the iot quarterly: 2q16 - · pdf filethe iot quarterly: 2q16 equity research ... 5g, iot...
TRANSCRIPT
August 8, 2016
Internet of Things
The IoT Quarterly: 2Q16
Equity Research
2Q 2016 Update: MWC Shanghai, 5G, IoT World, Qualcomm, Samsung, HPE
A new quarterly series tracking IoT
This is the second installment in our new
quarterly series on IoT. Since our last issue, IoT
has continued to drive strategy across industries
(as highlighted, for example, at the GE Digital
Investor Meeting) and M&A (e.g.
Verizon/Fleetmatics). For more detail on the
impact of IoT across industries, please refer to our
multi-volume IoT report series (links inside).
What you can find in the IoT Quarterly
Our 2nd installment includes the following topics:
1. 2Q16 updates: MWC Shanghai, FCC spectrum
allocation, IoT World, GE Digital Investor
Meeting, Verizon’s IoT study
2. Profiles in IoT: Qualcomm, Samsung, HPE
3. Start-up Spotlight: Enlighted
4. IoT endpoint growth: top-down and bottom-up
5. Key news flow
6. M&A tracker
7. IoT funding events
8. IoT start-up list
9. Upcoming events
Key events this quarter
(1) Qualcomm and China Mobile demoed 5G at
MWC Shanghai. (2) Qualcomm and Ericsson said
that the 5G adoption timeline is accelerating. (3)
The FCC allocated spectrum for 5G. (4) The GE
Digital Investor day highlighted GE’s leadership in
Industrial IoT. (5) A VC panel at IoT World and a
Verizon study highlighted the much larger
opportunity in enterprise vs. consumer IoT.
IoT Cellular connections up 33% yoy
Across major global carriers, (Vodafone, AT&T
and Orange), IoT connections were up 33% yoy.
Start-up Corner
VCs invested $399mn in 93 IoT start-ups in 2Q16
(Exhibit 11). In this issue, we highlight Enlighted,
which offers an IoT platform for commercial
building automation, such as advanced lighting
control. It has a number of Fortune 500 customers
including Agilent, AT&T, Google, HP and Uber.
Enlighted has raised $80mn from investors
including Kleiner Perkins and Intel Capital.
Simona Jankowski, CFA
(415) 249-7437 [email protected] Goldman, Sachs & Co.
Marcus Shin
+82(2)3788-1154 [email protected] Goldman Sachs (Asia) L.L.C., Seoul Branch
Brian Lee, CFA
(917) 343-3110 [email protected] Goldman, Sachs & Co.
Balaji Krishnamurthy, CFA
(415) 249-7482 [email protected] Goldman, Sachs & Co.
Connie Qian
(415) 249-7445 [email protected] Goldman, Sachs & Co.
Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.
The Goldman Sachs Group, Inc. Global Investment Research
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 2
Simona Jankowski, CFA Marcus [email protected] [email protected]
(415) 249-7437 +82 (2) 3788-1154
Goldman, Sachs & Co. Goldman Sachs (Asia) LLC
Brian Lee, CFA Balaji Krishnamurthy, [email protected] [email protected]
(917) 343-3110 (415) 249-7482
Goldman, Sachs & Co. Goldman, Sachs & Co.
Connie Qian Ankit [email protected] [email protected]
(415) 249-7445 (212) 934-6394
Goldman, Sachs & Co. Goldman Sachs India SPL
Authors
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 3
Contents
Profiles in IoT: Qualcomm, Samsung, HPE 8
Start-up Spotlight: Enlighted 12
IoT endpoint growth: top-down and bottom-up 14
Key news flow on IoT in 2Q16 17
M&A activity in IoT in 2Q16 18
Capital invested and funding events in IoT startups 19
IoT funding events in 2Q16 20
List of IoT Startups 22
Upcoming events 24
Disclosure Appendix 25
This is the latest installment in our series exploring the implications of the Internet of Things across sectors and the technologies and
companies enabling greater connectivity. View the full series below and visit our portal to see related research, videos and more.
The IoT Quarterly: 1Q16, May 25, 2016
Making S-E-N-S-E of the next mega-trend: Framing the IoT opportunity for CommTech and Semiconductors, June 25, 2014
Software and the IoT: Platform, data and analytics– The role of software across the enterprise and consumer IoT, July 8, 2014
Moving from B-R-I-C-K-S to B-I-T-S: Understanding the Industrial IoT, with a deep dive into home automation, July 16, 2014
Smart technology and the future of insurance: As cars and homes get smarter, so too will insurance companies, September 24, 2014
The digital revolution comes to US healthcare, June 29, 2015
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 4
The IoT Quarterly: 2Q16 update
In this section, we detail the key developments in the broader Internet of Things (IoT) ecosystem during the quarter, including
conferences, company events, and other datapoints, to help investors track the broad IoT theme.
MWC Shanghai continued the focus on 5G and infrastructure for IoT
Mobile World Congress (MWC) Shanghai, previously known as Mobile Asia Expo, was held from June 29, 2016 to July 1, 2016 in
Shanghai, with around 550 exhibitors and over 53,000 participants. Consistent with the global MWC held in Barcelona in February,
the announcements and demonstrations at Shanghai largely revolved around 5G, which we believe will be a key enabler of the
infrastructure for IoT. According to a report by GSMA, China’s machine-to-machine market will reach 1bn connections by 2020.
At the event, Qualcomm demoed a 5G New Radio (NR) prototype system in collaboration with China Mobile. The system, which
consists of a base station and user equipment, operates in spectrum bands below 6GHz and achieves data rates of multi-gigabit per
second with significantly lower latency. Qualcomm expects the system will be able to facilitate robust mobile broadband
communications. We believe this is particularly important for Chinese telecom operators, as there are discussions in the industry
about using sub-6GHz spectrum bands for 5G in China. Qualcomm also demonstrated the capabilities of its power-efficient LTE IoT
modems, first announced at CES in January. Qualcomm revealed that its MDM9x07 chipset family, consisting of the Snapdragon
X5 LTE modem and MDM9207-1 modem for IoT, has secured 100+ design wins with 60+ equipment and module manufacturers.
These chipsets are being tested and deployed in a wide range of applications in smart cities and commercial and industrial IoT.
China Mobile and Huawei jointly demonstrated several 5G developments. They showed a 5G 3.5GHz prototype, a first pre-
commercial prototype which supports throughput up to 3Gbps in this spectrum band. China Mobile expects to complete the 3.5GHz
trials by end of 2017 with large-scale field trials in 2018 and commercial deployment in 2020. The companies also showed a 5G
prototype above the 6GHz band, a 5G network slicing solution, and 5G smart car use case solution.
Huawei also launched an end-to-end narrow band IoT (NB-IoT) solution to accelerate cellular IoT. The solution is designed to meet
operators’ low power and wide-area coverage requirements, thereby helping the operators to expand their IoT services and turn IoT
into a basic service in the future. Huawei said the solution is based on 3GPP standards and will be available in September 2016 for
large commercial trials and large-scale commercial deployments from December 2016.
Ericsson, China Mobile and Intel together demoed a Smart City solution at MWC Shanghai calling it the “world’s first application
demonstration based on latest Cellular IoT technology”. The system comprised of Intel’s XMM 7115 modem, China Mobile’s
environment monitoring system, and Ericsson’s RBS6000 multi-mode base station combined with pre-commercial software
supporting the latest cellular IoT technology. The system captures environmental conditions such as temperature, humidity,
particulate matter, etc. and sends it to CM’s monitoring application. The companies expect that the technology will be used in
several applications such as smart homes, smart meters, municipal IoT, industrial IoT, wide area IoT, etc.
F5 Networks announced a standalone carrier-class firewall which supports up to 1.2bn concurrent connections (20mn+ connections
per second) for end-to-end security across service provider networks. The scalability of the firewall is designed to address rising
security concerns associated with growth of IoT, development of 5G and NFV networks.
For more detail, please see our April 18 note, 5G: How 100x faster wireless can shape the future
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 5
Virtual Reality and Augmented Reality were also a topic of discussion, with the key announcement being HTC’s formation of a
VR-focused alliance of 28 global VCs with an aim to develop the VR ecosystem. The Virtual Reality Venture Capital Alliance
(VRVCA) together has about $10bn of capital to invest in VR and AR related projects and start-ups.
FCC spectrum allocation likely to accelerate 5G development in the US
In July, the FCC unanimously approved a plan to begin working toward making 5G available in the US. Accordingly, FCC has
opened up nearly 11GHz of spectrum in the above 24GHz band (3.85 GHz of licensed spectrum and 7 GHz of unlicensed spectrum)
for 5G, including mobile and fixed-use wireless broadband networks. The FCC expects the first 5G networks to go live in 2020. It
noted that its decision has made US the first nation to identify high-band spectrum for 5G. The decision was widely hailed by
carriers and industry participants. AT&T commented that the FCC’s decision to open up high-frequency spectrum for 5G was
positive, saying “FCC made a big down payment on the next generation of wireless innovation in the US”. Verizon commented,
“The FCC order puts the US on track to become the first country in the world to open up wide swaths of high-band spectrum, which
is critical to ensure that the US retains its global leadership in advanced wireless communications.”
Separately, Verizon revealed on its earnings call that the FCC has approved its request to lease licenses in the 28GHz and 39GHz
high-frequency bands from XO Communications. The FCC has granted Verizon permission to move ahead with its plans of fixed 5G
deployments. Verizon reiterated its plans for fixed commercial wireless fiber launch in 2017 and to be the first carrier in the US with
5G networks. Meanwhile, AT&T also applied to FCC to seek permission to use bands in 28GHz and 39GHz bands for 5G trials.
Qualcomm’s CEO commented on its earnings call that the company has also seen acceleration in the 5G timeline over the last year,
and especially over the last quarter in the US. The company now believes the 5G deployment timeline has fast-tracked from an
expected 2020 a year ago to a 2018/2019 timeframe now, depending on the type of deployment (i.e. fixed-use or wireless). Ericsson
said on its earnings call that the company has increased its investment in 5G, as it expects the technology to be available earlier
than previously anticipated. Ericsson’s CEO (days before stepping down) also said in an interview that the 5G developments and
pre-commercial trials by carriers are happening much quicker than the company anticipated, further adding that the US has ramped
up quickly in 5G. Overall, we view these developments in the quarter as likely to accelerate the 5G evolution in the US.
IoT World: Venture Capitalists focused on subscription models and expect ‘survival-of-the-fittest’
We attended a panel discussion with several venture capitalists (VCs) at IoT World on May 11, 2016 in Santa Clara, CA. Our key
takeaways are as follows: (1) VCs pointed out that IoT is gaining significant traction, with the focus shifting from consumer to
industrial IoT, with the industrial IoT opportunity to be 9X the size of consumer IoT (this is consistent with the views expressed by
companies such as Cisco and Verizon as well). In addition, they noted that IoT is, if anything, under-hyped and believe that it could
potentially grow 10X the size of internet, thereby providing immense growth opportunities through early investments in this market.
(2) VCs are increasingly focusing on subscription models to have more predictable, recurring source of revenue. IoT helps
merchants/vendors shift from selling products to providing services. For instance, instead of selling cars to customers, companies
can provide transportation services enabled by IoT, such as fleet management. (3) VCs expect ‘survival-of-the-fittest’ as the
market consolidates. VCs pointed out that large companies no longer have the best developers and the gap in innovation between
large companies and start-ups is at an all-time high. Large companies typically look at inorganic ways to reduce this gap. For
instance, Qualcomm, Cisco, Intel, and GE among others have set up dedicated VC arms to invest in startups from an early stage. In
addition, companies also look at M&A to acquire talent as well as products and technologies to augment their in-house capabilities.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 6
VCs expect to see a lot of consolidation going forward, including multi-billion dollar deals as the market matures further (e.g. as we
recently saw with Verizon’s $2.4bn acquisition of GPS vehicle fleet management company Fleetmatics). We list the M&A activity and
key funding events in IoT for the quarter in Exhibits 10-13.
GE Digital Investor Meeting: expects 20% CAGR to $15bn in revenues by 2020
We attended the GE Digital Investor Meeting on June 23, 2016 in San Ramon, CA in which executives presented on GE’s Digital
strategy and opportunities going forward. GE is one of the leaders in the Industrial IoT, and we profiled the company’s IoT strategy
in our inaugural IoT Quarterly. Our analysts believe that its cloud-based, open-source Predix platform developed for Industrial IoT
could be transformational for GE’s services business. We highlight several key takeaways from the event: (1) GE Digital expects to
grow at over 20% CAGR (2016-20) with sales of $15bn by 2020. Of that, the company expects its Predix platform to contribute $4bn
by 2020 (with most of the revenue ramp expected post 2018) with industrial applications such as Asset Performance Management
(APM) and Brilliant Manufacturing adding an additional $10bn in sales and an incremental $1bn from productivity enhancements.
(2) GE is investing organically as well as inorganically to grow GE Digital. GE differentiates itself from other platform providers
(such as IBM, SAP, AWS etc.) through its domain expertise, global scale and operational knowledge. With organic investments of
~$2bn, it has focused toward Digital thread (to connect factories digitally) along with enhancing vertical and horizontal capabilities.
Apart from that, the company also highlighted strategic investments in Pivotal, NeuCo, and Servicemax to enhance platform
capabilities and accelerate its growth trajectory. (3) In addition, GE aims to develop a healthy developer and partner ecosystem
to commercialize its platform. It intends to grow its Predix developer community to over 20,000 and have over 50 partners by 2016.
Notably, on July 11, GE partnered with Microsoft to add support for GE’s Predix platform on Microsoft Azure in order to leverage its
enterprise applications. Ultimately, GE aspires to make Predix the preferred open-source platform for industrial IoT.
Verizon’s study highlights 5 macro trends that will drive IoT opportunities
In early April, Verizon published a report titled “State of the Market: Internet of Things 2016” providing several insights into the
market opportunities created by IoT. Notably, while consumer applications were the focus of IoT startups in the past (raised 15%
more VC funding compared to the enterprise focused IoT startups in 2014), the trend reversed in 2015 as enterprise-focused IoT
startups gained more traction and raised over 75% more funds compared to consumer counterparts. Further, Verizon believes that
enterprise-focused IoT startups are on a rise and will generate 2-3x more funding relative to consumer-focused IoT startups in 2016.
Notably, Verizon acquired Fleetmatics (provides fleet-tracking solutions) on August 1 for $2.4bn to bolster its telematics business. It
had earlier (in June) acquired Telogis in the same segment. Broadly, Verizon expects IoT-led revenue opportunities to be driven by 5
macro trends: growing consumer expectations, data monetization, evolving regulatory landscape, network connectivity, and
security. We summarize these below.
Growing consumer expectations – Consumers have already become accustomed to smartphones and are beginning to realize
their potential as a gateway to monitor and control physical objects by connecting them to the network. As a result, consumer
demand for IoT is increasing as they want to connect more things around them in order to monitor and control them effectively.
Data monetization – As billions of things are connected to the network, enterprises will be able to monetize them through
analytical services that can sift through the massive amounts of data generated by these connected devices and derive valuable
insights. Once the benefits of data monetization become clearer, more companies will pursue IoT strategies.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 7
Evolving regulatory landscape – Regulators are increasingly mandating greater monitoring in order to make processes more
efficient and tackle social issues. For instance, the Energy Act (2007) accelerated the deployment of smart meters in order to
monitor energy consumption. In addition, the Drug Supply Chain Act aims to solve the issue of counterfeit drugs ($75bn annual
industry loss) by tracking prescription drugs across the supply chain by transferring details such as shipment information,
transaction history etc. to electronic medium by 2017.
Network connectivity – As the cost of sensors declines and connecting devices to the network becomes cheaper, large scale
deployment of IoT devices becomes more feasible. In addition, 5G can provide the infrastructure to support an end-to-end
connected ecosystem with wearables, connected cars, home automation devices, smart grids, and industrial applications.
Security – As more devices get connected to the network, security and privacy become high priority issues. It involves several
layers, i.e. (1) Governance, Risk and Compliance to lay the groundwork of risk management; (2) Threat Management to enforce
security policies and protect the perimeter; (3) Authentication and Privacy to ensure unauthorized access to critical data is
prevented; and (4) Professional Security Services to deal with security threats to contain the potential impact to the ecosystem.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 8
Profiles in IoT: Qualcomm, Samsung, HPE
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 9
Qualcomm: Spearheading connectivity and processing technology development for IoT
Covered by Simona Jankowski, Hardware & Communications Technology Analyst
Qualcomm stands to benefit from the proliferation of IoT from both a chipset and licensing standpoint, as it can leverage its leadership position in wireless
connectivity (3G/4G, Wi-Fi, Bluetooth, GPS, etc.) in a wide range of new applications from wearables to smart homes to automobiles and healthcare.
Qualcomm recently disclosed that non-smartphone devices or IoT generated $1.7bn of revenues last year, and are expected to generate $2.5bn this year
(representing 16% of chipset division revenues). Over the past few years, Qualcomm has made several acquisitions to broaden its IoT portfolio, including
Atheros and CSR, and we think M&A will likely remain a driver of Qualcomm’s expansion in this area.
Strong traction with LTE IoT modems – At the end of June 2016, Qualcomm had more than 100 design wins across over 60 OEMs with its MDM9X07
LTE modem for IoT. The chipset is designed for deployment in Smart City, Commercial and Industrial applications, and offers edge processing for IoT
devices. The chipsets can support up to 10Mbps Cat-1 LTE downlink, with up to 10 years of battery, and are compatible with global cellular standards
and 802.11ac Wi-Fi. Qualcomm expects to broaden out the family over the next year to cover expanding LTE capabilities.
Chipsets for Connected Cars – Qualcomm introduced Snapdragon 602A (S602A) in 2014, and it was engaged with over 15 OEMs in over 40 models by
the end of 2014. Qualcomm leveraged its early leadership in LTE in the mobile space to the automotive space, with nearly 100% share of the early
design wins, including BMW, GM and Audi. At the Consumer Electronics Show (CES) in 2016, Qualcomm launched the Snapdragon 820A (S820A)
processor for cars with optional integration of the X12 LTE modem (in Snapdragon 820Am) supporting Cat-12 (600Mbps downlink and 150Mbps uplink)
speeds. S820Am can support up to 8 camera sensors that can be used to provide active driver assistance (ADAS) features such as lane departure,
possible collision detection etc. It has already shipped 340mn+ chips to over 20 automakers globally. Built on its portfolio of automotive offerings,
Qualcomm introduced its Connected Car Reference Platform in June 2016.
Snapdragon Wear SoCs power the next-generation of wearables – Qualcomm’s Snapdragon Wear platform includes system on chip (SoCs) for
wearables. It includes Snapdragon Wear 2100, which is designed for multi-purpose applications in the next-generation of wearables including
smartwatches, sports watches, connected eyewear etc. and Snapdragon Wear 1100, which is targeted primarily toward trackers for kids and elderly by
leveraging Qualcomm’s IZat location service. Relative to the predecessor Snapdragon 400, Wear 2100 is 30% smaller and consumes 25% less power to
provide more flexibility to ODMs. Qualcomm also disclosed that its processors are used in over 100 wearables including Samsung Gear S, LG Urbane
LTE, and Asus Zenwatch among others.
Exhibit 1: Expanding addressable market through adjacencies and additional growth opportunities Serviceable addressable opportunity (US$ bn)
Source: Company data.
23.033.0
10.0
18.01.7
3.0
2.0
6.0
2.5
5.0
6.6
15.05.0
18.0
2015 2020E
Data center
Healthcare
IoT
Networking
Mobile compute
Automotive
RFFE
Core mobile
$46 bn $103 bn
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 10
Samsung: Wearables, Virtual Reality, Smart homes, and Artik platform
Covered by Marcus Shin, Asia Pacific Hardware & Semis Analyst
In the IoT arena, Samsung provides wearables, virtual reality devices and connected home solutions for consumers, and its family of Artik modules and
cloud platform for enterprises. It announced plans to invest $1.2bn over the next four years in US-focused R&D and IoT related investments.
Samsung Gear’ing up with its portfolio of Wearables and Virtual Reality devices – Samsung has 10+ variations of fitness trackers and
smartwatches available under its Gear brand. Most recently, Samsung launched Gear Fit2 (in June 2016), which added Android support, GPS tracking,
and has an improved UI compared to its predecessor, Gear Fit. In addition to smartwatches, Samsung also introduced the Gear IconX wireless earbuds
that use Bluetooth to connect to each other as well as to the smartphone. They can also be used as a fitness tracker to measure heart rate, number of
steps, distance travelled, and calories burnt etc., and have an ambient-sound mode which keeps users aware of their surroundings, particularly useful
outdoors from a safety standpoint. Samsung has two products in the realm of virtual reality (VR), the Gear VR headset and Gear 360 VR camera.
Samsung developed the Gear VR headset in collaboration with Oculus (acquired by Facebook in 2014) which works with Samsung’s flagship Galaxy
devices. Separately, in April 2016 Samsung launched the Gear 360, which is a spherical VR camera that can capture high-resolution 360-degree images
and videos.
Samsung SmartThings make Smart Homes – Samsung addresses the smart home market through its SmartThings offering (acquired in August
2014). It consists of the SmartThings Hub, which provides an interface to wirelessly connect to and control smart devices. Along with its own sensors,
Hub is also compatible with hundreds of other smart products such as Philips Hue lights, Kwikset locks, and Honeywell thermostats. In addition to the
Hub, the SmartThings portfolio includes dedicated sensors to detect unexpected motion, arrival of known people, water leakage and a multi-purpose
sensor that can be used to monitor temperature/vibrations as well as whether doors, windows etc. are shut, which can automatically trigger alerts in
case of break-ins. Other connected products include power outlets and event-triggered cameras which can record as well as provide live video feeds.
Artik Platform to simplify development of IoT solutions – Samsung’s Artik platform includes Artik Modules and Artik Cloud, aimed at simplifying the
process of development and enabling faster time-to-market for IoT applications. Samsung launched Artik modules (in May 2015) in 3 variants (Artik 1, 5,
and 10) to cater to different requirements (size, power, capacity etc.) across IoT devices. While Artik 1 is most suited for wearables where small size and
low power consumption are critical requirements, Artik 5 is designed with keeping connected cameras and drones in mind, and Artik 10 provides
advanced capabilities which are most suited for industrial applications. In April 2016, Samsung entered the cloud services market by launching Artik
Cloud where it competes with the likes of Azure IoT and AWS IoT platforms amongst others. Artik Cloud provides an open platform to develop
connected IoT applications by supporting devices across protocols to derive valuable insights. Also, Samsung acquired Joyent (in June 2016) to further
augment its cloud platform.
Exhibit 2: Samsung’s SmartThings platform has 3 containers to secure and simplify the control of connected devices SmartThings platform segments into 3 containers, i.e. Accounts, Locations, and Groups
Source: Company data, Goldman Sachs Global Investment Research
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 11
HPE: Building an ecosystem for Industrial IoT
Covered by Simona Jankowski, Hardware & Communications Technology Analyst
HPE has announced several notable offerings as well as partnerships with key players to bolster its presence in the Industrial IoT domain. It introduced
the Universal IoT platform at IoT World in early May and further highlighted its IoT efforts at HPE Discover 2016 (on June 8). HPE launched its
converged system offering (Edgeline IoT systems), real-time data analytics platform for the edge, and announced its strategic partnership with GE to
target industrial use-cases. We discuss these in detail below.
Universal IoT Platform, HPE’s end-to-end enterprise IoT offering – HPE launched the Universal IoT Platform, intended to simplify IoT for enterprises
by providing an end-to-end solution, which is data centric and focused on improving data monetization. It can work across industries and vendors to
support heterogeneous devices irrespective of the underlying network. It supports LoRa and SIGFOX (competing low power unlicensed spectrum
wireless communication standards for IoT) in addition to WiFi, Bluetooth, and cellular connectivity. It can further leverage the HPE Vertica and Haven
OnDemand data analytics platforms to extract meaningful insights with enhanced security. HPE disclosed that Objenious (a Bouygues Telecom
subsidiary) is leveraging this platform to improve its fleet management as well as other IoT based solutions for predictive maintenance, remote meter
reading, etc.
Edgeline IoT Systems leverage Vertica platform for real-time data edge analytics; Aruba ClearPass automates IoT device onboarding – HPE
launched the EL 1000 and EL 4000 converged systems developed for industrial IoT use-cases with a focus on oil & gas, telecom, and manufacturing
companies for which data collection from remote sites is a major pain point. These systems are designed to withstand harsh temperatures and
vibrations, making them suitable for industrial deployments such as oil rigs. In addition, these can further enhance operational efficiency by analyzing
data at the edge in real-time instead of transmitting it to the cloud. HPE launched its Vertica analytics platform that works with EL 4000 systems to
process large amounts of IoT data in real-time to generate actionable insights. Separately, HPE’s WLAN solution (acquired last year), Aruba ClearPass,
allows for automated device onboarding and more efficient device management by dynamic authentication and enforcement of security policies. This
could be valuable for large gatherings, such as in sports events, music concerts etc. where a large number of devices have to be securely connected.
Focus on partnerships to drive Industrial IoT innovation – HPE intends to develop an ecosystem to facilitate innovation in Industrial IoT in
collaboration with other companies. For example, in collaboration with Intel, HPE has set up IoT Innovation Labs in Houston (Texas, USA), Grenoble
(France), Bangalore (India), and Singapore to assist customers with development of their IoT offerings. HPE also has partnerships with PTC, National
Instruments, and GE Digital to develop joint Industrial IoT solutions. In particular, HPE partnered with GE to leverage its Predix platform for edge
analytics. The partnership is targeted toward developing IoT applications for industries including aerospace, oil & gas, automotive, manufacturing, and
energy.
Exhibit 3: HPE Universal IoT Platform is based on oneM2M standard to ensure inter-operability of devices across industries and vendors HPE Universal IoT Platform Architecture
Source: Company data.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 12
Start-up Spotlight: Enlighted
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 13
Start-up Spotlight: Enlighted Enlighted is a venture-backed start-up founded in 2009 and based in Sunnyvale, CA. The company’s last round, Series D in March 2016, raised $25mn,
bringing its total to $80mn with investors including Kleiner Perkins Caufield and Byers, Draper Fisher Jurvetson, RockPort Capital Partners, Intel Capital,
and Tao Capital. Enlightened offers an IoT platform for commercial building automation, with its initial focus on advanced lighting control. Its solution
initially targets Fortune 500 companies, with customers including Agilent, AT&T, Google, HP and Uber. In April 2016, Enlighted formed a 5-year global
partnership with commercial real estate company Jones Lang LaSalle for implementing end-to-end smart building solutions.
How it works: Enlighted’s commercial IoT solution is based on patented digital sensors that are attached to LED lighting fixtures, a resilient and secure
wireless mesh network that can manage over 10,000 sensors per building, and a cloud infrastructure that includes a software analytics platform to help
process the data and manage the overall solution. Enlighted can retrofit existing lighting infrastructure with the sensors, or provide them integrated
with the lighting in new deployments. The sensors measure temperature, light, and motion, which can enable solutions such as energy management
(lighting and HVAC), space planning, building security, or asset tracking, with additional apps or third party solutions added over time.
Value proposition: By automating the lighting in a building, an enterprise can achieve 65-70% in energy savings (up to 90% when combined with an
LED upgrade) as lighting is controlled based on occupancy and daylight harvesting. While enterprises can recoup the cost of the system through the
energy savings over time, Enlighted offers financing options that make deployment possible without an up-front cash outlay. This go-to-market
approach further stimulates adoption. Enlighted’s solutions have been installed in over 135mn square feet of building space so far. For context,
commercial real estate represents 80bn of sq.ft. in the US, with 3bn or more sq.ft. developed or remodeled every year. Enlighted’s solution costs about
$1/sq.ft. for new construction and $2-3/sq.ft. for retrofits. Please also refer to Brian Lee’s recent note on connected LED lighting competitor Digital
Lumens.
Customer case studies: AT&T retrofitted 20mn sq.ft. of space across 240 sites by replacing fluorescent light fixtures with LEDs equipped with the
Enlighted lighting solution. This resulted in $8mn/year in lighting energy savings. Eventually, AT&T plans to retrofit its entire 120mn sq.ft. of real estate.
Agilent retrofitted 400 light fixtures in 50k sq.ft. of real estate, achieving 20% energy savings on weekdays and more than 90% on weekends. Enlighted
was awarded the AT&T Supplier Sustainability award and was named a 2016 Cool Vendor by Gartner.
Exhibit 4: The Enlighted System
Source: Company data.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 14
IoT endpoint growth: top-down and bottom-up
From a top-down perspective, IDC estimates that we exited 2015 with 12bn connected IoT devices (excluding PCs, smartphones or
tablets), up from nearly 10bn exiting 2014. IDC fine-tuned its forecasts in May 2016. Overall, it forecasts the global IoT installed base
to cross 30bn devices by 2020, growing at 2015-20E CAGR of over 20%. The types of connected devices included in this market
sizing cut across multiple sectors, based on IDC’s taxonomy:
Consumer: home security, appliances, thermostats, smart meters, surveillance cameras, door and window locks, etc.
Government: automated public transit, environmental monitoring, traffic signals, toll booths, parking, first responders, etc.
Healthcare: patient monitoring, fitness bands, telemedicine, etc.
Insurance: telematics using GPS and accelerometers in cars
Manufacturing: connected vehicles, food supply chain tracking, maintenance, factory automation, asset tracking, etc.
Exhibit 5: IDC expects global IoT installed base to grow over 20% CAGR (2015-20E) and cross 30bn devices by 2020 The installed base in IDC’s definition includes IoT end points that use IP-based communication without human interaction
Source: IDC.
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2014 2015 2016E 2017E 2018E 2019E 2020E
Inst
alle
d ba
se (m
n)
IoT Installed Base (mn units)
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 15
IoT connections across major carriers were up 24%-55% yoy – We show below the growth trajectories and key use cases for the
M2M cellular connections of several major global carriers (Exhibits 6-8). Note that cellular connections represent a much smaller
portion of the total IoT end points. The vast majority of end points use other communication standards such as WiFi, Bluetooth,
ZigBee or RF, which do not require a monthly data plan and are therefore much cheaper to operate. Thus, these data sets are
representative of only a small fraction of the IoT universe, but have the advantage of being trackable on a quarterly basis as one
snapshot of the pace of adoption.
AT&T added 1.2mn connected devices in 2Q16, down 17% yoy. AT&T now has nearly 29mn devices connected to its network. It
disclosed having over 8mn cars (i.e. roughly 30% of the total ~28mn devices) on its network as of 1Q and had partnerships with 19
top automakers globally in 2015. In 2Q, it launched unlimited data plans for connected car customers (support for ZTE Mobley WiFi
plugin as well as select cars) for $40 per month. In addition, it established several partnerships to develop IoT solutions across
industries. Notably, it partnered with GlobeComm to leverage satellite connections for physical asset tracking and Otis to develop
IoT solutions for real-time monitoring and data collection from elevators, escalators, and walkways. Separately, AT&T views 5G as
an important enabler of IoT with the potential of significantly reduced latency and much faster speeds to effectively support billions
of connections. Recall that AT&T unveiled its roadmap for 5G in February with plans to start conducting trials with Ericsson and Intel
2Q onwards. However, it views 5G as largely a 2020 story for standards to evolve over phases and standards based large-scale
deployments to commence subsequently. Importantly, on July 14, the FCC unanimously voted in favor of opening high frequency
bands (above 24GHz) for 5G, which should provide a boost to US-based carriers (including AT&T) in their journey toward 5G.
Exhibit 6: AT&T added 1.2mn connected devices in 2Q16 after adding 1.6mn in 1Q16
AT&T’s connected devices (mn units)
Source: Company data.
0
5
10
15
20
25
30
35
Q115 Q215 Q315 Q415 Q116 Q216
Con
nect
ed d
evic
es (m
n)
AT&T
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 16
Vodafone had over 41mn IoT connections in 2QCY16, up 39% yoy. Vodafone views IoT as a strategic area of growth and reported
2Q IoT revenues of $174mn in 2Q, up 20% yoy. It primarily addresses automotive and smart grid applications but also participates in
the domain healthcare, wearables, and agriculture by providing its managed IoT connectivity platform. Notably, Huawei
collaborated with Vodafone to develop a Narrow Band IoT (NB-IoT) ecosystem and opened the first lab in the UK in April. The
companies expect NB-IoT devices to be available toward the end of 2016 or early 2017. Recall that Vodafone aims to convert all 4G
sites to NB-IoT by 2020. Separately, Vodafone noted that its mobile networks in the European Union are eCall-ready.
Orange grew its M2M subscribers (France) to 4.6mn in 2Q16, implying net adds down 1% yoy. As part of its Essentials2020
program, Orange has repeatedly highlighted IoT/M2M as its strategic priority. Recall that Orange expects IoT/M2M to contribute
EUR 600mn in additional revenues by 2018. It participates primarily in the domain of healthcare, smart cities, transport, and
manufacturing through its services platform. In its last earnings conference call, management disclosed having over 10mn devices
connected to and managed by its network. In addition, Orange is expanding beyond France and secured a smart city project win in
India. Separately, Orange assists IoT startups expand their reach by providing access to Orange’s global sales and distribution
channels.
Exhibit 7: Vodafone had over 41mn IoT connections by C2Q16
Vodafone’s M2M connections (mn)
Exhibit 8: Orange grew its M2M subscribers (France) to 4.6mn in 2Q16
Orange’s M2M subscribers in France (mn)
Source: Company data.
Source: Company data.
05
1015202530354045
Q115 Q215 Q315 Q415 Q116 Q216
M2M
con
nect
ions
(mn)
Vodafone
0.0
1.0
2.0
3.0
4.0
5.0
Q115 Q215 Q315 Q415 Q116 Q216
M2M
sub
scrib
ers
(mn)
Orange
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 17
Key news flow on IoT in 2Q16
Exhibit 9: Summary of major IoT related company announcements
Source: Company data, Goldman Sachs Global Investment Research.
Company Date NewsAmazon 28-Jun-16 Disclosed having over 1,400 Alexa skills and added features to simplify discovering skillsAmazon 3-Jun-16 Developers created 1000+ skills for Alexa with Alexa Skills Kit (eg. order Domino's pizza, book Uber etc.)AT&T/Wistron NeWeb 17-Jun-16 Developed next generation LTE modules (M14A2A Cat-1 and M18Q2F Cat-4) for IoT devices
AT&T 19-May-16 Introduced unlimited data plans for connecting select cars or through ZTE Mobley pluginDisclosed having 8mn+ connected cars (as of 1Q16) and relationships with 19 top car brands worldwide
AT&T/Otis 25-Apr-16 Collaborated on developing IoT based solutions for elevators, escalators and moving walkwaysAT&T/GlobeComm 25-Apr-16 Partnered to enhance IoT connectivity to track physical assets using satellite connectivity with cellularChina Mobile/Nokia 13-Jun-16 Signed EUR 1.36bn frame agreement to meet the growing demands from IoT and 5GCisco/IBM 2-Jun-16 Collaborating to provide IoT analytics at the edge of the network Cisco/Rockwell Automation 26-Apr-16 Collaborating on Industrial IoT Security through deep-packet-inspection (DPI) technologyFossil 11-May-16 Founder smartwatch the number one selling SKU in 1Q 2016Google/Levi's 20-May-16 Collaborating toward smart jackets that can take calls, use navigation, control music etc.HPE 8-Jun-16 Introduced Edgeline EL1000 and EL4000 converged systems for IoTHPE 10-May-16 Launched Universal IoT Platform, aligned with oneM2M standard to support cross platform devicesHuawei 30-Jun-16 Launched end to end NB-IoT solution and plans to commercialize for large-scale use by the end of 2016Huawei/Telefonica 22-Jun-16 Signed a joint innovation agreement on 5G and NG-RAN to efficiently support IoTHuawei 12-Apr-16 Announced Indoor Connected Solution to provide a fully-connected indoor user experience
Huawei 12-Apr-16 Announced IoT as one of its strategic priorities and unveiled 5 IoT based solutions: smart home & industrial IoT gateway, NB-IoT solution, cloud-based management platform, & LiteOS
IBM/ISS 30-Jun-16 Collaborating to use IBM Watson to improve the management of 25,000+ buildings globally
IBM 8-Apr-16 IBM Watson Health completed the $2.6bn acquisition of Truven Health Analytics providing it access to extensive health data to derive insights and aide healthcare organizations
IBM/Pfizer 7-Apr-16 Collaborating toward research and development of IoT based healthcare solutions such as remote monitoring for patients suffering from Parkinson's disease
Intel 26-May-16 Acquired Itseez to enable customers develop applications in autonomous driving, surveillance etc. Intel 5-Apr-16 Acquired Yogitech to improve IoT functional safety and better compete in automotive and industrial marketsMicrosoft 1-Apr-16 Schneider Electric is integrating Azure with its smart energy saving offerings (over 30 customer deployments)NXP 16-May-16 Showcased autonomous vehicle platform using its BlueBox engine and its silicon at ADAS nodesNXP 5-Apr-16 Collaborated with DAF Trucks to demonstrate IoT based self-driving technologies for trucks
Qualcomm 8-Jun-16 Announced Connected Car Reference Platform to accelerate connectivity in cars (340mn+ chips shipped to 20+ automakers)
Qualcomm 31-May-16 Introduced QCA4012 WiFi solution with support for Apple HomeKit and Google Weave & Snapdragon Wear 1100Qualcomm/Google 19-May-16 Collaborating to enable android infotainment systems based on Snapdragon 820A and 602A processorsSalesforce 10-May-16 Using Amazon's cloud to develop new services instead of using its own infrastructure (as is typical)Samsung/Intel 22-Jun-16 Formed National IoT Strategy Dialogue to provide IoT related recommendations to policy makersSamsung 21-Jun-16 Announced intentions to invest $1.2bn in IoT over 4 years toward US focused R&D and investmentsSamsung 16-Jun-16 Announced intentions to acquire Joyent to add its cloud platform for IoT solutionsSamsung 3-Jun-16 Launched Gear Fit2 smartwatch and Gear IconX smart earplugsSamsung 27-Apr-16 Introduced Artik Cloud platform targeting IoT applications and servicesTelefonica/PTC 6-Jun-16 Partnered to leverage PTC's ThingWorx IoT platform in Telefonica's Smart Device ServiceTelefonica/Automatic Labs 25-May-16 Signed a multi-year agreement to leverage Telefonica's Global SIM provisioning & management serviceTelefonica 28-Apr-16 Selected for a smart metering project for Charleroi in Belgium by Ores and SWDEVerizon 21-Jun-16 Acquired Telogis to provide SaaS based solutions in its connected vehicle offerings
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 18
M&A activity in IoT in 2Q16
Exhibit 10: IoT related M&A continuing at a healthy pace
IoT M&A tracker
Source: Company data, compiled by Goldman Sachs Global Investment Research.
Date Acquirer Target Deal size ($mn) Domain Status
21-Jun-16 Verizon Telogis Undisclosed Telematics Announced
31-May-16 Nokia Withings $191 Connected Health Completed
25-May-16 Intel Itseez Undisclosed Autonomous cars Announced
9-May-16 Salesforce Implisit Undisclosed Analytics, automation Announced
3-May-16 Microsoft Solair Undisclosed Connected devices Announced
28-Apr-16 Cypress Broadcom (wireless IoT business) $550 WiFi, Bluetooth, Zigbee Announced
18-Apr-16 Qorvo GreenPeak Undisclosed RF solutions, SOCs for IoT devices Announced
5-Apr-16 Intel Yogitech Undisclosed Autonomous cars Announced
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 19
Capital invested and funding events in IoT startups
Exhibit 11: VCs invested $399mn in 93 IoT start-ups in 2Q16
Note: In December 2014, Xiaomi raised $1.1bn, causing a spike in funding in 4Q14. There may be variance in historicals as PitchBook revises its data retroactively.
Source: PitchBook, Goldman Sachs Global Investment Research.
314 273 315 453
681
311 371 445 399
1,100
107
122114
150155
111
127 128
93
0
20
40
60
80
100
120
140
160
180
-
200
400
600
800
1,000
1,200
1,400
1,600
2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
# of
dea
ls
Cap
ital I
nves
ted
($m
ns)
Capital Invested Xiaomi # of deals
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 20
IoT funding events in 2Q16
Exhibit 12: IoT funding events in 2Q16 (not exhaustive)
Source: PitchBook, compiled by Goldman Sachs Global Investment Research.
Date Company Name Industry Last Financing Size ($mns)
Total Raised ($mns) Investors
4/6/2016 Karamba Security Network Management Software $2.5 $2.5 8200 EISP, GlenRock Israel, YL Ventures
4/7/2016 Electric Imp Wireless Communications Equipment $21.0 $44.0 Foxconn Technology Group, Lowercase Capital, PTI Ventures, Rampart Capital, Redpoint Ventures
4/8/2016 Meural Social/Platform Software $2.5 $2.7 Barbara Corcoran Venture Partners, Bolt Innovation Group, Corigin Ventures, Elio Sceti, Jerry Colonna
4/11/2016 KORE Wireless Group Wireless Service Providers $67.1 ABRY Partners
4/13/2016 Jolata Network Management Software $7.0 $11.7 ATA Ventures, Ericsson, Spirent Communications
4/14/2016 KONUX Other Commercial Products $7.5 $9.3 Andy Bechtolsheim, EIT Digital, Founder.org, HMW Innovations, Michael Baum, New Enterprise Associates, UnternehmerTUM, Warren Weiss
4/18/2016 Realtime Immersion Other Media $9.3 $11.3 Alison Murdock, Chris Lalli, Clive Downie, Doug Barry, Ian Del Balso, John Coelho, Marker, Paul Wattis, Ricardo A. Sagrera, Viceroy Ventures
4/21/2016 Sirqul Media and Information Services (B2B) $3.0 $10.7 415 Investments, Owen Van Natta, Rick Dalzell, Rudy Gadre
4/21/2016 Xaptum Social/Platform Software $2.2 $2.9 1871 Chicago, Hyde Park Angels, Jai Shekhawat
4/22/2016 Cirrent Other Commercial Services $5.0 $5.0 DCM Ventures
4/25/2016 Helium Systems Connectivity Products $20.0 $38.8 Digital Garage, FirstMark Capital, GV, Jeffrey Schox, Khosla Ventures, Marc Benioff, Munich Re/HSB Ventures, Shawn Fanning, Slow Ventures, SV Angel, The Marc R. Benioff Revocable Trust
4/26/2016 Disruptive Technologies Production (Semiconductors) $6.1 $11.2 Ubon Partners
4/26/2016 SparkCognition Social/Platform Software $6.0 $9.0 Alameda Ventures, Alfonso Barragan, CME Ventures, Entrepreneurs Fund, MSD Capital, Verizon Ventures
4/27/2016 SintecMedia Business/Productivity Software $400.0 $20.0 Francisco Partners, SEB Private Equity
4/27/2016 Vivint Electronics (B2C) $100.0 Peter Thiel, Solamere Capital, Summit Partners, The Blackstone Group
4/27/2016 Nuki Other Consumer Durables $2.3 Up to Eleven, Venta Group
4/28/2016 Glue Application Software $3.7 $3.7 Alfven & Didrikson, Kristian Hansson, MOOR Capital, Peter Carlsson
4/30/2016 CarVi Application Software $5.0 $5.0 JayHyo Park, Korea Telecom, Plug and Play, Posco, Samsung Venture Investment
5/2/2016 SAM (electronics kits) Electronics (B2C) $4.7 $4.8 Imperial Innovations Group, Microsoft Accelerator
5/3/2016 Sixgill Connectivity Products $6.0 $7.5 Mobile Financial Partners
5/4/2016 LitBit Social/Platform Software $7.0 $10.5 AME Cloud Ventures, Correlation Ventures, FundersClub, Illuminate Ventures, Storm Ventures
5/8/2016 Signal Laboratories Other IT Services $3.3 $3.3
5/10/2016 Bayshore Networks Network Management Software $6.6 $7.0 Houston Angel Network, Trident Capital Cybersecurity
5/12/2016 Device Authority Social/Platform Software $9.2 Tern
5/18/2016 Afero Software Development Applications $20.3 $22.5 Assembly Partners, Fenox Venture Capital, Presidio Ventures, Robert Dobkin, Samsung Strategy and Innovation Center, Sanshin Electronics
5/18/2016 Resin.io Automation/Workflow Software $8.0 $11.8 Aspect Venture Partners, Draper Fisher Jurvetson, Ericsson, GE Ventures, Gil Dibner, OpenFund, Panayiotis Papadopoulos
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 21
IoT funding events in 2Q16 (continued)
Exhibit 13: IoT funding events in 2Q16 (not exhaustive)
Source: PitchBook, compiled by Goldman Sachs Global Investment Research.
Date Company Name Industry Last Financing Size ($mns)
Total Raised ($mns) Investors
5/19/2016 Hologram Internet Software $4.8 $6.1 Bong Koh, Brendan Weitz, Brian Ficho, Christopher Muhr, Drive Capital, Idris Mokhtarzada, KohFounders, Maiden Lane, Mucker Capital, NextView Ventures, Raj Ruparell, Tyler Willis
5/24/2016 Glide Communication Software $8.0 $36.5 DG Incubation, Eniac Ventures, Marker, Menlo Ventures, MSQ Ventures, New Ground Ventures, Nihal Mehta, Orey Gilliam, Prolific Venture Capital, Square Peg Capital, Two Sigma Investments, Venkatesh Harinarayan
5/24/2016 Optofidelity Electronic Equipment and Instruments $4.1 $4.1 Finnish Industry Investment, VisionPlus
5/25/2016 Zubie Automotive $6.0 $25.9 Best Buy Capital, Castrol InnoVentures, Comporium, Magna, Melody Capital Partners, Nokia Growth Partners, OPENAIR Equity Partners
5/30/2016 Thermondo Social/Platform Software $26.6 $33.1 Climate-KIC, E.ON Strategic Co-Investments, Global Founders Capital, GreyCorp, Holtzbrinck Ventures, IBB Beteiligungsgesellschaft, Leverate Media, Picus Capital, Rocket Internet
6/1/2016 Sentera (Sensor) Other Commercial Products $2.0 $8.5
6/1/2016 Linkbee Electronics (B2C) $6.0 $6.0 Loeb Enterprises, Loeb.nyc, Pegasus Capital Advisors
6/3/2016 Qadium Media and Information Services (B2B) $23.3 Defense Advanced Research Projects Agency, Founders Fund, Knoll Ventures, New Enterprise Associates, Palantir Technologies, Scott Sandell, Susa Ventures
6/6/2016 KnuEdge Vertical Market Software $100.0 $100.0
6/7/2016 Ranzure Networks Wireless Service Providers $7.6 $7.6 LiveOak Venture Partners, Mitel Networks
6/10/2016 Omnispace Media and Information Services (B2B) $8.3 $18.4 Columbia Capital
6/14/2016 DeepSense (Machine Crowd Sourcing) Business/Productivity Software $2.0 $2.0 AfterDox, BizTEC, JANVEST Capital Partners, Microsoft Accelerator, SeedIL
6/15/2016 Addsecure Security Services (B2B) $84.9 ABRY Partners
6/16/2016 Soracom Communication Software $28.4 $34.1 Infinity Venture Partners, Mitsui Private Equity, Pavilion Capital Partners, World Innovation Lab
6/17/2016 All Traffic Solutions Business/Productivity Software $8.0 $8.0 Edison Partners
6/22/2016 Sevenhugs Electronic Equipment and Instruments $14.6 $16.2 Business Angels des Grandes Ecoles, Cap Decisif Management, Femmes Business Angels, Investessor, Kima Ventures, NovX Capital, Women Business Angels Club, Xerys
6/23/2016 iControl Networks (Connect & Piper) Other Software $140.0
6/24/2016 ZTE Intelligent IOT Technology Company Other Commercial Products $22.5 ZTE
6/27/2016 Mojo Networks Media and Information Services (B2B) $16.3 $65.1 Blueprint Ventures, Cipio Partners, Granite Ventures, Presidio Partners, Trident Capital, Walden International
6/27/2016 Ayla Networks Business/Productivity Software $39.0 $59.1 3NOD Digital Group, Acorn Pacific Ventures, Alliance Capital Ventures, Ants Capital, Cisco Investments, Crosslink Capital, International Finance Corporation, Linear Venture, Mitsui & Company, Oriza Ventures, Peter Hsing, Phil Boyer, SAIF Partners, SJF Ventures, Voyager Capital
6/28/2016 Deako Electronics (B2C) $6.8 $8.3 ZTE
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 22
List of IoT Startups
Exhibit 14: List of IoT startups (not exhaustive)
Source: Crunchbase, PitchBook, compiled by Goldman Sachs Global Investment Research.
Startup Key product category Investors Startup Key product category Investors
3D Robotics Drones Qualcomm Ventures Glue Home Application Software Alfven & Didrikson, Kristian Hansson, MOOR, Peter Carlsson
7Invensun Virtual Reality; eye tracking Qualcomm Ventures Gotye Wearables; Communication Services Intel Capital
Actility Low Power WAN Ginko Ventures Helium Systems Secure connectivity for things Khosla Ventures, FirstMark Capital
Addsecure Security Services (B2B) ABRY Partners Hologram Internet Software Drive Capital
Advanced Micro-Fabrication Equipment In Semiconductors Qualcomm Ventures IDENTEC GROUP Asset Tracking Intel Capital
Afero Software Development Applications Samsung Strategy and Innovation Center Ineda Systems SoCs Qualcomm Ventures; Cisco Investments
Airspan Wireless 4G Broadband for Smart Grids Oak Investment Partners INRIX Traffic Monitoring Kleiner Perkins Caufield & Byers, Intel Capital
All Traffic Solutions Business/Productivity Software Edison Partners Intersec Group Data consolidation; Realtime analtyics Cisco Investments
Altiostar Networks Next-gen 4G LTE architecture Cisco Investments ip.access Capacity for mobile operators Cisco Investments
Ambiq Micro High efficiency controller for computing devices Kleiner Perkins Caufield & Byers, Cisco Investments Jaunt Virtual Reality Google Ventures
APPScomm Wearables; Health Management Intel Capital Jawbone Wearables Kleiner Perkins Caufield & Byers
Athos (MAD Apparel, Inc.) Smart Clothing True Ventures Karamba Security Network Management Software 8200 EISP, GlenRock Israel, YL Ventures
August Home Connected Home; Smart Locks Qualcomm Ventures; Bessemer Keen Home Connected Home RMR Capital; Galvanize Ventures; Bullet Time Ventures
Autofind Industrial Equipamentos Asset Tracking Intel Capital Kii Cloud Integration for IoT data sources Cisco Investments
Avegant Corp. Wearables; Virtual Retinal Display Intel Capital KONUX Commercial Products TechFounders, New Enterprise Associates
Ayla Networks End-to-end platform for cloud connectivity Cisco Investments KORE Wireless Group Wireless Service Providers ABRY Partners
Bayshore Networks Network Management Software Houston Angel Network, Trident Capital Cybersecurity LIFX Smart bulbs Qualcomm Ventures; Sequoia Capital
Bit Stew Systems Real-time network operations solutions Cisco Investments Linkbee Electronics (B2C) Loeb Enterprises, Loeb.nyc, Pegasus Capital Advisors
Bloom (Orbit HCI) Remote Monitoring; Social Health Management Google Ventures LISNR Wearables Intel Capital
Bocom Intelligent Security, Transportation Solutions Intel Capital LitBit Social/Platform Software Storm Ventures
Body Labs 3D body-scanning sensors Intel Capital littleBits Smart Home True Ventures; Foundry Group
Braigo Labs Wearables; Braille Printer Intel Capital Loggly Cloud-based logging Cisco Investments
Brain Corp. Autonomous navigation Qualcomm Ventures Lookout, Inc. Security Qualcomm Ventures
Brewbot Smart Home FG Angels Mark One Smart Cup Intel Capital
CarVi, Inc. Application Software Korea Telecom, Plug and Play, Posco, Samsung Ventures Meural Social/Platform Software Corigin Ventures
Cavendish Kinetics Wearables; Radio components Qualcomm Ventures Microprogram Information IoT management solution Intel Capital
Celeno Semiconductors; Wi-Fi systems Cisco Investments MobiKwik Mobile wallet Cisco Investments
Cirrent Commercial Services DCM Ventures Mojo Networks Media and Information Services (B2B) Blueprint, CMEA, Granite Ventures, Trident Capital, Walden Int'l
Cohda Wireless Connected Cars Cisco Investments Motiv Inc. Wearables Kleiner Perkins Caufield & Byers
Convacsis Industrial IoT Cisco Investments Mozaiq Interoperability of smart home systems Cisco Investments
CrossChx Healthcare Management Khosla Ventures, Drive Capital MuleSoft Device to cloud connectivity Lightspeed Ventures, New Enterprise Associates, Salesforce
Deako Electronics (B2C) ZTE N3N IoE visualization solutions provider Cisco Investments
DeepSense (Machine Crowd Sourcing) Business/Productivity Software AfterDox, BizTEC, JANVEST, Microsoft Accelerator, SeedIL Navdy Connected Car; Heads-up Display Qualcomm Ventures
Device Authority Social/Platform Software Tern NextInput Wearables; ForceTouch Intel Capital
Disruptive Technologies Production (Semiconductors) Ubon Partners Ninebot Smart Transportation Intel Capital
Electric Imp Wireless Communications Equipment Foxconn Tech Group, Lowercase Capital, PTI Ventures, Rampart Noom Wearables; Healthcare Solutions Qualcomm Ventures
Enlighted Building Automation Kleiner Perkins Caufield & Byers Novasentis Wearables Samsung Ventures, Chengwei Capital
Enovix Wearables; Rechargeable battery solutions Intel Capital Nuki Consumer Durables Up to Eleven, Venta Group
Enverv SoC for Advanced Metering Infrastructure (AMI) Benchmark, Cisco Investments Omnispace Media and Information Services (B2B) Columbia Capital
Eques Technology Co. Connected Home Security Qualcomm Ventures Optofidelity Electronic Equipment and Instruments Finnish Industry Investment, VisionPlus
EVRYTHNG Connecting consumer products to web Cisco Investments OrCam Wearables; Visual Recognition Intel Capital
Eyefluence Wearables; Eye tracking Intel Capital Ossia Inc. Wearables; Wireless charging Intel Capital
Fibocom Wireless M2M communication provider Intel Capital Passport Inc. Connected Parking, Smart City MK Capital
Fon Wireless Ltd. Wi-Fi connectivity Qualcomm Ventures Peloton Technology V2V solutions Intel Capital
Glide Talk Communication Software Marker, Menlo Ventures Percolata Smart Retail; Store Traffic Analytics Andreessen Horowitz, Google Ventures, Menlo Ventures
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 23
List of IoT Startups (continued)
Exhibit 15: List of IoT startups (not exhaustive)
Source: Crunchbase, PitchBook, compiled by Goldman Sachs Global Investment Research.
Startup Key product category Investors Startup Key product category Investors
Performance Lab Wearables; Fitness Intel Capital Sirqul Media and Information Services (B2B) 415 Investments, Owen Van Natta, Rick Dalzell, Rudy Gadre
Phunware Multiscreen Platform Cisco Investments Sixgill Connectivity Products Mobile Financial Partners
Placemeter Smart City New Enterprise Associates Soracom Communication Software Infinity Venture Partners, Pavilion Capital, World Innovation Lab
Poynt Co. Smart Payments Google Ventures, Matrix Partners Sotera Wireless Wearables; Health Management Intel Capital; Qualcomm Ventures
Primo1D E-Commerce Rhône Alpes Création, Sofimac Partners SparkCognition Social/Platform Software CME Ventures, Verizon Ventures
Qadium Media and Information Services (B2B) New Enterprise Associates; Founders Fund Streetline Vehicle Management; Smart Parking Qualcomm Ventures, True Ventures
Qnovo Wearables; Battery Management Intel Capital StretchSense Wearables, Sensors Start Today Co. Ltd
Quantcast Audience Measurement Cisco Investments Taifatech SoC Intel Capital
Ranzure Networks Wireless Service Providers LiveOak Venture Partners, Mitel Networks Telcare Social Health Management Qualcomm Ventures
Realtime Immersion Media Viceroy Ventures Telink Connected Home Intel Capital
Relayr IoT developer kits Kleiner Perkins Caufield & Byers Thermondo Social/Platform Software E.ON, Global Founders, Grey Corp, Holtzbrinck, Rocket Internet
Resin.io Automation/Workflow Software Draper Fisher Jurvetson uBeam Wireless Charging Upfront Ventures
RetailNext Smart Retail; Store Traffic Analytics Qualcomm Ventures UNISOUND Voice recognition for smart appliances; Wearables Qualcomm Ventures
Ring (Bot Home Automation, Inc.) Home Security; Smart Home True Ventures Veniam V2V and V2X solutions Cisco Investments
Ringly Wearable Jewelry Andreessen Horowitz Wearable Intelligence Enterprise Solutions for Wearables Google Ventures
Rithmio Wearables; Gesture Control Intel Capital WebRadar Big Data Analytics Qualcomm Ventures
SAM Labs Connected kits for coders Imperial Innovations Group, Microsoft Accelerator Welltok Social Health Management Qualcomm Ventures
Samsara Wireless Sensors Andreessen Horowitz WHILL Personal mobility 500 Startups
SanJet Technology Remote Video Monitoring Intel Capital Worldsensing Industrial IoT and Smart City solutions Cisco Investments
Sano Intelligence Inc. Biometric sensors Intel Capital Xaptum Social/Platform Software 1871 Chicago, Hyde Park Angels, Jai Shekhawat
SAY Wearables Wearable Jewelry NFX Guild Zephyr Health Social Health Management Google Ventures
Sensity Smart Lighting Cisco Investments ZMP Car robotics and sensor systems Intel Capital
Sevenhugs Electronic Equipment and Instruments Xerys Funds ZTE Intelligent IOT Technology Company Commercial Products ZTE
SintecMedia Business/Productivity Software Francisco Partners, SEB Private Equity Zubie Automotive Magna International, Nokia Growth Partners
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 24
Upcoming events
Exhibit 16: List of upcoming events
Source: Company data, compiled by Goldman Sachs Global Investment Research.
Event Name Location Start Date End Date
2016 China International IoT and Smart China Exhibition Shenzhen, China 18-Aug-16 20-Aug-16Wearables Tech in Sport Summit San Francisco, US 24-Aug-16 25-Aug-16IoT in Oil and Gas Houston, US 14-Sep-16 15-Sep-16The Internet of Healthcare London, UK 21-Sep-16 22-Sep-16Industrial Internet Summit London, UK 21-Sep-16 22-Sep-16Internet of Insurance New York, US 27-Sep-16 28-Sep-16M2M and IoT Strategies Summit Berlin, Germany 11-Oct-16 12-Oct-16Monetizing IoT Copenhagen, Denmark 12-Oct-16 13-Oct-16Connected Automobiles Milan, Italy 17-Oct-16 18-Oct-16IoT Security Summit Boston, US 17-Oct-16 19-Oct-16Internet of Retail New York, US 18-Oct-16 19-Oct-16IoT Tech Expo North America Santa Clara, US 20-Oct-16 21-Oct-16IoT Planet Grenoble, France 25-Oct-16 27-Oct-16Internet of Manufacturing Chicago, US 1-Nov-16 2-Nov-16Connections Europe Amsterdam, Netherlands 2-Nov-16 3-Nov-16IoT Emerge Chicago, US 2-Nov-16 4-Nov-16IoT World Dublin, Ireland 20-Nov-16 22-Nov-16IoT World Forum 2016 London, UK 29-Nov-16 30-Nov-16
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 25
Disclosure Appendix
Reg AC
We, Simona Jankowski, CFA, Marcus Shin, Brian Lee, CFA, Balaji Krishnamurthy, CFA, Connie Qian and Ankit Prasad, hereby certify that all of the views expressed in this report accurately reflect our
personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report.
Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Goldman Sachs' Global Investment Research division.
Investment Profile
The Goldman Sachs Investment Profile provides investment context for a security by comparing key attributes of that security to its peer group and market. The four key attributes depicted are: growth,
returns, multiple and volatility. Growth, returns and multiple are indexed based on composites of several methodologies to determine the stocks percentile ranking within the region's coverage
universe.
The precise calculation of each metric may vary depending on the fiscal year, industry and region but the standard approach is as follows:
Growth is a composite of next year's estimate over current year's estimate, e.g. EPS, EBITDA, Revenue. Return is a year one prospective aggregate of various return on capital measures, e.g. CROCI,
ROACE, and ROE. Multiple is a composite of one-year forward valuation ratios, e.g. P/E, dividend yield, EV/FCF, EV/EBITDA, EV/DACF, Price/Book. Volatility is measured as trailing twelve-month
volatility adjusted for dividends.
Quantum
Quantum is Goldman Sachs' proprietary database providing access to detailed financial statement histories, forecasts and ratios. It can be used for in-depth analysis of a single company, or to make
comparisons between companies in different sectors and markets.
GS SUSTAIN
GS SUSTAIN is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The GS SUSTAIN focus list includes leaders our analysis shows to be well
positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers. Leaders are identified based on
quantifiable analysis of three aspects of corporate performance: cash return on cash invested, industry positioning and management quality (the effectiveness of companies' management of the
environmental, social and governance issues facing their industry).
Disclosures
Coverage group(s) of stocks by primary analyst(s)
Simona Jankowski, CFA: America-Consumer Hardware & Mobility, America-IT Hardware, America-Telecom Equipment. Marcus Shin: Korea Technology. Brian Lee, CFA: America-Clean Energy,
America-Solar Energy.
America-Clean Energy: Acuity Brands Inc., Cree Inc., Silver Spring Networks Inc., TerraVia Holdings, Universal Display Corp., Veeco Instruments Inc..
America-Consumer Hardware & Mobility: Apple Inc., BlackBerry Ltd., BlackBerry Ltd., Corning Inc., Garmin Ltd., GoPro Inc., Qualcomm Inc..
America-IT Hardware: Aerohive Networks Inc., Arista Networks Inc., Brocade Communications Systems, CDW Corp., Cisco Systems Inc., EMC Corp., F5 Networks Inc., Hewlett Packard Enterprise Co.,
HP Inc., Motorola Solutions Inc., NetApp Inc., Nimble Storage Inc., Pure Storage Inc., Xerox Corp., Zebra Technologies Corp.
America-Solar Energy: 8point3 Energy Partners, First Solar Inc., SolarCity Corp., SolarEdge Technologies Inc., SunPower Corp., Sunrun Inc., TerraForm Global Inc., TerraForm Power Inc., Vivint Solar
Inc..
America-Telecom Equipment: Acacia Communications Inc., ADTRAN Inc., ARRIS International Plc, Ciena Corp., Finisar Corp., Infinera Corp., Juniper Networks Inc., Lumentum Holdings.
Korea Technology: Samsung Electro-Mechanics, Samsung Electronics, Samsung SDI Co., Samsung SDS Co., Seoul Semiconductor, SK Hynix Inc..
Company-specific regulatory disclosures
The following disclosures relate to relationships between The Goldman Sachs Group, Inc. (with its affiliates, "Goldman Sachs") and companies covered by the Global Investment Research Division of
Goldman Sachs and referred to in this research.
Goldman Sachs has received compensation for investment banking services in the past 12 months: Hewlett Packard Enterprise Co. ($21.91) and Qualcomm Inc. ($62.00)
Goldman Sachs expects to receive or intends to seek compensation for investment banking services in the next 3 months: Hewlett Packard Enterprise Co. ($21.91), Qualcomm Inc. ($62.00) and
Samsung Electronics (W1,561,000)
Goldman Sachs had an investment banking services client relationship during the past 12 months with: Hewlett Packard Enterprise Co. ($21.91), Qualcomm Inc. ($62.00) and Samsung Electronics
(W1,561,000)
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 26
Goldman Sachs had a non-investment banking securities-related services client relationship during the past 12 months with: Hewlett Packard Enterprise Co. ($21.91), Qualcomm Inc. ($62.00) and
Samsung Electronics (W1,561,000)
Goldman Sachs had a non-securities services client relationship during the past 12 months with: Hewlett Packard Enterprise Co. ($21.91), Qualcomm Inc. ($62.00) and Samsung Electronics
(W1,561,000)
Goldman Sachs has managed or co-managed a public or Rule 144A offering in the past 12 months: Hewlett Packard Enterprise Co. ($21.91)
Goldman Sachs makes a market in the securities or derivatives thereof: Hewlett Packard Enterprise Co. ($21.91) and Qualcomm Inc. ($62.00)
Goldman Sachs is a specialist in the relevant securities and will at any given time have an inventory position, "long" or "short," and may be on the opposite side of orders executed on the relevant
exchange: Hewlett Packard Enterprise Co. ($21.91)
Distribution of ratings/investment banking relationships
Goldman Sachs Investment Research global Equity coverage universe
Rating Distribution Investment Banking Relationships
Buy Hold Sell Buy Hold Sell
Global 31% 54% 15% 66% 60% 50%
As of July 1, 2016, Goldman Sachs Global Investment Research had investment ratings on 2,963 equity securities. Goldman Sachs assigns stocks as Buys and Sells on various regional Investment
Lists; stocks not so assigned are deemed Neutral. Such assignments equate to Buy, Hold and Sell for the purposes of the above disclosure required by the FINRA Rules. See 'Ratings, Coverage groups
and views and related definitions' below. The Investment Banking Relationships chart reflects the percentage of subject companies within each rating category for whom Goldman Sachs has provided
investment banking services within the previous twelve months.
Price target and rating history chart(s)
82
9095
88
79
7873
65
5856
64
1,600
1,700
1,800
1,900
2,000
2,100
2,200
40
50
60
70
80
90
100
Qualcomm Inc. (QCOM)
Goldman Sachs rating and stock price target history
Stock Price Currency : U.S. Dollar
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 6/30/2016.
The price targets show n should be considered in the context of all prior published Goldman Sachs research, which may or may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.
Rating
Price target
Price target at removal
Covered by Simona Jankow ski, CFA
Not covered by current analyst
S&P 500
Inde
xPr
ice
Stoc
kPric
e Oct 15 Aug 24B NR
AB
S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J2013 2014 2015 2016
17500001800000
17500001700000
1650000
16000001550000
1500000
1400000
13500001600000
15500001450000
14000001300000
1350000
1400000
1300000
1250000
1300000
13500001400000
1,8001,8501,9001,9502,0002,0502,1002,1502,200
1,000,0001,100,0001,200,0001,300,0001,400,0001,500,0001,600,0001,700,0001,800,000
Samsung Electronics (005930.KS)
Goldman Sachs rating and stock price target history
Stock Price Currency : South Korean Won
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 6/30/2016.
The price targets show n should be considered in the context of all prior published Goldman Sachs research, which may or may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.
Rating
Price target
Price target at removal
Covered by Marcus Shin,as of Oct 6, 2014
Not covered by current analyst
Korea SE Composite (KOSPI)
Inde
xPr
ice
Stoc
kPr
ice
May 5B
AN
S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J2013 2014 2015 2016
19
1819
1,600
1,700
1,800
1,900
2,000
2,100
2,200
12.0013.0014.0015.0016.0017.0018.0019.0020.00
Hewlett Packard Enterprise Co. (HPE)
Goldman Sachs rating and stock price target history
Stock Price Currency : U.S. Dollar
Source: Goldman Sachs Investment Research for ratings and price targets; FactSet closing prices as of 6/30/2016.
The price targets show n should be considered in the context of all prior published Goldman Sachs research, which may or may not have included price targets, as w ell as developments relating to the company, its industry and financial markets.
Rating
Price target
Price target at removal
Covered by Simona Jankow ski, CFA,as of Oct 26, 2015
Not covered by current analyst
S&P 500
Index
Price
Stoc
kPric
e
May 24, 2016 to NR from N
Oct 26N
A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J2013 2014 2015 2016
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 27
Regulatory disclosures
Disclosures required by United States laws and regulations
See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager or co-manager in a pending transaction; 1% or
other ownership; compensation for certain services; types of client relationships; managed/co-managed public offerings in prior periods; directorships; for equity securities, market making and/or
specialist role. Goldman Sachs trades or may trade as a principal in debt securities (or in related derivatives) of issuers discussed in this report.
The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts, professionals reporting to analysts and members of their
households from owning securities of any company in the analyst's area of coverage. Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes
investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an officer,
director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts may not be associated persons of Goldman, Sachs & Co. and
therefore may not be subject to FINRA Rule 2241 or FINRA Rule 2242 restrictions on communications with subject company, public appearances and trading securities held by the analysts.
Distribution of ratings: See the distribution of ratings disclosure above. Price chart: See the price chart, with changes of ratings and price targets in prior periods, above, or, if electronic format or if
with respect to multiple companies which are the subject of this report, on the Goldman Sachs website at http://www.gs.com/research/hedge.html.
Additional disclosures required under the laws and regulations of jurisdictions other than the United States
The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws and regulations. Australia: Goldman Sachs Australia
Pty Ltd and its affiliates are not authorised deposit-taking institutions (as that term is defined in the Banking Act 1959 (Cth)) in Australia and do not provide banking services, nor carry on a banking
business, in Australia. This research, and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act, unless otherwise agreed by Goldman Sachs. In
producing research reports, members of the Global Investment Research Division of Goldman Sachs Australia may attend site visits and other meetings hosted by the issuers the subject of its research
reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Goldman Sachs Australia considers it is appropriate and reasonable in the
specific circumstances relating to the site visit or meeting. Brazil: Disclosure information in relation to CVM Instruction 483 is available at http://www.gs.com/worldwide/brazil/area/gir/index.html.
Where applicable, the Brazil-registered analyst primarily responsible for the content of this research report, as defined in Article 16 of CVM Instruction 483, is the first author named at the beginning of
this report, unless indicated otherwise at the end of the text. Canada: Goldman Sachs Canada Inc. is an affiliate of The Goldman Sachs Group Inc. and therefore is included in the company specific
disclosures relating to Goldman Sachs (as defined above). Goldman Sachs Canada Inc. has approved of, and agreed to take responsibility for, this research report in Canada if and to the extent that
Goldman Sachs Canada Inc. disseminates this research report to its clients. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on
request from Goldman Sachs (Asia) L.L.C. India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities Private
Limited, Research Analyst - SEBI Registration Number INH000001493, 951-A, Rational House, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India, Corporate Identity Number
U74140MH2006FTC160634, Phone +91 22 6616 9000, Fax +91 22 6616 9001. Goldman Sachs may beneficially own 1% or more of the securities (as such term is defined in clause 2 (h) the Indian
Securities Contracts (Regulation) Act, 1956) of the subject company or companies referred to in this research report. Japan: See below. Korea: Further information on the subject company or
companies referred to in this research may be obtained from Goldman Sachs (Asia) L.L.C., Seoul Branch. New Zealand: Goldman Sachs New Zealand Limited and its affiliates are neither "registered
banks" nor "deposit takers" (as defined in the Reserve Bank of New Zealand Act 1989) in New Zealand. This research, and any access to it, is intended for "wholesale clients" (as defined in the Financial
Advisers Act 2008) unless otherwise agreed by Goldman Sachs. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the Russian legislation, but are
information and analysis not having product promotion as their main purpose and do not provide appraisal within the meaning of the Russian legislation on appraisal activity. Singapore: Further
information on the covered companies referred to in this research may be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference
only and must not be reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the Financial Conduct Authority, should read this research in conjunction
with prior Goldman Sachs research on the covered companies referred to herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these
risks warnings, and a glossary of certain financial terms used in this report, are available from Goldman Sachs International on request.
European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/125/EC is available at
http://www.gs.com/disclosures/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with Investment Research.
Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer registered with the Kanto Financial Bureau under registration number Kinsho 69, and a member of Japan Securities Dealers
Association, Financial Futures Association of Japan and Type II Financial Instruments Firms Association. Sales and purchase of equities are subject to commission pre-determined with clients plus
consumption tax. See company-specific disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese Securities
Finance Company.
Ratings, coverage groups and views and related definitions
Buy (B), Neutral (N), Sell (S) -Analysts recommend stocks as Buys or Sells for inclusion on various regional Investment Lists. Being assigned a Buy or Sell on an Investment List is determined by a
stock's return potential relative to its coverage group as described below. Any stock not assigned as a Buy or a Sell on an Investment List is deemed Neutral. Each regional Investment Review
Committee manages various regional Investment Lists to a global guideline of 25%-35% of stocks as Buy and 10%-15% of stocks as Sell; however, the distribution of Buys and Sells in any particular
coverage group may vary as determined by the regional Investment Review Committee. Regional Conviction Buy and Sell lists represent investment recommendations focused on either the size of the
potential return or the likelihood of the realization of the return.
Return potential represents the price differential between the current share price and the price target expected during the time horizon associated with the price target. Price targets are required for all
covered stocks. The return potential, price target and associated time horizon are stated in each report adding or reiterating an Investment List membership.
Coverage groups and views: A list of all stocks in each coverage group is available by primary analyst, stock and coverage group at http://www.gs.com/research/hedge.html. The analyst assigns one
of the following coverage views which represents the analyst's investment outlook on the coverage group relative to the group's historical fundamentals and/or valuation. Attractive (A). The
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 28
investment outlook over the following 12 months is favorable relative to the coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 12
months is neutral relative to the coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 12 months is unfavorable relative to the coverage
group's historical fundamentals and/or valuation.
Not Rated (NR). The investment rating and target price have been removed pursuant to Goldman Sachs policy when Goldman Sachs is acting in an advisory capacity in a merger or strategic
transaction involving this company and in certain other circumstances. Rating Suspended (RS). Goldman Sachs Research has suspended the investment rating and price target for this stock, because
there is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating or target. The previous investment rating and
price target, if any, are no longer in effect for this stock and should not be relied upon. Coverage Suspended (CS). Goldman Sachs has suspended coverage of this company. Not Covered (NC). Goldman Sachs does not cover this company. Not Available or Not Applicable (NA). The information is not available for display or is not applicable. Not Meaningful (NM). The
information is not meaningful and is therefore excluded.
Global product; distributing entities
The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global basis. Analysts based in Goldman Sachs offices
around the world produce equity research on industries and companies, and research on macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia
by Goldman Sachs Australia Pty Ltd (ABN 21 006 797 897); in Brazil by Goldman Sachs do Brasil Corretora de Títulos e Valores Mobiliários S.A.; in Canada by either Goldman Sachs Canada Inc. or
Goldman, Sachs & Co.; in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by
Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by Goldman Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company
Number: 198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection with its distribution in the United
Kingdom and European Union.
European Union: Goldman Sachs International authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, has
approved this research in connection with its distribution in the European Union and United Kingdom; Goldman Sachs AG and Goldman Sachs International Zweigniederlassung Frankfurt, regulated
by the Bundesanstalt für Finanzdienstleistungsaufsicht, may also distribute research in Germany.
General disclosures
This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we consider reliable, but we do not represent it is
accurate or complete, and it should not be relied on as such. The information, opinions, estimates and forecasts contained herein are as of the date hereof and are subject to change without prior
notification. We seek to update our research as appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large majority
of reports are published at irregular intervals as appropriate in the analyst's judgment.
Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have investment banking and other business relationships with a
substantial percentage of the companies covered by our Global Investment Research Division. Goldman, Sachs & Co., the United States broker dealer, is a member of SIPC (http://www.sipc.org).
Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and principal trading desks that reflect opinions that are contrary
to the opinions expressed in this research. Our asset management area, principal trading desks and investing businesses may make investment decisions that are inconsistent with the
recommendations or views expressed in this research.
The analysts named in this report may have from time to time discussed with our clients, including Goldman Sachs salespersons and traders, or may discuss in this report, trading strategies that
reference catalysts or events that may have a near-term impact on the market price of the equity securities discussed in this report, which impact may be directionally counter to the analyst's published
price target expectations for such stocks. Any such trading strategies are distinct from and do not affect the analyst's fundamental equity rating for such stocks, which rating reflects a stock's return
potential relative to its coverage group as described herein.
We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or
derivatives, if any, referred to in this research.
The views attributed to third party presenters at Goldman Sachs arranged conferences, including individuals from other parts of Goldman Sachs, do not necessarily reflect those of Global Investment
Research and are not an official view of Goldman Sachs.
Any third party referenced herein, including any salespeople, traders and other professionals or members of their household, may have positions in the products mentioned that are inconsistent with
the views expressed by analysts named in this report.
This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It does not constitute a personal
recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Clients should consider whether any advice or recommendation in this
research is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income
from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have
adverse effects on the value or price of, or income derived from, certain investments.
Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors. Investors should review current options
disclosure documents which are available from Goldman Sachs sales representatives or at http://www.theocc.com/about/publications/character-risks.jsp. Transaction costs may be significant in option
strategies calling for multiple purchase and sales of options such as spreads. Supporting documentation will be supplied upon request.
All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all research content is redistributed to our clients or
available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our research by third party aggregators. For research, models or other data available on a particular
security, please contact your sales representative or go to http://360.gs.com.
August 8, 2016 Americas: Technology
Goldman Sachs Global Investment Research 29
Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY 10282.
© 2016 Goldman Sachs.
No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc.