Value shifts in the telecom, media, and technology industries

Published: September 26, 2011

Executive summary

Between 2006 and 2010, revenues in the telecom, media, and technology (TMT) industry grew 38 percent, from US$3.15 trillion to $4.36 trillion. Yet that impressive rate of growth — an average of 8.4 percent annually — hides a critical fact: Despite all appearances, the industry’s sources of revenues and profits from sector to sector remained relatively stable. Still, a closer examination of the data suggests several subtler shifts in value that will have long-term consequences for every player in the industry

That is the primary finding of Strategy&’s recent study of how and where value is shifting in the TMT industry. This study provides a detailed, data-driven analysis of the industry’s winners and losers over the past five years, and of the primary sources of revenue in each of the industry’s five sectors — network operations, hardware, IT services and software, content, and intermediation — across the globe. We also examine how players in each sector are attempting to move into adjacent sectors in search of growth.

Network operations remains the largest sector in the industry, the study reveals, but efforts by network operators to expand into other sectors have been slow to bear fruit. Content and hardware companies and IT services and software players have similarly struggled to expand. Meanwhile, despite attempts by various players to move into intermediation, this sector has become increasingly dominated by just a few players. The hardware infrastructure sector had an extraordinary rebound in 2010, growing more than any other TMT sector, including intermediation. Such growth in infrastructure investments is usually a sign of a new wave of growth for the industry as a whole. Finally, although the share of revenues derived from emerging markets has increased slightly, the vast majority of the industry’s overall revenue growth, in absolute terms, came from mature markets.

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Value shifts in the telecom, media, and technology industries

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