Webscales need to enter and disrupt trillion-dollar industries to maintain growth trajectories and sustain stock valuations
Transportation (e.g., connected vehicles), logistics, financial services, healthcare, telecom and other sectors each represent at least a trillion dollars in economic value globally, and webscales are targeting each of these industries for disruption.
Webscales need to rapidly scale their presence in these industries to add billions of dollars in top-line revenue to their respective income statements each year to sustain their stock valuations.
Telecom is a unique market to disrupt because it represents around $2 trillion in current economic value and provides foundational infrastructure to drive disruptive initiatives across other industries. Intelligent connectivity transcends all industries in a digital economy and is the foundational medium for data transmission and the conveyance of cyber-physical exchange that fuels digital transformation. Moves by Microsoft to acquire Affirmed Networks and Metaswitch underscore the strategic imperative for webscales to disrupt the telecom sector.
Webscales will ensure the Fourth Industrial Revolution becomes a reality
The Big Nine webscales are investing over $300 billion annually collectively (R&D and capex), and this amount is growing rapidly, on world-changing endeavors, such as building virtual worlds, truly autonomous vehicles, conversational voice AI, quantum computers, and frictionless, intelligent and ubiquitous connectivity. These initiatives will push the rollout of ICT infrastructure at scale and get governments and businesses aligned to ensure they are digitally transforming.
Webscales are standardizing industrial digitalization to bring enterprises into their ecosystems, and over time the webscales will enhance and broaden the capabilities they offer to enterprises en route to full realization of Industry 4.0.
TBR believes the world’s largest webscales will likely own and control key platforms and ecosystems pertaining to the realization of Industry 4.0 and will garner an outsized portion of the value that is created from the digital economy.
The next major device category is AR/VR
AR/VR represents a relatively new, trillion-dollar market category that could eclipse the market impact smartphones have had on the global economy since the inception of the iPhone in 2007. Microsoft’s up to 10-year, $21.9 billion contract with the U.S. Army for HoloLens-based solutions exemplifies the potential of this market.
All of the Big Nine webscales are investing in AR and VR devices and/or applications as they aim to capitalize on this market.
As with the smartphone era, AR/VR will put enormous requirements on global networks as uptake of new devices occurs. Webscales are learning from prior issues and are actively exploring connectivity options to mitigate the high bandwidth/low latency requirements of AR/VR devices to ensure user experience is acceptable.
TBR has revamped its original Webscale ICT Market Landscape starting with the 1H21 publication. As part of this revamp, the report name has been changed to Webscale Digital Ecosystem Market Landscape. Though this report still covers the end-to-end digital ecosystem endeavors of the major webscales at a holistic level, the content of this report will focus on webscales’ disruption of the telecom industry. The 1H21 publication of the report specifically focuses on webscales’ disruption of the network intelligence-layer technologies domain. TBR’s next edition, expected to publish in January 2022, will focus on the connectivity infrastructure and connectivity business model disruption endeavors of the webscales and what this means for telcos and vendors.