The Internet Value Chain

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GSMA_The-internet-Value-Chain_WEB

THE INTERNET VALUE CHAIN

It is important to note that this 2015 value chain, and the

corresponding analysis below, combines B2C and B2B.

The reason for this is the increasing overlap between

B2C and B2B in online services; for example social

networks such as LinkedIn, e-retail services such as

Amazon, and communication platforms such as Skype

(to name a few) actively serve both the B2C and B2B

market. 1 With the value chain structured to encompass

all types of players, we analyse the size of each category

(and, in select cases, subcategory) in terms of revenues,

growth rates, EBIT performance, degree of concentration,

and market capitalisation.

Adding up the global revenues of each category, we

estimate the internet economy to be worth nearly $3.5

trillion in 2015—more than 4 per cent of gross world

product, up from less than 2 per cent in 2008 (see figure

4). It is important to note that we only count the

proportion of spend attributable to internet provision of

a product or service. That is, if someone buys a used car

from a website, we count the commission earned and not

the full value of the car. For this reason, our analysis

differs from some other reports that ask the question

‘what proportion of the economy is touched in some

way by the internet?’

Figure 4

Market size by segment and category

$ billion, % of total market, 2015

CR

ONLINE SERVICES

ENABLING

TECHNOLOGY

AND SERVICES

CONNECTIVITY

USER INTERFACE

SPORTS

MUSIC

OTHER E-SERVICES

INFORMATION AND REFERENCE

CLOUD SERVICES

M2M

PAYMENT

PLATFORMS

SATELLITE

OPERATING

SYSTEMS

APP

STORES

SECURITY

AND

SOFTWARE

VIDEO

PUBLISHING

SEARCH

GAMING

SOCIAL AND

COMMUNITY

GAMBLING

IP COMMS

B2B COMMS

VIDEO

MUSIC

ADVERTISING

SERVICES

AD AGENCIES

FIXED

OTHER

CONSOLES SMART

ITEMS

TABLETS

OTHER

HARDWARE

WEARABLES

PUBLISHING

CORE NETWORK

AND INTERCHANGE

CONTENT DELIVERY

AND OPTIMISATION

SMART TVS

PCS

STBS

AND

DMRS

GAMING

B2B E-RETAIL

B2C E-RETAIL

E-TRAVEL

DESIGN AND

DEVELOPMENT

WEB HOSTING

MOBILE

SMARTPHONES

64 (2%) 1,637 (47%) 373 (11%) 577 (17%) 813 (23%)

TOTAL MARKET = $3,463 BILLION

Notes: The value chain is represented at category level, except when showing it at subcategory level would enhance the analysis and understanding.E-retail excludes all other paid-for services

captured in other parts of the internet value chain; also excludes sales of digital media content (publishing, gaming, video, music) and electronic data interchange. ‘Ad agencies’ includes

analytics, which is insufficiently large to be broken out. CR is content rights, IP is internet protocol, M2M is machine to machine, STB is set-top box, and DMR is digital media receiver.

Sources: Financial statements, investor presentations, broker reports; A.T. Kearney analysis

Online services, which are the services many consumers

probably perceive to actually be ‘the internet’,

represents slightly less than 50 per cent of the total

value chain. The next largest area, making up 24 per

cent, is the market for user interface, which covers the

devices and software that end users employ to access

those online services. The remaining revenues are

distributed across connectivity, enabling technology

and services, and content rights.

1 The Methodology section provides a full definition of each category and subcategory.

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