Hello opportunity seekers.
It is Sunday here and we have prepared something very special for you.
Big Data sector is booming and it means a lot of money can be and must be made.
As Bonus we have few companies listed below which most likely will benefit from this change. Enjoy!
With the digital revolution in the early 2000s, the use and presence of technological devices has grown significantly. Every day we use internet, our laptops or smartphones. Having an access to computer and internet is easier than ever before. Thus, by using so much of this numeric system, we create huge volumes of data each day and every hour. Each research, transaction, sent email has the consequence of creating a data. Now, that the system is globalised, each day we create 2.5 trillion megabytes of data. This is called “Big Data”.
Big Data is a volume of unstructured data so large that it cannot be treated, analysed and understood by human being or classic computer’s programs. The Big Data sector is the business of finding, extracting and compiling these data to be eventually analysed, simplified and sold by the Data Analytics sector.
Big data is physically every type of marks we left on Internet, every financial transaction, every search, every post we liked or shared. Our technology creates a continuous and swift flow of data. However, we do not create “finished” or simple data. We create unstructured, unreadable pack of figures. Hence, to be used by us these figures need to become readable information such as numbers, graphs, tool bars etc. Only then this information becomes valuable for consumers. The conversion is made with help of algorithmic analysis and other complex computer’s programs which requires a huge power supply and difficult installation procedures.
We can use similarities between the data sector and the oil industry. Data is the raw resource, same as oil. Data cannot be used effectively without being transformed to another state. For oil it's the petrol, for data it's the information.
Big data will be a tool in a wide range of industries. It can be used in politics, sciences, agriculture, finance, energy, almost in anything. We can already see that the financial sector has been widely transformed by the big data. Quantitative Finance based on algorithms and High Frequency Trading are practical application from Big data’s using.
Now, that the gold mine of data is found and it seems to be the Web. We can clearly assess that the
"Big Data" is not a bold investment choice. The growth of this industry is strong (between 13% and 20% p.a according to most of sources) and revenue are increasing (from $7.6 Bn in 2011 to $33.5 Bn in 2017 according to Statista). It is still seems as good investment opportunity, as this sector is not yet discovered by most of investors.
Please, do not forget that every businesses which somehow is connected to "Big Data" Sector are well expected to grow with the Big Data business as well. Processing such large data volumes requires cloud infrastructure, creation of unstructured data base, analysis algorithms, development of mega computer, data centre and many more. If you in doubt, here is my reason to believe in an exponential growth of this sector: The data sector is relatively young but already strong and has bright future, because it relies on our use of technology. The technology gets cheaper every day and thus increase accessibility to Internet and its opportunities for constantly increasing population.
In this birth of a data market, I am focused on the Data Analytical sector. Companies extract and provide the same form of data. The way this information is valuated, simplified, summarized and analysed can have significant differences. Thus, the real added-value in the near future should be in the analysis process and around the precision and the relevance of the created information.
(As with the “oil similarity”, every company can find oil in a desert and the difference between extraction points is tight. But you create the value for the customer when you transform it into another product which can be used for different purposes, such as: petrol for planes, cars, buses and many other types of machinery)
One important point to have in mind is the legislation of this sector which is very light. For some sectors (meteorology, agriculture…) there are no problem. However, more and more concerns are arising how this data will be used by businesses, will the consumer benefit from it?
Will it encourage monopoly? Data which is collected are actually a private part of citizens which they do not want to share. Nobody wants to have its private life exposed to public by collecting their user experience. In addition, a true question of ethics is present for "Big Data" companies using it in advertising, eg. is it ethic to use stolen private data from someone to eventually use it to boost your advertising campaign? Big data is a blue ocean with a lot of unknown.
Overview and Advise
Start-ups to watch in sectors of Analytics and Data:
Alteryx (Ticker: AYX), and Cogint (Ticker: COGT). Those are Venture Capital Backed companies
but are expected to play a bigger role in the next coming years.
Current major players of Big Data sector are: IBM (9.3% of market share), SAP (3.9%), Oracle (3.3%),
HP (3%), then Microsoft, Google, Facebook and Amazon.
All of them are Publicly listed companies and current leaders of the technological era.
An index which tracks "Big Data" sector does exist. It is called the ISE Big Data Index.
If you interested to invest in this highly developing sector we would advise you to use Exchange Traded Funds (ETFs) to diversify you risks. If you would like to know more about Exchange Traded Funds (ETFs) check our article.
Thank you for your time.
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Written by Samuel Chaineau │Independent stock analyst
Edited and Corrected
by Vee Venski