Challenge and opportunities in the communications and technology industry

Written by Kate Stone. Posted in Banner Stand

Insight may already know the answer, but for those of us mere mortals, after seeing this ranking, or inverted breath, the world's largest company is not in Seattle, not in London, or even in Tokyo. When a promising young people graduated from National America University, with his father's generation, began planning an international giant corporate career, first on the list make sure that we were shocked.

According to the Oswald consulted analysis, all companies want to list must choice: either from the emerging markets, backhoes new people caught hundreds of millions of consumers in mature markets, or to attract those picky but do not hesitate to Austrian passenger bait. Apple, for example, their ability to innovate let the latter obediently team line up for hours in the cold to buy a touch phone never touched.

America enterprises have the opportunity to become Godzilla? In fact, several But frankly speaking, we do not see out of them to take what kind of strategy?



Telecommunications, media and technology companies should be proud of the performance of its industry as a whole in 2007 during. The market value of the telecommunications, media and technology sector improved significantly by 20%, global market value of $ 8.2 trillion, accounting for about 14% of the total equity valuation. We analyzed the market value of the 450 largest listed telecommunications, media and technology companies, which company has the best performance, where a meteoric rise, and what qualities they outperformed its peers. It was found that 2/3 of the 60 best performance of companies, telecommunications companies, 18 from emerging markets, from emerging markets in the mobile market capitalization surpassed Microsoft headquartered in Seattle. We found that:

Emerging markets and the field of mobile communications win. Company headquarters from the market value of companies in emerging markets (such as China), headquarters from mature markets (such as the United States) is growing faster (annual growth rate of 38% and 15%, respectively). The pure telecommunications company annual growth rate of 31%, far more than the industry average of 18%. For example: in 2007, China Mobile's market capitalization has more than Microsoft, the world's most valuable telecommunications, media and technology companies, the end of the year, its market capitalization reached $ 3,460 million, compared with $ 338 billion for Microsoft.

Blue-chip corporate performance more than 3 times more than the industry average. Found 60 best performance in the world's largest 450 telecommunications, media and technology companies. These companies, the average stock performance index of 340, while the industry average was 111; optimal performance of the company's market capitalization increased by 40% per year, while the industry average is only 18%.

Performance excellence the company has three major characteristics

They will transfer trend based on high-growth emerging markets and the value of the field to adjust the strategy, especially mobile communications.

They know how to proper use of traditional and new improved leverage, enhance operational excellence and reduce business risk. Such as network outsourcing, human resource planning.

They adopt innovative business design, including the re-integration of communications, media and technology industry value chain, re-customer segments and the use of new advertising business model to capture high-value opportunities.

The strategy increased risk. Changes in consumer preferences, the advancement of technology and the changing global regulatory situation, to the telecommunications, media and technology companies to bring greater strategic risk. To remain competitive, companies need to improve the ability to identify strategic risk aversion.

By the end of 2007, the telecommunications, media and technology industry in the world by market capitalization reached $ 8.2 trillion, accounting for 14% of the total global equity valuation. However, value creation is not evenly distributed. Certain areas, regions and companies more adept manage complex factors drive the value of the transfer, including the increasingly prominent trend of globalization, rapid technological changes, changes in customer preferences and geographical advantages change.

Figure 1 highlights the end of 2007, six major areas of 11 districts, 450 the world's largest communications, media and technology companies in the market value of how they are distributed. (Total global market capitalization of $ 7.7 trillion, the market value of these companies about communication, media and technology industries global market capitalization of 93%).

At present, the company's market capitalization of the United States, Canada region accounted for 45% of the total market capitalization of the 450 largest listed telecommunications, media and technology companies, followed by Western Europe, accounting for 24%. Japan and Greater China ranked No. 3, respectively, 10% and 9%. Such as classified in accordance with the industries, hardware and semiconductor fields bear the brunt of 31% of the total value, followed by the field of fixed and mobile communications as well as pure field of mobile communications, which accounted for 20% and 15%. More than half of the world's technology hardware and semiconductor companies headquartered in the United States, Canada, and more pure mobile communications company will be headquartered in emerging markets.

Now let's take a look at how the value is transferred between various fields and regions.

The most significant findings of this report one of the outcomes is inconsistent growth rate in emerging markets and mature markets. Over the past five years, the market capitalization of companies headquartered in emerging markets grow at an annual rate of 38%, the market value of the companies set up their headquarters in mature markets grew by only 15%.

Today, the emerging markets is the driving force behind revenue growth in many areas in the global telecommunications, media and technology industry. For example, computer usage in emerging markets grew by 22%, 12% mature markets; emerging markets, the number of mobile phone users grew by 36%, compared with 9% in the mature markets. 2002-2007, telecommunications, media and technology industry companies to set up their headquarters in the Greater China region annual growth of 34%, a market capitalization of $ 211 billion last year alone. Other emerging markets - the market value of the scale smaller - even experienced a more robust growth in these markets include Middle East / Africa, Central and Eastern Europe, and India (2002 to 2007 period, the annual growth of 72%, 49% and 48 %). As many emerging markets are expanding rapidly in the past five years, those who set up headquarters in the mature markets of the company is gradually emerging markets as the main driving force of its revenue and income growth.

However, to compare the main challenges in the global company, is to determine what benchmark or index should be used to identify the best performing companies within each industry. We opted Shareholder Performance Index (SPI) selection of the best performing companies.

The best performance of the company of our study, we found two major trends: the value flows to emerging (compared to mature) economies and mobile communications. Many American, European and Japanese telecommunications company in the past five years, due to the lack of investment in new growth areas, or to protect the implementation of the regulations of emerging market corporate announcement, lost a lot of value share. Now, headquartered in emerging markets the pure telecommunications company's market capitalization accounted for 59% of the industry as a whole, the growth rate is three times the company is headquartered in mature markets (53% and 17%, respectively). Most companies for local enterprises, their size and growth rate of these markets, low penetration and regulations entities from time to time provided by the monopoly structure widely as revenue. As follows:

China Mobile successfully grasp the rapid development of the telecommunications market in mainland China, expanding and growing through the effective user. The company's market share in 2006 was 68%, the number of users up to 301 million, as of the end of 2007, China Mobile market value of U.S. $ 3,460 billion, more than Microsoft (market value of U.S. $ 3,380 billion at the end of 2007) as telecommunications, media companies with the highest market value and the high-tech industry.

America Movil in the past five years, through the acquisition of 15 companies, a combination of dispersed user base, the company's mobile business expansion to Latin America from Mexico 16 high-growth market, from 2003 to 2006, the company The annual growth rate of revenues and EBITDA (interest, taxes, depreciation and amortization profit) were 39% and 37%, respectively. The company's shareholders Performance Index of 535, ranking the second large capital size category.

Even though many foreign multinational companies have missed the opportunity to dominate the fast-growing market or industry, but there are still a few companies recognize this trend, they have been successful in these markets, for example as follows:

Telenor in Asia and Central Europe (for example: Bangladesh, Pakistan and Hungary) early investment homogeneity of goods to offset the European mobile voice services. Currently, these markets accounted for 61% of the income of the corporate action services, to become the driving force for most of its revenue growth. (Bangladesh and Ukraine accounted for Telenor2006-year revenue growth of 45% and 51%. Norwegian and Danish market accounted for only 7% and 8%.)

Despite strong revenue growth in the domestic market, Spain's Telefonica is still adjacent and emerging markets to invest heavily. Third quarter of 2007, the external market revenue accounted for 63% of the company's total revenue, 53% of the operating income.

Singapore Telecom investment in 20 new markets in Australia and Southeast Asia, revenue increased 16% in the 2002-2006 period, EBITDA is a 15 percent increase.

What brought the telecommunications, media and technology industry's leading companies far the other companies throw in behind it? In addition to the traditional cost-cutting leverage strategic procurement and improve supply chain efficiency, these blue-chip companies such as workforce planning, architecture and network outsourcing, a new generation of excellent operating leverage and reduce the risks faced by the business. Such as Hewlett-Packard (Hewlett-Packard) initiated the integration of traditional and new generation of operational excellence in one of the improvements.

Other telecommunications, media and technology companies by reducing the strength of the assets in order to reduce the risks inherent in its business design, and improve their ability to adapt to changes in demand. For example:

The BhartiAirtel is well-known pure mobile operators in India, is a fully outsourced network deployment / Create, information technology services, and customer service centers, succeed in establishing Lean and asset-light mode of operation. The company through streamlining processes and save capital expenditure to achieve a fairly effective growth. Since 2003, the percentage of operating costs as a percentage of the company's revenue dropped by an average of 8%, through a combination of reduced-risk business model and the precise adjustment of the action and emerging market trends transfer of value, the the Bharti company's Shareholder Performance Index (547) ranking the top of the telecommunications, media and technology companies.

Hutchison Telecommunications (Hutchison Telecommunications)

Not only committed to explore new growth opportunities in the emerging markets of Asia, while also using the asset-light model. The company has outsourced network and information technology services, to maintain a lean operating, and cut costs. To 2005-2007, the company's operating profit by about 6 percentage points. In addition, the 60 best performance from more backward than the performance of regions and areas.

Introduction of personal computers for the technology industry has brought spell specialization and decomposition of the value chain. 1980-2000 period, with an integrated business model well-known industry leaders (including IBM and Digital Equipment Corporation) semiconductor (such as Intel) and software (Microsoft, SAP and Oracle) manufacturer specializing in the design, to seize a large number of market value and market share. The traditional concept had to let a professional manufacturer to produce various parts of the value chain.

However, our study several leading companies have openly challenged the conventional wisdom. Today, the interaction between hardware, software and Internet Internet Service is quite powerful. The best performance of the company realized that want to have the best customer experience, you need to control the key link of the value chain of the telecommunications, media and technology industry (even if they do not need to complete those links). Please refer to the case:

Apple iPod (Apple) business designed to be a winner in the field of music, for the following reasons: First of all, this business design through the integration of portable devices, software, services and content, creating a simple, intuitive user experience. Apple is not the first company to produce such equipment, listed on the iPod, clumsy, non-user-friendly interface (including hardware and software of the device, as well as between the equipment and online services), a single product at your fingertips. Second, Apple's service design through sales of music, to capture the value of the introduction of the new mechanism. (Currently, Apple is the third largest music retailer in the United States) Interestingly, iTunes / iPod platform, the value is not transferred from the hardware to the online service. In fact, through the sales of the iPod product, Apple to achieve higher profits, because the iTunes service of its hardware competitors formation of differences, and to achieve a higher than average market pricing. In the past five years, the company's market capitalization almost doubled doubled annual profit growth rate of 38%. The success of the iPod also provided a springboard for further growth of integration for Apple products (such as the iPhone and AppleTV)

Blackberry manufacturer Research in Motion (RIM) mobile communications solutions, and determine the interaction between the equipment and software has a very important meaning. The company integrated approach to achieve a seamless connection between hardware engineering, equipment, software and back-end systems, but also makes the company's products and services to win the favor of many of the world's professionals. RIM's products also has reliable security features, and is fully compatible with the office e-mail features, before expanding to the consumer market, a feature that has helped the company to convince the suspicious nature of enterprise IT customers. The past two years, RIM's revenues grow at an annual rate of 87%, 377 Shareholder Performance Index ranked the seventh of the list of companies have large capital scale.

Advertising mode 2.0

Enterprises in the telecommunications, media and technology industry uses advertising sponsorship business design for a long time. Funding of $ 427 billion advertising market for television, radio and the print media industry for over 40 years. Online advertising is a $ 40 billion industry is expected in the next 10 years, the annual growth rate will exceed 20%.

View of consumers' online work, communication and opportunity to read the contents of the increasing number of enterprise customer base increasingly refined to provide more customized advertising opportunities for investment in marketing to win more lucrative returns. While everyone's attention in recent years, mostly concentrated in the main search site online advertising, however, is expected to grow more rapidly in the new field of advertising - especially mobile phones, built-in game and video -. We believe that online, the rapid growth of mobile phones and other new forms of advertising will be able to reshape the telecommunications, media and technology industries, which is in the historical analysis of the 450 leading telecommunications, media and technology companies to react. Let us refer to the example of some of the early innovative advertising model, as well as the case of some companies win the competition through the application of these modes:

Search-based advertising model. In the arena of search-based advertising, Google is undoubtedly the most important cases as well as the first winner. Proven, search is connected to the most powerful mechanism for advertisers and the particular consumers interested in their products. More passive way of television, radio and publications can never copy the search to locate the target micro-segments and micro information. Self-advertising delivery model (AdWords and AdSense) has established a business relationship with more than 160,000 advertisers. Since 2003, Google's annual revenue growth of 64%, EBITDA grew by 79%.

Social networks and communities. Business model of social networks and communities, gathered with the common interests of the beneficiaries, and the use of advertising and services provided, the value to be generated from these individual organizations. Long-term viability of this type of business model still need to test several leading companies of this field which have not been listed, so they do not meet the requirements of the Shareholder Performance Index (Facebook is a typical example), however, we do have in the index a best performance of the company. Tencent QQ is a company registered in Hong Kong, through the use of new mobile devices and provide a seamless user experience, strategic control of the large user base, the dominant strength. One Shop Online the strategy (including multimedia instant messaging, e-mail, community portals, and Tencent currency diversification virtual store) to help Tencent has 715 million registered users, virtual communities. Reached about 300 million active users. In the past three years, Tencent realized the fact that income growth of more than 3 times.

All in all, in the past five years, the best performing business design innovation to achieve the highest market capitalization growth. The best performance of the company's shareholders Performance Technology 364, contrast, telecommunications, media and technology industry average of only 111. This shows that investors pay more attention to identify future opportunities and risks, as well as capture the opportunities at the same time, through the adjustment of the business model, the ability to avoid the risk. As for the telecommunications, media and technology companies that can not be successful and innovative business design, its growth will gradually decline with the growing strength of non-traditional new entrants. This aspect of the well-known examples include Music Labels, the company missed the online digital music market; unable to avoid the risk of a crash 15 years ago, the value chain technology company.

What factors will facilitate the growth of telecommunications, media and technology sector, the next stage? The best performance we analyze how the company will benefit from the growth and maintenance of their own performance? With the continued development of the industry, the losing candidates and active industry leaders on how to improve their business results? The value of the transfer is the inevitable trend of various industries, and the dynamic changes in the telecommunications, media and technology sector is particularly intense. Managers need to reflect on the current trend will last long, the next trend may be what.