Startup Village 2014 Technology trends sessions extracts

Technology trends discussed at Startup Village 2014, Skolkovo, Moscow: 1. Who creates the new materials and how do they do it?

2. Supercomputers for everyone

3. Connected World

4. Brain and Creativity

5. Applications for UAV: Russian and International practice

6. Digital Retail

7. High-tech Startups in Wearables & Augmented Reality

8. IT Security

9. Cell Technologies and Regenerative Medicine

10. Brain Computer Interface

11. Impact of the New Technological Developments on the Hydrocarbons Market

12. Impact of New Technological Developments on the Russian Electric Power Market

Who creates the new materials and how do they do it? Drivers: In XXI century new materials result from programming desired properties, not trial-and-error search as before. “Hack” of traditional physics and chemistry, such as nanotechnology and chemistry of ultra-high pressure. Working software algorithms available for design of material properties. Trends: Metamaterials - artificial materials engineered to have properties that are not found in nature. Previously inexistent properties: e.g. negative refraction index, negative dielectric coefficient, light compression, “invisibility”, etc. Light-based (quantum) computers to replace Si-based computing and enhance calculation capacity up to 105 times. Russian outlook: Russian Quantum Center. Quantum simulators for new materials (metamaterials). New algorithms allowing computer to design materials (crystal structures) with theoretically predicted properties.

Supercomputers for everyone Drivers: Supercomputers (SC) are internationally recognized as main instrument in winning the global market competition. Approach to innovation has changed from theory and experiments to computer models and simulation. Computing is omnipresent in every single economy sector. Pampers and Pringles designed/produced with the help of SC. Modeling, simulation, analytics, data processing – all requires expanding calculation capacities. Energy issue: annual operation expenses are comparable to the SC cost itself. Pricy: startups in SC are so far possible only in software. Trends: In 10-15 years notebooks will have the power of SC. There are 3 mln GPU cores in Top 1 supercomputer now. Cognitive computing - solution to make SCs more intuitive to use. Fourth generation approach in innovation: Theory+Experiment+Simulation+Bigdata. Private cloud computing. SC merging with cloud computing. Computers comparable with human brain capacity by 2025. Issue: information noise also grows very fast. Massive component integration into complex aggregated systems. Open standards. Quantum computing. Energy efficient (green) computing. Russian outlook: Gap between Russia and developed countries is growing now. Local supercomputers developed by: SKIF, Quant, Rosatom, RSC Group. Dozen of Russian supercomputers have made it to top 500 rating. Russia has #46 place in Green 500 energy-efficient SC.

Connected World (Internet of Things) Drivers: In 2008, the number of devices connected to the Internet, exceeded the number of people on Earth • By 2020, there will be 50billion connected devices • Beyond 2016, IoT will be of >$3tln in value creation potential Technology trends, enabling the Internet of Things: • Sensors in everything • Networks everywhere • Measurment/analisys of everything • Wearables: by 2020 40-50 bln devices, 10 wearable connected devices per each human being.

First “validations” of IoT: Driverless car (e.g. Google); Fleet Management (e. g. Fleetmatic); Smart Building Energy Management Systems (e.g. Schneider); $3.2 Billion Thermostat by Nest (Apple); Wearable devices (wearables market is projected to reach $6-$12 Billion by 2018). Russian outlook: For IoT penetration of Internet is critical => in Russia broadband connection will be delivered to all localities populated by over 250 people. Where first disruptive IoT applications are possible in Russia? • RFID-type technology for public and private transport. • Modernization of the Russian Post – logistics optimization (joint project with Rosnano)

Brain and creativity Drivers: Development of microscopy and scanning (MRI, PET, etc) techniques. Brain scans are so far expensive ($600). Promising brain function research in isolated population groups. Brain-computer interface already real, chips being implanted in brain. Trends: Brain mapping technologies in 3D to monitor activity, function and diseases. ENIGMA – first global human brain scans database, for brain mapping, drug discovery, etc. Information offload from brain to external storage (computer, cloud), all brain memory is only 10 ccm in size. Concept of brain almost liberated from information storage function by 2045. XXI century is human-centric technology century, technologies are build for and around human beings. Russian outlook: Microanalysis lab in Skolkovo – 3D modeling of brain tissues.

Drivers • Penetration of mobile phones: 1,2 bn of devices in 2014 • Development of IoT: 40-80 bn connected objects by 2020 • Developing market of consumer robotics: 390 bn by 2017 • Crowdsourcing and low barriers to entry into the market

Trends • Applications for wearables: wearable cameras; sports & activity trackers; smart clothing & textiles;

smart glasses; smart watches; entertainment & gaming • The industry of wearable devices is still actively looking for customer appealing use-cases • Privacy is an important issue: wearable devices produce a lot of personal data that is sensitive • Product design and user education play important role • Applications for AR: medicine, education, industrial – defense, architecture, manufacturing and

repair; public service; transport; gaming and entertainment, travel • Both industries are not startups any more with big players such as Intel and CISCO involved.

Russian Outlook • Use of AR in Education and social networks • Use of AR for industrial applications • Transition from applications and software to hardware products • Time-saving technologies for consumers and indusry

High-tech Startups in Wearables & Augmented Reality

Wearables global market size 2014 - $5 bn 2018 forecast – $12,6 bn AR global market size 2011 - $181 mln 2018 forecast - $5 bn

Applications for UAV: Russian and International practice

Drivers and world market for UAV technologies: • Military-initiated UAVs development accelerate civil applications. • Development of artificial intelligence, navigation, flight control systems.

Industry trends and Issues • Civil market is at very early stage, currently being formed. • Need to join the efforts of military and civil UAV developers • Aviation robots. New applications: telecom, agriculture, logistics • More regulation and control in the future => Needed to ensure safety in airspace • Use of geo-information systems for analysis and interpretation of data, received from UAVs • Monitoring important objects. Civil reconaissance, for example Arctic see ice conditions.

Russia: 3% - civil use; 97% - military use (Ministry of Defense, Ministry of Emergency Situations, border control). Existing legislation is not adequate (pending amendments to the Russian Air Code). Volume of Russia’s market for UAV technologies: EUR ~300 mln, civil share is only ~ 1mln . In the last 2-3 years, Russian UAV market demonstrated annual growth of 150%.

Two main directions of civil use in Russia: Monitoring of oil/gas and energy complex facilities and aerial cartography. Emergency situations (forest fires, flood, etc) monitoring is rising. Number of companies in the industry (Russia) so far 10-12.

UAV Market Breakdown: • North America – 72% • Russia – 7% • Europe – 7% • Asia – 7% • Middle East – 5% • Latin America – 2% 2013 - $6 bin 2020 forecast - $7.1 bln

Digital Retail Drivers: Sales of non-food consumer goods actively moving into online sphere. Growing role of digital marketing. Nowadays, audience leads the market. The rise of social networks marketing and reference services.

Trends: • Wider adoption of mobile payments and introduction of biometrics-based payments • Supply chain – further optimization of logistics • Transition to cloud technologies • Synergies with social networks • Use of omnichannel sales to create consistent customer experience • Closer integration with mobile services • Real-time and Big Data analytics (social media, customer loyalty programs, mobile operators) • Introduction of new RFID-based types of identifiers in retail: NFC tags in product labeling and

UHF tags in retail logistics

Russian outlook: • In 2014, digital retail will account for 50% of all retail sales • Russia is 4th market in Europe in digital retail (annual turnover – 2 bn Euro) • Every 2nd dollar earned in digital retail in Russia is earned by Yandex • Russian online audience is 2nd in the world after Israel on time spent in soc. networks

IT Security Drivers: Development of Internet of Things expands security needs. Increased attack surface (exponentially growing volume of data) and threat diversity. Security in IoT is on the level of IT security was in the 90’s.

Trends: • Scalable trustworthy systems • Enterprise-level metrics • System evaluation lifecycle • Combating insider threats • Combating malware and botnets • Global scale identity management • Survivability of time-critical systems • Provenance and Usability • Privacy-aware security • Situational understanding & Attack attribution

Russian outlook: Russian Academy of Sciences developed “Cybersecurity 2030” strategy document.

Cell Technologies and Regenerative Medicine Drivers: Rapidly growing bio-data banks, Google is #1 bioinformatics source. Aging population dictates for increase in productive lifespan. US national debt due to Medicare/Medicade programs independently evaluated as high as $300 tln (instead of official $17 tln) – healthcare cuts are critical. 80% of healthcare expenses currently goes to the last 2 years of patients life – bad healthcare model. Aging is not defined as a disease, hence procedures of ant-age drug development are undeveloped.

Trends: Ageless generation. Healthcare paradigm change from “last mile” treatment to prevention and lifetime extension. Spread healthcare expenses over lifetime more evenly. Translational research. Traditional pharma reached its limits, breakthrough technologies are required. IT, merging with healthcare, will provide for longer lifetime in the next 10-15 years. It will mostly contribute in risks reduction (such as personal diagnostics).

Russian outlook: Absence of a legal regulation for cell technologies in Russia. Probably will appear by 2015. Very few labs in Russia, grey market for rich people. Have international level researchers, such as by Alex Zhavoronkov who runs Biogerontology Research Foundation, a UK-based think tank for aging research.

Brain computer interface

Drivers: Neuroimaging technologies for brain function and activity mapping. Development of robotics, including surgery robots and computer-guided prosthetics for disabled. US Brain initiative with first $100mln allocated for research. Optogenetics - breakthrough technology allowing control of neurons, genetically sensitised to light. Monkeys already able to manipulate robots through brain-computer-robot interface.

Trends: Humans enter virtual world, they will cease to physically directly operate objects. Direct brain-computer interfaces without intermediary action such as typing or speech. Interface that allow to operate computers just with power of mind. Next generation smart home operated by power of mind. Brain-computer-robot integration. Access to the mind of disabled persons (like Stephen Hawking). Optogenetics allows for maximum brain integration with minimal trauma.

Russian outlook: Already existing prototypes by professor Kaplan with people typing on computer only using head surface electrodes, 15 words/min at 95% accuracy. Neuro-photonics and brain laser technologies lab in Kurchatov institute, Russia.

Drivers • Growing excellence of national oil & gas companies • Growing demand and production in oil & gas • Decreasing volumes of oil extraction, Increasing complexity of recovery • Shift to hard-to-recover reserves and unconventional recovery (shale oil, Arctic and deep sea mining) • Increasing expenditures on exploration with focus on new regions • Shortage in qualified workforce

Technological Trends • Fundamental research becoming increasingly important • Expertise in integrated technological solutions becomes as important as product expertise • Technological innovations developed by industry-wide partnerships to address the issues of

increased complexity of recovery • MNCs approach to innovations differ drastically and evolve • Technologies moving down the maturity curve with increased speed • Growing role of innovations in business processes • Proliferation of “intellectual oil filed” systems

Russian Outlook and Government Priorities • Focus on more efficient exploration, inc. exploration of Arctic offshore • Development of deeper oil refining, esp. black products and their secondary and tertiary use • Petrochemical sector: increase volume of primary processing and increase depth of processing

Impact of the New Technological Developments on Russian Hydrocarbons Market

Drivers Proliferation and further development of small distributed power production (smart grid). Generally decreasing demand for energy (due to energy efficient technologies), except for industry of electric cars. Development of energy storage technologies.

Technological Trends:

Russian Outlook “Energy Strategy of the Russian Federation until 2035” priority areas in the electrical power industry are: efficient and powerful gas turbines of 300-350MW; high-efficiency combined cycle power plants of 500-800MW working on natural gas; cogeneration heat sources using gas turbines of medium and low capacity; clean coal condensing units; coal gasification technology; distributed generation in the form of non-conventional power plants; use of progressive conductors made of new composite materials; high-temperature superconductor (HTS) materials and devices; inexpensive and reliable electricity storage of different types at all levels; distributed control systems; controlled electric networks on flexible AC transmission systems; technologies for repairs and modernization of power lines.

Impact of New Technological Developments on Russian Electric Power Market

Generation • Growth in efficiency of

traditional technology (up to 60%)

• Renewable energy • New types of energy

generation: fuel cells

Transmission • Direct current • Digital substations • Adaptive network

Consumption • Energy-efficient

appliances and gadgets • Intelligent energy

consumption control systems

• Autonomous power supply systems

Sales • Intellectual systems for

information collection and analysis

• Advanced billing • Online services • New payment methods

Domestic competences

Market presence

Super Computers

New Materials

Brain-Computer interface

Connected World (IoT)

Digital retail

IT Security

UAV Wearables

New Tech for Oil&Gas

Cell Tech

New Tech for Energy

Interested to know more?

Contact us

Future Watch Team in Helsinki Heli Karjalainen (heli.karjalainen at tekes.fi)

Laura Nurmi (laura.nurmi at tekes.fi)

Future Watch Team in Russia Virpi Herranen (virpi.herranen at tekes.fi)

Pavel Cheshev (pavel.cheshev at tekes.fi)

This material is prepared in cooperation with Skolkovo Foundation