Farewell, 3.1 Trillion

That is how much value has been wiped away from the global communications, media and technonology industry since 2003, according to a very interesting report released today.

Every industry has been so battered by the financial crisis that it is hard to draw much meaning from stock prices and market movements - pretty much every stock graph looks like a ski slope these days, and we are long past the day when companies are priced based on fundamentals.

But more interesting than the 3.1 trillion figure is what the report says about "value migration." Basically, there has been an underlying shift in how capital is allocated to the industry: telecom companies are far more valuable than before, and consumer electronics, hardware and semiconductor businesses are far less.

This is basically a long-term shift in what we consider valuable. Almost all things manufacturable are becoming commoditised, with talk of a $20 laptop in India, and Nokia pumping out cheap mobiles like cans of soda. Abu Dhabi is helping AMD commoditise microchip manufacturing, and it seems like the only hardware maker with long term clues is Apple, which sets the bar pretty high in terms of integrating hardware, software and services. Does anyone seriously think companies like Dell and Toshiba have what it takes?

Mobile companies like to talk about turning their business into a "smart pipe," meaning a channel for delivering content that is far more intelligent and valuable than "dumb pipes" like copper wire of radio waves. That is their most valuable asset: a content distribution network that knows more about its customers - where they are, how much they spend, where they go on weekends, the social networks they move in - than anyone else.

Even better? The smart pipe includes an amazingly effective billing system, which can charge by the month, megabyte, second or song. People can pay by credit card, or by the best distributed payment system in history - prepaid cards, available on literally every street corner in the world.

If I was running a newspaper, game developer, movie studio or record label, I would spend a good chunk of every day thinking very hard about how to get my content out there through these smart pipes. There are 3.1 trillion reasons why this industry needs to get its act together, fast.