,500 individuals, after the
company failed to sell its cellular base
band business. It recently reported
neither profits nor revenue growth for
its latest quarter.
• Broadcom will take a $417 million
charge, about $150 million of it this
quarter, for the restructuring which will
include closing or consolidating 18
offices. "The decision to exit the cellular
base band business puts Broadcom on
a path to being a stronger company,"
said Broadcom's chief executive Scott
McGregor.
• The decision underscores the
significance of the smartphone market
and how it is consolidating into the
hands of fewer, larger system and
chipmakers. The layoffs represent
about 20 per cent of Broadcom's
12,400 employees.
Broadcom’s stock performance
STMicroelectronics
MEMS Microphone Lab in Taiwan
• STMicroelectronics (NYSE:STM), a
global semiconductor leader serving
customers across the spectrum of
electronics applications, announced it
has opened a new MEMS Microphone
Lab (Anechoic Chamber) in Taiwan to
test and analyze high-performance
audio applications built with ST's MEMS
microphones.
STMicroelectronics’s stock performance
Semiconductor Market
Driver and Sensor Market in Smart Lighting
• The market for LED drivers, MCUs,
sensors and other chips used in smart
lighting will grow from around $67
million in 2014 to $1.05 billion in 2019.
This is according to a new report from
industry analyst firm NanoMarkets
titled, "The Markets for Smart Lighting
Drivers, Controllers and Sensor Chips –
2014."

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Software Industry
Google
Acquisition of DrawElements
• Google has purchased Helsinki-based
3D graphics start-up DrawElements,
the company confirmed on its web-site.
• While finan-cial terms of the deal were
not disclosed, Arcticstart-up reports
that the sale price was over $10
million.
Google’s stock performance
Facebook
Cooperation with Samsung for VR
• Oculus VR made its name building
high-end virtual reality headsets for the
living room, but it's leaving mobile to
the other guys.
• The virtual reality pioneer, which
Facebook finished purchasing for $2
billion earlier this week, is working with
Samsung Electronics on a headset that
uses mobile devices to create a VR
experience, people familiar with the
matter say.
• Both companies stand to benefit widely
from working together: Samsung gains
access to Oculus's software and
specialized hardware to help build its
own virtual reality headset for mobile
devices. Meanwhile, Oculus gains
access to Samsung's manufacturing
expertise and help as it develops a
headset for consumers. In addition,
working with the Korean titan will allow
Oculus to introduce virtual reality to
many more consumers than it
otherwise would be able to reach.
• The current prototypes are being
shipped by Samsung to developers,
people familiar with the matter say,
and so far it appears they can't make
enough to meet demand. Financial
considerations between the two
companies, how the final product will
be unveiled and marketed, which
company's names will appear on them,
and in what order, are still unclear.
Facebook’s stock performance
LinkedIn
Acquisition of Bizo
• Pro social network LinkedIn has
purchased marketing-platform startup
Bizo in a deal worth $175 million, the
company announced.
• Bizo produces B2B marketing products
that measures display and social
advertising campaigns for specific
audiences. Recently, the company
launched a marketing automation
product called Multi-Channel Nurturing,
as VentureBeat previously reported.
• The $175 million acquisition will see
LinkedIn paying 90 percent in cash; the
remaining 10 percent is in stock.

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Service Industry
Servis Market
Pay TV Market
• The worldwide pay-TV market
continues to grow in Q1 2014.
According to ABI Research’s Market
Data, the total pay-TV subscriber base
is expected to surpass 936.4 million at
the end of 2014, generating $280.4
billion in service revenue.
• Although the global cable TV market
grew in 2013, the North American cable
TV market lost around 4% subscriber
base in 2013. High subscription cost
and other pay-TV alternatives are
blamed for the declining subscriber
base; however, cable TV operators
experienced slower subscriber loss rate
in the past two quarters. In Q1 2014,
subscriber net loss of major cable
operators in the United States was
around 7k compared to over 200k
subscriber loss in 4Q 2013. “Innovative
services such as Comcast’s cloud based
X1 system which allows customers to
store and watch TV Shows on different
devices has helped to reduce churn,”
commented Jake Saunders, VP and
practice director of core forecasting.
“The North American pay-TV subscriber
base is expected to reach 113.2 million
in 2014.”
• ABI Research anticipates that the
worldwide pay-TV subscriber base will
reach 1.1 billion subscribers in 2019.
“Emerging markets such as Asia-Pacific
and Latin America will have a higher
growth rate than mature markets in the
years to come. The global pay-TV
market is expected to generate $331
billion in 2019,” says Khin Sandi Lynn,
industry analyst.
References
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