The digitisation of service delivery over networks and the spread of the IP networking protocol have enabled significant changes in the supply chain for media and communications services. We see three main supply chain trends arising from this change:
- The separation of the Internet applications industry from the underlying IP connectivity industry, splitting industries that were traditionally vertically integrated;
- The horizontal integration of both the applications and the infrastructure industries, though for different reasons. Applications aggregators are integrating different kinds of applications in order to leverage their common investments in applications support platforms. Infrastructure owners such as telcos and cloud service providers are consolidating to achieve economies of scale that can offset declining margins;
- The internationalisation of application markets and the emergence of global applications and of global aggregators like Google and Apple.