February 27, 2012

The Financial Times

Bloomberg to reveal data service redesign

Bloomberg announced a $100m-plus redesign of its eponymous market data service on Monday, heightening its rivalry with Thomson Reuters by seeking to make its complex 30-year-old system simpler, more intuitive and easier to navigate.

The private company has converted 105,000 subscribers to the Bloomberg Next design already and plans to upgrade all 313,000 subscribers by December, in an effort to demonstrate more value in its $20,000-a-year service.

Thomson Reuters has disappointed analysts by selling just 16,000 subscriptions to its Eikon terminal, but a new management team is trying to position the new flagship product as an open alternative to Bloomberg’s closed system, to which users can add their own data and applications.

The battle between the market leaders has intensified as regulatory changes and cost pressures have left financial institutions looking to reduce the number of data subscriptions they take.

“Our business model is that we keep our price fixed but we dramatically increase the value of our product,” Tom Secunda, Bloomberg’s co-founder, vice-chairman and head of financial products and services, told the FT: “Every firm on Wall Street is trying to look at costs.”

Bloomberg Next includes navigation to allow an overview of each market for novices as well as deep analysis for experts, Mr Secunda said, citing traders’ growing need to understand interconnections between bond, equity and other markets.

Bloomberg has cut the 30,000 functions available in its previous desktop product by about half.  “Simplicity has tremendous value,” said Mr Secunda.  “A function that’s brilliant and never used is worth zero.”

A marketing effort starting on Monday, including seminars on bank trading floors, caps a two-year development process involving 3,000 programmers in which Bloomberg’s laboratories monitored users’ key strokes and eye movements to analyse how they used its system.

Burton-Taylor International Consulting LLC, a consultancy, estimates financial institutions spent $25bn in 2011 on market data, up from $23bn in 2008.

By its measure, which excludes revenues from indices, credit ratings services and stock exchange data feeds, Bloomberg’s market share has risen from 27 per cent to 30.4 per cent in four years, while Thomson Reuters fell from 34.5 per cent to 30 per cent.

Thomson Reuters has also made moves to simplify its products, built through acquisitions of competing technologies including the 2008 transaction that united Thomson Financial and Reuters, and to improve customer service.

by Andrew Edgecliffe-Johnson in New York and Philip Stafford in London