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February 24, 2019
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Two former Qualcomm engineers are using AI to fix China’s healthcare problem

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Artificial intelligence is widely heralded as something that could disrupt the jobs market across the board — potentially eating into careers as varied as accountants, advertising agents, reporters and more — but there are some industries in dire need of assistance where AI could make a wholly positive impact, a core one being healthcare.

Despite being the world’s second-largest economy, China is still coping with a serious shortage of medical resources. In 2015, the country had 1.8 physicians per 1,000 citizens, according to data compiled by the Organization for Economic Cooperation and Development. That figure puts China behind the U.S. at 2.6 and was well below the OECD average of 3.4.

The undersupply means a nation of overworked doctors who constantly struggle to finish screening patient scans. Misdiagnoses inevitably follow. Spotting the demand, forward-thinking engineers and healthcare professionals move to get deep learning into analyzing medical images. Research firm IDC estimates that the market for AI-aided medical diagnosis and treatment in China crossed 183 million yuan ($27 million) in 2017 and is expected to reach 5.88 billion yuan ($870 million) by 2022.

One up-and-comer in the sector is 12 Sigma, a San Diego-based startup founded by two former Qualcomm engineers with research teams in China. The company is competing against Yitu, Infervision and a handful of other well-funded Chinese startups that help doctors detect cancerous cells from medical scans. Between January and May last year alone, more than 10 Chinese companies with such a focus scored fundings of over 10 million yuan ($1.48 million), according to startup data provider Iyiou. 12 Sigma itself racked up a 200 million yuan Series B round at the end of 2017 and is mulling a new funding round as it looks to ramp up its sales team and develop new products, the company told TechCrunch.

“2015 to artificial intelligence is like 1995 to the Internet. It was the dawn of a revolution,” recalled Zhong Xin, who quit his management role at Qualcomm and went on to launch 12 Sigma in 2015. At the time, AI was cereping into virtually all facets of life, from public security, autonomous driving, agriculture, education to finance. Zhong took a bet on health care.

“For most industries, the AI technology might be available, but there isn’t really a pressing problem to solve. You are creating new demand there. But with healthcare, there is a clear problem, that is, how to more efficiently spot diseases from a single image,” the chief executive added.

An engineer named Gao Dashan who had worked closely with Zhong at Qualcomm’s U.S. office on computer vision and deep learning soon joined as the startup’s technology head. The pair both attended China’s prestigious Tsinghua University, another experience that boosted their sense of camaraderie.

Aside from the potential financial rewards, the founders also felt an urge to start something on their own as they entered their 40s. “We were too young to join the Internet boom. If we don’t create something now for the AI era, it will be too late for us to be entrepreneurs,” admitted Zhong who, with age, also started to recognize the vulnerability of life. “We see friends and relatives with cancers get diagnosed too late and end up  The more I see this happen, the more strongly I feel about getting involved in healthcare to give back to society.”

A three-tier playbook

12 Sigma and its peers may be powering ahead with their advanced imaging algorithms, but the real challenge is how to get China’s tangled mix of healthcare facilities to pay for novel technologies. Infervision, which TechCrunch wrote about earlier, stations programmers and sales teams at hospitals to mingle with doctors and learn their needs. 12 Sigma deploys the same on-the-ground strategy to crack the intricate network.

Zhong Xin, Co-founder and CEO of 12 Sigma / Photo source: 12 Sigma

“Social dynamics vary from region to region. We have to build trust with local doctors. That’s why we recruit sales persons locally. That’s the foundation. Then we begin by tackling the tertiary hospitals. If we manage to enter these hospitals,” said Zhong, referring to the top public hospitals in China’s three-tier medical system. “Those partnerships will boost our brand and give us greater bargaining power to go after the smaller ones.”

For that reason, the tertiary hospitals are crowded with earnest startups like 12 Sigma as well as tech giants like Tencent, which has a dedicated medical imaging unit called Miying. None of these providers is charging the top boys for using their image processors because “they could easily switch over to another brand,” suggested Gao.

Instead, 12 Sigma has its eyes on the second-tier hospitals. As of last April, China had about 30,000 hospitals, out of which 2,427 were rated tertiary, according to a survey done by the National Health and Family Planning Commission. The second tier, serving a wider base in medium-sized cities, had a network of 8,529 hospitals. 12 Sigma believes these facilities are where it could achieve most of its sales by selling device kits and charging maintenance fees in the future.

The bottom tier had 10,135 primary hospitals, which tend to concentrate in small towns and lack the financial capacity to pay the one-off device fees. As such, 12 Sigma plans to monetize these regions with a pay-per-use model.

So far, the medical imaging startup has about 200 hospitals across China testing its devices — for free. It’s sold only 10 machines, generating several millions of yuan in revenue, while very few of its rivals have achieved any sales at all according to Gao. At this stage, the key is to glean enough data so the startup’s algorithms get good enough to convince hospital administrators the machines are worth the investment. The company is targeting 100 million yuan ($14.8 million) in sales for 2019 and aims to break even by 2020.

China’s relatively lax data protection policy means entrepreneurs have easier access to patient scans compared to their peers in the west. Working with American hospitals has proven “very difficult” due to the country’s privacy protection policies, said Gao. They also come with a different motive. While China seeks help from AI to solve its doctor shortage, American hospitals place a larger focus on AI’s economic returns.

“The healthcare system in the U.S. is much more market-driven. Though doctors could be more conservative about applying AI than those in China, as soon as we prove that our devices can boost profitability, reduce misdiagnoses and lower insurance expenditures, health companies are keen to give it a try,” said Gao.

News Source = techcrunch.com

Bright spots in the VR market

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Virtual Reality is in a public relations slump. Two years ago the public’s expectations for virtual reality’s potential was at its peak. Many believed (and still continue to believe) that VR would transform the way we connect, interact, and communicate in our personal and professional lives.

Google Trends highlighting search trends related to Virtual Reality over time; the “note” refers to an improvement in Google’s data collection system that occurred in early 2016

It’s easy to understand why this excitement exists once you put on a head mounted display. While there are still a limited number of compelling experiences, after you test some of the early successes in the field, it’s hard not to extrapolate beyond the current state of affairs to a magnificent future where the utility of virtual reality technology is pervasive.

However, many problems still exist. The all-in cost for state of the art headsets is still out of reach for the mass market. Most ‘high-quality’ virtual reality experiences still require users to be tethered to their desktops. The setup experience for mass market users is lathered in friction. When it comes down to it, the holistic VR experience is a non-starter for most people. We are effectively in what Gartner refers to as the “trough of disillusionment.”

Gartner’s hype cycle for “Human-Machine Interface” in 2018 places many related VR related fields (e.g., Mixed Reality, AR, HMDs, etc.) in the “Trough of Disillusionment”

Yet, the virtual reality market has continued its slow march to mass adoption, and there are tangible indicators that suggest we could be nearing an inflection point.

A shift towards sustainable hardware growth

What you do and do not consider a virtual reality display can dramatically impact your view on the state of the VR hardware industry. Head-mounted displays (HMDs) can be categorized in three different ways:

  • Screenless viewers — affordable devices that turn smartphones into a VR experience (e.g., Google Glass, Samsung Gear VR, etc.)
  • Standalone HMDs — devices that are not connected to a computer and can independently run content (e.g., Oculus Go, Lenovo Mirage Solo, etc.)
  • Tethered HMDs — devices that are connected to a desktop computer in order to run content (e.g., HTC Vive, Oculus Pro, etc.)

2018 has seen disappointing progress in aggregate headset growth. The overall market is forecasted to ship 8.9M headsets in 2018, up from an approximate aggregate shipment of ~8.3M in 2017, according to IDC. On the surface, those numbers hardly describe a market at its inflection point.

However, most of the decline in growth rate can be attributed to two factors. First, screenless viewers have seen a significant decline in shipments as device manufacturers have stopped shipping them alongside smartphones. In the second quarter of 2018, 409K screenless viewers were shipped compared to approximately 1M in the second quarter of 2017. Second, tethered VR headsets have also declined as manufacturers have slowed down the pricing discounts that acted as a steroid to sales growth in 2017.

Looking at the market for standalone HMDs, however, reveals a more promising figure. Standalone VR headsets grew 417% due to the global availability of the Oculus Go and Xiaomi Mi VR. Over time, these headsets are going to be the driver of the VR market as they offer significant advantages compared to tethered headsets.

The shift from tethered to standalone VR headsets is significant. It represents a paradigm shift within the immersive ecosystem, where developers have a truly mobile platform that is powerful enough to enable compelling user experiences.

IDC forecasts for AR/VR headset market share by form factor, 2018–2022

A premium market segment

There are a few names that come to mind when thinking about products that are available for purchase in the VR market: Samsung, Facebook (Oculus), HTC, and Playstation. A plethora of new products from these marquee names —  and products from new companies entering the market —  are opening the category for a new customer segment.

For the past few years, the market effectively had two segments. The first was a “mass market” segment with notorious devices such as the Google Cardboard and the Samsung Gear, which typically sold for under $100 and offered severely constrained experiences to consumers. The second segment was a “pro market” with a few notable devices, such as the HTC Vive, that required absurdly powerful computing rigs to operate, but offered consumers more compelling, immersive experiences.

It’s possible that this new emerging segment will dramatically open up the total addressable VR market. This “premium” market segment offers product alternatives that are somewhat more expensive than the mass market, but are significantly differentiated in the potential experiences that can be offered (and with much less friction than the “pro market”).

The Oculus Go, the Xiaomi Mi VR, and the Lenovo Solo are the most notable products in this segment. They are the fastest growing devices in this segment, and represent a new wave of products that will continue to roll out. This segment could be the tipping point for when we move from the early adopters to the early majority in the VR product adoption curve.

A number of other products have also been released throughout 2018 that fall into this category, such as Lenovo’s Mirage Solo and Xiaomi’s Mi VR. Even more so, Oculus recently announced that  they’ll be shipping a new headset called Quest this spring, which will sell for $399 and will be the most powerful example of a premium device to date. The all-in price range of ~$200–400 places these devices in a segment consumers are already conditioned to pay (think iPad’s, gaming consoles, etc.), and they offer differentiated experiences primarily attributed to the fact that they are standalone devices.

News Source = techcrunch.com

Google adds a bunch of rugged devices to its Android Enterprise Recommended program

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Rugged smartphones, the kind of devices that business can give to their employees who work in harsh environments, are a bit of a specialty market. Few consumers, after all, choose their smartphones based on how well they survive six-foot drops. But there is definitely a market there, and IDC currently expects that the market for Android -based rugged devices will grow at 23 percent annually over the next five years.

It’s maybe no surprise that Google is now expanding its Android Enterprise Recommended program to include rugged devices, too. Chances are you’ve never heard of many of the manufacturers in this first batch (or thought of them as smartphone manufacturers): Zebra, Honeywell, Sonim, Point Mobile, Datalogic. Panasonic, which has a long history of building rugged devices, will also soon become part of this program.

The minimum requirements for these devices are pretty straightforward: they have to support Android 7+, offer security updates within 90 days of release from Google and, because they are rugged devices, after all, be certified for ingress protection and rated for drop testing. They’ll also have to support at least one more major OS release.

Today’s launch continues our commitment to improving the enterprise experience for customers,” Google writes in today’s announcement. “We hope these devices will serve existing use cases and also enable companies to pursue new mobility use cases to help them realize their goals.

News Source = techcrunch.com

Huawei overtakes Apple in smartphone shipments

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Chinese smartphone manufacturer Huawei is now the second biggest smartphone manufacturer in the world according to new reports from IDC and Canalys, as The Verge initially spotted.

In IDC’s latest report, the firm says that the overall market has shrunk by 1.8 percent in Q2 2018. But the biggest surprise is that Huawei now has a 15.8 percent market share with 54.2 million smartphones shipped in Q2.

It doesn’t mean that Apple is performing poorly. The company is shipping slightly more smartphones this year compared to last year. Apple also has a slightly bigger market share with 12.1 percent of the market.

Samsung is shipping 10.4 percent less smartphones but still remains the leader with 20.9 percent market share, or 71.5 million smartphones. In other words, many Samsung buyers are now buying Huawei devices, or other Android devices.

Canalys confirms this trend with the same order — Samsung, Huawei and then Apple. But the firm also highlights that Apple suffers from seasonability compared to its competitors.

Samsung and Huawei sell many different devices and release new phones all year long. Apple usually releases new devices in September, which creates a huge spike during the last quarter of the year. Apple will likely overtake Huawei and maybe even Samsung in a couple of quarters.

It’s interesting to see that Huawei is performing so well while the company has had issues with the U.S. government. If you browse the smartphone category on Amazon, Honor devices usually appear near the top of the list — Honor is Huawei’s brand for cheaper devices. The Huawei P20 Pro is also a solid device for those looking for a premium device.

News Source = techcrunch.com

In Canada’s cloud services market, venture investment opportunities abound

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Canada will be home to a new venture capital fund that will invest in enterprise cloud startups. Its backer? Salesforce Ventures, the global investment arm of Salesforce, a leading cloud-hosted business software provider.

According to a recent press release from Salesforce, the $100 million Canada Trailblazer Fund has already taken stakes in four Canadian startups building cloud-based tools for the enterprise, including Tier1CRM, Traction Guest, Tulip and OSF Commerce.

(Disclosure: Salesforce’s venture arm is an investor in Crunchbase News’s parent, Crunchbase. As with all investors in Crunchbase, Salesforce Ventures has zero input in the operation or coverage of the News team.)

The companies mentioned above join a handful of other Canadian enterprise cloud companies in Salesforce’s broader investment portfolio. In the years prior to announcing the new Canada Trailblazer Fund, Salesforce Ventures made investments in Aislelabs, Vidyard and LeadSift. And Salesforce itself participated in Fredericton, New Brunswick-based Introhive’s $7.3 million Series B round back in 2015.

Almost exactly one year ago, Crunchbase News profiled Salesforce Ventures and a new AI-focused fund it announced at the time. But instead of revisiting the firm and its investments, this time we’re going to take a look at the state of the market it’s jumping into. 

Investors’ growing appetite for Canada’s cloud companies

Specifically, using Crunchbase data, we’re going to take a quick peek at Canadian companies in the “enterprise cloud” sector. To do so, we’ve pulled together a list of more than 1,000 companies in a wide variety of categories in Crunchbase. We used the enterprise applications, enterprise software, SaaS, CRM, sales automation, ERP, billing, meeting software, marketing animation, contact management and scheduling categories as a rough proxy for the kinds of markets on which Salesforce’s new fund may be interested.

And what did we find? 

For one, there’s been a general uptick in venture investment activity in Canadian cloud companies, but that growth has come in fits and starts. Below, you’ll find a chart displaying aggregated annual venture investment data for Canadian cloud companies.

The above chart is based on reported data in Crunchbase, which, especially for seed and early-stage rounds, carries some reporting delays. These may not affect dollar volume figures (fledgling companies don’t raise all that much money), but reported deal volumes will undershoot reality for up to two years.

Regardless, between 2012 and 2017, reported venture dollar volume grew by approximately 124 percent.

2018: Off to a strong start on the investment side

Although it’s not pictured in the chart, so far in 2018 there have been more than 20 reported venture funding rounds in Canada for cloud companies in the categories we searched above. Here are some of the highlights so far:

With help of the PointClickCare round, Canada’s enterprise-focused cloud service startups may be on track to raise more capital in 2018 than they did in the prior year.

Where do Canada’s cloud companies reside?

As for where the hot spots are for Canadian cloud companies, you shouldn’t be surprised that they’re based in the country’s major population centers. Below is a chart showing the distribution of headquarters for our list of cloud companies founded in the past decade.

This being said, it may make sense for Salesforce and other investors interested in Canadian cloud companies to start looking outside these major metro areas. The proportion of cloud companies founded elsewhere in Canada is on the rise. In our data set, around one-fifth of the cloud companies founded in 2008 were located outside the five major metro areas cited above. For companies founded in 2015 and 2017, half are headquartered in other Canadian metro areas.

It goes without saying that there are seemingly endless market niches in the enterprise cloud services market, and as such we just barely scratched the surface here. There are countless data points and anecdotes we didn’t cover here, like this fun fact: Slack, the seemingly ubiquitous workplace chat platform, was originally founded in Vancouver. (It’s since relocated HQ to San Francisco.) Another: Shopify, which is based in Ottawa, went public in May 2015 and raised nearly $131 million in the offering, making it one of Canada’s biggest-ever tech IPOs.

In its statement, Salesforce cited IDC research findings, which say that Canada’s public cloud software market will grow six times faster than on-premise deployments, reaching CA$4.1 billion by 2019. No doubt, there will be stiff competition among investors for an increasing number of Canadian companies seeking capital in years to come.

News Source = techcrunch.com

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