A group of lean, fit and relatively small companies are taking the telecommunications services industry by storm and showing the bigger players how it’s done.
That’s according to leading business analysts Plimsoll Publishing, who say the emerging companies are increasing sales at 3 times the rate of their larger competitors, delivering 4 times the profitability and showing 5 times the return on investment.
According to Plimsoll, which has 16,000 customers worldwide who rely on its regular reports on the market, price deflation is hitting the bigger companies where it hurts – in their pockets. It started with air travel, moved to electrical goods, used cars and even insurance. And now it has arrived in the telecommunications services industry.
32 of the top 100 firms are losing money, while 37 are making less profit than last year. Salaries alone at the top 100 companies eat up 17% of sales. In general they pay their staff more and are less productive.
But the new kids on the block are nimbler, slicker and more efficient.
Plimsoll’s senior analyst, David Pattison, said: “32 of the bigger companies are displaying symptoms of extreme tiredness. But the big companies are desperate not to miss out on the new profit and growth areas, so they are busy hunting down the emerging firms. At Plimsoll, we have identified why this is happening, and who it is happening to.”
The telecommunications services business is just the latest in a long line of industries to be affected by falling prices. The cost of used cars has fallen by an average 3.6% since 2000. Over the same period, the price of IT equipment has dropped by 20%, photographic gear by 8%, clothing by 6% and toys by 5%. At the same time, the cost of production has risen by 1.3% in one year alone, between 2005 and 2006.
The findings are contained in a special two-part analysis of the industry. The first part of the study focuses on the top 100 telecommunications services companies and sets their performance within the context of the overall market, while the second identifies and charts the progress of the up and coming firms outside the elite 100.