2018 will be the year that large, incumbent companies take on big tech

By The Economist online….

According to Ginni Rometty, IBM’s boss, the digital revolution has two phases. In the first, Silicon Valley firms make all the running as they create new markets and eviscerate weak firms in sleepy industries. This has been the story until now. Tech firms have captured 42% of the rise in the value of America’s stockmarket since 2014 as investors forecast they will win an ever-bigger share of corporate profits. A new, terrifying phrase has entered the lexicon of business jargon: being “Amazoned”.

The second phase favours the incumbents, Ms Rometty believes, and is starting about now. They summon the will to adapt, innovate to create new, digital, products and increase efficiency. The schema is plainly self-serving. IBM is itself fighting for survival against cloud-based tech rivals and most of its clients are conventional firms. Yet she is correct that incumbents in many industries are at last getting their acts together on technology.

Enough time has elapsed for even the dopiest to see the threat. It is 11 years since Netflix began streaming video and five since Tesla unveiled the Model S. The evisceration by tech firms of some mid-sized businesses, such as department-store retail, has concentrated minds. Lagging share prices have helped. In 2017 Ford fired its boss, Mark Fields, despite near-record profits. Its board concluded he was complacent about technological change.

Taking a sample of America’s 20 most valuable non-tech firms, 14 now have a digital dimension to their strategies. Some blue chip firms are mixing fashionable cocktails of e-commerce, big data and artificial-intelligence (AI) initiatives. But others are making comprehensive, multi-billion-dollar bets. Read more here: 2018 will be the year that large, incumbent companies take on big tech…read more

Category: Business and finance, Approved, Business and finance, Business

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