During the first internet boom, 20 years ago, there was ample talk about the convergence of Telco, Media and Technology (TMT). Now, the last months have completed this convergence, creating an scenario that would have been difficult to imagine back then.
First, eight new technology giants have emerged, threatening to take over the world. They started in Digital Advertising (Google, Facebook, Tencent, Baidu), Digital Commerce(Amazon and Alibaba), or managed to transform their way from traditional PC software and hardware (Microsoft and Apple). Now those eight companies have grown into unstoppable behemoths that dominate the top 10 most valuable company list and are worth over 3 Trillion dollars. They have expanded to take over adjacent industries like media and IT infrastructure, they took control of the smartphone age, they buy up companies that threaten their dominance and they are betting hard on AI as the new paradigm to continue their dominance.
Media has finally, and painfully, converged with Telco and Technology. Print media was decimated and has mostly moved to digital, with even the largest properties struggling to hold their relevance. Pay TV is progressively integrating into telco (Liberty into Vodafone, Direct TV into ATT) or content (Sky in Fox). New content majors have emerged, Netflix already more valuable than any other media company and Disney completing its transition to a full range media giant. Traditional majors are being bought up by telco (Universal by Comcast, Warner by AT&T), tech players (Columbia by Sony), with Fox up for grabs between Comcast and Disney, and Viacom embroiled in a corporate dispute about its future.
IT infrastructure and hardware is being taken over by cloud, which has been taken over by Amazon, Microsoft, Google and Alibaba. This is putting great pressure on traditional blue chips like IBM or HP, which could be quietly moving to irrelevance. Only the technology giants seem to have the scale, skill and daring to conquer this new world. The cloud dominance of only a few companies could eventually have knock-on effects on other industries like hardware or chips.
Business Software is in full transformation with the traditional players (SAP and Oracle) having been able to buy their way into the new world world of Software as a Service. The price they have paid is to dilute their shareholders by buying innovation, in a similar way to pharma companies, and to admit three new players into their oligopoly. Salesforce, Microsoft and Adobe, have improved their position and now have joined SAP and Oracle as key providers to many large and small companies. Beyond the new Big 5, there has been an amazing explosion of innovation with tens of thousands of SaaS companies creating new software, which is only comparable to biotech innovation in the pharma sector.
Telco keeps its place in the world as the gateway to the new connected world. A couple of years ago, connectivity seemed under fire, with Google Fiber or Facebook Aquila apparently focused on eliminating telcos from the equation. However, the Big Techs realized that telco was about perspiration and territoriality, while they are about inspiration and global scale. In consequence, they have abandoned their connectivity projects and moved to work with the telcos (e.g. Facebook with TIP and Google with RCS).
Device manufacturers lost their position and a new set regained it again. The pre-smartphone ecosystem was almost completely wiped out, with Apple and Samsung becoming the only profitable games in town. Only recently, did the Chinese players (Huawei, Xiaomi, 1plus1,…) manage to recreate a competitive ecosystem on the Android part of the equation.
Internet services have been captured mostly by the Big Techs, either directly or through acquisitions, and some independent unicorns. Messaging and communication with Whatsapp and Skype. Social networks with Facebook, Linkedin and the new wave (e.g. Instagram, Snapchat). Only some specific verticals like transport (e.g. Uber, Lyft) or lodging (e.g. AirBnB) have been large and independent enough to create their own ecosystems
The new TMT Hypersector is very different from what could have been expected 20 years ago in the eve of the dotcom boom and crash, or even 10 years ago at the start of the smartphone revolution. We can only guess how the next ten years will evolve for each of the subdomains and for the dominance and balance of power among players.