Technomediatainment Futures: Evolution, Barriers, Structure and Opportunities of a New Industry

Technomediatainment Futures:Structure, Barriers, Outlooks and Assessments

By Dave Livingston, Managing Principal, Llinlithgow Associates (www.llinlithgow.com)

Dave is a management consultant primarily focused on improving enterprise performance by coupling strategy with execution thru the design and implementation of workable, integrated management systems. He blogs on this and related issues in Economics, Markets & Investments and specific industries and companies atwww.llinlithwo.com/bizzx

, his BizzXceleration blog.

This essay collection is a survey of the emerging and evolving Technomediatainment Industry and itscomponent Industries. The label is an invented one that incorporates Technology, Telecom and Media &Entertainment. Over the last few years technology evolution has resulted in the convergence of theseindustries into one very large virtual industry where characteristics and activities in one define theenvironment and outcomes in another. Yet, at the same time, each industry continues to be a powerfulforce in its own right and must be understood by itself as well as for the interconnections and impacts onthe others.Toward that end we build up a suite of tools and conceptual frameworks for each industry and use themin series of performance evaluations. Simultaneously we look at the economic and market factors, aswell as these internal and technical components, to understand where the industry is at. And to alsounderstand what the key barriers and opportunities are, how individual companies are performing andwhat the likely outlook and outcomes are.The net result is a set of tools that allow you to analyze the industry per se, its impacts on the businessperformance of its customers, the key challenges and barriers facing it and the consequences forinvestment, economic & business performance and marketplace implications. What we find over andover again is that much of the commentary is too centered on the headlines and doesn’t understand, noradequately take into account, all of these various factors and how they inter-play.If you are an employee, customer, investor or market purchaser at all involved in these exciting but riskyindustries you’ll find a set of approaches to use in your evaluations, as well as examples forinvestigation.Let’s put that another and blunter way – using these tools can make you money, save you money orprotect your business and career when properly used. We hope we’ve done our part by building acomplete toolkit and showing how to use it. The rest is up to you.As always with our essays they are largely drawn from an inventory of blog postings built up over threeyears. For each essay the URL is listed and each post generally contains a very extensive list of background reading excerpts. These not only document the issues and companies but provide a libraryof resources for you in your own investigations.

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Table of Contents

1. Tech, tech, who's got the tech: Greenberg on Definitions 32. Tech Bizz: Times They are Changing 43. B2C Wars:Yhoo/MS Merger - Disaster in the Making? 64. Tech: Dropping Outlook vs Climbing Competition 75. Comments on the Tech Outlook (and Earnings in general) 96. Telecom, Media & Entertainment 117. Small to Large - IT Industry Structure 128. DLS's, Two Cultures and the Breakdown 149. Commoditization, Consolidation, Consequences 1510. Telecom: More Perfect Storms a'Comin 1611. Telemedia, Entertonics: Let the Wars Begin 1712. The Content Who Would Be King 1813. Tech Industry: Innovators, Survivors & Also-rans 2014. Tech Industry: APPL vs MSFT vs YHOO Wars 2115. Technomediatainment (Telecom): RIM, ATT, Sprint, Cable Wars 2316. Technomediataiment (Content): the Revolution is HERE 2417. Technomediatainment: Maturities, Barriers and Disruptions 2518. Technology Industry: HPQ/EDS, PCs and Prospects 2719. Tech Industry: Playing it Again, Same...oops Sam 3020. Tech Trends I (Readings): Big Picture to Key Players 3021. Tech Trends II (Analysis): What're the Drivers and Outlooks 3222. Tech Trends III: Dell Earnings to Bandwidth to Content Wars 3523. Tech Industry Refresh I: Boxes to Software to Phones - OUCH! 3824. Tech Industry Refresh II: From Downturn to Re-structure to Re-engineer? 4025. About Llinlithgow Associates 44

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Tech, tech, who's got the tech: Greenberg on Definitions

http://llinlithgow.com/bizzX/2007/10/tech_tech_whos_got_the_tech_gr.html Earlier this week Herb Greenberg had an interesting Marketwatch colum on just exactly what is a technologycompany that's not only worth reading but even more worth thinking about. And then perhaps comparing andcontrasting to Fleck's most recent jeremiad wherehe trys to focus on profits, earnings and margins forreal.Herb borrows and advances the argument that youneed to look at R&D spending and gross margins,which is useful, but only a start and can be morethan a bit mis-leading. My argument would be thatyou need to look at the consequences to thatspending in terms of sustainable income andcontinuos innovation. Which is, btw, really hard workto dig into. But at the end of the day the ability toinvest in R&D, translate that into products and sellthose products for an above-average profit becauseyou've focused on delivering value is the real set ofthings to look at. So as you're looking at theexcerpts and links below check out theaccompanying 3-month chart and ask yourself - isthat NDX runup based on sustainable profitableproducts or not ? Or is it just a momentum play ?To start with Mr. Greenberg here's what he had to say:

Why Google, Apple, Dell, others may not be what they appear.Herd mentality drives menuts, especially when it involves "technology stocks" as if one size fits all. It often is acategorization that is as arbitrary and blurry as the line can be between value and growthstocks. That is simply the way Wall Street works, especially when any sector comes intofavor, as tech has been in recent months. But that also raises the question: What really isa tech stock? Broadly defined, high-tech is anything having to do withtelecommunications, semiconductors or personal computers. But that can be misleading,which is why former hedge-fund manager, tech analyst and all-around out-of-the-boxthinker Andy Kessler likes to take it a step further to say that to be considered bona fidetech, a company must spend "some exorbitant amount on research and development"resulting in products that more than pay their own way. The easiest way to figure that outis to look at gross margins and the amount spent on research and development relative tosales. On both counts, the higher the better.Definitely worth reading but there are several major problems with taking it to far.Having commented on the column let me quote myself:

A useful set of distinctions and metrics that are also worth kicking around - for one thing if thefolks putting money into tech think it's tech then it is; at least from a short- and intermediate-termmarket view. On the other end of the spectrum the test being proposed here is that relativemagnitude of R&D investment in overall spending. By that measure the two really dominanttechnology industries are Pharma and Aerospace where one should really run two P&Ls. One onthe research side and the other on the operations side, linked by the capital asset acquired by the