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Impact of Converging Industries on Corporate Strategy Robert B Lamb Stern School of Business The Convergence of the Internet, Telecom, Cable, Satellite, Computer, Entertainment and Information Industries Robert B. Lamb Stern School of Business Contents Today’s Digital Revolution

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impact of converging industries on corporate strategy

Impact of Converging Industrieson Corporate Strategy

Robert B Lamb

Stern School of Business

slide2

The Convergence of the Internet, Telecom, Cable, Satellite, Computer, Entertainment and Information Industries

Robert B. Lamb

Stern School of Business

contents
Contents
  • Today’s Digital Revolution
  • Drives the Convergence of Industries
  • Impacts Corporate Strategy by causing dynamic change in business environment:
  • to Networks of Strategic Alliances,
  • toPorter’s Five Forces of Competition,
  • tovalue of Core Competencies, Resources
  • to length of Sustainable Advantages,
  • Winner Take AllMkts, Virtuous/Vicious Cycle
slide4
The Digital RevolutionDigital TransferDigital ManagementDigital Content:is the driving force of the convergence of industries
analyzing the business environment
Analyzing the Business Environment
  • Infrastructure & Distribution = Digital Transfer
        • Telecom Industry
        • Cable Industry
        • Satellite Industry
        • Internet
  • Enabling Technologies = Digital Management
        • Computer Industry (HW,SW,Svcs)
        • Internet Appliances
        • Internet Business to Business Management Links
  • Content Providers = Digital Content
        • Entertainment Industry
        • Information Industry
        • Internet Content
infrastructure distribution
Infrastructure & Distribution
  • Telecom Industry
    • Regional Bell Operating Companies
    • AT&T, British Telecom, Japan Telecom
    • Sprint, Worldcom filed for bankruptcy
    • Qualcomm – Palm; Motorola - Microsoft
    • Qwest [U.S. West]
    • Frontier[Global Crossings]
    • Northern Telecom, France Telecom
    • Deutsche Telecom, Olivetti-IT, Telmex
    • Vodaphone-AirTouch-Mannesman-Jtel
    • AOL TW Cable IP Telephony Launch 2004
infrastructure distribution7
Infrastructure & Distribution
  • Cable Industry
    • ATT Broadband-(Telecommunications, Inc.-

MediaOne) (acquired & then spin-off)

    • Time Warner Cable
    • Comcast+ ATT Broadband
    • Charter Communications
    • Cox Cable
    • Cablevision
    • Adelphia (under criminal investigation)
infrastructure distribution8
Infrastructure & Distribution
  • Satellite Industry
    • News Corp. (DirecTV) - BSkyB, StarTV
    • EchoStar
    • Loral Space & Comm. Ltd.
    • Motorola, [Iridium-bankrupt]
    • Lockheed Martin
    • Teledesic - $9billion, 840 satellites
      • Craig McCaw & Bill Gates
enabling technologies format
Enabling Technologies/Format
  • Computer Industry
        • Hardware (For Countless Industries

from Fin Services, Health to Retail)

          • Dell, IBM, HP - Compaq, Apple
          • Intel, Motorola
          • Sun Microsystems, Silicon Graphics
          • Sony, Sharp, NEC, Toshiba
          • 3Com, Cisco Systems, Panasonic
          • Palm, Visor, General Instruments
enabling technologies format10
Enabling Technologies/Format
  • Computer Industry
        • Software (for countless industries from jets yield maximization, financial derivatives, drugs, architecture, to mapping oil fields)
          • Microsoft MSN, MS-NBC, WebTV
          • IBM , Oracle, SAP, I2, Ariba
          • Sun Microsystems (Java, Jini)
          • Computer Associates Int’l
          • Computer Sciences Corp.
          • Open Source - Linux and Apache
          • AOL - CompuServe - Netscape
enabling technologies format11
Enabling Technologies/Format
  • Computer Industry
        • Services(For Countless Industries)
          • Electronic Data Services (EDS)
          • IBM + PriceWaterhouse Coopers
          • GE Computer Services
          • Computer Sciences/Continum
          • Accenture (Formerly Anderson)
          • D &T, E & Y, Booze Allen,
content providers
Content Providers
  • Entertainment Industry
        • AOL-Time Warner/ Turner
        • Disney- ABC,
        • GE-NBC-Vivendi Universal
        • Viacom - Paramount - CBS
        • News Corp. – Fox TV-20Th Century Fox
        • Sony/Columbia/ SONY/BMG Music?
        • MCA / Polygram
        • EMI/Warner Music?
        • VS. PIRATES: KAZAA, GNUTELLA
content providers13
Content Providers
  • Information Industry
        • Bloomberg +++
        • Reuters,
        • Thomson Financial
        • Dow Jones
        • Google
        • Microsoft Network (MSN)+++
        • Yahoo
        • America On Line / Compuserve ++
        • Lexus – Nexus, Lycos
content providers entertainment industry
Content Providers Entertainment Industry
  • Strategic Alliances & Acquisitions
        • AOL-Time Warner-Turner- EMI/Warner
        • Viacom-Paramount-CBS
        • Disney (many alliances)
        • GE-NBC-Vivendi/Universal/ USA Networks
        • News Corp + Direct TV
        • Bertelsmann Europe TV,
        • SONY/BMG Music? -EMI/Warner Music?
        • MCA- Polygram
porter s five forces model telecom cable satellite
Threat of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Rivalry Among Existing Competitors

Threat of Substitute Products or Services

Porter’s Five Forces Model(Telecom, Cable, Satellite)

Su97

Sp04

High

High

Low

Mix

Med

High

High

High

High

High

convergence internet media
Convergence (Internet Media)
  • Industry Attractiveness-Business Strength Matrix

Industry Attractiveness

High Medium Low

AOL & TW

2000

High

TW

2003

Business Strength

Medium

AOL

2003

Low

telecom industry
Telecom Industry
  • Technological convergence undermines usefulness of many strategy tools
  • Industry Attractiveness-Business Strength Matrix

Industry Attractiveness

  • WorldCom

Bankruptcy

  • Mannesman
  • BellAt-GTE
  • NTelecom
  • BT, FT, DT
  • Japan Tel

1998 High Medium Low 2002

MCI

2004

AT&T

World Com

High

RBOCs

Vodaphon

AT&T

Business Strength

Medium

WorldCom

2002

Low

content providers information industry
Industry Attractiveness

High Medium Low

Bloomberg

Thompson

High

Google

Reuters

Business Strength

Medium

Low

Content ProvidersInformation Industry
  • Industry Attractiveness-Business Strength Matrix
  • Microsoft ++
  • Yahoo ++
  • Lexus-Nexus

AOL TW

CNN

Telerate X

the convergence horizontal
The Convergence - Horizontal

Entertainment & Information

- Viacom-Paramount

- Disney/ABC,

- Time Warner Turner

- GE-NBC, Universal/MCA

- Bloomberg

- Yahoo/Thomson

- Microsoft Network

- Microsoft

- Oracle, Cisco

- Sun Microsystems

- AOL/Netscape

- News Corp. - -

-Time Warner Cable

- Cox Cable,

- Comcast

- Sony/Columbia

- CBS-Westinghouse

- Matsushita/Universal

- News Corp-Direct TV.

- Reuters, Dow Jones

- AOL/CompuServe

- Miscellaneous

- General Instruments

- Intel, HP, Dell, Apple

- Palm, Silicon Graphics

- HP Compaq +DEC

- Direct TV

- - AT&T, Broadband

- FT, DT

- Bell Atlantic, GTE

Computer (Hardware & Software)

Telecom, Cable, Satellite

the convergence vertical
The Convergence - Vertical

Entertainment & Information

- Viacom-Paramount

- Disney/ABC,

- Microsoft Network

- GE-NBC, Universal

- Bloomberg, Thomson

- Yahoo, Google - - - AOL TW Telephony

- Microsoft

- Oracle, Cisco

- Sun Microsystems

- Palm

- News Corp.,

- Time Warner Cable

- Comcast AT&T Broadban

- Cox Cable,

- Sony/Columbia

- CBS-Westinghouse

- Matsushita

- News Corp.

- Reuters, Dow Jones

- America On Line

- Miscellaneous

- General Instruments

- Intel, Dell

- Silicon Graphics

- HP- Compaq-DEC

- Direct TV

- Motorola

- FT, DT, BTelecom, JT

- Bell Atlantic, GTE

Computer (Hardware & Software)

Telecom, Cable, Satellite

corporate strategy merger alliance network or build from within
Merger

Portfolio Mgmt.

Restructuring

Transferring Skills

Sharing Activities

...per Porter

Alliance or

Network

Sharing knowledge as a competitive tactic

per Hamel, Doz, Prahalad

Corporate Strategy:Merger, Alliance, Network or Build from within?

Build

From

Within

...

the convergence
The Convergence
  • Business Based
  • Technology Based
  • Resource Based
  • Intellectual Property
  • Establish an alliance ?
  • Form a merger ?
vertical horizontal convergence
Vertical & Horizontal Convergence

Entertainment & Information

- Viacom-Paramount

- Disney/ABC,

- Time Warner Turner

- GE-NBC, Vivendi-Univer

- Bloomberg

- Yahoo, Thomson

- Microsoft Network

- Microsoft

- Oracle

- Sun Microsystems

- AOL-Netscape

- News Corp.

- Time Warner Cable

- Cox Cable,

- Comcast

-

- Sony/Columbia

- CBS-Westinghouse

- News Corp.

- Reuters, Dow Jones

- Google

- America On Line

- Miscellaneous

- General Instruments

- Intel, HP, Dell

- Silicon Graphics

- Compaq-DEC

- Direct TV, Sprint,

- ATT Broadband, BTelecom

- GTE, Vodaphone AirTouch

- Bell Atlantic, FT, DT

Computer (Hardware & Software)

Telecom, Cable, Satellite

the convergence24
The Convergence

“These big players are ‘octopuses all with

their hands in each other’s pockets. Where

one industry starts and the other stops

will be hard to decide.’ ”

John Malone

CEO & Chairman

TCI, Inc.

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