Speaking in Sydney on Monday, Antipodes Partners chief investment officer Jacob Mitchell said major industry players – citing Walmart and Disney as examples – are updating their technology infrastructure to respond to threats from new market entrants such as Amazon and Netflix.
“What happens in that environment is usually the strong incumbent starts to get the message that just milking profitability isn’t going to cut it.
“They’ve started to reposition the business, invest in innovation … so they have a very capable software defined networking solution,” Mr Mitchell said.
Walmart and Disney would have to respond to Amazon and Netflix – but these companies “are not dead in the water”.
For example, he pointed to the fact that Disney had “a very competent content creation engine”, and it was just a matter of “pivot[ing] away” from distributing content via cable and “basically unbundling it and going to a subscription model” to compete “head to head with Netflix”.
Mr Mitchell added that Walmart, too, would need to move online and also “renovate” their IT infrastructure.
“Part of their competitive advantage is they’re building scalable infrastructure where they can put the focus on the value-add, put the focus on being nimble, getting customers what they want,” he said – which would trigger spending on technology.
The ‘clusters’ within the technology sector that would benefit from this would be “traditional enterprise vendors”, like networking technology providers such as Cisco and cloud-based service providers like Microsoft.
