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Honeycomb Asset Management is betting big on OLED display technologies to lead future interactive technology advancement and improvements, according to a letter the firm sent out to investors. Of course, smartphone and tablet manufacturers will certainly benefit from the advancements. Moreover, customers of those manufacturers will see some substantial added benefits. However, according to Honeycomb, the biggest beneficiaries of the display technology and its implications are likely to be companies such as YouTube, Netflix, Google, and Facebook.
To fully grasp the implications of OLED on the hardware front, it is important to first understand what OLED does. Organic light-emitting diodes (OLED), according to Honeycomb, allow for “paper-thin” displays that “emit crystal clear images” without the need for a backlight. That not only makes them more efficient on the power-consumption side of things but also enables screens that are much more flexible than traditional technologies like LCD. OLED displays can be foldable and applied to a variety of surfaces “from plastic to glass.” Honeycomb says that means they can be applied to “windows, walls, and car tail lights” and the implications of that for mobile devices are fairly obvious with consideration for the number of patent filings seen for folding displays. Not only does the lack of backlighting significantly reduce power consumption, it also allows for displays and the devices those displays exist on that be more compact when needed – for example, folded to put into a pocket – and to become larger when needed for media consumption.
At the same time, the leading beneficiaries of OLED technology are not necessarily going to be the manufacturers putting those displays into consumers’ pockets. For example, Honeycomb suggests that subsequent gains that can be brought by the technology to companies that depend on video advertising for revenue – including Google, Facebook, and YouTube. The firm points to the fact that there was a negative impact to those organizations caused by the transition from full sized desktop screens to smaller mobile screens. Foldable OLED displays could bring a kind of bounce-back due to the increased screen space on offer. Honeycomb attributes its confidence to the differences in ad-revenue generated by video ads as compared to “click-through links.” YouTube is also joined by Netflix in growth potential, according to Honeycomb, as the two media giants that could see massive gains in viewership thanks to the availability of larger, more comfortable displays. Power consumption could also play into that since the current viewing rates could be affected by better battery life expectations for mobile users. Currently, YouTube users collectively consume around 1 billion hours of media every day and Netflix users collectively consume around 1 billion hours per week. For YouTube, that equates to around 40 minutes per day, per user, but that number could increase significantly with longer battery life and larger displays. The same could also be said of Netflix’s numbers.
For Honeycomb, the opportunity in OLED display technology lies in the firm’s current investments in Applied Materials – which is the “global leader in materials engineering solutions for the semiconductor, flat panel display, and solar photovoltaic (PV) industries.” With that said, Honeycomb isn’t the only firm interested in the technology, either. Prominent investment banking firm Goldman Sachs has, according to Honeycomb, predicted that the OLED industry will be worth $46 billion by 2020. That estimation may not be too far off if recent reports about LG and Samsung are to be believed. That’s because LG Display will reportedly have invested $13.4 billion in its OLED production capabilities by that same year. Meanwhile, Samsung is reportedly working on building the biggest OLED Factory in the world. The factory is expected to be completed by 2019, just a year before Goldman Sachs estimation date, and to be operating at peak efficiency by 2021. For Samsung, that makes sense as it already uses a variation of OLED with their AMOLED screens, which are effectively OLED screens with an active matrix back panel consisting of thin-film transistors. The two companies could make up a substantial portion of the OLED industry by themselves and it is possible to draw the conclusion that Goldman Sachs estimate is a fairly conservative one.