Recession reprieve?

I’d argue there are probably only two large Web-centric companies well-positioned enough to grow — or at least survive and then perhaps benefit from consolidation opportunities: Google and Microsoft. Google is an especially interesting case. Given the scale of what they do, they are even thought to have a “magic dial” that allows them to turn up the frequency and location of ads to boost their revenues in times of need. I guess we’ll see if that’s the case in the coming months. It’s also interesting that Google seems to be looking to partner with service providers for content distribution (and pay them), rather than just be a pure over-the-top rival. As for Microsoft, they are in much the same position as incumbent telcos: Their core business is huge, if under attack; however, they are well-positioned to acquire the downtrodden and use this economic lull to play a bit of catch-up.

To bring this to a close, check out this description of our current economic situation — dubbed "The Great Disruption” — from an article today at Harvard Business Publishing:

“For many companies, the Great Disruption requires nothing short of transformation. It requires fending off attacks from below and making the creation of new growth systematic. It demands embracing new forms of innovation, such as business model innovation, and dramatically improving the productivity of innovation efforts. Investing in transformational efforts in a brutal market appears difficult, but the alternative isn't stagnation, it is extinction.”

Whether industry “transformation” projects have been a huge success or not — more on that in our upcoming print edition cover story — incumbent carriers are well into multiyear, multibillion investments to rebuild themselves around IP networks, more flexible software systems and new business opportunities. Those investments may slow a bit next year, but they won’t stop. Some efforts to do business in a new way will fail, at times embarrassingly so, but I’m willing to bet that what incumbent service providers look like — and what will remain of their competition — by the close of next year may be 2009’s biggest surprise.