The Convergence of the Telecom_ Cable_ Satellite_ Computer .ppt

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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
   Drives the Convergence of Industries
   Impacts Corporate Strategy by causing
    dynamic change in business environment:

   to Networks of Strategic Alliances,
   to Porter’s Five Forces of Competition,
   to value of Core Competencies, Resources
   to length of Sustainable Advantages,
   Winner Take All Mkts, Virtuous/Vicious Cycle
The Digital Revolution
       Digital Transfer
    Digital Management
      Digital Content:
 is the driving force of the
 convergence of industries
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
 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 & 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 & 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
   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/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/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
   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 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
   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)
                                     Su97   Sp04
 Threat of New Entrants           High High
 Bargaining Power of
                                   Low Mix
  Suppliers
 Bargaining Power of Buyers       Med High
 Rivalry Among Existing
  Competitors
                                   High High
 Threat of Substitute             High High
  Products or Services
         Convergence (Internet Media)
 IndustryAttractiveness-Business
 Strength Matrix
                               Industry Attractiveness
                                High     Medium   Low
 Business Strength




                              AOL & TW
                      High      2000
                                          TW
                     Medium               2003
                                                  AOL
                       Low                        2003
                                Telecom Industry
 Technological convergence undermines
  usefulness of many strategy tools
 Industry Attractiveness-Business Strength
  Matrix      Industry Attractiveness
                                                               WorldCom
                            1998 High Medium   Low      2002
    Business Strength




                                  AT&T           MCI               Bankruptcy
                         High World Com          2004
                                                               Mannesman
                                 RBOCs
                        Medium                  AT&T              BellAt-GTE
                                Vodaphon
                                               WorldCom         NTelecom
                          Low
                                                 2002
                                                                BT, FT, DT
                                                                Japan Tel
                           Content Providers
                          Information Industry
 IndustryAttractiveness-Business
 Strength Matrix
                              Industry Attractiveness
                               High   Medium    Low
 Business Strength




                            Bloomberg                    Microsoft ++
                      High
                            Thompson                     Yahoo ++
                             Google AOL TW
                     Medium                              Lexus-Nexus
                             Reuters  CNN
                       Low   Telerate X
              The Convergence - Horizontal
            Entertainment & Information
- Viacom-Paramount                 - Sony/Columbia
- Disney/ABC,                      - CBS-Westinghouse
- Time Warner Turner                - Matsushita/Universal
- GE-NBC, Universal/MCA             - News Corp-Direct TV.
- Bloomberg                         - Reuters, Dow Jones
- Yahoo/Thomson                     - AOL/CompuServe
- Microsoft Network                 - Miscellaneous
      Computer (Hardware & Software)
- Microsoft                        - General Instruments
- Oracle, Cisco                    - Intel, HP, Dell, Apple
- Sun Microsystems                 - Palm, Silicon Graphics
- AOL/Netscape                     - HP Compaq +DEC

               Telecom, Cable, Satellite
- News Corp. - -                   - Direct TV
 -Time Warner Cable              - - AT&T, Broadband
- Cox Cable,                       - FT, DT
- Comcast                          - Bell Atlantic, GTE
                   The Convergence - Vertical
               Entertainment & Information
  - Viacom-Paramount                   - Sony/Columbia
    - Disney/ABC,                      - CBS-Westinghouse
    - Microsoft Network                 - Matsushita
    - GE-NBC, Universal                 - News Corp.
    - Bloomberg, Thomson                - Reuters, Dow Jones
    - Yahoo, Google                     - America On Line
- - - AOL TW Telephony                  - Miscellaneous
         Computer (Hardware & Software)
  - Microsoft                          - General Instruments
  - Oracle, Cisco                      - Intel, Dell
  - Sun Microsystems                   - Silicon Graphics
  - Palm                               - HP- Compaq-DEC

                  Telecom, Cable, Satellite
  - News Corp.,                        - Direct TV
  - Time Warner Cable                  - Motorola
  - Comcast AT&T Broadban              - FT, DT, BTelecom, JT
  - Cox Cable,                         - Bell Atlantic, GTE
          Corporate Strategy:
      Merger, Alliance, Network or
          Build from within?
 Merger               Alliance   or    Build
  –   Portfolio      Network            From
      Mgmt.           – Sharing          Within
  –   Restructuring     knowledge
  –   Transferring      as a
      Skills            competitive
                               ...
  –   Sharing           tactic
                      – per Hamel,
      Activities
                         Doz, Prahalad
  –   ...per Porter
       The Convergence
 Business Based
 Technology Based
 Resource Based
 Intellectual Property
 Establish an alliance ?
 Form a merger ?
          Vertical & Horizontal Convergence
           Entertainment & Information
- Viacom-Paramount               - Sony/Columbia
- Disney/ABC,                    - CBS-Westinghouse
- Time Warner Turner              - News Corp.
- GE-NBC, Vivendi-Univer          - Reuters, Dow Jones
- Bloomberg                       - Google
- Yahoo, Thomson                   - America On Line
- Microsoft Network               - Miscellaneous
     Computer (Hardware & Software)
- Microsoft                      - General Instruments
- Oracle                         - Intel, HP, Dell
- Sun Microsystems               - Silicon Graphics
- AOL-Netscape                   - Compaq-DEC


- News Corp.
              Telecom, Cable, Satellite
                                 - Direct TV, Sprint,
- Time Warner Cable              - ATT Broadband, BTelecom
- Cox Cable,                     - GTE, Vodaphone AirTouch
- Comcast                        - Bell Atlantic, FT, DT
          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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