Hyperscale Business and the Stat of the Day

March 3, 2015

Hyperscale businesses, taking advantage of digital technology to process millions or billions of information points a day, are threatening to upend markets, change business models and create potent new competitors.

In "Competition at the digital edge: ‘Hyperscale’ businesses," Michael Chui and James Manyika in the McKinsey Quarterly look at how companies such as Amazon, Twitter and Google are using computing power to scale up huge businesses at lightning speed. Massive data also allows companies to test new markets and business opportunities.

"New business models may emerge from exploiting machine-to-machine data, making it possible for companies that draw revenues from sales of physical assets, such as vehicles or factory machines, to evolve into service businesses based on usage charges," the authors note.

Here's one set of numbers that brings this new hyperscale economy into perspective:

"In 1990, the top three automakers in Detroit had among them nominal revenues of $250 billion, a market capitalization of $36 billion, and 1.2 million employees," Chui and Manyika write. "The top three companies in Silicon Valley in 2014 had nominal revenues of $247 billion, a market capitalization of over $1 trillion, and only 137,000 employees."

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