An article posted on Yahoo business today was interesting in that it brought to light the concept that some technology markets have matured and technology based companies are starting to think about the business differently. This was about Samsung Electronics selling off some of the storage businesses to Seagate — both Global 5000 companies.
With technology constantly in the news – whether it be the latest mobile device to compete with the iPad or a Smartphone or a new wave of social media — we tend to lump them all in together as technology. And we tend to lump all those companies in together as well. Hidden behind it is big business and big dollars, of course. Along with that is the realization that much of the technology and firms that produce the technologies have become commodity items and segments of the industry have consolidated.
The technology sector has been growth driven for many years now and there are still pockets of great promise and growth. They are not immune to the ups and downs of economic cycles, however. We took a look at the companies mentioned in the article (all Global 5000 companies) – Samsung, Seagate, Micron, Intel, Western Digital and Hitachi. In total, these firms represent approximately $200 billion of revenue and have seen their growth year over year as follows
- 2007 = 21.4%
- 2008 = neg 2%
- 2009 = neg 4%
- 2010 = 24% (not all results in yet)
This looks almost like a boom – bust industry
Looking further at the top 10 technology based companies — including names like HP, IBM, Nokia, Microsoft, Dell, Fujitsu, NEC, Apple, Cisco and Canon we find a top 10 technology group with over $500 billion and growth rates as follows:
- 2007 = 19%
- 2008 = 9%
- 2009 = neg 10%
- 2010 = 15% (not all results in yet)
So — the technology business does not go up all the time and we see shifts and waves in companies as well as the technology products just like any other segment. With that we will continue to see consolidation and more M&A activity as portions of the market mature and new, emerging technologies come to life.
If you are marketing or selling to this sector, there are many nuances to understand as one technology company is not like the next one.