PLATFORM COMPANIES: TREADING THE PATH FROM EARLY DISRUPTOR TO TITAN PART 1: THE INDUSTRY WE CAN T LIVE WITHOUT

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1 PLATFORM COMPANIES: TREADING THE PATH FROM EARLY DISRUPTOR TO PLATFORM TITAN PART 1: THE INDUSTRY WE CAN T LIVE WITHOUT

2 1 A Diverse and Influential Sector Affecting All Areas of Life Social networks, search engines, cloud software providers and ride-sharing companies form an influential and fast-growing group of Platform companies which are reaping huge rewards by disrupting existing industries. Despite varied offerings and widely differing sector focus, these companies have much in common. They need to grow fast or risk being left behind, and the pace of technological change offers little time for reflection, analysis and decision making. If they are to join the Platform Titans that dominate the sector they will face similar challenges as they scale their businesses and expand globally. In this three-part series, we look at the hurdles that all Platform companies must overcome to expand and mature in a fast-moving and unforgiving environment. In part one we look at the types of companies that make up the Platform sector and the impact they currently have on virtually every facet of work and life. Two of the most widely recognized platform companies in the world are Uber and Airbnb. Digitally driven, they have come from nowhere to disrupt long-established sectors, taking incumbents by surprise. But the disruption that Uber and Airbnb have brought to the taxi and lodging industries respectively is not new. They follow a long line of digital-centric companies Amazon, Alibaba, Google, Facebook, Salesforce, Tencent and others that have rewritten the rules of competition in their industries and left incumbents struggling to catch up. Their ability to disrupt established industries such as media, communications and retail has helped them become some of the most valuable companies in the world: Platform Titans. 2

3 These companies are reshaping the global economy and transforming how we work nd live. They have entered a variety of sectors ranging from traditional software and consumer devices to media: ecommerce & payments companies are disrupting and transforming retail and other forms of commerce. Devices such as smartphones and fitness trackers are blurring the lines between entertainment and information, creating new competitive arenas in video, gaming, and virtual/augmented reality. SaaS and cloud now include not just pure-play SaaS companies but established software companies moving their businesses to become SaaS- and cloud-enabled. Search and information companies use content to drive advertising revenue based on numbers of users and levels of engagement. Social networks enable users to create and share content but are mainly driven by advertising revenue. Over-the-top (OTT) media companies companies using the internet as their delivery mechanism are rapidly capturing audience share from traditional communications providers. On-demand companies such as Uber and Airbnb represent the fastest-growing, yet smallest, subsegment of the group. Exclusively platform-driven, they use e-commerce to satisfy a wide range of consumer needs. 3

4 Platform Titans now represent a significant portion of the global economy. Per a recent Accenture analysis of nearly 250 leading Platform companies, Titans generate more than $1 trillion in annual revenue and are valued at more than $4.7 trillion. By far the largest portion of this revenue comes from ecommerce and Payments. But the industry is highly diverse, with no single segment accounting for more than one-third of the total. PRODUCT CATEGORY 2016 REVENUE ($B) 2020 REVENUE ($B) CAGR ecommerce & Payments $308 $597 18% Devices $246 $297 5% SaaS & Cloud $223 $314 10% Search and Info $128 $217 14% Social Networks $89 $181 19% OTT Media $20 $34 14% On Demand $13 $39 32% TOTAL $1,027 $1,679 13% Source: Capital IQ, CB Insights, company websites, Accenture analysis All seven categories will grow rapidly in the next several years: Accenture predicts growth revenue of 13 percent from , three to four times the growth rate of most other industries. On Demand services, though currently the industry s smallest segment, is expected to experience the biggest increase in revenue over this period. 4

5 The next generation of Platform companies is now emerging to challenge both incumbent industries and today s largest Titans. While it is hard to predict who will write the next success story, these industry players face the same growth challenges and follow the same path to success as those who have come before. We will examine what that path looks like in the next installment of this series. 5

6 ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 411,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. Copyright 2017 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. 6