Comparison of How Internet Giants like Amazon and Telcos like Vodafone Invest for Competitive Advantages


By Olayinka Oduwole

I recently came across an Interesting Innovation graph produced by Chris Barraclough of STL Partners UK depicted below. It compares the revenue spend of various telcos with that of the major internet players. The graph clearly shows that the telcos invest more in Capex (Capital Expenditure) whereas the internet players invest in Research and Development in order to gain competitive advantage and entry into new markets. It is a known fact that the internet players have an enabling environment that constantly supports and encourages innovation. Telcos continually complain of increased competition from the internet players but this graph put things into perspective.

Several articles have been written highlighting the need for telcos to increase their spending on product innovation, research and development etc. as we move towards the era of disruptive technologies. For previous cellular generations (2G, 3G, 4G), investing in Capex and Opex (Operating Expenditure) was more than enough for telcos to justify their investments. With 5G, this is no longer going to be the case. Innovation will be vital here to surviving the digital landscape, especially considering the increased competition from other players and to work interoperably with these players.

Even though the telcos highlighted here are based within Europe, US and other parts of the world, I hope that this research can be conducted for telcos within Africa. But I doubt if the results will be any different.

Besides telcos, developing countries, in general, lack the vision to invest in Research and Development. They are very proficient in consuming technologies rather than contributing towards the production of these technologies. One would notice huge enthusiasm from young ones or even lawmakers on acquiring the latest technological gadgets but hardly observe any such drive towards the production of such devices within the continent.

As one who has worked in research over the years, I understand the significance of Research and Development (R&D) on the development of any country or nation. In-fact, no country can grow without investing in its R&D capabilities. It’s not a mistake or error that developed countries are developed whereas developing countries continue to be developing.

As R&D is not a profit making venture and can be very long term intensive without any major breakthrough in sight, it’s hard to get the commitment of the likes of Aliko Dangote and other billionaires within the African continent to invest in such capabilities.

I am however very optimistic for the continent because of the rise of scholars in Africa who are redefining  what it means to be scholars while also actively applying technology to solve problems within the continent. Furthermore, the wave of entrepreneurial activities within the technology space on the continent is equally very encouraging. I can mention lots of home grown technology solutions that have recently been developed within the continent e.g. GoKada, Kobo360, SafeMotos, Safari Yetu etc. This would also indirectly help in addressing the brain drain as the world shifts towards a knowledge based economy.

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