Rough picture of how far the tech revolution has to go

John Bredehoft expanded my discussion on the tech revolution just getting started.

In his post, Why are some revolutions imperceptible?, he describes the revolution in his industry from getting powerful PCs. The impact on the economy was tiny, if even measurable, because the entire industry was small in relation to the overall US economy.

To point out how small the publishing and music industries are, he looked at the Fortune 500 list of largest companies in terms of sales. He points out that the largest identifiable media companies are News Corp at 91 and Time Warner at 103.

Since I’m an accountant and like to quantify things, his post gave me an interesting idea. I went to the list and did a quick analysis to compare the size of a few industries.

I listed the 40 largest companies by sales and aggregated the sales by industry. My analysis isn’t very accurate since I didn’t spend a lot of time on it. I’m not sure how to aggregate Apple, IBM, and Microsoft so I didn’t add those into the analysis. I don’t recognize a few names on the list. So, my calcs are guaranteed to be inaccurate, but as auditors say, they are materially correct for the purpose of this analysis.

So, look at the combined revenues in some industries amongst the top 40 companies on the Fortune 500 list:

  • $62B for News Corp and Time Warner combined
  • $342B for 4 health care companies
  • $482B for 4 manufacturing companies
  • $784B for 8 finance and insurance companies
  • $1,215B for 6 energy companies (that’s over 1 trillion)

The revenue in 4 industries amongst the top 40 companies overwhelm revenue of the two largest media companies.

Here’s the proportions. The revenue of the companies in those industries in relation to the two largest media companies:

  •   5x as large – 4 health care
  •   8x as large – 4 manufacturers
  • 12x – 8 finance and insurance
  • 19x – 6 energy sector
  • 79x  as large – the top 40 companies in total

Refine the analysis any way you want – fine tune my categorization, extend it to the entire Fortune 500, change the cutoff from 40 to some other number – I think the overall point will stand.

So the question again – what happens when the radical transformation we’ve seen in music and book publishing fully permeates energy, health care, and manufacturing?

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