Friday 31 March 2017

Land of hype and glory: how tech ticked in 2015

Dublin’s bustling Silicon Docks. Photo: Naoise Culhane
Dublin’s bustling Silicon Docks. Photo: Naoise Culhane

Technology Editor Adrian Weckler on the 9 major trends that shaped tech in Ireland in 2015

1 Expansionary year for Irish tech firms

It was a lively year for Irish tech companies and US-based firms founded by young Irish entrepreneurs.

In April, Dublin-based mobile technology company Movidius announced one of Europe’s biggest tech funding rounds, with €38m in cash and 100 new Irish jobs. The fresh investment brought its funding haul to over €83m. Movidius makes chip technology for cameras, phones and other mobile devices and has won big contracts with Google and other tech giants.

Online payments firm Stripe, founded by Limerick brothers Patrick and John Collison, adjusted its valuation to $5bn (€4.6bn) after closing a fresh round of venture funding in July. The company also launched new products aimed at accepting payments on social media channels such as Twitter and Pinterest.

Irish online entrepreneur Oisin Hanrahan, from Rathcoole, raised $50m in funding for the online cleaning and home services company, Handy.com. The funding round leaves the company with an estimated valuation of $500m.

Another home cleaning service co-founded by Kildare entrepreneur Jules Coleman was acquired by the world’s biggest home cleaning service outside the US, Helpling. The deal was reported to be worth an estimated €32m.

In August, Dublin-based online customer communications firm Intercom landed a €30m funding round from investors that include Mark Zuckerberg, Sheryl Sandberg and Twitter boss Jack Dorsey. Intercom’s total funding now amounts to $66m (€58m), following a €17m funding round last year. Company co-founder and chief executive Eoghan McCabe said that the company wants to seek a public flotation and reach a valuation of €1bn.

In October, Dublin-based e-commerce company Clavis Insight closed a $20m (€18.2m) funding round led by Silicon Valley investment firm Accel-KKR. In December, Cork-based Trustev, which had raised €7m in funding, was acquired for €19m. The deal also encompasses the possibility of the acquisition price rising to €40m if unspecified targets are met in future.

 

2 The Dublin  Web Summit shenanigans

2015 was a weird year for Ireland’s reputation as an international conference venue. By far the biggest talking point was the departure of the Web Summit to Lisbon, a move that spawned rancour and division both within the industry and among the public. In what turned out to be the Irish tech industry’s version of Saipan, pundits, punters and politicians lined up to give their take. Had Web Summit founder Paddy Cosgrave become too big for his boots with outrageous demands? Or had the Government let a world class homegrown event slip away because of a depressing mediocrity in its ambition?

In September, Mr Cosgrave laid out the reasons he was taking the conference to Portugal. “We need a new home for future growth at Web Summit,” he said. “Lisbon has the infrastructure and that is why we are making the move.”

Dublin was chaotic with poor public transport, creaking venues and no real will among authorities to do much about it, he said.

Correspondence between Mr Cosgrave and the Government revealed that the Web Summit had requested Garda escorts for VIP guests of the Web Summit, as well as infrastructural improvements. This drew fire from some politicians and media commentators, who said he was asking for too much for a private conference.

“We don’t want a penny,” wrote Mr Cosgrave in response.

“Even an indicative plan and we would stay. But after three years of asking and asking, we still don’t even have one single page outlining even a basic committed plan for the city. What little is being done for this year is unfortunately disorganised, uncoordinated and in many instances not guided by evidence.”

In reply, the Government shrugged its shoulders, calling Mr Cosgrave’s decision a “commercial” one. Senior ministers dismissed the issue.

“I don’t think that people will be disappointed,” said Minister for Finance, Michael Noonan. “Dublin is chock-a-block with business at present. The hotels are full nearly every weekend.”

The Web Summit was credited by Fáilte Ireland with bringing in between €38m and €100m of business to Dublin, with the figure later being revised down by almost two-thirds after Mr Cosgrave announced that the event was set to leave the city.

 

3 Europe plays sheriff with US tech giants

If big US multinationals thought that the European Commission was going to ease off on its probes into competitive and taxation issues last year, they were sorely disappointed.

The European Commission accused Google of favouring its shopping service in delivering search results at the expense of rivals. European Competition Commissioner Margrethe Vestager can either fine the company up to €6bn and order it to stop its alleged anti-competitive business practices or give it the opportunity to change its practices without any sanction or finding of wrongdoing.

“At this time it’s still open as to how it will end. It can take different routes, there is no decision yet on our side at least as to how it should end,” she said in November.

Meanwhile, Apple continues to wait on a verdict from the European Commission about whether or not it benefited from illegal state aid via taxation structures from Ireland. If the Commission finds against Ireland, the tech giant may find itself having to pay Ireland millions, or even billions, in back taxes. In November, Apple chief executive told the Irish Independent that an adverse decision would be appealed.

“The Irish government has been clear to us that if there’s an adverse ruling they’ll appeal,” he said. Mr Cook also denied that Apple ever benefited from special tax treatment.

“Our advisers have looked at it and they’re very clear there was no special deal,” he said. “And I have every faith that the system, either initially or eventually, will find the same.”

 

4 The Dublin property crunch

2015 was the year when the crunch on office space in Dublin for tech firms began to create real headaches for tech companies seeking to hire more people or establish new offices in the city. Despite vacant plots the size of football pitches a few hundreds yards from the Silicon Docks – the place that most digital tech and software firms seem to want to be – there was no almost no building going on.

Furthermore, there was very limited refurbishment of dilapidated old buildings. Nama, planning laws and ‘the banks’ were all blamed for the impasse, happening at a time when the Irish tech economy was roaring ahead with funding and job announcements from startups to multinationals.

In February, the head of the Society of Chartered Surveyors of Ireland (SCSI) said that the shortage of “prime” office space ”poses a threat to our international competitiveness in terms of attracting foreign direct investment”. In some areas, vacancy rates dropped to as low as 1pc.

Twitter agreed to take a new building just off Merrion Square. Airbnb took on some old warehouses in the Grand Canal Basin, undertaking to completely rebuild and refurbish them for brand new offices.

While some tech firms spoke of putting off expansion plans because of the office crunch, other companies moved into other areas.

Multi-billion software firm Workday, which would count itself firmly among the sort of digital Silicon Valley software firms that like to populate the Silicon Docks, opened a new HQ in Smithfield. Yahoo established a new base in Dublin’s Sheriff Street, next to the Point Depot. Others moved further into Dublin 4 and Dublin 6, leafy areas that are a little outside the buzz of central Dublin’s cafés and restaurants.

5 The venture capital gates are still open

Venture capital funding for tech firms continued to flow in Ireland over the year, despite some VC firms warning of a cash crunch for smaller startups. Official figures from the Irish Venture Capital Association showed €307m was raised in the first half of 2015. This accounted for 45pc growth in VC funding compared to 2014 and over 90pc compared to 2013.

Within Irish tech startups, business software remains the biggest sector to see funding, with 38pc of all VC funding deals here.

Medical devices (15pc) come next, with financial software (7pc), biotech (7pc) and environmental tech (7pc) the next most funded categories. Telecoms tech (6pc) and e-learning (6pc) startups remain actively funded while electronic components (4pc), health tech (4pc) consumer tech (3pc) and food tech (1pc) bring up the rear. The vast majority (72pc) of VC investment in Irish tech startups remains under €3m per deal, with 33pc of all deals worth less than €1m.

Only one in eight of the VC investments outlined in the IVCA figures is for over €10m, shrinking to one in 14 when narrowed down to ‘native’ Irish startups.

There also remains a split between Dublin and the rest of the country, with at least €227m of the €307m (and 44 of the 68 disclosed individual VC investments) raised by startups in the first half of this year going to companies based in Dublin.

 

6 Europe stands up to the US over data

If 2014 positioned Europe as a stalwart of privacy rights with the ‘right to be forgotten’, 2015 may be remembered as the year when Europe finally stood up to US infiltration of citizens’ personal information. In a landmark move, the European Court of Justice struck down a major EU-US treaty that had been the legal basis for the transfer of data between the two trading blocs for years. The treaty, ‘Safe Harbour’, was supposed to guarantee EU-style privacy rights for European citizens’ personal data when transferred to the US. But in a damning judgment, Europe’s highest court said US laws “permitting the public authorities to have access on a generalised basis to the content of electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life”. Consequently, the transfer of our personal data there was deemed unsafe.

The European court decision is the result of an action brought against Facebook in the Irish High Court by an Austrian student, Max Schrems. He argued that Facebook flouts privacy because personal data processed by the company is unprotected from snooping US authorities. His case has now been referred back to Irish Data Protection Commissioner Helen Dixon, who will re-examine his complaints.

If successful, Mr Schrems may see the ECJ’s reference to Ireland “suspending” data between Europe and the US come to some fruition.

For its part, Facebook says that it would be expensive and technically difficult to divide users’ data so that US users could not access European users’ information. “It would be very expensive to divide out data so that it’s stored only in Europe,” one Facebook executive told the ‘Sunday Independent’ in October. “We would have to build new data centres [in Europe]. We would probably also have to halt some product development while we rethink the architecture of how the data was stored and dealt with.”

 

7 Broadband rollout steps up a gear

2015 was a big year for the rollout of fibre broadband around the country. As the year progressed, a race developed between two rival camps – Eircom (which changed its name to Eir in the second part of the year) and Siro, a joint venture made up by the ESB and Vodafone. Siro’s promise was to connect 500,000 homes and businesses in non-urban Irish towns to broadband of 1,000Mbs using existing ESB infrastructure.

In response, Eircom upped its eventual fibre broadband rollout roadmap by 300,000 to 1.9m homes and businesses by 2020. All of this was taking place against the backdrop of the Government’s state-subsidised National Broadband Plan, which aims to hook 750,000 rural homes and businesses up to fibre broadband by 2021.

 

8 Smartwatch hype peaked and ebbed

Tech hype cycles often stay concentrated for two-year stints: 2015 saw the back end of one of those hype cycles (smartwatches) and gathering momentum around the next one (virtual reality). The mythical qualities of mainstream computing moving to wearables finally crystallised when Apple released its Watch. So far, the industry isn’t sure whether to call it a success: Apple isn’t releasing sales figures for the device yet. But while those who own one are said to be happy with it, there is not the same kind of buzz around smartwatches now as there was 12 months ago, when we were in the lead-up to Apple’s launch. Of course, many manufacturing rivals (Pebble and Sony, particularly) would legitimately say that they have been at the smartwatch game for a lot longer than Apple. And when wearable fitness gadgets such as Fitbits and Jawbones are counted, smart device ownership is actually quite widespread today.

 

9 Dawn of a new hype cycle: virtual reality

There is little doubt that virtual reality rose to become the ‘it’ technology of 2015, with little sign of any waning going into 2016. Big companies such as Facebook, Samsung, Sony and HTC are investing billions in the platform, while a core of enthusiastic users is getting bigger and bigger.

“At some point, VR is going to be more ubiquitous than today’s phones,” Palmer Luckey, the founder of the world’s most famous VR company, Oculus Rift, told me in November. “Eventually the cost is going to come down, the quality is going to go up and the form factor is going to shrink from being a big set of goggles to being more like a pair of sunglasses.”

Luckey isn’t alone. “We’re investing heavily in this,” Facebook’s chief technology officer, Mike Schroepfer, told me at the Web Summit. “We’re building a system that gives you a sense of place, of being anywhere you want in the world and then, more importantly, with other people.”

It’s not just ‘virtual’ reality, either. ‘Augmented’ reality – superimposing a virtual world over what you’re actually seeing – got a shot in the arm, too, with Microsoft’s announcement of its Hololens headset. And lots of this is being introduced at an affordable price, with Google’s Cardboard device costing little more than €20.

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