Digitization and digital transformation – an overview of the most important topics from the month of July
29. July 2016
Another month is nearly over. In July, which topics relating to digitization and the startup scene were in the news? We gaze into the crystal ball and look at the automobile industry in 2025. The topic of digitization and the labor market remains a perennial issue, Alphabet and Amazon celebrate fantastic financial results, and a study has revealed which startups have the strongest brands.
“The automobile industry is facing the biggest challenge of its 130-year history – digitization and new players are forcing traditional manufacturers to implement far-reaching changes to their business models,” writes business magazine Focus Money. Automobile manufacturers are already having to compete against new rivals from the digital sector. The automobile industry is on the brink of a paradigm shift. The focus is no longer on the product itself (i.e. the car). Instead, it is now on “a positive, efficient and ecological mobility experience.” Any attempt to perform a balancing act that combines traditional mass production with the new, digital world is unlikely to succeed. It is more likely that automobile manufacturers will choose to play a certain role. Providers of “connected life” solutions only offer services in the areas of coordination and mobility, without actually building vehicles themselves. Similarly, sales specialists, such as the recent newcomer Amazon, focus exclusively on sales. Asset-light integrators such as Apple and Google outsource the manufacturing and “concentrate on developing the key components,” such as those required for driverless vehicles. In the future, although traditional integrated automobile manufacturers will provide the basic vehicle, they will need to enter into partnership arrangements with digital specialists.
Nevertheless, traditional automobile groups should not simply surrender the sector to the digital players without a fight. In his recent “Der digitale Entrepreneur” (The Digital Entrepreneur) column for the BILANZ website, Philipp Depiereux outlined the way that automobile manufacturers should approach digitization.
It is rare that a week passes without a new study being published about the impact of digitization on jobs and the labor market. While some of them paint a bleak picture, others come to the conclusion that digital transformation will instead lead to an increase in the number of jobs. Yet one thing is clear: digitization will fundamentally change the way that we work. The research institute Economix created a forecast that was commissioned by Germany’s Federal Ministry of Labor and Social Affairs. According to the forecast, the main areas in which jobs will be lost will be public administration, engineering, hospitality and metal production. On the other hand, additional jobs will be created in the healthcare and social care sectors in particular. This is partly due to demographic changes. There will also be an increase in demand for consultancy services that can help companies to implement digital transformation. The researchers also make the following statement: “The demand for labor will shift further in a direction that favors graduates.” Job hunting will become increasingly difficult for those with fewer academic credentials. This is a challenge not only for the education system. The research states that the welfare state must also become more flexible and must identify and support those people who lose their jobs as a result of digital transformation.
An all-time high for Alphabet and Amazon (Frankfurter Allgemeine Zeitung – FAZ)
The employees of Google’s parent company, Alphabet, probably don’t need to worry about job security for the time being. Earlier this week, Facebook released good financial figures, confirming that it is following a successful trajectory. Alphabet has now followed suit. For the first quarter, Alphabet’s turnover increased by 21 percent to 21.5 billion dollars. “After close of trading, its share price had increased by nearly five percent at times, exceeding the 800 dollar mark. This is an all-time high for shares in Alphabet.” Alongside the driving force, Google, numerous other products and services are also part of the Alphabet conglomerate. These include Nest, which manufactures Internet-enabled household products, and the healthcare company Calico. Yet in comparison to Google, which is something of a cash cow, these businesses recorded losses.
Amazon is another company that is enjoying good results at the moment. In the second quarter, the online retailer’s turnover increased by 31 percent to around 30 billion dollars. The growth in the “Amazon Web Services” cloud computing division is particularly noteworthy. As a result, the company made a record profit of 857 million dollars.
Startups can only dream of those kinds of turnover and profit figures. But being recognizable is an important step towards being successful. A survey by the brand consultancy Interbrand has for the first time identified the strongest startup brands in the world. One of the companies in the top 60, Mymuesli, is a German startup. It was ranked fourth in the “Growing together: Building businesses around people” category. Other well-known names in the ranking included the Deliveroo food delivery company from the UK and Niantic, the developers behind the Pokémon Go app, which has generated a lot of hype. The IBM incubator Watson was ranked first in the “Innovation Incubators” category.