Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio. So late last month,
Speaker 1: Bin put out it's Technology Report one. It's ninety two
Speaker 1: pages of the new Technology Economy. There's a lot going on,
Speaker 1: everything from big tech, m and A venture capital, software, hybrid, cloud,
Speaker 1: talent wars, chip shortages, supply chains. These are two things
Speaker 1: that we talked about with Michael Dell a Dell just yesterday. Uh.
Speaker 1: And layering over at all Tim, is the U S
Speaker 1: and China to coupling. We talked about that with Eric
Speaker 1: Shatzker based on his conversation with Ken Griffin over at Citadel. Yeah,
Speaker 1: he's he said that, and he reminded us that Griffin
Speaker 1: warrened that the U S should not decouple from China. Right, exactly,
Speaker 1: pretty adamant about it. So let's see what Anne Hecker
Speaker 1: has to say. She's head of America's Technology and Cloud
Speaker 1: Services practice, uh, and also ahead of the Semiconductor group
Speaker 1: based in Silicon Valley. She is on the phone and
Speaker 1: this is over at Bain on the phone in Palo Alto, California.
Speaker 1: And Uh, Tim and I been looking forward to this conversation.
Speaker 1: Welcome to Bloomberg. Thank you. Hey. Tell us a little
Speaker 1: bit about when you guys put together a report, Uh,
Speaker 1: you probably get a lot of information, a lot of
Speaker 1: research that's done. Is there something though, that just rose
Speaker 1: to the top, like this is going to be at
Speaker 1: the top of everyone's mind when it comes to anything
Speaker 1: and everything in the technology space. Yeah, that's a great question.
Speaker 1: And as we looked at our Technology report this year,
Speaker 1: what we really did was take up fact based view
Speaker 1: to look at all of the different trends which we've
Speaker 1: been following for years, and really trying to understand what
Speaker 1: was the impact of COVID nineteen in the global pandemic
Speaker 1: that we've all been experiencing. And one thing that we
Speaker 1: found was it really was an acceleration of a lot
Speaker 1: of the technology trends that we've been following. And a
Speaker 1: lot of that's based on not only the research we
Speaker 1: did for this report, but over the past eighteen months,
Speaker 1: we've been talking to our CEO COMPS clients, talking with
Speaker 1: a lot of ce i os to understand how are
Speaker 1: they seeing different technology trends as it played out during
Speaker 1: the pandemic kind of quarter over quarter, and what we
Speaker 1: saw was really an acceleration of a lot of trends
Speaker 1: like cloud based infrastructure, based security, AI as a service offering,
Speaker 1: and then you know accelerations of some like PC and
Speaker 1: hardware sales as a service UM for remote work is
Speaker 1: everyone transition to work from home and school from home.
Speaker 1: It's really just an acceleration across the board and a
Speaker 1: lot of the different textrins we've been following for years. Well,
Speaker 1: how much of that was pulled forward for you know,
Speaker 1: because of the pandemic into what extent is they're sort
Speaker 1: of going to be a pause in because people did
Speaker 1: a lot of those upgrades. That's a great question, and
Speaker 1: it probably varies a little bit by sector within technology.
Speaker 1: I think some of the big ones where we saw
Speaker 1: a lot of growth. So again, cloud based security moving
Speaker 1: towards the cloud based infrastructure was a trend that we've
Speaker 1: been watching for years, and if anything, this just accelerated
Speaker 1: it and we think it will continue to accelerate. So
Speaker 1: it pulls it forward some of the adoption UM. But
Speaker 1: now I think just the use of those new technology
Speaker 1: trends will continue to expand as as adoptions has just
Speaker 1: spread across many different in markets and use cases. Hey,
Speaker 1: and I think there are oh, go ahead for forgive bab,
Speaker 1: please finish. And then I think there are areas where
Speaker 1: we're looking at closely around you know, um, some of
Speaker 1: the things you think of, like PCs or peripherals that
Speaker 1: people bought a lot of to to enable you to
Speaker 1: work in school from home. Now we have those. Are
Speaker 1: you going to see that same spike? Those sales have
Speaker 1: actually held up better than expected. Um, but those are
Speaker 1: ones that might come back down socially on the peripheral set.
Speaker 1: So what's interesting too is, you know, we talk a
Speaker 1: lot about the decoupling of US and China, and we
Speaker 1: mentioned on the introduction to this um our air Shafts
Speaker 1: are caught up with the chief investment officer of its Soros,
Speaker 1: who said, you know, now is not the time to
Speaker 1: be investing in Chinese companies. On the other hand, he
Speaker 1: also talked with Citadels Ken Griffin, who said, you know,
Speaker 1: we should not be decoupling the United States from China,
Speaker 1: that we should be having that relationship. We know just
Speaker 1: a little bit earlier today, President Biden city plans to
Speaker 1: meet virtually with President g before the end of the year.
Speaker 1: We know tensions between the two largest economies have been
Speaker 1: rising once again, and are you anticipating there you are
Speaker 1: in Silicon Valley, what are the conversations that you have
Speaker 1: with people from different parts of the tech community. Are
Speaker 1: we going to have kind of two separate huge Chinese
Speaker 1: um not Chinese, two huge tech movements those aligned with
Speaker 1: China or China just on its own developing technology, and
Speaker 1: then kind of the western world, the US and others
Speaker 1: moving ahead on technology. Yeah, it's it's a great question
Speaker 1: and one that we have spent a lot of time
Speaker 1: thinking about for quite a few years now around just
Speaker 1: the relationship between US and China and how does it evolve,
Speaker 1: And it really has accelerated, I think over the last
Speaker 1: couple of years. So when we think of this and
Speaker 1: the coupling, even you know, two or three years ago,
Speaker 1: we used to lay out three scenarios that you know,
Speaker 1: we used to be in a world is more globalization,
Speaker 1: and then we moved to one of globalization, which is
Speaker 1: a term I think the economist coined where there would
Speaker 1: still be global trade, but there'll be more tariffs, more
Speaker 1: sanctions that would flow some things down. And then the
Speaker 1: third would be do we moved into a more decoupled world?
Speaker 1: Where you really do start to see the development of
Speaker 1: independent economies and supply cheese that really just have fewer
Speaker 1: linkages across those And we used to debate up how
Speaker 1: fast would you be moving towards that more decoupled scenario,
Speaker 1: And I think we've moved faster than anyone expected. UM,
Speaker 1: I don't think it's going to be linear. I think
Speaker 1: will probably move some to the left sum to the
Speaker 1: right over time. But a few data points that have
Speaker 1: really I think show this is if you look at
Speaker 1: foreign direct investments UM tech related foreign direct investment has
Speaker 1: dropped from and if you click under that, Chinese investment
Speaker 1: in the US bell off very quickly kind of around
Speaker 1: to seventeen and the US has been a more strait decline. Hey,
Speaker 1: and hang on a second, because we've got to do
Speaker 1: a little bit of news. But we'll come back and uh,
Speaker 1: continue our conversation. And Hecker ahead of BAN America's Technology
Speaker 1: and Cloud Services Practice. Will get back to her in
Speaker 1: just a moment right here on Bloomberg. I want to
Speaker 1: get back to our conversation still with us is and
Speaker 1: Hecker she's head of Ban's America's Technology and Cloud Services Practice. Uh,
Speaker 1: and UH she's still with us on the phone in
Speaker 1: Palo Alto, California. And you know what's great about talking
Speaker 1: with folks like you. You guys talk with a lot
Speaker 1: of different companies. A lot of them are your clients.
Speaker 1: You do the research to try and figure out, you know,
Speaker 1: what's coming uh And and then I think about our
Speaker 1: audience who's listening to it, their investors, They're trying to
Speaker 1: figure out what are the next next waves. We love
Speaker 1: talking with the CEOs. Who are the disruptors, the innovators
Speaker 1: or the investors in the disruptors and the innovators. Who
Speaker 1: do you think are ultimately based on the latest tech
Speaker 1: report that you guys put out, who are the winners
Speaker 1: and losers? Yeah, that's a great question when we look
Speaker 1: at it. Um part of the report we looked at
Speaker 1: was just how much technology has really um broadened in
Speaker 1: its impact across all industry. So sometimes we look at,
Speaker 1: you know, the tech companies, but we also looked in
Speaker 1: this report about how companies outside of traditional tech channels,
Speaker 1: so your retail companies, financial service, healthcare, consumer products, and
Speaker 1: the research there we showed that companies across all industries
Speaker 1: that take a more tech driven strategy or have a
Speaker 1: lot of um tech as an underpinning in their business
Speaker 1: model are actually outperforming others in their own industry. So,
Speaker 1: while we can think of technology companies as a vertical
Speaker 1: in and of itself the enabling aspect of technology and
Speaker 1: embracing that across all different industries, companies that have successfully
Speaker 1: done that are outperforming their peers that haven't done that yet.
Speaker 1: And can you give us just for the sake of
Speaker 1: case study or or or so so people understand examples,
Speaker 1: can you share historical examples where one company has embraced
Speaker 1: that type of shift and one hasn't and we've seen
Speaker 1: our performance. Well, sure, so you can see some of
Speaker 1: some of the examples would be would be on your
Speaker 1: listeners are very aware of like companies like an Amazon
Speaker 1: or an Ali Baba kind in the consumer space that
Speaker 1: it really just are kind of what we would call
Speaker 1: born check right that they were born with the technology underpinning.
Speaker 1: And then I think you can see some examples in
Speaker 1: industrials and financial services where more traditional companies have really
Speaker 1: embraced technology, either whether it be payments or how do
Speaker 1: they think about telehealth, where they've now added new lines
Speaker 1: of business or new ways of delivering their goods to
Speaker 1: the consumers that they've kind of embedded technology into their
Speaker 1: delivery even if they weren't kind of a born in
Speaker 1: the cloud type company. Well I do. It is really
Speaker 1: such an interesting time, and I guess we just keep wondering,
Speaker 1: you know, what is the next big thing in terms
Speaker 1: of our world and what happens? Um if there is
Speaker 1: a decoupling, I'm want to go back to that because
Speaker 1: that's where we started. If we have that decoupling, uh,
Speaker 1: And it does seem like we're moving towards that because
Speaker 1: we are already seeing just a strained relationship. But we've
Speaker 1: been there before re China before. If we are in
Speaker 1: terms of the tech world, it just means kind of
Speaker 1: too tech development verticals. That's how it plays at And
Speaker 1: that's okay because there's still a lot of money to
Speaker 1: go around and still big markets to play in. That's
Speaker 1: where this a whole coupling gets very challenging because if
Speaker 1: you actually look at the technology value chain, UM, no
Speaker 1: one country can do it alone. Right now, we are
Speaker 1: still a very global supply chain and there's um it's
Speaker 1: a very unique value chain and that it's very segmented
Speaker 1: and highly specialized. So each country has areas where they're
Speaker 1: quite strong, and then also key competencies or parts of
Speaker 1: the value chain that they're missing. So, for example, um
Speaker 1: China really needs semiconductor capital equipment that's nasfully in the
Speaker 1: U S or Europe. They need access to leading edge
Speaker 1: manufacturing process technology for semiconductors, which is strong in the US, Korea,
Speaker 1: and Taiwan. The US really is needs ode in capacity
Speaker 1: um PCB capacity, which is very heavily in China right now.
Speaker 1: The US also needs more leading edge silicon capacity, which
Speaker 1: again you know the US has some, but a lot
Speaker 1: of it's in Taiwan, a lot of it's in Korea.
Speaker 1: And then if you keep going down the value chain,
Speaker 1: there's different areas where different countries have quite a bit,
Speaker 1: but everyone is still very dependent on each other, which
Speaker 1: is what one thing that just makes the coupling so
Speaker 1: tricky is it's very hard to do right now. So
Speaker 1: I think companies and countries are starting to take steps
Speaker 1: and starting to make investments to try to make their
Speaker 1: own supply chains more resilient to these risks. But it's
Speaker 1: impossible right now for any one country to do it
Speaker 1: all on their own. All right, We're gonna have to
Speaker 1: stop on that note, Hey, and thank you, and Heck
Speaker 1: our head of Beans America's technology and cloud services practices,
Speaker 1: joining us on the phone from Palo Alto, California, you know,
Speaker 1: to we talked about it and beyond the bail some
Speaker 1: of the big macro stories you and I. I mean,
Speaker 1: energy is definitely going through some changes as we move
Speaker 1: away from carbon too much more alternative energy supply chains
Speaker 1: are we you know, significantly changing the equation in terms
Speaker 1: of how companies manage them. Do we see big changes
Speaker 1: following what happens what happened with COVID and what happened
Speaker 1: with the supply chain crunch with some companies building facilities
Speaker 1: here in the US. But it's a year's long process.
Speaker 1: It's a long process, and that's why maybe to some
Speaker 1: extent you're seeing that discomfort in the markets and dislocation
Speaker 1: because it does take a while to do some of this.
Speaker 1: Uh So, we will certainly stay up to date on it.