Goldman Sachs Technology 2010 Year-In-Review: A Recap

Last month, Goldman Sachs released a 2010 Year in Review and 2011 Issues and Outlook summary. Below is a recap of Goldman’s view on trends in the technology sector in 2010. Next, we will focus on Goldman’s predictions for 2011.

  1. Large Acquirors Dominate Deals – Larger technology companies such as Intel, HP, IBM, SAP, EMC and Oracle had cash to burn, and low interest rates fueled a cash-based, competition-focused acquisition dynamic.
  2. Cross-Border Acquisitions Accelerate – Total volume of cross-border acquisitions was up 700% from 2009, and foreign firms invested in the United States to gain foothold in the U.S.-end-user market and take advantage of last-minute pre-recovery pricing.
  3. IT Vendors Seek Vertical and Horizontal Consolidation – Data volume went up exponentially (again) and vendors sought to capitalize on the need for ever-more-efficient, end-to-end data management solutions.
  4. SaaS Hits the Big Time –Larger enterprises embraced software as a service, and markets responded – SaaS deals accounted for 55% of the tech M&A market in 2010.
  5. Investors (Heart) Growth, Take More Risks – Tech growth stocks outperformed NASDAQ by 130% over three years, and investors have become less risk-averse and high-returns driven than in 2008-2009.
  6. Smartphones and Tablets Are Paradigm Shift – Smartphone and tablet growth dramatically outpaced PC/notebook growth, leading to a major shift in investment to new, mobile-focused software that can run on multiple platforms, especially iOS and Android.
  7. IP Video and VoIP On Steep Part of Growth CurveNetflix, Hulu, YouTube and Skype, among others, drove strong growth in VoIP infrastructure and Video/VoIP-related investment.
  8. eCommerce + Social Media = Wisdom (and $$) of Crowds – eCommerce continued its drive for increased market share within the retail sector, while social extensions of the eCommerce market such as OpenTable, Groupon and Gilt Groupe utilized the tech savvy of younger and higher-income customers to drive purchases.
  9. Home Is Where the Profits Are – Technology that integrates home electronics, wireless Internet and remote access generates heat, while on the legal side regulatory battles, such as the upcoming Netflix/Comcast dispute, remain dangerous.
  10. 3D: The Next Big Thing? – Three-dimensional packaging or stacking of devices is key to continued technological refinement in the semi-conductor industry, enabling the continuation of Moore’s Law (i.e., the number of transistors incorporated in a chip will approximately double every 24 months) without the challenges of nano-scale engineering

This post was authored by Caitlin Vaughn.

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