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Opening Cross: From Hosting Fundraising Crowds to Hosting Data Clouds

Inside Market Data, Max Bowie

Our New York readers—plus anyone else with an interest in politics—will be well aware of the mayoral race to replace Michael Bloomberg. But as we hang on the endless rounds of baby-kissing, fundraising, public debates and Weiner-wagging (if by some miracle you don’t know who Anthony Weiner is, you must read about how he, ahem, connects personally with voters), are we ignoring another important question: what will Bloomberg do next?

For a man with the personal wealth to buy a small country and retire there, Bloomberg’s options are wide open. But no doubt Mayor Mike will be wary of a Bloomberg News headline from June 11—“Retirement Will Kill You”—and be keen to return to work, or perhaps some higher political office. However, he could do worse than return to some role in his eponymous data vendor business, which is picking up steam in the EMEA region against rival Thomson Reuters, according to the latest research from Burton-Taylor International Consulting

As in other regions, Bloomberg and Thomson Reuters dominate in terms of market share, leaving other vendors to fight over the remainder. These other vendors are by no means minnows, especially considering the level of consolidation in the data industry over the past 10 years. Yet this consolidation appears to have done little to expand competition beyond the current duopoly.

This leaves it to vendors to differentiate themselves through innovation and commercial models. Activ Financial, for example—whose president Frank Piasecki argues the case for as-a-service data infrastructures in an Open Platform in this week’s issue—has transformed itself in recent years from being a low-latency US options ticker plant specialist to an enterprise-level data provider with much broader and international content sets, in a bid to challenge Thomson Reuters. Activ’s expansion is a logical move to avoid being pigeonholed perpetually in the low-latency niche, since the potential addressable market is limited for any niche player—and chances are, there are other competitors with which they must share that market. The more you can offer, the broader your potential base.

This is one of the drivers for research management software vendor Code Red’s current expansion plans, which include targeting larger firms then finding other ways that its RMS can be used within other divisions of those firms beyond those consuming investment research—for example, using it as a CRM system populated with client data, for which the vendor already uses the system internally.

Meanwhile, Chicago-based Barchart is looking to break out of its niche and gain broader traction among traders—primarily in futures, but also other asset classes—with a completely redesigned workstation with trading capabilities, at a lower price point than other professional terminals.

But companies can’t depend purely on innovative tools. Before you can build on your niche, you must first establish yourself within that niche. And alas, not even the midas touch of Mayor Mike—who extended the NY mayor term limit once already—could grant another four years to behavioral analytics vendor Titan Trading Analytics, which quietly closed down last month after failing to attract enough business or additional funding to keep it running. The fact is, any data-intensive business incurs a range of costs—from procuring data to storing it in datacenters, as well as technology and R&D costs. And though the barriers to entry may be falling, the amounts of data—and hence the overall cost of collecting and processing it—are rising exponentially. This is likely to drive adoption of cloud-based hosting services designed for data-heavy operations, such as Nasdaq OMX’s FinQloud.

So if Mayor Mike is looking for a job, perhaps growing Bloomberg’s existing hosting services into a full-scale industry data cloud is the next step. After all—despite the privacy concerns raised by the recent Bloomberg News snooping scandal—who wouldn’t benefit from being on a Bloomberg-run data cloud?

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