What’s Common To: AOL, Verizon, Microsoft And Undersea Cables?

Friendship of dog and cat- resting together, lying on white sofa.

Two totally different news items have caught my eyes today:

Verizon to acquire AOL: “Verizon Communications Inc. (VZ) agreed to buy AOL Inc.  (AOL) in a $4.4 billion deal aimed at advancing the telecom giant’s growth ambitions in mobile video and advertising.” read more at WSJ And take a look also at the following pieces here and here which further give insights on the transaction.

Microsoft to invest in undersea Data Cables projects: “Microsoft (MSFT) knows this all too well, it seems, as it just poured money into three sub-sea fiber projects (Aqua Comms, Hibernia and New Cross Pacific Cable Network) that should speed up connections to Asia-Pacific and Europe. The Redmond crew sees this as a small investment that could pay off big in the future. As it explains, online products like the Azure computing platform and Office 365 are booming — it only makes sense to have those moneymakers running as smoothly as possible.” Read more at Engadget.

These news have probably raised a few eyebrows today, but I claim that it makes lots of sense and that we will see more and more disruptions like that as well as similar industry moves very soon. Any business transaction, organic or inorganic growth in the digital landscape can be explained by “Owning the Chasms" model.

In that model I broke down the ecosystem elements into: Services, Pipes, Interfaces and People. Then I discussed the chasms between those elements. I claimed that failing to handle these chasms (for the mid to long term) may result in one or more of the following:

  • Competitive disadvantage to other Digital Service Provider who serve the same customers
  • Loss of revenues (due to down time of a pipe, user distraction to a non connected scenario, etc)
  • Loss of market share and of new markets to one of the existing or new digital service providers

I also argued that a potential industry disruption, if happens, will be like an earthquake that will make the chasms even bigger, and this can have significant impact on the digital service providers.

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