I was thinking about that blog last week about the Moto-CEO, and the 20 changes that the blog outlined where each of the given changes in mobile telecoms was first observed and when that change arrived to American shores. My mind was still tossing those issues around this weekend and I decided to do a kind of follow up.. Not about Moto or about mobile, but more about that big picture convergence story, telecoms, IT and media (TMT, Telecoms, Media and Tech, as some call it).

Regular readers of our blog know that the our book Communities Dominate Brands discussed the digital convergence of media, telecoms and IT to a good degree, and in my latest book Digital Korea, I've already outlined the next stages of digital convergence, beyond these three industries, to add banking and advertising (and more bizarre industries such as robotics, telematics and virtual worlds).

But that looks into the future. Over the weekend my mind was pre-occupied with some thoughts about where we stand today. So I took a look at the Fortune Global 500 edition from last August, and wanted to see if my gut feeling was on the right track. Its quite fascinating what I found.

Lets look at today, the giant corporations of today. They of course reflect sound management decisions and bold strategies for the past decade or more, the successful business enterprise execution of the "right" strategies to become one of the 500 biggest businesses of today. The Global 500 companies listed by Fortune acount for a combined 20.9 Trillion dollars (20,900 Billion) of revenues or about 51% of the world's total GDP. These are the 500 companies that pretty much define the world economy.

I did a quick analysis adding up the Telecoms sector (Telecommunications and Networking Equpment) and the Tech or IT sector (Computers, Computer Services, Semiconductors, and Wholesale Computers); and the Media sector (Electronics and Entertainment). I did some quick tabulations and analysis and my gut feelings were quite clearly validated.

I then did a more thorough comparison for our purposes. I considered each company that Fortune had listed, and in a few cases re-allocated them - Cisco, for example, can well be counted in Networking (as Fortune does), but when I want to delineate between telecoms and IT, Cisco does not fit that well into telecoms, they belong more in the tech sector (computer and internet networking, rather than telecoms networking). And I also allocated a quick-and-dirty attribution of one third of total revenues of selected major players form one industry to another - such as Motorola being yes majority in Telecoms (where Fortune lists them), but they also are a major supplier of seminconductors; Samsung is yes an electronics company, but the world's second largest handset maker is obviously also in telecoms. And many companies in random other industries do have a significant telecoms presence, such as Hutchison Whampoa out of Hong Kong (listed for its main business under Specialized Retail) which owns one of the world's largest groups of mobile telecoms providers under the "Three" brand in a dozen countries from the UK to Australia, or SK out of South Korea (listed under Petroleum) which owns South Korea's largest mobile operator SK Telecom, etc. I went through the 500 companies, made the detail adjustments and then tabulated my findings.

Entertainment is an Asia-dominated Industry

Lets start the media and home entertainment part. (Electronics and Entertainment). Fortune listed 22 companies in this space. After my adjustments, I had 25 companies with whole, majority, or significant minority of revenues from this sector. The 25 companies had total (adjusted) revenues of 868 Billion dollars. A big industry sector yes, ruled by home electronics giants like Sony, Matsushita (ie Panasonic) and Samsung. The interesting part is that of the 8 countries represented, 55% of the total Fortune Global 500 company revenues were earned by companies based in Asia. The USA is far smaller in total revenues of the giant media and entertainment companies, with 37%; and Europe is a tiny player whose couple of Fortune Global 500 companies in this sector accounted only for 7% of the revenues. Yes, the home electronics and media industry is governed by the Asians. And perhaps a good metaphor for this sector is the plasma screen TV - perhaps a Toshiba or LG.

IT is an US-dominated Industry

So then the technology sector (Computers, Computer Services, Semiconductors and Wholesalers of Computers). Of the three, like in real life, also among the biggest global companies making the Global Fortune 500, this is the smallest sector, worth "only" 690 Billion dollars. The sector included 21 companies after my adjustments. This sector is in the hands of companies based in only 5 countries. And North America, USA and Canada, accounted for 73% of the earnings of the Global Fortune 500 in technology/IT. Europeans have no representatives here. Asians account for the remaining 27%. A good metaphor for the IT industry is a laptop computer, by Apple or Dell.

Telecoms is a Europe-dominated Industry

So then telecoms (Networking Equipment and Telecommunications). This is the biggest sector of the three TNT sectors, worth 1.2 Trillion dollars (1,200 Billion). The Fortune Global 500 mimics the real world again as telecoms is the biggest of the three even in the global economy. So where are they? I had 33 companies from 17 different countries, and nearly half, 45% from Europe. Asians account for 30% and USA and Canada 20% of the earnings of the Global Fortune 500 telecoms sector companies. (The last 5% are in other countries.). Note that where the IT industry is very compressed, in 5 countries in total, only in North America and Asia, and three fourths in North America, now in telecoms there are companies all over the place. This is a difficult industry to track if you have to follow companies from Australia to Italy to Mexico to China. And yes, telecoms is led by the Europeans, and the metaphor here is a mobile phone by Nokia.

We can also look at the regional emphasis-points for the three regions. Considering the above, this is quite predictable and consistent

Europe is telecoms-obsessed.

In Europe the TNT sector has the smallest overall size at only 589 Billion, and 88% of that is telecoms. The only small additional industry is media of the remaining 12%. Europe has no tech/IT companies in the Global Fortune 500. So Europeans seem to think only in telecoms terms. And that the Nokia phones have added many more entertainment features rather than copying PDA functions suggests this telecoms-to-media focus. The same is true of the various initiatives of the European mobile operators moving into the media space, such as France Telcom/Orange investing in movies.

Asia is home electronics focused

The Asians are more balanced. The TMT sector is almost twice that of Europe, at 1.05 Trillion (1,053 Billion) dollars. It is led by home electronics and entertainment at 46%, followed by telecoms 37% and IT/tech last at 17%. Asians think entertainment and home gadgets first but understand telecoms well, computers less well. So LG the electronics giant launching as a telecoms operator in South Korea is perfect illustration of this spread of interest. Sony relaunching its Walkman and Cybershot onto high end smartphones, is another indication of this interest expanding from entertainment to telecoms.

America is tech focused.

The North Americans are also similarly balanced to the Asians and the three-industry TMT sector in North America is almost identical size to Asia at 1.07 Trillion (1,072 Billion) dollars. North America is led by the IT/tech industry accounting for 47%, followed by media/electronics at 30% and having telecoms last at 23%. The Americans clearly think IT first, and media second - ie Apple going iPod and iTunes makes perfect sense in this context, before thinking of the iPhone. Same for Microsoft going for the gaming market with the Xbox.

Now, for anyone looking to find numbers on the related industries, please remember, that the numbers in this blog posting are severely less than the global numbers, because these are only the totals of adding up the related Fortune Global 500 company revenues which only reflect half of the world GDP. The real industry global numbers probably twice these reported.

But global media, telecoms and IT numbers broken down by sector and region, for current global data, are hard to come by from any one (free) source, so this look into the Global Fortune 500 is a reasonable proxy for a comprehensive global comparison between the three industries, and certainly about where their leading companies are based.

So, I think it does well validate the "prejudices" that we find when consulting or giving seminars to audiences in Asia, Europe and North America. I had definitely noticed the difference in dealing with executives from North America vs those from Europe, on say the PDA functionalities in thinking about smartphones etc. But I hadn't picked up on the "Asian dimension" until now, as I am reminded vividly that often here in Asia the executives will use the Sony PSP (PlayStation Portable) as a typical gadget of reference, the pocket media device. Yes, interesting how our regional focus areas will influence how we think and see the world outside.

So - a final point contrasting the three. The tech/IT industry is the smallest of the three, and growing at sluggish rates. The media and electronics business is very much a hits and misses industry, quite volatile, and growing only at about the average for the world economy. But the telecoms industry - is the biggest of the three, and growing the fastest. Which one did you want to focus on? Of telecoms, the losing proposition is the fixed landline telecoms business, and all the growth, revenues, customers, traffic and profits, are on the mobile telecoms side. Its a very challenging business, but if you get it right, the rewards can be enormous. This is the business to be in..

Original Source: Communities Dominate Brands