Key Postings Vb (Technomediatainment): Maturities, Barriers and Disruptions
Two industries where we've ended up taking particularly deep dives are Technology and what we're calling Technomediatainment - the emerging composite of Telecom, New Media, Entertainment and Consumer Electronics. After the break you'll find the usual summary tables with all the previous posts in these areas separated into those categories.
The two industries are interesting for their own sakes, as exemplars of the approach we take to business analysis and for the implications and impacts on the broader markets and economy. The first two Tech posts focused on the market situation and pointed out with slowing Capex spending (thereby linking back to our "understand the context" theme of coupling to economic analysis) that the unusual performance of the Tech indices was unlikely to continue. An argument which seemed to first be born out from Oct to Mar and then wrong as the NDX/Nasdaq bubbled up over the SP500. Notice however that, literally today, the NDX is now moving in concert with or lower than the S&P. Interesting, eh what ? That question will be settled by whether or not earnings hold up unusually well - something we don't think will happen as the Economy continues to tip over but which is likely to lag other indicators.
Exactly how the Tech & Techno enterprises perform will result from the confluence of changes in industry structure, the emergence of new products, services and solutions and the performance of individual companies. All of which is discussed in more detail in these prior posts by some of which can be briefly reviewed here.
Technology
1. Industry Structure - Technology per se is essentially a commodity, at least on the bottom part of the stack. On the top part, the applications/content/solutions portion, there's still lots of room for value creation. The former assertion leads to the wave of consolidation we've been seeing among the platform providers and middleware vendors. The latter on-going challenge leads to the struggles of the application vendors as well as the emergence of SaaS, e.g. Salesforce, to try and fill in that gap. The biggest untapped opportunity is to provide reasonably sophisticated business applications to the grossly under-served mid-market.
2. New Frontiers - the Application Space. The interesting thing is the continuing challenge on the part of vendors, customers/users, analysts and service providers still wrestling with the multi-decade old "two cultures" problem where Tech guys like bright shiny things and resent adult supervision. Contrawise business guys just want it to work but aren't willing to invest the hard...hard work in learning enough about Tech - at least in terms of end-use - to provide the guidance, participation and supervision required. That btw also means that those invidual user enterprises who can and do learn how to manage their Tech investments will continue to enjoy a sustainable competitive advantage. Sadly and surprisingly that's the same list of the "Usual Suspects" it's been for decades, e.g. Fedex, WMT, et.al.
Technomediatainment
1. Industry Structure - the key factor here is the rapid convergence of the various networks to a common infrastructure based on the same "stack" that underpinings the Internet and creates the strategic opportunity for XoIP where IP = Internet Protocol and X = Data, Voice, Video, etc. etc.
2. The Techno Stack - this shift creates huge opportunities for the Equipment Sector and the Service Providers (Phone and Cable companies). It also enables a revolution in the New/Old Media and Consumer Electronics companies, an exemplar of which is Apple's successive introduction of the iPod and iPhone. Which are really digital consumer electronics that are complete end-to-end solutions that are destroying the underpinnings of the old analog world in both media and consumer electronics. Whee...we're having fun now.
Winners and Losers: the Undiscovered Country
The separation between the winners and the losers will be between those who establish an on-going, sustainable and repeatable innovation capability and those who do not. And we DON'T just mean invent new crap but also execute on the delivery of those inventions. The relevant operating distinction between invention and innovation is whether or not you deliver it and make money in the process. Clever is fun but doesn't count. This will get interesting in all the sectors of these industries but is particularly fascinating to watch as as the New Media companies adapt to the "Content Wars". The series of posts on Innovation walk thru the general requirements and characteristics involved - here illustrated by contrasting pathways. So where do MSFT vs YHOO fall ? How 'bout Dell vs HPQ ? Or Nintendo or AAPL ?
Anyway...that's certainly not all the accumulated graphics digging into various aspects of these Industries. And definitely all the discussions, analysis and readings. If anything strikes your fancy you'll have to follow the pointers below to dig in some more. Bon Appetit' indeed. We are definitely living in interesting times.
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